Private International Arbitration And § 1782: Are We Nearer To A Reckoning?

In In re Application and Petition of Hanwei Guo (S.D.N.Y. 2019), the court, following the Second Circuit’s precedent in National Broadcasting Co. v. Bear Stearns & Co., 165 F.3d 184 (2d Cir. 1999), held that a private international arbitral tribunal was not a “tribunal” for purposes of § 1782, and thus it denied an application for leave to serve a subpoena. In NBC, the Second Circuit reasoned that the text of the statute itself was ambiguous but that the legislative history showed that Congress intended the statute to reach public international arbitrations but not private arbitrations. The court rejected the argument that Intel, the leading Supreme Court decision from 2004, had overruled the Second Circuit’s precedent, noting that Intel’s citation to Hans Smit’s commentary, which included arbitral tribunals in the scope of the statute’s reach, was merely a dictum. (The judge’s description of Smit’s article as a “secondary source” is correct but maybe a little unfair, as Smit drafted the statute!)

Both the Seventh Circuit and the Eleventh Circuit have also cast doubt on whether a private arbitral tribunal is a tribunal for purposes of the statute. So it could be that the trend of the cases is headed in that direction. But not so fast! In another very recent decision, In re Application of the Children’s Investment Fund Foundation (S.D.N.Y. 2019), the court, citing an earlier SDNY decision and several decisions from other courts, held that a private arbitral tribunal is a tribunal for purposes of the statute. Because conflicting decisions are now bubbling up in the SDNY, it seems likely that relatively soon, the Second Circuit will decide whether its own precedent is still good law in light of Intel.

I have previously suggested that there is at least one reason to think that the statute should not reach private arbitrations: under § 1782, any interested party can seek discovery, whereas under Chapter 1 of the FAA, a court will only enforce a subpoena issued by the arbitrator. Why should a party to a foreign arbitration have greater rights to obtain US discovery than a party to a domestic arbitration? But I no longer think this a good argument, because it proves too much. Suppose the foreign tribunal brought the application for the benefit of one of the parties (as a foreign court sometimes transmits a letter rogatory seeking evidence for the benefits of a party). If it is not a tribunal for purposes of the statute, the application would fail. But why should a foreign arbitrator have less right than a domestic arbitrator here? I think the key really is the legislative intent and the purposes and policies of the statute. I think the drafter’s intent (which is not, of course, the same as Congress’s intent, but I am not going to delve into that complexity) is clear. The policy is a little less clear to me: the statute means to provide aid to foreign litigants, partly in order to encourage foreign states to provide similar aid to American litigants abroad. But that rationale applies to foreign courts in a way it does not seem to apply to private foreign arbitral tribunals.

One response to “Private International Arbitration And § 1782: Are We Nearer To A Reckoning?”

  1. […] is available to any “interested person,” whether or not the tribunal consents, in a 2019 post. There, I […]

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