U.S. Supreme Court Rules That Courts May Grant U.S.-Style Discovery to Private Party That Filed Complaint With E.U. Commission

Article by Wilhelmina A. de Harder*

Published in International Business Lawyer, December 2004.

In Intel Corp. v. Advanced Micro Devices, Inc.,1 the U.S. Supreme Court2 resolved several important issues that will have a significant impact on litigants involved in proceedings outside the United States and that seek U.S. federal court assistance in obtaining U.S.-style discovery.3 The decision addressed a number of inconsistent rulings of the lower courts regarding the interpretation of 28 U.S.C. Ǡ1782 ("Section 1782"). These differences in the application of Section 1782 have created uncertainty among litigants seeking federal assistance under the statute. Although a number of issues remain unresolved, this decision marks an important clarification of the scope of Section 1782.

The Intel decision confirmed a broad interpretation of Section 1782, unfettered by limitations not specified within the text of the statute. The Supreme Court ruled, in a 7-to-1 opinion written by Justice Ginsburg, that U.S. federal courts have discretion under Section 1782 to grant discovery to a private party for use in an antitrust investigation by the Commission of the European Communities ("EU Commission") in which the party had filed a formal complaint. In reaching this decision, to which only Justice Breyer dissented, the Court clarified that parity and comity concerns did not represent categorical bars to Section 1782 assistance, but that such considerations were among a number of factors the district court should weigh in making its decision on the merits of a request.

The decision is a huge blow to the EU Commission, which argued that the lower court ruled improperly when it concluded that Intel could be forced to turn over internal documents to a European investigation of anticompetitive practices. The EU Commission filed a brief with and participated in oral arguments before the high court. The EU Commission's appearance before the Supreme Court marks the first time a foreign sovereign has appeared before the U.S. high court.

Background on Section 1782

Parties to proceedings outside the United States may need to obtain evidence that is not within the adjudicating tribunal's jurisdiction. In 1964, to facilitate foreign parties that seek discovery within U.S. borders, the United States revised and expanded Section 1782 of Title 28 of the U.S. Code, entitled "Assistance to foreign and international tribunals and to litigants before such tribunals." Section 1782 allows "foreign or international tribunals" or "any interested person" to request that a district court order the production of documentary or testimonial evidence "for use in a proceeding in a foreign or international tribunal."

The majority of requests for discovery under Section 1782 are granted without incident. However, a number of cases have triggered debate about the scope and proper application of Section 1782. Most debate centers on the 1964 revisions, which widened the scope of the rule but did not clearly define the boundaries for a statute open to very liberal interpretation.

Statutory Interpretation Issues Surrounding Section 1782

Among the major changes, the 1964 revisions removed the word "court" and replaced it with "tribunal." The 1964 revisions also allow any interested person to request discovery before the court, instead of limiting such requests to foreign or international tribunals. In addition, the 1964 revisions eliminated the requirement that the proceeding be "pending," requiring only that the evidence requested be for use in a proceeding before a foreign or an international tribunal. The exact meaning of each of the above revisions raises a question about Section 1782's scope.

Meaning of Tribunal

Exactly what type of adjudicating body qualifies as a tribunal for the purposes of Section 1782? This question becomes more important as participants in the global marketplace increasingly agree to settle disputes through arbitration before private international tribunals. The change to "tribunal" has been recognized as broadening the applicability of Section 1782 beyond traditional courtroom adjudications to include administrative and other quasi judicial agencies. However, for various reasons a number of courts have declined to recognize private arbitral bodies as tribunals within the meaning of Section 1782.4

Although the text easily lends itself to an interpretation that includes arbitration, arguments have been advanced for excluding arbitral bodies from the ambit of Section 1782. In finding that an arbitral body is not a tribunal for the purposes of Section 1782, the Court in In re Medway Power Ltd.5 set forth the following reasons:

Proceedings before a private arbitral proceeding lack the official quality of a proceeding backed by the power of a foreign sovereign government.

Arbitrations are contractual in nature and should be treated like any other obligation imposed by private agreement.

Section 1782 should not be used to empower arbitrators with authority they would not otherwise have.

Arbitrators have power to adjudicate only over those who have consented.

Granting discovery requests under Section 1782 would allow arbitral bodies to exercise discovery powers over persons not subject to the arbitral agreement.

Finally, there is a consistent distinction between "tribunals" and "arbitrations" in the U.S. code that provides evidence that the ordinary understanding of "tribunal" does not encompass private arbitrations.

It has also been noted that "[e]mpowering arbitrators or, worse, the parties, in private international disputes to seek ancillary discovery through the federal courts does not benefit the arbitration process. Arbitration is intended as a speedy, economical, and effective means of dispute resolution."6 Nevertheless, Hans Smit, Fuld Professor of Law at Columbia University, who was the chief draftsperson of the 1964 Amendments, has written extensively on why "international tribunal" was intended to cover all international arbitral tribunals.7

Meaning of Interested Person

The question of who qualifies as "any interested person" is closely tied to the question of the proper meaning of "tribunal." In general, courts have interpreted...