Case of the Day: In re Application of the Republic of Ecuador

Today’s case of the day, In re Application of the Republic of Ecuador (N.D. Cal. 2011), is a request for judicial assistance by Ecuador seeking to obtain discovery from one of the experts whose reports Chevron offered in the Lago Agrio litigation and in the BIT arbitration. Our previous coverage of all things Lago Agrio is here.

Judge Breyer’s discussion of the Intel discretionary factors is interesting for its discussion of the implications of the fact that the expert, Dr. Michael A. Kelsh, was not a party to the BIT arbitration. Article 24.3 of the UNCITRAL Rules contemplates discovery from parties but not from non-parties. In its brief, Chevron pointed to Article 3.9 of the IBA Rules on the Taking of Evidence in International Arbitration, which provides:

If a Party wishes to obtain the production of Documents from a person or organisation who is not a Party to the arbitration and from whom the Party cannot obtain the Documents on its own, the Party may, within the time ordered by the Arbitral Tribunal, ask it to take whatever steps are legally available to obtain the requested Documents, or seek leave from the Arbitral Tribunal to take such steps itself. The Party shall submit such request to the Arbitral Tribunal and to the other Parties in writing, and the request shall contain the particulars set forth in Article 3.3, as applicable. The Arbitral Tribunal shall decide on this request and shall take, authorize the requesting Party to take, or order any other Party to take, such steps as the Arbitral Tribunal considers appropriate if, in its discretion, it determines that (i) the Documents would be relevant to the case and material to its outcome, (ii) the requirements of Article 3.3, as applicable, have been satisfied and (iii) none of the reasons for objection set forth in Article 9.2 applies.

Chevron argued that Ecuador was seeking to circumvent the tribunal’s proof-gathering rules by bringing an application for judicial assistance without leave of the tribunal as Article 3.9 (if it governs) requires. Judge Breyer, focusing on the emphasized language, reasoned that the rule, on its face, requires resort to the tribunal only if the party cannot obtain the evidence “on its own”, and that Ecuador’s application for judicial assistance was precisely an attempt to obtain the evidence “on its own”, without resort to the tribunal. The judge’s conclusion is not self-evident: one could read the words “on its own” in Art. 3.9 to mean that unless the party can obtain the evidence without compulsion, it must resort to the procedures the rule prescribes. I think the more restrictive rule is probably the better rule, at least in purely private international arbitrations (the BIT arbitration, of course, is not a private arbitration, and so what I am about to write doesn’t fully apply to the case at hand; the point is really aimed at the correct construction of Art. 3.9 in private arbitrations). As I wrote in my post on Gary Born’s take on In re Caratube and in an earlier post on arbitral tribunals as “tribunals” for purposes of 28 U.S.C. § 1782, it is anomalous to permit parties to international arbitrations to have free access to US discovery procedures under § 1782, while parties in domestic arbitration must, under the FAA, obtain a subpoena from the arbitrator. One answer to this problem is to construe § 1782 to exclude private arbitral tribunals from the definition of “tribunal” altogether, but a less radical answer is to give the tribunal some gatekeeper authority over the parties’ power to invoke US discovery procedures. Since the trend in the case law seems to be in favor of treating arbitral tribunals as within the scope of § 1782, I think the rationale for limiting the parties’ right of free access to § 1782 is stronger than ever.

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