In international arbitrations, it is not uncommon for the parties to seek the help of United States Courts to obtain discovery from litigants located in the United States. The Federal Courts of Appeals have reached conflicting decisions on whether such discovery is allowed in private international arbitrations, and the Supreme Court appears ready to address this split in authority. This ruling could have far-reaching impact for private international arbitrations going forward, as it could greatly expand the scope of discovery beyond what is typical in a private international arbitration.
On Monday, March 22, 2021, the United States Supreme Court granted certiorari in Servotronics, Inc. v. Rolls-Royce PLC, et. al.1 The United States Supreme Court phrased the question presented as such:
Whether the discretion granted to district courts in 28 U.S.C. §1782(a)2 to render assistance in gathering evidence for use in “a foreign or international tribunal” encompasses private commercial arbitral tribunals, as the Fourth and Sixth Circuits have held, or excludes such tribunals without expressing an exclusionary intent, as the Second, Fifth, and, in the case below, the Seventh Circuit, have held.3
By granting certiorari, the Supreme Court appears ready to resolve how to interpret what qualifies as “a foreign or international tribunal” under 28 U.S.C. § 1782(a),4 which has been interpreted in numerous contexts and using multiple methods (i.e., dictionary and common definitions; statutory context; previous statutes; legislative history; public policy goals; statutory goals; statutory context; comparisons with domestic federal arbitration powers; efficiency considerations; and stare decisis).5
Servotronics I and II, both arise from the same dispute, but were decided in different circuit courts of appeals (the Fourth Circuit and Seventh Circuit).6 These two circuits prescribe to different theories of interpretation for 28 U.S.C. § 1782(a) that led to different outcomes.7 The Fourth Circuit in Servotronics I determined that the federal district court could order discovery in the United States at the request of a Servotronics, Inc., as an interested party to a U.K. based private arbitration under 28 U.S.C. § 1782(a).8 While the Seventh Circuit in Servotronics II, determined the federal district court could not order discovery in the same arbitration.9
We will briefly look at the underlying case from which certiorari was granted—Servotronics II, briefly compare that with the findings in Servotronics I,10 look at the arguments of the parties before the United States Supreme Court, discuss the possible outcomes by the United States Supreme Court, and discuss the potential impacts.
Servotronics II–The Underlying Case
Servotronics II arose from an indemnity dispute.11 Rolls Royce, PLC (“Rolls”), manufactured a jet engine, which caught fire while attached to test plane owned by The Boeing Company (“Boeing”).12 Rolls seeks indemnity from Servotronics, Inc. (“Servo”),because they concluded it was a valve manufactured by Servo that caused the fire.13 The parties’ agreement and inability to settle this in negotiation requires them to submit this dispute to “binding arbitration . . . under the rules of the U.K.’s Chartered Institute of Arbiters.”14
During this arbitration Servo filed an ex parte application invoking 28 U.S.C. § 1782(a) in the U.S. District Court for the Northern District of Illinois, which requested the court to order Boeing to produce documents for use in the foreign arbitration.15 After an ex-parte order was entered Rolls and Boeing intervened and moved to quash arguing that 1782(a) does not allow “a district court to order discovery for use in a private foreign commercial arbitration.”16
The court in Servotronics II briefly discusses the statute, determines that Servo is seeking the subpoena as an “interested person,” and determines it must decide whether a private foreign arbitration panel is a “tribunal” as intended by § 1782(a).17 The court in Servotronics II then reviewed both sides of the issue:
- The Second Circuit and Fifth Circuit believe that “foreign or international tribunal” is ambiguous by not expressly including or excluding private arbitral panels, and that allowing § 1782 to be read to include them would allow discovery to be compelled in the United States for foreign private arbitrations in a manner that stands in “stark contrast” to what is allowed on the Federal Arbitration Act;18 and
- The Sixth Circuit and Fourth Circuit have read “tribunal” broadly to include private foreign arbitrations, because “tribunal”by definition can include a private arbitral panel, and the in case of Servotronics I because the U.K. and U.S. both have government conferred authority via statute for the use of private arbitration panels.19
The court in Servotronics II sides with the Second Circuit and Fifth Circuit, finding conflicting and non-conflicting definitions of “tribunal” leave it ambiguous.20 Further, the court in Servotronics II determines that:
- The purposes given for the development of the statute, which were provided to the Commission on International Rules of Judicial Procedure (the “Commission”), omits assisting private foreign arbitrations;21
- The other parts of the statute deal with matters of comity22 (i.e., mutual benefit between nations such as letters rogatory or service of process assistance), thus “foreign or international tribunal,” must only include foreign governments to whom comity considerations apply;23
