Servotronics Goes to the Supreme Court

On March 22, 2021, the U.S. Supreme Court granted certiorari in Servotronics, Inc. v. Rolls-Royce PLC to decide whether 28 U.S.C. § 1782(a) can be used to obtain discovery in the United States in aid of a foreign private commercial arbitration. Section 1782 provides a federal district court with authority to grant discovery “for use in a foreign or international tribunal,” but lower courts have split as to whether this provision applies to foreign private commercial arbitrations, or just foreign or international courts.

If the Supreme Court determines that Section 1782 authorizes domestic discovery to aid foreign private commercial arbitrations, it will open up U.S. companies to potentially broad and costly discovery. Either way, the Supreme Court’s decision may have broad ramifications for any company that routinely engages in international arbitration as well as companies that may have documents responsive to matters involved in an international arbitration, even if they are only third parties. 

Legal Background

Section 1782 authorizes, but does not require, a federal district court in the United States to grant discovery in aid of proceedings before “a foreign or international tribunal” at the request of “any interested person.” 28 U.S.C. § 1782(a). Increasingly, litigants have used Section 1782 to obtain discovery that would not have otherwise been available to litigants in foreign courts or arbitration proceedings.

In 2004, the Supreme Court held in Intel Corp. v. Advanced Micro Devices, Inc. that, by enacting Section 1782, Congress had sought to provide “assistance to foreign courts and quasi-judicial agencies.” Id. at 258 (quoting Act of Sept. 2, Pub. L. 85–906, § 2, 72 Stat. 1743) (emphasis added). The Court did not define “quasi-judicial agencies,” and since Intel, the Supreme Court has not provided lower courts with further guidance about the scope of the phrase “foreign or international tribunal.”

Recently, federal appellate courts have split as to whether a foreign private commercial arbitration tribunal qualifies as a “foreign or international tribunal” under Section 1782. The Second, Fifth, and Seventh Circuit Courts of Appeals have rejected requests for discovery in aid of foreign private commercial arbitration proceedings under Section 1782, while the Fourth and Sixth Circuit Courts of Appeals have authorized such discovery. Compare Servotronics, Inc. v. Rolls-Royce PLC, 2020 WL 5640466 (7th Cir. Sept. 22, 2020) (denying discovery), Nat’l Broad. Co., Inc., v. Bear Stearns & Co., Inc., 165 F.3d 184 (2d Cir. 1999) (same), and Republic of Kazakhstan v. Biedermann Int’l, 168 F.3d 880 (5th Cir. 1999) (same) with In re Application to Obtain Discovery for Use in Foreign Proceedings (FedEx) 939 F.3d 710, 723 (6th Cir. 2019) (granting discovery), and Servotronics Inc. v. Boeing Co., 954 F.3d 209, 210 (4th Cir. 2020) (same).

The issue is currently pending before the Third and Ninth Circuits, with a decision expected in both cases in the coming months. See In re EWE Gassepeicher GMBH, Docket No. 2020 WL 1272612 (D. Del. March 17, 2020), appeal docketed, No. 20-1830 (3d Cir. April 24, 2020); HRC-Hainan Holding Co. LLC v. Yihan Hu, 2020 WL 906719 (N.D. Cal. Feb. 25, 2020), appeal docketed sub nom., In re HRC-Hainan Holding Co. LLC, No. 20-15371 (9th Cir. March 4, 2020).

The Servotronics Dispute

Amidst the circuit split, Servotronics filed applications in the district courts for the Northern District of Illinois and the District of South Carolina to obtain Section 1782 discovery from Rolls-Royce and Boeing for use in an ongoing private commercial arbitration in London under the Chartered Institute of Arbitrators. In the arbitration proceeding, Rolls-Royce alleged that Servotronics provided defective engine valves that precipitated a fire during a test flight of a Boeing 787 Dreamliner aircraft. The Fourth Circuit authorized the requested discovery while the Seventh Circuit rejected it. Compare Servotronics, 2020 WL 5640466 (denying discovery) with Servotronics, 954 F.3d at 210 (granting discovery).

The Seventh Circuit reasoned that the dictionary definition of the word “‘tribunal’ means ‘a court,’” and not an arbitral panel. Servotronics, 2020 WL 5640466 at *693. In contrast, the Fourth Circuit held that foreign private commercial arbitration qualifies as a “foreign or international tribunal” because arbitration is a “product of ‘government-conferred authority.’” Servotronics, 954 F.3d at 214.

In December 2020, Servotronics filed a petition for certiorari to appeal the Seventh Circuit’s denial of discovery. The question presented is “[w]hether the discretion granted to district courts in 28 U.S.C. § 1782(a) to render assistance in gathering evidence for use in a ‘foreign or international tribunal’ encompasses private commercial arbitral tribunals. . . .” Pet. For Writ of Cert., Servotronics, Inc. v. Rolls-Royce PLC and the Boeing Company, No. 20-794 (U.S.).

Rolls-Royce argued (unsuccessfully) that the Court should not grant certiorari because the arbitration for which Servotronics continues to seek discovery is currently scheduled to conclude before the Supreme Court can issue a decision, which could render the dispute moot. The arbitration is currently scheduled to take place in London in April 2021.

The Importance of this Issue

As the use of Section 1782 discovery in international arbitration has grown, litigants have continued to test its boundaries. The Supreme Court’s expected decision in Servotronics may provide uniformity among the federal courts of appeals and prevent forum shopping. However, as the underlying arbitration proceeds to hearing in the coming weeks, the Court could potentially decline to rule.