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.
Arbitrator’s Power To Order Pre-Hearing Document Production Or Testimony From Non-Parties
In Part I of our post on the Circuit Courts split over discovery matters in international arbitration, we have discussed the Courts’ different views on whether a private international arbitration constitutes a “foreign or international tribunal” within the meaning of section 1782. The federal Courts of Appeals do not agree on another discovery matter that relates to obtaining evidence from non-parties in arbitration—including international arbitration—with the seat in the United States. There is a Circuit split on whether an arbitrator may compel pre-hearing document production or testimony from non-parties pursuant to Section 7 of the Federal Arbitration Act (“FAA”), which applies to any arbitration in the United States involving interstate or international commerce.
The Second Circuit, Third Circuit (which includes Delaware, New Jersey, Pennsylvania), and Ninth Circuit (which includes Arizona, Alaska, California, and Hawaii) have ruled that an arbitrator does not have power to compel pre-hearing discovery of documents and testimony pursuant to the FAA, and can compel such discovery only for an arbitration hearing.
Life Receivables Tr. v. Syndicate 102 at Lloyd’s of London, 549 F.3d 210, 216 (2d Cir. 2008) (“The language of section 7 is straightforward and unambiguous. Documents are only discoverable in arbitration when brought before arbitrators by a testifying witness.”); Hay Group, Inc. v. E.B.S. Acquisition Corp., 360 F.3d 404, 407 (3d Cir. 2004) (Alito, J.) (“The power to require a non-party ‘to bring’ items ‘with him’ clearly applies only to situations in which the non-party accompanies the items to the arbitration proceeding, not to situations in which the items are simply sent or brought by a courier.”); see also CVS Health Corp. v. Vividus, LLC, 878 F.3d 703, 707 (9th Cir. 2017) (discussing the split among the Circuits). Thus, in these Circuits, an arbitrator cannot compel deposition testimony or pre-hearing production of documents, but can require a witness to testify at a hearing.
The Eighth Circuit (which includes Arkansas, Iowa, Minnesota, Missouri, and Nebraska) reached the opposite conclusion. In re Sec. Life Ins. Co. of Am., 228 F.3d 865, 869 (8th Cir. 2000) (“implicit in an arbitration panel’s power to subpoena relevant documents for production at a hearing is the power to order the production of relevant documents for review by a party prior to the hearing.”).
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 pre-hearing discovery from a non-party in the United States may depend on which Circuit the 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.