In Re Application Of Owl Shipping: Does § 1782 Permit Discovery To Aid Foreign Arbitral Proceedings?

The District of New Jersey has issued a recent opinion highlighting a potential resource for parties engaged in foreign arbitral proceedings - the use of 28 U.S.C. § 1782, which allows parties engaged in foreign proceedings to seek discovery in the United States. This Court permitted the discovery in aid of a foreign arbitral proceeding, but courts in other circuits have taken divergent positions as to whether § 1782 permits discovery to aid foreign arbitral proceedings. Parties interested in utilizing this § 1782 resource may be limited by the jurisdiction in which it is sought.

In re Application of Owl Shipping, LLC & Oriole Shipping, LLC

On October 17, 2014, the District of New Jersey issued its opinion in In re Application of Owl Shipping, LLC & Oriole Shipping, LLC, No. 14-5655, 2014 WL 5320192 (D.N.J. filed Oct. 17, 2014), granting the Petitioners' application for depositions and document production under § 1782. The arbitration was before the London Maritime Arbitrators Association ("LMAA") and centered on two separate time-charter agreements allowing Respondent to use Petitioners' vessels. Petitioners claimed that Respondent failed to make required payments and now owes over $1 million to each Petitioner. Petitioners sought the discovery to demonstrate that Respondent acted in bad faith because it knew that it did not have the funds to make the required payments at the time of contracting, which were part of Petitioners' claims before the LMAA.

Under § 1782(a), "[t]he district court 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 . . . [t]he order may be made . . . 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." Once the statutory requirements are met, the district court may, in its discretion, grant the application. In Intel Corp. v. Advanced Micro Devices, Inc., the Supreme Court explained the factors that a court should consider when deciding whether to grant a § 1782 application:

(1) whether the person from whom the discovery is sought is a participant in the foreign proceeding; (2) the nature of the foreign tribunal, the character or the proceedings underway abroad, and the receptivity of the foreign government or the court or agency abroad to U.S...