U.S. Supreme Court Agrees To Review Whether Federal Courts Can Order Discovery In Aid Of Private International Arbitrations Under 28 U.S.C. 1782(a)

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In our recent post, we discussed the split in the federal appeals courts over whether a private international arbitration constitutes a “foreign or international tribunal” within the meaning of 28 U.S.C. § 1782(a), which authorizes U.S. district courts to provide assistance to foreign or international tribunals by ordering discovery of persons in the district.

On March 22, 2021, the U.S. Supreme Court agreed to decide the issue by accepting a petition for certiorari to review judgment of the Court of Appeals for the Seventh Circuit, which joined the Second and Fifth Circuits in holding that 28 USC § 1782(a) applies only to cases in foreign courts and not to private international arbitration. The Fourth and Sixth Circuits have held just the opposite – that 28 USC § 1782(a) does apply to private international arbitration.

In Servotronics, Inc. v. Rolls-Royce PLC et al., No 19-1847, the parties were involved in arbitration in England under the rules of the Chartered Institute of Arbiters, which concerned an indemnification dispute over losses incurred when an aircraft engine caught fire during testing in South Carolina. Servotronics filed an ex parte application under Section 1782 in the U.S. District Court for the Northern District of Illinois seeking a subpoena compelling Boeing to produce documents to be used in the arbitration in England. The District Court initially issued the subpoena, but after Rolls-Royce intervened and moved to quash it, the District Court ruled in with Rolls-Royce’s favor.

Servotronics, which was previously successful in the Fourth Circuit, appealed the District Court’s decision. The Seventh Circuit, after discussing the split among the circuit courts, held that “a more limited reading of Section 1782(a) is probably the correct one: a ‘foreign tribunal’ in this context means a governmental, administrative, or quasi-governmental tribunal operating pursuant to the foreign country’s ‘practice and procedure.’” The Seventh Circuit relied on the statute’s legislative history and the fact that the narrower interpretation of the “tribunal” avoids “a serious conflict” with the Federal Arbitration Act.

The Seventh Circuit noted that if Section 1782 were construed to permit federal courts to provide discovery assistance in private foreign arbitrations, litigants in those arbitrations would have access to more expansive discovery than litigants in domestic arbitrations:

It’s hard to conjure a rationale for giving parties to private foreign arbitrations such broad access to federal-court discovery assistance in the United States while precluding such discovery assistance for litigants in domestic arbitrations.

 Servotronics filed a petition for a writ of certiorari to the Supreme Court, posing the following question: “Whether the discretion granted to district courts in 28 U.S.C. §1782(a) to render assistance in gathering evidence for use in a ‘foreign or international tribunal’ encompasses private commercial arbitral tribunals, as the Fourth and Sixth Circuits have held, or excluded such tribunals without expressing an exclusionary intent, as the Second, Fifth, and, in the case below, the Seventh Circuit, have held.” The International Institute for Conflict Prevention and Resolution and the Atlanta International Arbitration Society filed amicus briefs in support of Servotronics’ petition.

The Supreme Court granted the petition, which means that, unless there is some procedural reason not to reach the merits, the Court will now resolve this issue that has long divided the lower courts.

[View source.]

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