To obtain evidence for the arbitration, Servotronics’ attorneys filed a petition with the U.S. District Court for the District of South Carolina to obtain testimony of three current and former Boeing employees residing there, as well as a petition with the U.S. District Court for the Northern District of Illinois requesting a subpoena to compel Boeing to produce certain documents. These petitions were filed pursuant 28 U.S.C. section 1782.
28 U.S.C. §1782(a)
28 U.S.C. §1782(a) provides that a U.S. district court may, upon the application of an interested party, provide discovery assistance to “a foreign or international tribunal” by ordering a person in its district “to give his testimony or statement or to produce a document or other thing for use in [the] proceeding.” To obtain such discovery, the petitioner must satisfy three conditions:
- the person from whom discovery is sought must reside or be found in the district where the application was made;
- the discovery must be for use in a proceeding before a foreign or international tribunal; and
- the applicant must be either a foreign or international tribunal or an interested person.
The circuits are split as to whether such assistance may be given to private foreign or international tribunals or only to tribunals that are “state-sponsored.”
Different Outcomes in the Two Servotronics Cases
Both district courts ruled against Servotronics and declined to issue the requested subpoenas on the ground that the section 1782 procedure is not available to private arbitral tribunals.
On March 30, 2020, the Court of Appeals for the Fourth Circuit reversed the district court’s decision and held that the arbitral panel in the United Kingdom is indeed a foreign tribunal for purposes of §1782. Servotronics, Inc. v. Boeing Co., 954 F.3d 209 (4th Cir. 2020) (Servotronics I). The Fourth Circuit thereby joined the Sixth Circuit in holding that section 1782 permits discovery assistance to private arbitral tribunals. Abdul Latif Jameel Transp. Co. v. Fedex Corp., 939 F.3d 710 (6th Cir. 2019). The Eleventh Circuit ruled likewise in Consorcio Ecuatoriano de Telecomunicaciones S.A. v. JAS Forwarding (USA), Inc., 685 F.3d 987, 993–98 (11th Cir. 2012) but withdrew that conclusion in Consorcio Ecuatoriano de Telecomunicaciones S.A. v. JAS Forwarding (USA) Inc., 747 F.3d 1262, 1270 n.4 (11th Cir. 2014) (“leav[ing] the resolution of the matter for another day”).
The Seventh Circuit reached the opposite result. On September 22, 2020, it affirmed the district court’s decision and held that section 1782 applies only to “state sponsored” foreign and international tribunals, and not to private tribunals. Servotronics, Inc. v. Rolls-Royce PLC (7th Cir. 09-22-2020) (Servotronics II). The 7th Circuit thereby joined the positions taken by the Second Circuit in In re: Application and Petition of Hanwei Guo, 19-781 (2nd Cir. July 8, 2020, amended July 9, 2020) and the Fifth Circuit in El Paso Corp. v. La Comision Ejecutiva Hidroelectrica Del Rio Lempa, 341 F. App’x 31, 33-34 (5th Cir. 2009).
So, what led these two courts to such different outcomes?
The Court’s Holding in Servotronics I
In Servotronics I, the Fourth Circuit Court relied on the legislative history of section 1782. It noted that Congress had installed a “Commission on International Rules of Judicial Procedure” (the Rules Commission) to recommend changes designed to improve international cooperation and that, in 1964, Congress adopted the Rules Commission’s recommendations, including section 1782, without change. The court relied greatly on the U.S. Supreme Court’s decision in Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241 (2004) (Intel), which dealt with another issue concerning section 1782, but which in a footnote referred to an article (login required) by the reporter of the Rules Commission, Professor Hans Smit, “indicating that the term ‘tribunal’ was meant to include ‘investigating magistrates, administrative and arbitral tribunals, and quasi-judicial agencies, as well as conventional civil, commercial, criminal, and administrative courts’ (emphasis added) (cited approvingly in Intel).” Servotronics I, 954 F.3d at 213.
The court emphasized Congress’s commitment to “increase international cooperation by providing U.S. assistance in resolving disputes before not only foreign courts but before all foreign and international tribunals. This policy was intended to . . . encourag[e] a spirit of comity between foreign countries and the United States.” Servotronics I, 954 F.3d at 213.