- This narrower interpretation avoids a conflict that that would allow much broader access to discovery for private foreign arbitration litigants than domestic litigants;24 and
- Intel only allowed discovery because the tribunal was the foreign Directorate General (over the European Commission dealing with an Antitrust issue) which was the first instance of litigation for a foreign proceeding;25 and
- The Smit discussion in Intel is out of context dicta that does not necessarily include private arbitral tribunals, but only “arbitral tribunals” (i.e. still ambiguous).26
Accordingly, Court in Servotronics II finds that “§ 1782(a) does not authorize the district courts to compel discovery for use in private foreign arbitrations.”27
Conversely, the court in Servotronics I, found nearly the opposite, finding:
- § 1782 represents a 150 year long policy of Congress to provide assistance in evidence gathering to foreign tribunals and based upon this policy, the Commission increased international assistance by changing the statute from “in any judicial proceeding pending in any court in a foreign country” to read “in a proceeding in a foreign or international tribunal,”28
- Intel’s history discussion can be read to conclude that when Congress accepted this change they knew that § 1782 would then be used in foreign arbitral proceedings abroad;29
- Limiting “tribunal” to only include those that exercise government conferred authority (i.e., as opposed to authority by contract which is contended to be private) is too narrow an understanding of arbitration, because authority to conduct arbitrations is provided by the governments of both the United Kingdom and the United States, and is preferred by both;30 and
- No conflict with U.S. law or lack of efficiency exists because § 1782 and Intel only authorize a federal district court to provide assistance for discovery, they do not require it, which is much narrower that the federal rules of discovery in scope and allowance (i.e., parties can serve their own discovery and it may be much broader in scope).31
The Supreme Court Case–Parties Arguments
Petitioner, Servo follows the reasoning as used by the Fourth and Sixth Circuits:
- As stated in Intel and determined by one of the drafters of the active version of § 1782 (i.e., Hans Smit), the intent of Congress was to include private arbitrations;32 and
- Servo’s interpretation is supported by the findings of the Fourth and Sixth Circuits because tribunal by common definition includes private arbitral panels;33
- The Courts are split and this case is ideal for resolution based on having split rulings on a narrow issue (i.e., what does “tribunal” include);34
- The Seventh Circuit incorrectly decided this matter incorrectly by calling “tribunal” ambiguous, but even if they did not congressional intent was for it to include private arbitrations; 35
- The courts that have found otherwise ignored legislative history, intent, and the canons of construction.36
Respondents Rolls and Boeing, follow the reasoning as used by the Second and Fifth Circuits:37
- The Seventh Circuit correctly concluded that “tribunal” does not include a private arbitral panel, because they are not a “state sponsored, public, or quasi-governmental entity,” based on the well-reasoned decisions in the Second and Fifth Circuits (i.e., tribunal at the time of congressional approval did not include private arbitral panels, the statutory context indicates it is a vehicle for states/nations to cooperate);38
- Allowing this interpretation of § 1782 could create a conflict with the Federal Arbitration Act because it would allow discovery not contemplated therein (i.e., litigants ordering discovery, not arbitrators; changing jurisdiction to increase the scope from where the arbitrators sit to where the evidence resides; and allowing non-party discovery);39
- Legislative history of the 1964 changes to § 1782 only support the rationale that Congress meant to provide access to this mechanism for proceedings before foreign countries (i.e., governments);40
- There is a split, but it is minor; the Sixth Circuit rejected long established authority and failed to consider statutory context; and the Fourth Circuit took a “somewhat incongruous approach” by determining the U.K. Arbitration Act was governmental authority sufficient to allow § 1782 to apply to private arbitration; accordingly, the United States Supreme Court should allow further precedent to develop;41 and
- The case is likely to become moot because the arbitration is approaching, and the arbitral panel has already rejected Servo’s remaining requests for disclosure of the documents.42
The Supreme Court Case—Options and Impact
The United States Supreme Court has granted certiorari, so at least for the time being, they appear to found the issue ripe for decision, and have not ruled the matter moot or otherwise non-justiciable.43
Assuming the United States Supreme Court does not later rule the matter moot or otherwise non-justiciable, in a non-exhaustive manner, the Court will likely address the following issues:
- If “foreign or international tribunal” is ambiguous and legislative history should be deployed to determine the intent of Congress:
- Whether the intent was to includes private arbitration panels;
- Whether the intent was not to includes private arbitration panels; and
- Determine whether, if Congressional intent is unclear, public policy supports including private arbitration panels within the definition.
