Diales Compendium Issue 3 - Flipbook - Page 9
ISSUE 3
COMPENDIUM
In order for a Section 1782 application to succeed, it must
comply with three statutory requirements: (i) the district
court has jurisdiction over the person from whom evidence
is sought (in other words the individual targeted is either
physically present or maintains a residence in the district
and / or the corporation targeted is incorporated or has its
principle place of business in the district - but - also if the
business would be subject to personal jurisdiction in that
district by virtue of its systematic and continuous activities
there); (ii) the evidence is sought for “use in a proceeding
in a foreign or international tribunal”; (iii) the request is
being made by “a foreign or international tribunal” or an
“interested person”. Further factors a court should consider
when exercising its discretion to grant or deny a discovery
request include: (i) whether the target is a participant in the
foreign proceeding; (ii) the nature of the foreign tribunal,
the character of the proceeding underway abroad, and the
receptivity of the foreign government or the court or agency
abroad to U.S. federal-court judicial assistance; (iii) whether
the request conceals an attempt to circumvent foreign proofgathering restrictions or other policies of a foreign country
or the U.S. and (iv) the request contains unduly intrusive or
burdensome demands1.
SECTION 1782 IN INTERNATIONAL ARBITRATION
Section 1782 was generally understood to represent a
compelling strategic tool that could happily provide the
benefit of liberal U.S. discovery rules as a means to obtain
broader discovery for use in international arbitration seated
outside of the U.S. The U.S. rules permit discovery of any
non-privileged matter that is relevant to any party’s claim
or defence and proportional to the needs of the case, which
implies extensive discovery of documents and electronically
stored information, and also allow for depositions. The
benefits of using Section 1782 are clearer in the context of
foreign litigation proceedings where discovery rules are
strict, such as in civil-law systems. However, arbitration
proceedings are more nuanced and Redfern or Stern
Schedules codify respective document production requests
(typically made commensurate with so-called soft law). There
is a tangible lack of empirical data available on how often 1782
applications were made but there is a view that the unclear
limits on arbitrators’ discretion to compel documentation
production and the restricted means available to sanction
non-compliance on document production made Section 1782
a handy mechanism in Counsel’s tool box. Further, patently
gathering evidence required to comply with document
production orders can be challenging when documents and
witnesses are located abroad or belong to third parties such
that seeking the assistance of the local courts may be easier.
From an academic or intellectual perspective, Section 1782
has unique and distinctive features as set out below by case
law2:
-
The application needs to be made by an “interested
person” which is intended to include not only litigants
before foreign or international tribunals but also foreign
and international officials and any other person who has
a “reasonable interest” in obtaining judicial assistance;
-
The applications may be made on an ex parte basis by a
party directly to a district court, without the need to notify
in advance the party from whom discovery is sought or
the adverse party in the foreign proceeding;
-
The foreign proceeding need not be pending or even
imminent but “in reasonable contemplation”. In essence,
this means that an interested person can therefore seek
pre-action discovery;
-
An applicant is not constrained by the fact that the
sought-after material or deposition testimony would not
have been discoverable had the proceedings been located
in the “foreign tribunal” to which the application relates;
-
Section 1782 enables an applicant to obtain information
from an individual / entity which is not a participant in the
foreign arbitration or litigation proceeding.
Parties to international arbitration have petitioned to U.S.
district courts to seek discovery from third-parties based in
the U.S., such as the parent companies and subsidiaries.
In addition, the availability of Section 1782 had an obvious
impact on experts appointed in arbitration proceedings.
Some practitioners would be nervous about appointing
U.S.-based experts given that they could be subject to broad
discovery obligations and others sought to use Section 1782
as a means to obtain work product and related documents
from such experts. Against this backdrop, a threat emerged
that arbitral parties may use / abuse Section 1782 in order
to obtain discovery in a manner that would not have been
permitted by the foreign arbitral tribunal. However, it ought
to be noted that the U.S. courts managed applications
differently in the context of international arbitration and were
more deferential to the will of the arbitrators3. In some cases
it had been suggested that Section 1782 discovery should only
be granted if the request is either made by the arbitrators
themselves or with the consent of the arbitrators (thus
restricting the availability of Section 1782 assistance after
the appointment of the tribunal) so as to aid the international
arbitration process and not distort it4. Others have viewed
Section 1782 as a judicial intrusion into arbitration and
considered that it would burden the arbitral process, increase
the cost and duration of the document production phase
of the arbitration and that applications under Section 1782
would bring undesirable publicity to confidential arbitrations.
END OF SECTION 1782 IN PRIVATE ARBITRATION
The wording of Section 1782 had led to conflicting
decisions with regards to the meaning of the term “foreign
or international tribunal” and whether Section 1782
encompassed all international arbitration. This question had
been the subject of a long-standing “circuit-split”. The 2nd,
5th, and 7th Circuits have held that 28 U.S.C. Section 1782
did not extend to private international arbitration, but in 2019
and 2020 respectively, the 4th and 6th Circuits held that it did.
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