The recent decision by the Seventh Circuit in determining that a private foreign arbitration proceeding is not a “tribunal” for the purposes of 28 U.S.C. §1782 further confirms the circuit court split that has emerged in the interpretative debate on the use of §1782 assistance to obtain evidence for international arbitration.
Earlier this year Servotronics persuaded the Fourth Circuit that the private arbitration in London at issue qualifies for assistance under 28 U.S.C. §1782(a). Yet in Servotronics, Inc. v. Rolls-Royce, PLC, No. 10-1847 (7th Cir. 2020), the Seventh Circuit held that (1) the word “tribunal” is not defined in the statute and there is no agreed upon definition for the term in precedent, (2) the statutory context of §1782 leads to a narrow interpretation where “foreign tribunal” means “a governmental, administrative, or quasi-governmental tribunal,” (3) a narrow interpretation of “tribunal” is required to avoid serious conflict between §1782 and the Federal Arbitration Act, and (4) the legislative history of §1782(a) and an article written by the Statute’s chief author cannot “bear the weight” of arguments in favor of a broader interpretation of “tribunal.”
Rolls-Royce initiated arbitration in London to seek indemnification after an engine sold by Rolls-Royce to Boeing, containing a Servotronics valve, caught fire during tests in South Carolina. Boeing and Rolls-Royce settled for $12 million in 2017, but the case came before the Seventh Circuit after Servotronics filed an ex parte application in the U.S. District Court for the Northern District of Illinois, seeking to compel Boeing to produce documents for use in the London arbitration. After hearing a joint motion by Rolls-Royce and Boeing, the district court decided to quash the motion because it concluded that the statute did not provide aid for private international arbitration proceedings.
Seventh Circuit’s Decision
On appeal to the Seventh Circuit, the court affirmed the district court’s decision. The court was particularly concerned about interpreting §1782 in light of the Federal Arbitration Act (FAA), which was a concern shared by the U.S. Supreme Court in its reasoning in Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241 (2004). Here, however, Judge Sykes reached a different conclusion than the Supreme Court regarding the Congressional intent in drafting section 1782.
The late Justice Ginsburg delivered what is currently the only Supreme Court opinion on §1782 in Intel. She noted, in particular, that nothing in the legislative history indicated that Congress intended to rein in the range of discovery authorized by §1782. This approach stands in contrast to that taken by the Seventh Circuit in Servotronics, where the court concluded that a narrow interpretation of the meaning of tribunal was required to avoid a “serious conflict” with the FAA. This serious conflict, the court reasoned, would emerge from its interpretation of section 1782 should it fail to consider the effect of its decision on the power conferred to federal courts. Empowering a federal court to essentially compel discovery in private foreign arbitrations would “stand in stark contrast” to what is normally a limited judicial role in domestic arbitrations. Id at *7.
The significance of this decision is apparent when we consider what is now an ever-increasing split in the circuit court’s approach to §1782 assistance for private international arbitration. The Fourth and Sixth Circuits have held that the statute applies to private international commercial arbitration. On the other hand, the Second, Fifth, and now the Seventh Circuits have concluded otherwise. It remains to be seen to what extent the circuit courts will continue to diverge on the issue—and what the impact of this split will be for clients with international disputes.
One of the main advantages for parties to an international arbitration is the relative degree of neutrality, flexibility, and self-determination for each party with regard to the procedures of the arbitration. If parties can no longer rely upon a predictable federal court approach to section 1782 assistance, then these parties may participate in venue shopping when a dispute does arise. Or perhaps, they might include in their arbitration agreement language making clear that the tribunal shall not request or permit assistance under §1782 or any similar statute.
This ruling by the Seventh Circuit makes it clear that the existing circuit split on the interpretation of §1782 will continue and, perhaps, lead to consideration by the Supreme Court. Until then, and with two circuit court decisions pending on the same issue in the Third and Ninth Circuits, it seems almost inevitable that the federal courts will continue to agree to disagree on the availability of section 1782 assistance for private international arbitration.
Yesenia Alfonso is an assistant county attorney for the Broward County Government in Fort Lauderdale, Florida.
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