Recent decisions of the Sixth and Second Circuits have the potential to significantly broaden the application of 28 U.S.C. § 1782 in order to compel production of documentary evidence for use in arbitration proceedings seated outside the U.S.

Specifically, on September 19, 2019 the Sixth Circuit determined that the term "foreign or international tribunals" as used in § 1782 encompasses private foreign or international arbitrations, as well as state-sponsored proceedings.1 This is in direct contrast to recent decisions of the Second and Fifth Circuits, which had restricted discovery pursuant to § 1782 to national courts and other state-sponsored bodies.2

Separately, on October 8, 2019, the Second Circuit ruled that § 1782 applies extraterritorially to encompass documents wherever they are located, provided they are within the "possession or control" of the respondent party. 3

These two recent decisions may substantially broaden the scope of discovery available under § 1782 in cases involving foreign or international arbitrations and/or documents located outside of the U.S. Such a broadening could be especially relevant for entities like financial institutions and consulting firms that often maintain substantial repositories of documents and information for their clients.  Considering the potential significance of the two decisions, they also set the stage for possible review of the statute by the U.S. Supreme Court for the first time since 2004.

Statutory Overview of § 1782

Pursuant to 28 U.S.C. § 1782, a U.S. federal district court may order discovery "for use in a proceeding in a foreign or international tribunal" upon application by "any interested person." U.S. courts interpreting the statute have generally required proof of three statutory prerequisites in order to grant discovery requests:

1) the party invoking Section 1782 is an "interested person" with reasonable interest in judicial assistance of the U.S. courts or is a "foreign or international tribunal";

2) the evidence sought is to be used in a "proceeding in a foreign or international tribunal"; and

3) the person or entity targeted for production of evidence "resides" or "is found" in the U.S. court's district.

In the event that these three prerequisites are all met, a district court may have the discretion, but not the obligation, to permit discovery to proceed depending upon its assessment of several discretionary factors set out in the Supreme Court's decision in Intel4.

Circuit Courts Split on § 1782

In the past month, the U.S. Court of Appeal for each of the Sixth and Second Circuits has issued potentially path-breaking decisions relating to the interpretation of the second and third statutory prerequisites mentioned above. Specifically, the Sixth Circuit in ALJ Transportation v. FedEx5 addressed the question of whether private foreign or international arbitrations constitute "proceeding[s] in a foreign or international tribunal," thereby creating a split among the circuits. The Second Circuit in In re del Valle Ruiz6 addressed what it means under Section 1782 for a party to "reside[]" or be "found" in the federal court's district as well as whether discovery may be sought of documents maintained outside that district, including outside of the U.S.

A. Private Commercial Arbitrations Included in Definition of "Tribunals"

In ALJ Transportation v. FedEx, 7 the Sixth Circuit addressed the question of whether private foreign or international arbitrations constitute "proceeding[s] in a foreign or international tribunal" for which Section 1782 discovery is available. In 1999, both the Second and Fifth Circuits had answered that question in the negative, opining instead that Section 1782 discovery is available only for use in "governmental or intergovernmental arbitral tribunals and conventional courts and other state-sponsored adjudicatory bodies." 8 In direct contrast to those prior holdings, in its recent decision in ALJ the Sixth Circuit has now expressly held that Section 1782 "permits discovery for use in the private commercial arbitration at issue." 9

The Sixth Circuit's decision in ALJ v. FedEx turns largely on a plain-language interpretation of the phrase "proceeding in a foreign or international tribunal." According to the Sixth Circuit, the principal question was not whether a private foreign or international arbitration was "foreign or international" in the relevant sense – it obviously was – but rather whether such a foreign or international arbitral body constituted a "tribunal." 10 To answer that question, the Sixth Circuit consulted various dictionary definitions and common usage, as well as the language of the surrounding provisions of Section 1782, to hold that a private arbitral body is indeed a tribunal. 11

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Footnote

*New York associate Ye Eun Charlotte Chun contributed to the preparation of this Alert Memorandum.

1 Abdul Latif Jameel Transportation Co. v. FedEx Corp. (6th Cir. 2019).

2 See National Broadcasting Co., Inc. v. Bear Stearns & Co., Inc., 165 F.4d 184, 190 (2d Cir. 1999); see Republic of Kazakhstan v. Biedermann Int'l, 168 F.3d 880, 882 (5th Cir. 1999).

3 In re del Valle Ruiz, No. 18-3474 (2d. 2019).

4 See Intel (2004). The most commonly cited discretionary factors (known as the Intel factors) include: (1) whether the person or entity targeted for the production of evidence is a participant in the foreign proceeding; (2) the nature of the foreign arbitral tribunal, the character of the foreign proceedings, and the "receptivity" of the foreign tribunal to U.S. judicial assistance; (3) whether the request is an attempt to circumvent a foreign country's or the United States' policies or discovery limitations; and (4) whether the request is unduly burdensome or intrusive.

5 See ALJ (6th Cir. 2019).

6 See In re del Valle Ruiz (2d. 2019).

7 See ALJ (6th Cir. 2019).

8 See NBC, 165 F.3d at 190; see Biedermann, 168 F.3d at 882.

9 See ALJ (6th Cir. 2019).

10 Id. at 10.

11 Id.at 10, 14.

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