In these series of posts, we discuss the differences that have emerged in rulings by federal appeals courts in the United States Circuits on certain issues that may affect the ability of a party in an international arbitration to obtain evidence from non-parties to the arbitration.
Application Pursuant 28 U.S.C. §1782
A federal statute, 28 U.S.C. § 1782, states that U.S. district court may provide assistance to foreign or international tribunals by ordering discovery of persons in the district. The Circuit Courts, however, disagree whether a private international arbitration constitutes a “foreign or international tribunal” within the meaning of section 1782.
In In re Application of Hanwei Guo for an Order to Take Discovery for Use in a Foreign Proceeding Pursuant to 28 U.S.C. § 1782, 965 F.3d 96 (2d Cir. July 8, 2020), the U.S. Court of Appeals for the Second Circuit reaffirmed its previous holding that a party cannot invoke 28 U.S.C. § 1782 to obtain documentary and testimonial evidence to be used in a private international commercial arbitration proceeding.
In Guo, a claimant in a matter before the China International Economic and Trade Arbitration Commission (CIETAC) sought discovery from four non-party investment banks by filing a petition for discovery pursuant to section 1782(a) in the United States District Court for the Southern District of New York. One of the requirements for obtaining discovery under the statute is that the discovery will be for use in “a foreign or international tribunal.”
The Second Circuit (which includes Connecticut, New York, and Vermont) ruled that a private commercial arbitral tribunal seated outside of the United States does not constitute a “foreign or international tribunal” within the meaning of section 1782. The Fifth Circuit (which includes Louisiana, Mississippi, and Texas) has previously ruled the same way. See Republic of Kazakhstan v. Biedermann Int’l, 168 F.3d 880, 883 (5th Cir. 1999). Two other Circuits, however, disagree. The Sixth Circuit (which includes Kentucky, Michigan, Ohio, and Tennessee) and Fourth Circuit (which includes Maryland, North and South Carolina, Virginia, and West Virginia) both recently ruled that section 1782 may be invoked to seek discovery in aid of private foreign or international commercial arbitrations. See In re Application to Obtain Discovery for Use in Foreign Proceedings, 939 F.3d 710, 714–15 (6th Cir. 2019); Servotronics, Inc. v. Boeing Co., 954 F.3d 209, 210 (4th Cir. 2020).
This issue is also currently under consideration in the Ninth Circuit (which includes Arizona, Alaska, California, and Hawaii) with oral argument scheduled for mid-September. In the decision on appeal—HRC-Hainan Holding Co., LLC v. Yihan Hu, No. 19-MC-80277-TSH, 2020 WL 906719 (N.D. Cal. Feb. 25, 2020)— the district court agreed “with the Sixth Circuit’s conclusion that the ordinary meaning of “tribunal” draws the conclusion that  § 1782(a) applies to private arbitral tribunals.” Id. at *7. Like Guo, HRC Hainan involved a CIETAC arbitration.
Until there is a decision from the U.S. Supreme Court clarifying this issue, the ability of a party in an international arbitration to obtain discovery from a non-party in the United States may depend on which Circuit non-party is located in.. As a result, a party who seeks discovery in the United States from non-parties in aid of a private commercial international arbitration should consult a U.S. attorney concerning the rules applicable to obtaining discovery from non-parties in the jurisdictions where such discovery may be sought.