- If “foreign or international tribunal” is not ambiguous:
- Whether the legal or common definition includes private arbitration panels;
- Whether legal or common definition includes private arbitration panels;
- Whether legal or common definition conflict and use statutory context to determine it includes private arbitration panels; and
- Whether legal or common definition conflict, but if Congress wanted to exclude private arbitration panels from the definition they could have said so.
- If “foreign or international tribunal” is not ambiguous, and it does not include a private arbitration panels, is there is a grant of authority by another statute:
- Whether there is a grant of authority in this case due to similarities and policies in the UK Arbitration Act and Federal Arbitration Act; and
- Whether the UK Arbitration Act and Federal Arbitration Act grant governmental authority or merely provide private contract rights.
If the United States Supreme Court determines that § 1782 allows litigants involved foreign private arbitrations to request orders requesting discovery from entities of the United States, some of the potential impacts of such ruling may be:
- Increased used of arbitration;
- Increased international evidentiary cooperation;
- Longer arbitrations as a result of discovery disputes in Federal Court;
- Discovery jams in Federal Court that delay arbitration results; and
- Increased arbitration discovery costs.
If they do not allow this cross border process, some potential impacts could be:
- A reduction of parties choosing arbitration;
- An increase in Federal case load;
- Less discovery in arbitration resulting in faster arbitration proceedings; and
- Less discovery fights but less discovery in arbitration.
The issue to be clarified by the Supreme Court is one that needs clarification based on the differing opinions of the Courts of Appeals, and it will likely have a big impact on private international arbitration proceedings. The ruling should clarify whether the parties to such proceedings can utilize the U.S. Federal Courts to seek discovery in the United States.
1 Servotronics, Inc. v. Rolls-Royce PLC, et. al., No. 20-794, 2021 WL 107228 (U.S. Mar. 22, 2021); see also Servotronics, Inc. v. Rolls-Royce PLC, 975 F.3d 689, 690 (7th Cir. 2020) [hereinafter Servotronics II], cert. granted sub nom.Servotronics, Inc. v. Rolls-Royce PLC, at al., No. 20-794, 2021 WL 1072280 (U.S. Mar. 22, 2021).
2 This statute reads in pertinent part: “(a) The district court of the district 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, including criminal investigations conducted before formal accusation. The order may be made pursuant to a letter rogatory issued, or request made, by a foreign or international tribunal or 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. By virtue of his appointment, the person appointed has power to administer any necessary oath and take the testimony or statement. The order may prescribe the practice and procedure, which may be in whole or part the practice and procedure of the foreign country or the international tribunal, for taking the testimony or statement or producing the document or other thing. To the extent that the order does not prescribe otherwise, the testimony or statement shall be taken, and the document or other thing produced, in accordance with the Federal Rules of Civil Procedure. [¶] A person may not be compelled to give his testimony or statement or to produce a document or other thing in violation of any legally applicable privilege.” 28 U.S.C. § 1782(a) (emphasis added).
