On June 13, the United States Supreme Court in ZF Auto. US, Inc. v. Luxshare, Ltd., No. 21-401, 2022 WL 2111355 (U.S. June 13, 2022) resolved a disagreement among the circuits and held that Section 1782 does not apply to private arbitration.
The statute, 28 U.S.C. § 1782, has long provided a mechanism for obtaining discovery located within the United States, and permits federal courts to assist foreign litigants and other interested parties in gathering evidence in the United States for use in foreign proceedings. Such applications are to be freely granted in the interest of justice and comity. Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 247-248 (2004). A district court has authority to grant a Section 1782 application where (1) the discovery is sought from a person residing in the district to which the application is made; (2) the discovery is for use in a proceeding before a foreign tribunal; and (3) the applicant is a foreign or international tribunal or an interested person. If the statutory requirements are met, a district court retains discretion whether to grant, refuse or limit the discovery, based on a variety of factors looking to the nature of the case, burdensomeness, and so forth.
The question has been the scope of the phrase “foreign and international tribunal,” and whether that included private arbitration, or was otherwise limited to non-U.S. courts and governmental proceedings. Almost 20 years ago, the Supreme Court in Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 249 (2004), cited legislative history to explain “that Congress introduced the word ‘tribunal’ to ensure that ‘assistance is not confined to proceedings before conventional courts,’ but extends also to “administrative and quasi-judicial proceedings.” Since then, courts have been divided over the application of the statute to purely private arbitration.
In a unanimous decision, the Court in ZF Auto, addressing two consolidated appeals, first held that the phrase “foreign or international tribunal” did not include private adjudicative bodies. Looking initially at the text, it found that while “tribunal” standing alone could refer to any adjudicative body and not just courts, the context compelled a different result. Because “tribunal” was modified by “foreign or international,” the Court held that “tribunal” was “best understood as an adjudicative body that exercises governmental authority.” It relied on other statutory interpretations that linked “foreign” with governmental connotations. Taking the words in their entirety, the Court wrote that “‘foreign tribunal’ and ‘international tribunal’ complement one another; the former is a tribunal imbued with governmental authority by one nation, and the latter is a tribunal imbued with governmental authority by multiple nations.” The statute’s history and comparison to the Federal Arbitration Act were found to corroborate that conclusion. The Court then found that the two entities before it were not foreign tribunals as defined; the first involved a private dispute resolution organization that provided arbitration services, and the second one involved an ad hoc arbitration panel set up by international treaty, and which arbitration involved sovereign parties, but ultimately that ad hoc panel did not exercise governmental authority.
As for Intel, the Court stated that it had not at the time purported to establish a test as to what actually would qualify as a foreign or international tribunal; the issue was not before it then, and Intel only decided that the particular entity then before it did qualify because it was a “’first-instance decisionmaker’ that rendered dispositive rulings reviewable in court.”
Whether or not one agrees with the reasoning, the unanimity of this decision puts to rest the interpretive dispute that courts have wrestled with since Intel. For those who favor the more expansive reading, a legislative solution would be appropriate. Short of that, Section 1782 as written does not preclude persons within the United States from voluntarily providing testimony or statements or producing documents for use in such proceedings, but attention must still be paid to the ability to use such evidence in the foreign proceeding itself.
The views and opinions expressed in the article represent the view of the authors and not necessarily the official view of Clark Hill PLC. Nothing in this article constitutes professional legal advice nor is intended to be a substitute for professional legal advice.