The court rejected the argument that an arbitral panel did not qualify as a “tribunal” because its authority derived from the parties' agreement rather than the government. It pointed out that both the Federal Arbitration Act (FAA) and the English Arbitration Act of 1996 evidence the legislature’s strong preference for arbitration, and the many instances in which the courts exercise a supervisory function, thus making arbitrations “sanctioned, regulated, and overseen by the government and its courts.” Servotronics I, 954 F.3d at 214.
Accordingly, the court concluded that the phrase “foreign and international tribunals” in section 1782 includes private arbitral tribunals.
The Court’s Holding in Servotronics II
In Servotronics II, the Seventh Circuit took an entirely different tack. It examined the legislative context of section 1782, noting that Congress in the same act also revised 28 U.S.C. §1696, pertaining to service of process in foreign litigation, and section 1781, regarding letters rogatory, and that all three of these statutory revisions use the phrase “foreign and international tribunals.” The court opined that “[i]dentical words or phrases used in different parts of the same statute (or related statutes) are presumed to have the same meaning” (citing case law). The court further thought that these two other provisions cannot deal with private arbitrations, as service of process commonly relates to litigation, and letters rogatory commonly are issued in the context of litigation.
The court also noted that if relating to private arbitration, the more generous provisions of section 1782 would conflict with the weaker statutory scheme of section 7 of the FAA, which permits the arbitration panel—but not the parties—to summon witnesses before the panel to testify and produce documents. In other words, if section 1782 were to include private arbitrations, so the argument goes, the parties in a foreign arbitration would have access to much broader discovery that the parties in a domestic arbitration pursuant to section 7. In addition, to the extent that section 7 applies to the enforcement of foreign arbitral awards under chapters 2 and 3 of the FAA, the two provisions would conflict directly, as pursuant to section 208 and 307 respectively, section 7 would have residual application at the same time that 28 USC §1782 would apply.
The court also found that Servotronics’ reliance on the footnote in Intel that quotes an article by Professor Smit stating that the phrase “foreign and international tribunals” includes arbitral tribunals is unfounded, because the footnote does not indicate that the U.S. Supreme Court took the term “arbitral tribunals” to include private arbitral tribunals.” Slip Opinion, p.15.
Accordingly, the court concluded that section 1782(a) does not authorize the district courts to compel discovery for use in private foreign arbitrations.
Where Do We Go from Here?
On April 16, 2020, Rolls-Royce filed a motion to stay proceedings in the appeals court while it prepared a petition for a writ of certiorari. However, the petition was never filed. Thus, there is no present opportunity for the U.S. Supreme Court to resolve the divergent interpretations of section 1782.
At the moment, there are two more circuit courts of appeals that are confronted with the same question about section 1782’s scope:
- the Court of Appeals for the Third Circuit in In re Application of EWE Gasspeicher GmbH, 19-mc-109-RGA, 2020 WL 1272612 (D. Del. Mar. 17, 2020) and In re Storag Etzel GmbH, No. CV 19-MC-209-CFC, 2020 WL 1849714 (D. Del. Apr. 13, 2020), which are appeals from denials of a section 1782 petition and
- the Ninth Circuit in HRC-Hainan Holding Co., LLC v. Yihan Hu, No. 19-mc-80277-TSH, 2020 U.S. Dist. LEXIS 32125 (N.D. Cal. Feb. 25, 2020), which is an appeal from the granting of a section 1782 petition. Oral arguments before the Ninth Circuit took place on September 14, 2020.
Decisions in these three cases could come down any day now.
On September 18, 2020, a Delaware District Court ruled, consistent with the two prior decisions from that court, that “private commercial arbitrations are not ‘tribunals’ within the meaning of section 1782.” In re Ex Parte Application of Axion Holdings Cyprus Ltd., Misc. No. 20-00290 (MN) (D. Del. Sept. 18, 2020). Clearly, as the split of authority deepens, this issue will need to be resolved by the U.S. Supreme Court.
