The Fourth and Sixth Circuit Courts of Appeals, for instance, have held that the phrase “foreign or international tribunal” includes foreign arbitration.
Federal courts are empowered to order the production of discovery “for use in a proceeding in a foreign or international tribunal” under 28 U.S.C. § 1782(a). But, according to the Second Circuit Court of Appeals, this does not include materials for foreign arbitration.
In a decision announced on July 8, 2020, the Second Circuit rejected a Chinese petitioner’s appeal seeking discovery from four investment banks related to their work in the Chinese music streaming market. The petitioner, Hanwei Guo, sought to reverse a lower court’s order entered in February 2019, which had denied his application. The foreign arbitration proceeding in question remained scheduled to move forward on July 21, 2020, on Guo’s claim that he was defrauded of his equity stake in a Chinese music media conglomerate.
In upholding the lower court’s order, the Second Circuit reaffirmed its previous 1999 decision National Broadcasting Co. v. Bear Stearns & Co., 165 F.3d 184 (2d Cir. 1999) (NBC), which held that the phrase “foreign or international tribunals” does not include private arbitral bodies. Although the court admitted the statutory language was ambiguous, the NBC decision reasoned the legislative and statutory history of § 1782(a) favored excluding foreign arbitration and that a contrary reading would undercut the efficient and expeditious benefits parties seek by resorting to arbitration.
Importantly, in reaffirming its previous decision, the Second Circuit dismissed the argument that a more recent Supreme Court decision, Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241 (2004), invalidated NBC. Rather, according to the court, even though Intel addressed the statute in question, it did not opine on whether the scope of the phrase “foreign or internal tribunals” included foreign arbitral proceedings. While the Intel decision included a footnote giving a broad reading to the meaning of “tribunal,” the Second Circuit determined this footnote was not enough to abrogate NBC’s holding.
Given the Second Circuit has declared that NBC remains good law, this decision entrenches the circuit split on the scope of § 1782(a). The Fourth and Sixth Circuit Courts of Appeals, for instance, have held that the phrase “foreign or international tribunal” includes foreign arbitration, while the Fifth Circuit Court of Appeals’ interpretation has kept in line with the Second Circuit’s reading.
Regardless of the Second Circuit’s ruling, there is likely to be a petition for certiorari to the Supreme Court in the next few months challenging an unrelated Fourth Circuit decision concerning the testimony of employees in an arbitration proceeding in the United Kingdom. Should the Court take the case, it would have a chance to resolve the present split and ameliorate the inevitable race-to-the-courthouse approach the Second Circuit’s decision encourages.
About Duane Morris
Attorneys in the firm’s International Arbitration Group have considerable experience in helping clients navigate issues related to foreign arbitration, including under the major international arbitration conventions, rule systems and specialized arbitration providers.
For More Information
If you would like further information about this Alert or have questions related to foreign arbitration, please contact J. Manly Parks, Thomas R. Schmuhl, Nathan B. Reeder, any of the attorneys in our International Arbitration Group or the attorney in the firm with whom you are regularly in contact.
Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.