Will US Discovery Creep Into Private International Arbitration? No Resolution ' For Now

• Published date: 20 October 2021
• Subject Matter: Litigation, Mediation & Arbitration, Arbitration & Dispute Resolution
• Law Firm: Taft Stettinius & Hollister
• Author: Mr Christopher T. Grohman

Until recently, the U.S. Supreme Court (Supreme Court) was poised to decide a five-circuit split that would affect the way many international companies conduct foreign arbitrations going forward.

As background, section 1782(a) of Title 28 authorizes a district court to order a person within the district to give testimony or produce documents "for use in a proceeding in a foreign or international tribunal."

After unsuccessful negotiations over an indemnity claim made by Rolls-Royce against Servotronics Inc. (Servotronics), the parties entered into a private, binding arbitration in the United Kingdom. Servotronics then filed a motion to subpoena relevant records held by Boeing Company (Boeing) with the U.S. District Court for the Northern District of Illinois, citing the authority bestowed on district courts to assist in foreign discovery proceedings under 28 U.S.C. '1782(a). Rolls-Royce and Boeing filed a motion to quash the subpoena, arguing that '1782(a) does not extend to private commercial arbitral tribunals. The district court agreed with Rolls-Royce and Boeing and quashed the subpoena.

Servotronics then appealed to the U.S. Court of Appeals for the Seventh Circuit. See Servotronics, Inc. v. Rolls-Royce PLC, 975 F.3d 689 (7th Cir. 2020). The Seventh Circuit began its analysis by recognizing a circuit split on the issues of whether section 1782(a) applies to private foreign arbitrations or only official state-sanctioned court proceedings. The Second and Fifth Circuits held that ' 1782(a) authorizes the district court to provide discovery assistance only to state-sponsored foreign tribunals, not private foreign arbitrations. Nat'l Broad. Co. v. Bear Stearns & Co., 165 F.3d 184, 191 (2d Cir. 1999); Republic of Kazakhstan v. Biedermann Int'l, 168 F.3d 880, 883 (5th Cir. 1999).

The Sixth and Fourth Circuits reached the opposite conclusion, finding that section 1782(a) authorizes discovery in the United States to be used at private arbitrations overseas. Abdul Latif Jameel Transp. Co. v. FedEx Corp. (In re Application to Obtain Discovery for Use in Foreign Proceedings), 939 F.3d 710, 714 (6th Cir. 2019); Servotronics, Inc. v. Boeing Co., 954 F.3d 209, 214 (4th Cir. 2020).

The Seventh Circuit, issuing its opinion over a year after hearing oral argument, ultimately agreed with the Second and Fifth Circuits, finding that section 1782 does not apply to foreign arbitrations. The court noted that section 1728(a) authorizes foreign subpoenas only in cases pending...