Circuits Remain Split on Allowing U.S. Discovery in Private, International Arbitrations

Troutman Pepper

This is an update to our article “Supreme Court May Decide if Litigants Can Conduct U.S. Discovery for Private International Arbitrations,” published on July 7, 2020. The next day, July 8, the Second Circuit upheld its 1999 ruling that federal courts cannot order U.S. discovery pursuant to 28 U.S.C. §1782 for use in private, commercial, international arbitrations. In re: Application and Petition of Hanwei Guo for an Order to take Discovery for Use in a Foreign Proceeding Pursuant to 28 U.S.C. 1782, Case No. 19-781 [1]. Guo adds fuel to the fire of the current circuit split on this issue and increases the chances that the question will be addressed by the Supreme Court.

As explained in our previous article, 28 U.S.C. §1782 allows persons participating in a legal proceeding abroad to have access to discovery of witnesses and documents located in the U.S.:

“The district court of the district in which a person resides or is found may order him to give his testimony or statement or to produce a document or other thing for use in a proceeding in a foreign or international tribunal…”

The statute is powerful because it allows participants to obtain discovery without the procedural burdens of the Hague Convention, though its boundaries remain unclear.

There is no dispute that the statute applies to proceedings before a foreign nation’s judiciary or an international tribunal like the International Criminal Court. However, rulings conflict as to the definition of a “foreign or international tribunal”, and the issue that divides courts is whether parties in private, commercial, international arbitrations can avail themselves of the statute.

Petitioner-Appellant Hanwei Guo initiated arbitration before the China International Economic and Trade Arbitration Commission (CIETAC) in September 2018 (the matter remains pending with a hearing scheduled to begin July 21, 2020). Amended Opinion, 4. Guo invested nearly CNY 180 million (approximately $26 million USD) in Chinese music streaming businesses, and through a series of allegedly fraudulent transactions, eventually sold his shares for less than they were worth. Id. at 3-4. Subsequently, one of the businesses became part of Tencent Music, which “by some metrics [is] one of the largest music streaming services in the world.” Id. In support of his claims in the arbitration, Guo requested limited discovery from the Southern District of New York on December 5, 2018 from four investment banks involved in underwriting Tencent’s IPO. Memorandum of Law in Support, 5.

As discussed in our earlier article, in 1999, the Second Circuit in NBC v. Bear Stearns, 165 F.3d 184 (2d Cir. 1999), concluded that a private commercial arbitration administered by the International Chamber of Commerce, a private organization based in Paris, was not a “proceeding in a foreign or international tribunal.” Conversely, Guo argued the arbitration before CIETAC was before an entity “with the authority of the state.” Memorandum in Support, 22 citing NBC, 165 F.3d at 189. Guo additionally argued that the Supreme Court’s decision in Intel Corp. v. Advanced Micro Devices, Inc. 542 U.S. 241, 253 (2004), demonstrates that CIETAC is, in fact, a “foreign or international tribunal” because the term encompasses “investigating magistrates, administrative and arbitral tribunals, and quasi-judicial agencies…”. Memorandum of Law in Support, 22-23 citing Intel, 542 U.S. at 258.

However, the Second Circuit upheld the SDNY’s decision that the CIETAC arbitration is a private, commercial, international arbitration, finding that NBC made clear that “international arbitral panels created exclusively by private parties” are not “foreign or international tribunals.” Amended Opinion, 20 citing NBC at 190. Explaining that while CIETAC may have been originally created by state action, it subsequently evolved such that it no longer qualified as a government tribunal and, instead, possesses “the functional attributes most commonly associated with private arbitration.” Amended Opinion, 20-21. Those functional attributes included that (i) CIETAC jurisdiction was created by a contract between private parties; (ii) CIETAC arbitrators were selected by CIETAC alone and were not required to have ties to the Chinese government; and (iii) CIETAC arbitrations were confidential and therefore not likely subject to government intervention. Additionally, the Second Circuit found that the Intel Court had no occasion to consider whether foreign private arbitral bodies qualify as tribunals – only whether the Directorate General-Competition, a European Union organization charged with the investigation and enforcement of EU antitrust laws, qualified as a tribunal. Id. at 16.

The statute’s inapplicability to private, commercial, international arbitrations remains the law in the Second Circuit. The Fifth Circuit is in accord; however, the Fourth and Sixth Circuits have allowed parties to private international arbitrations to obtain discovery in the U.S. pursuant to the statute. Unless the Supreme Court weighs in, the circuits remain split.


[1] Originating case In re: Application of Hanwei Guo for an Order to Take Discovery for Use in a Foreign Proceeding Pursuant to 28 U.S.C. §1782, Case No. 1:18-mc-00561-JMF, (S.D.N.Y. 12/05/18).

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Troutman Pepper | Attorney Advertising

Written by:

Troutman Pepper

Troutman Pepper on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.