Discovery in Aid of International Arbitration - Part 3 Chapter 18 - The Practice of International Litigation - 2nd Edition
Lawrence W. Newman has been a partner in the New York office of Baker & McKenzie since 1971, when, together with the late Professor Henry deVries, he founded the litigation department in that office. He is the author/editor of 4 works on international litigation/arbitration.
Michael Burrows, Formerly, Of Counsel, Baker & McKenzie, New York.
Section 1782 of Title 28 of the U.S. Code (“Section 1782”) is a powerful, but probably much underutilized, weapon in the arsenal of those who practice in the international litigation arena. On the question of whether 1782 may be used in connection with an international arbitration proceeding, caselaw initially said “no.” But that may be changing.
In a very general sense, if discovery is sought for use “in a proceeding in a foreign or international tribunal,” Section 1782 authorizes a federal district court to order production of documents, as well as depositions of witnesses, located within that district. The Section 1782 application can be brought by “an interested person” (which includes a party to the foreign proceeding), is typically brought by way of an ex parte application, and does not require that the foreign proceeding even be pending at the time of application.
A few years ago, the question arose as to whether an “arbitral tribunal” qualified as an “international tribunal” for purposes of Section 1782. In Nat’l Broad. Co., Inc. v. Bear Stearns & Co., Inc., the Second Circuit answered the question in the negative. That case involved a commercial arbitration conducted in Mexico under the auspices of the International Chamber of Commerce (“ICC”). One reason given by the Second Circuit for not applying Section 1782 to an arbitration was that allowing the use of 1782 would mean that parties to the arbitration would themselves be able to seek discovery, which was inconsistent with the provision in the Federal Arbitration Act that limits to the arbitrators the right to order discovery. In addition, the Second Circuit reasoned that the legislative history of the statute demonstrated that the statute was intended to apply to intergovernmental tribunals not involving the United States but that there was no indication that Congress intended for the statute to reach private international tribunals (such as a tribunal created under the auspices of the ICC).
In Republic of Kazahkstan v. Beidermann, the Fifth Circuit likewise held that Section 1782 was drafted to facilitate discovery for international government-sanctioned tribunals, not private arbitral tribunals. The court also referred to the commonly understood belief that arbitration is intended as a speedy, economical, and effective means of dispute resolution – an advantage that, according to the Fifth Circuit, could be destroyed if the parties succumbed to fighting over burdensome discovery requests far from the place of arbitration.