3 QUESTIONS PRESENTED REP., Servotronics, Inc. v. Rolls-Royce PLC, et. al., No. 20-794 (U.S. Mar. 22, 2021).
4 The United States Supreme Court has dealt with this statute previously in a more limited manner. Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 246 (2004) (“we hold that the District Court had authority under § 1782(a) to entertain [respondent]’s discovery request. The statute, we rule, does not categorically bar the assistance [respondent] seeks: (1) A complainant before the European Commission, such as [respondent], qualifies as an “interested person” within § 1782(a)’s compass; (2) the Commission is a § 1782(a) “tribunal” when it acts as a first-instance decisionmaker; (3) the “proceeding” for which discovery is sought under § 1782(a) must be in reasonable contemplation, but need not be “pending” or “imminent”; and (4) § 1782(a) contains no threshold requirement that evidence sought from a federal district court would be discoverable under the law governing the foreign proceeding. We caution, however, that § 1782(a) authorizes, but does not require, a federal district court to provide judicial assistance to foreign or international tribunals or to “interested person[s]” in proceedings abroad. Whether such assistance is appropriate in this case is a question yet unresolved.”) Id. at 246–47.
5 Compare Servotronics, Inc. v. Boeing Co., 954 F.3d 209, 216 (4th Cir. 2020) [hereinafter Servotronics I] (“we conclude that the UK arbitral panel convened to address the dispute between Servotronics and Rolls-Royce is a ‘foreign or international tribunal’ under § 1782(a) and, therefore, that the district court has authority to provide, in its discretion, assistance in connection with the UK arbitration.”) (determining the same on statutory drafting, legislative history, statutory grants of authority, public policy, and the definition of tribunal); and Abdul Latif Jameel Transp. Co. v. FedEx Corp. (In re Application to Obtain Discovery for Use in Foreign Proc.), 939 F.3d 710, 730–31 (6th Cir. 2019) (“[w]e hold that the [Dubai International Financial Centre-London Court of International Arbitration] Arbitration panel is a ‘foreign or international tribunal,’ and the district court may order § 1782(a) discovery for use in the proceeding before that panel.”) (determining the same on the definition of tribunal from numerous sources, a review of United States law from multiple circuits/levels, public policy, statutory considerations, and efficiency considerations); with In Re Guo, 965 F.3d 96, 107 (2d Cir. 2020), as amended (July 9, 2020) (citing Nat’l Broad. Co., Inc. v. Bear Stearns & Co., Inc., 165 F.3d 184, 191 (2d Cir. 1999)) (“we consider a range of factors, including the degree of state affiliation and functional independence possessed by the entity, as well as the degree to which the parties’ contract controls the panel’s jurisdiction. In short, the inquiry is whether the body in question possesses the functional attributes most commonly associated with private arbitration. Here, considering these factors, it is clear that [China International Economic and Trade Arbitration Commission] arbitrations are private international commercial arbitrations falling outside the ambit of § 1782.”) (determining the same on prior circuit decision, which found the term “foreign or international tribunals” ambiguous and consulted the legislative history to determine this did not include “private arbitral panels created exclusively by private parties”); Republic of Kazakhstan v. Biedermann Intern., 168 F.3d 880, 883 (5th Cir. 1999) (“we conclude that the term ‘foreign and international tribunals’ in § 1782 was not intended to authorize resort to United States federal courts to assist discovery in private international arbitrations. The provision was enlarged to further comity among nations, not to complicate and undermine the salutary device of private international arbitration.”) (noting approval of Second Circuit interpretations of tribunal on legislative history, comparisons with the federal arbitration act allowances for discovery, and discussing efficiency concerns); and Servotronics II, 975 F. 3d at 696 (“In sum, what the text and context of § 1782(a) strongly suggest is confirmed by the principle of avoiding a collision with another statute: a ‘foreign or international tribunal’ within the meaning of § 1782(a) is a state-sponsored, public, or quasi-governmental tribunal.”) (noting approval of the reasoning of the Fifth and Second Circuits, and determining the question on the definition of tribunal, conflicts with statutory authority for U.S. arbitral panels, and legislative history). But see, Intel Corp., 542 U.S. at 258 (citing Hans Smit, International Litigation Under the United States Code, 65 Colum. L. Rev. 1015, 1026 n.71 (1965) (“[t]he term ‘tribunal’ … includes investigating magistrates, administrative and arbitral tribunals, and quasi-judicial agencies, as well as conventional civil, commercial, criminal, and administrative courts”)). The author of this article is put forth as having been instrumental in drafting the amendment to § 1782 under which the parties seek relief. Petition for A Writ of Certiorari, Servotronics, Inc. v. Rolls-Royce PLC, et. al., No. 20-794 (U.S. Dec. 7, 2020), at p. 7–9
