Supreme Court limits U.S. discovery in foreign arbitration proceedings

This article, written by attorney Robert Lucic, was originally published by New England Biz Law Update and can be found here.

Not all this summer’s United States Supreme Court decisions were controversial. In a decision that is probably only meaningful to litigation lawyers, the Supreme Court unanimously ruled that foreign, private arbitration disputes do not have access to United States federal courts to obtain orders for discovery from U.S. citizens.

Although the case, ZF Automotive US, Inc. et al. v. Luxshare, Ltd. did not receive the press of other, more controversial recent decisions, it was a clear indication from the Court that it was not willing to allow federal courts to become involved in enforcing discovery requests that clearly do not involve foreign governmental tribunals.  This may strike some of us as contrary to the more open, freewheeling discovery that is the norm in the U.S. and seems somewhat at odds with the general U.S. policy favoring arbitration.  But the dispute as to whether federal law allowed foreign, private arbitration panels to gather evidence from U.S. citizens had led to a split among the circuits and now has been (mostly) definitively resolved.

At issue was 28 U.S.C. §1782(a) which states:

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, including criminal investigations conducted before formal accusation. The order may be made pursuant to a letter rogatory issued, or request made, by a foreign or international tribunal or upon the application of any interested person and may direct that the testimony or statement be given, or the document or other thing be produced, before a person appointed by the court. By virtue of his appointment, the person appointed has power to administer any necessary oath and take the testimony or statement. The order may prescribe the practice and procedure, which may be in whole or part the practice and procedure of the foreign country or the international tribunal, for taking the testimony or statement or producing the document or other thing. To the extent that the order does not prescribe otherwise, the testimony or statement shall be taken, and the document or other thing produced, in accordance with the Federal Rules of Civil Procedure.

The consolidated cases before the Court, on appeal from the 6th and 2nd Circuits, gave the Court a path to define the central issue, namely whether “foreign or international tribunal” included private arbitration panels.  The answer was a definitive “no”, although the history of §1782 left some doubt.  Prior to 1964, §1782 applied to “any judicial proceeding” in “any court or foreign country.”  There is no question in the pre-1964 version that private arbitration panels were not included.  The statute was changed, however, to apply to “foreign or international tribunals.”  The intent was to expand the scope, but to whom?

The consolidated case, Alixpartners, LLP v. The Fund for Protection of Investors’ Rights in Foreign States, from the 2nd Circuit gives something of an unsatisfying answer.  The 2nd Circuit was among the Circuit courts that had determined that §1782 did not apply to foreign private arbitration proceedings.  However, the “tribunal” in that case was expressly sanctioned by the governments of Russia and Lithuania (in perhaps a simpler time) to resolve disputes.  The 2nd Circuit allowed the discovery to proceed because, in its view, the governmental sanction meant that it was a “foreign or international tribunal.”  The Supreme Court disagreed, although admitting that Alixpartners presented a harder case than a purely private panel.  It held that the ad hoc arbitration panel in that case was not sufficiently “imbued” with governmental authority.  The central question for all of us practitioners is determine whether the foreign nations “intend” to have the tribunal exercise governmental authority.

If this all seems a bit esoteric, it is, until you are confronted with the necessity of finding evidence outside of the jurisdiction you are in.  Many of us represent multinational clients and most of our U.S business clients have complex foreign supply chain and distribution issues.  Many of those supply-chain or distribution contracts include arbitration clauses that provide for private arbitration proceedings before panels throughout the world.

My firm has the privilege of being a member of Lex Mundi, a global association of independent law firms, with member firms in 125 countries with over 22,000 lawyers.  We recently created a free guide for all lawyers (not just Lex Mundi members) for gathering evidence in foreign jurisdictions which was begun during our virtual Asia Pacific Meeting of the Lex Mundi Litigation, Arbitration and Dispute Resolution Practice Group in 2021. We learned from our colleagues that obtaining discovery (that many of us in the U.S. take for granted) can be extremely difficult and time consuming and requires an enormous amount of planning.  It is extremely helpful to have local firms that know the courts and procedures and to line them up early to help.  The free guide can be accessed here: