Case of the Day: In re Servotronics
Posted on November 9, 2018
The case of the day is In re Servotronics, Inc. (D.S.C. 2018). In 2016, an engine fire broke out at a Boeing plant in South Carolina. The engine had been manufactured by Rolls Royce. It had a valve manufactured by Servotronics. Boeing made a claim against Rolls Royce, which was settled, and Rolls Royce then sought indemnity from Servotronics. The two firms had a contract that contained an agreement to arbitrate all disputes in Birmingham, England under the rules of the Chartered Institute of Arbitrators. Once the arbitration was underway, Servotronics sought leave under § 1782 to serve subpoenas on several Boeing employees.
The basic question in the case is whether a party to a private arbitration can seek aid under § 1782, or in other words, whether a private arbitration is a “foreign or international tribunal” for purposes of the statute. This 2014 post gives the lay of the land on this issue. In short, the cases are not unanimous, but the only circuits to reach the question hold that a private arbitral tribunal is not within the scope of the statute, and the Eleventh Circuit withdrew a contrary decision sua sponte for reasons that are not entirely clear.
The South Carolina court reviewed the circuit decisions on point, which predate Intel v. AMD, and it held that despite occasional claims to the contrary, nothing in Intel had addressed private arbitration or called the earlier decisions into question. I might add that § 1782 gives “interested persons” the right to seek discovery, while under the FAA, in a domestic arbitration, only the arbitrator, not a party, can issue a subpoena. So treating private international arbitrations as within the scope of § 1782 leads to the anomalous result that a party to an international arbitration might have greater rights to discovery than a party to a domestic arbitration! The court didn’t address that last point, but it did follow what seems to be the clear majority rule and hold that Servotronics could not seek judicial assistance under the statute.