6 See Servotronics I, supra note 5; see also Servotronics II, supra note 5.
7 See Servotronics I, supra note 5; see also Servotronics II, supra note 5.
8 See Servotronics I, supra note 5.
9 See Servotronics II, supra note 5.
10 See Servotronics I, supra note 5.
11 Servotronics II, 975 F. 3d at 690.
13 Id. at 690–91.
14 Id. at 691.
15 Id. As a comparison, Sevotronics I was filed in U.S. District Court of South Carolina to obtain testimony from three Boeing employees residing there. Servotronics I, 954 F.3d at 210.
16 Servotronics II, 975 F. 3d at 691. These same parties intervened at the appellate level with a similar argument in Servotronics I, 954 F.3d 211.
17 Servotronics II, 975 F. 3d at 691–92. The court in Servotronics I, was answering the same question. Servotronics I, 954 F.3d at 211.
18 Servotronics II, 975 F. 3d at 692 (citing Nat’l Broad. Co., Inc. v. Bear Stearns & Co., Inc., 165 F.3d 184, 188–91 (2d Cir. 1999); Republic of Kazakhstan v. Biedermann Intern., 168 F.3d 880, 883 (5th Cir. 1999)).
19 Id. at 692 (citing Abdul Latif Jameel Transp. Co. v. FedEx Corp. (In re Application to Obtain Discovery for Use in Foreign Proc.), 939 F.3d 710, 714 (6th Cir. 2019); Servotronics I, 954 F.3d at 212–14).
20 Id. at 693–94.
21 Id. at 694.
22 Comity, Black’s Law Dictionary (11th ed. 2019).
23 Id. at 694–95.
24 Id. at 695–96.
25 Id. at 696.
26 Id. (citing Intel Corp., 542 U.S. at 258; Hans Smit, International Litigation Under the United States Code, 65 Colum. L. Rev. 1015, 1026 n.71 (1965)).
28 Servotronics I, 954 F.3d 212–13 (citing Intel Corp., 542 U.S. at 248–49).
29 Id. at 213 (citing Intel Corp., 542 U.S. at 258; Hans Smit, International Litigation Under the United States Code, 65 Colum. L. Rev. 1015, 1026 n.71 (1965)).
30 Id. at 213–214 (citing Federal Arbitration Act; UK Arbitration Act of 1996)
31 Id. at 214–15. The court in Servotronics I doubts it can even look at conflicts with the Federal Arbitration Act. Id. at 216 (citing Intel Corp., 542 U.S. at 263) (“Intel “reject[ed] [the] suggestion that a § 1782(a) applicant must show that United States law would allow discovery in domestic litigation analogous to the foreign proceeding.”)
32 PETITION FOR A WRIT OF CERTIORARI, Servotronics, Inc. v. Rolls-Royce PLC, et. al., No. 20-794 (U.S. Dec. 7, 2020), at p. 7–9.
33 Id. at 7–11 (citing Servotronics II, 954 F.3d at 210; Abdul Latif Jameel Transp. Co. v. FedEx Corp. (In re Application to Obtain Discovery for Use in Foreign Proc.), 939 F.3d 710, 710 (6th Cir. 2019)).
34 Id. at 12–13.
35 Id. at 14–18.
37 BRIEF IN OPPOSITION, Servotronics, Inc. v. Rolls-Royce PLC, et. al., No. 20-794 (U.S. Dec. 7, 2020), at p. 7–9.
38 Id. at 7–12.
39 Id. at 12–14.
40 Id. at 14–15.
41 Id. at 16–19.
42 Id. at 19–21.
43 Servotronics, Inc. v. Rolls-Royce PLC, et. al., No. 20-794, 2021 WL 107228 (U.S. Mar. 22, 2021).