Case of the Day: Kazakhstan v. Lawler

The case of the day is Republic of Kazakhstan v. Lawler (D. Ariz. 2020). Big Sky Energy Corp. commenced an arbitration against Kazakhstan before ICSID, asserting a claim under the US/Kazakhstan bilateral investment treaty. The treaty does not provide protection to “any company that is controlled by non-U.S. nationals if that company does not conduct substantial business activities in the United States.” Kazakhstan sought and received leave under 28 U.S.C. § 1782 to serve a subpoena on William Lawler, Blue Sky’s principal, in order to obtain evidence to assert the jurisdictional defense. Shortly after the subpoena was served, Big Sky produced, in the context of discovery in the arbitration, the documents the subpoena had sought. Lawler then moved to quash the subpoena.

The judge did an Intel analysis that is somewhat interesting, but I’m not going to write about it. (In the end, the court quashed the subpoena, mainly because it thought that Lawler had proved that Kazakhstan could indeed get the discovery it needed in the arbitration). Instead, I want to suggest a reason that the case was rightly decided regardless of Intel. Can you see it?

Is it that the subpoena was in aid of an arbitration? Good guess! But no. As long-time readers know, the status of an arbitral tribunal as a a “tribunal” under the statute is a problem. But everyone agrees that public international arbitrations, like this treaty arbitration, are within the statute’s reach.

No, the problem is that the applicant is the Republic of Khazakhstan. The statute says that any “interested person” can bring an application to obtain discovery from any “person” found in the judicial district. The precedents say that the United States is not a “person” from which discovery can be sought, because the word “person” in the statute does not include a sovereign. Okay. Surely the word “person” means the same thing both time it is used in adjacent sentences? I conclude that a foreign sovereign cannot be an applicant in a 1782 case. The best practice is to name the state’s attorney general, minister of justice or someone similar as the applicant.

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