In a unanimous ruling last month, the US Supreme Court closed down a route being used by parties to private arbitrations taking place outside the US to obtain US-style discovery of documents through the US courts.
Arbitral tribunals will regularly order that documents are produced in line with the IBA Rules on the Taking of Evidence in International Arbitration, which provide for (relatively) narrow request based disclosure of documents. US style discovery on the other hand allows for a wider obligation on parties to produce all documents that are relevant to the pleaded issues, even if they are prejudicial to that party’s case.
Relevant US rule on discovery
Section 1782 of Title 28 of the US Code (‘’§1782’’) permits a US district court to order the discovery of documents or testimony “for use in a proceeding in a foreign or international tribunal’’.
Parties to arbitrations taking place outside of the US have previously sought to use §1782 to get discovery of documents or witness testimony through the US courts, on the basis that the arbitral tribunal hearing their case is a “foreign or international tribunal”. The attraction of this route was that a party could obtain a much wider form of discovery through the US courts than would be permitted through the rules governing the arbitration itself.
Issue before the US Supreme Court
Recently, the scope of §1782 was put to the test in two cases. The first, ZF Automotive v Luxshare, related to a private commercial arbitration with a Berlin seat. The second, AlixPartners LLP v The Fund for Protection of Investors’ Rights in Foreign States, related to an ad-hoc arbitration authorised under a bilateral investment treaty.
The question that the US Supreme Court had to determine was whether the arbitral tribunals in these two cases constituted a “foreign or international tribunal” for the purposes of §1782.
Decision and impact
Giving the judgment of the Court, Justice Amy Coney Barrett interpreted the phrase “foreign or international tribunal” as being restricted to just “governmental or intergovernmental adjudicative bodies’’ and decided that contract-based tribunals governing private disputes are to be excluded: “neither of the arbitral panels involved in these cases fit that bill”.
The court clarified that, for the purposes of §1782, “foreign tribunals” are those imbued with the sovereign authority of a single nation, rather than a tribunal simply in a foreign nation, whilst “international tribunals” are those granted governmental authority by two or more nations.
The result provides welcome clarity on the scope of §1782. It also puts an end to parties circumventing the rules on disclosure that they signed up to when agreeing to arbitrate their dispute and seeking potentially much wider discovery through the US courts.
In sum, only a governmental or intergovernmental adjudicative body constitutes a “foreign or international tribunal” under §1782. Such bodies are those that exercise governmental authority conferred by one nation or multiple nations. Neither the private commercial arbitral panel in the first case nor the ad hoc arbitration panel in the second case qualifies.