Pre-hearing discovery in arbitration: Beck’s Superior revisited

We recently looked at Beck’s Superior Hybrids v. Monsanto, an Indiana decision denying enforcement of an arbitrator’s subpoena on the grounds that the proper court in which to seek enforcement, under Section 7 of the FAA, was the court at the seat of the arbitration.  I thought it would be worth comparing the approach in Beck’s to the approach a party seeking evidence in an international arbitration could take to obtain evidence in advance of the hearing.Section 7 of the FAA, the statute at issue in Beck’s, provides for enforcement of a subpoena by petition of the district court “for the district in which such arbitrators, or a majority of them, are sitting.” A party in an international arbitration cannot, of course, look to Section 7, if the seat of the arbitration is outside of any judicial district of the United States. The party will instead look to the judicial assistance statute, which permits an interested person to apply to any district court in which a person resides or is found to give testimony or produce documents for use in a proceeding in a foreign or international tribunal. There is a split of authority among the lower courts on whether an arbitral tribunal is a “tribunal” for purposes of the statute. But assuming that it is, how does the right to pre-hearing discovery depend on whether the arbitration is domestic or international?

Domestic arbitration — FAA § 7 International arbitration — 28 U.S.C. § 1782
Territorial scope An arbitrator’s subpoena can be enforced only in the district where a majority of the arbitrators are sitting. An application for judicial assistance can be made in the district where the witness resides or is found.
Who’s initiative? The arbitrator must first issue a subpoena, which is generally a matter for his or her discretion, and a court typically will not compel issuance of an arbitrator’s subpoena. The court may act in response to a letter rogatory or request by the arbitral tribunal, or on the application of an interested person, such as a party to the arbitration.

So it is clear that in at least two respects, discovery is more readily available in aid of international arbitration than in aid of domestic arbitration. This is counter-intuitive, given that most other countries, and even common-law jurisdictions such as the U.K., afford much less latitude to the parties to compel pre-trial discovery in ordinary civil litigation.

Some U.S. courts have responded with procedural rigamaroles aimed at providing more ready access to pre-hearing discovery in domestic arbitration. My favorite example is Amgen, Inc. v. Kidney Center of Del. County, Inc., 879 F.Supp. 878 (N.D. Ill. 1995), criticized in Beck’s, where the court acknowledged that under Section 7, only the district court at the seat of the arbitration could enforce the arbitrator’s subpoena, but authorized the attorney of the party seeking discovery to issue a new subpoena, which, under Fed. R. Civ. P. 45, could then be enforced by the appropriate court. In Amgen, the parties had agreed to arbitrate pursuant to the Federal Rules of Civil Procedure, which is surely unusual, but it is unclear why an agreement among the parties should impact the rights of a non-party, or the statutory power of the court. Both the Indiana court in Beck’s and the Second Circuit, in Dynergy Midstream Servs. v. Trammochem, 451 F.3d 89 (2d Cir. 2006), have rejected this view outright.

Rather than reaching to find ways to increase access to pre-hearing discovery in domestic arbitrations beyond what Section 7 suggests, perhaps the courts, in deciding whether arbitral tribunals are “tribunals” within the meaning of the judicial assistance statute, should have in mind the arguable desirability of decreasing access to pre-hearing discovery in international arbitrations. Just a thought!

About Ted Folkman

Ted Folkman is a shareholder with Murphy & King, a Boston law firm, where he has a complex business litigation practice. He is the author of International Judicial Assistance (MCLE 2d ed. 2016), a nuts-and-bolts guide to international judicial assistance issues, and of the chapter on service of process in the ABA's forthcoming treatise on International Aspects of US Litigation, and he is the publisher of Letters Blogatory, the Web's first blog devoted to international judicial assistance, which the ABA recognized as one of the best 100 legal blogs in 2012, 2014, and 2015.

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