Court of Appeals Allows U.S. Discovery in Aid of Private Foreign Arbitration
The Sixth Circuit Court of Appeals (which covers the states of Michigan, Ohio, Tennessee and Kentucky) has recently held that parties engaged in a private international arbitration sited outside of the U.S. may obtain discovery in the U.S. in aid of that arbitration pursuant to 28 U.S.C. § 1782.
Under § 1782 (a), a U.S. federal district court “in the district in which a person resides or is found” may order discovery “for use in a proceeding in a foreign or international tribunal” upon application by “any interested person.”
The point of contention for some time has been whether the term “tribunal” is limited to courts and other governmental tribunals, or whether it encompasses private arbitrations as well.
In Abdul Latif Jameel Transp. Co. v. FedEx Corp., the case in question, the plaintiff (ALJ) and FedEx International were engaged in an arbitration in Dubai under the rules of the Dubai International Financial Centre-London Court of International Arbitration. FedEx Corp. (a separate entity) was not a party to the arbitration. ALJ filed an application for discovery under § 1782 in the federal district court in Tennessee claiming that FedEx Corp. was involved in luring ALJ into its contract with FedEx International and that it had misled ALJ into believing its future contractual relationship with FedEx International was secure. In its application ALJ requested document discovery as well as deposition testimony of a corporate representative of FedEx Corp.
The district court denied ALJ’s application, ruling that the Dubai arbitration tribunal was not a “foreign or international tribunal” under § 1782(a).
The Sixth Circuit, however, reversed. The Court held that the Dubai arbitration panel qualified as “foreign or international tribunal” within the meaning of § 1782(a). The Court rejected the argument that “foreign tribunal” was a term of art with any specialized limited meaning. Analyzing statutory language, legal writings and dictionary definitions, the Court found that none of these “dictate a more limited reading” of the term and concluded that “tribunal” encompasses private arbitrations as well.
Notably, the Sixth Circuit expressly disagreed with decisions of its sister courts that had reached the opposite conclusion. The Second (New York, Connecticut, Vermont) and Fifth (Texas, Louisiana, Mississippi) Circuit Courts had both previously held, relying on the legislative history of § 1782, that the term “tribunal” includes only “governmental or intergovernmental arbitral tribunals and conventional courts and other state-sponsored adjudicatory bodies.” The Sixth Circuit flatly rejected this reasoning.
Consequently, there is now a split among the federal appellate courts on this question, which likely means that sooner rather than later the issue will be up for a review by the Supreme Court. Until then, lawyers considering seeking § 1782 discovery in aid of a private arbitration should choose their forum carefully.