Discovery in International Arbitration Using U.S. District Courts

Davy Karkason and Debbie Karkason report on a recent U.S. Supreme Court ruling that has impacted Section 1782 of the United States Code.

Section 1782 explained

Section 1782 of the United States Code is a legislative provision formulated to aid litigants in obtaining discovery from sources within the U.S. for use in foreign or international judicial proceedings. This statute - 28 U.S.C.A. § 1782 (West) - operates as a channel for parties in international disputes to procure evidence situated in the U.S., encompassing testimonies or documents, to facilitate their litigation in foreign or international tribunals. Id.

In 2004, discovery was possible under section 1782 for foreign tribunals

In 2004, Advanced Micro Devices Inc (AMD) initiated a legal confrontation with Intel by filing a complaint with the European Commission. See Intel Corp. v. Advanced Micro Devices Inc., 542 U.S. 241, 241, 124 S. Ct. 2466, 2468, 159 L. Ed. 2d 355 (2004). The focal point of this dispute was the alleged monopolistic tendencies of Intel in the computer microprocessor market. Id. As the matter progressed, AMD sought to utilize Section 1782 to obtain certain documents from a distinct U.S. legal case to strengthen its position in the dispute. Id.

Despite the initial dismissal of AMD’s request by a U.S. district court, the decision was later reversed by the Ninth Circuit Court of Appeals and affirmed by the U.S. Supreme Court. Id. The U.S. Supreme Court emphasized the discretionary power bestowed upon U.S. judges by the statute, allowing for the facilitation of document discovery if deemed appropriate, and underscored the necessity of preliminary evidence collection before the main trial in a foreign tribunal. Id.

2022 Supreme Court ruling and its repercussions on discovery

However, in a landmark ruling on June 13 2022, the U.S. Supreme Court narrowed the applicability of 28 U.S.C.A. § 1782 (West). Through the adjudication of the consolidated cases ZF Automotive US Inc. v. Luxshare, Ltd. and AlixPartners LLP v. Fund for Protection of Investors’ Rights in Foreign States, the Supreme Court stipulated that 28 U.S.C.A. § 1782 (West) discovery is exclusively available for proceedings conducted by “governmental or intergovernmental adjudicative bodies.” See ZF Auto. US, Inc. v. Luxshare, Ltd., 142 S. Ct. 2078, 213 L. Ed. 2d 163 (2022); AlixPartners, LLP v. The Fund for Prot. of Investors' Rts. in Foreign States, 142 S. Ct. 638, 211 L. Ed. 2d 397 (2021).

This unanimous verdict eradicates the possibility of invoking 28 U.S.C.A. § 1782 (West) in private arbitrations abroad, a strategy previously available to discerning litigants through amenable district courts.. The Supreme Court substantiated this restriction by illustrating that the arbitration panels in ZF Automotive and AlixPartners were not instituted by any governmental authority, thus disqualifying them from Section 1782 assistance. See ZF Auto. US, Inc. v. Luxshare, Ltd., 142 S. Ct. 2078, 213 L. Ed. 2d 163 (2022); AlixPartners, LLP v. The Fund for Prot. of Investors' Rts. in Foreign States, 142 S. Ct. 638, 211 L. Ed. 2d 397 (2021).

Conclusion

The recent Supreme Court ruling has profoundly impacted the scope of Section 1782, confining its utility to proceedings under the aegis of governmental or intergovernmental adjudicative entities. This demarcation serves as a guideline for future litigants, delineating the boundaries of Section 1782’s applicability in international legal landscapes. The ruling fosters a refined understanding and utilization of Section 1782 in international arbitration, mandating governmental involvement as a prerequisite for its activation.

About the authors:

Davy Karkason is a seasoned international lawyer with roots in Lausanne, Switzerland, and founder of Transnational Matters law firm. He is expert in international law, Investor-State Dispute Settlement, International Commercial Arbitration, international securities fraud, and UCC litigations.   

Debbie Karkason operates and manages Transnational Matters international law firm. She provides the firm’s most high-profile cases with research, drafting and client support and contributes to the firm’s periodic articles on international law, arbitration and other substantive legal topics. 

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