Leveraging U.S. Courts in International Tribunals

“Interested persons” or parties in an international proceeding can apply to a U.S. district court to obtain discovery from a person or corporation located in the district.  28 U.S.C. §1782.  A legal action is initiated by local counsel to receive permission to serve a subpoena pursuant to the statute.

The statute does not compel the district court to permit the discovery.  The court may exercise its’ discretion by analyzing the application through four criteria delineated in Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241 (2004) as follows: 1) whether the discovery target is a participant in a foreign proceeding; 2) the type of tribunal and proceeding and whether the foreign tribunal is receptive to the assistance; 3) whether the discovery request is an attempt to circumvent the foreign tribunal’s orders or procedures; and 4) whether the request is unduly burdensome.  Id. at 264-65.

If the §1782 target is a party in the international tribunal, the district court will be less inclined to grant the application on the theory that the international tribunal should control its’ own discovery matters.  Certainly, where the international tribunal has declined to permit the discovery, the U.S. court will not act in contravention of that tribunal.

The federal circuit courts generally agree that all conventional civil, commercial, criminal and administrative courts are “tribunals” for purposes of the statute.  Moreover, governmentally sponsored administrative, arbitral and quasi-judicial agencies are regarded as “tribunals” for purposes of the statute.  However, there is some ambiguity and different approaches among the circuits relating to private arbitration.   The Second and Fifth Circuits do not regard private arbitration as a “tribunal” under the statute.  National Broadcasting Co., Inc. v. Bear Stearns & Co., Inc., 165 F.3d 184 (2d Cir. 1999); Republic of Kazakhstan v. Biederman Int’l, 168 F.3d 880 (5^th Cir. 1999).  In contrast, the Eleventh Circuit has ruled that private arbitrations constitute “tribunals” where they are first instance adjudicative decision makers.  In re Consorcio Ecuatoriano de Telecomunicaciones S.A. v. JAS Forwarding (USA), Inc., 2012 WL 2369166 (11^th Cir. 2012).

The district court will analyze whether the request is overly broad or unduly burdensome.  The discovery request should be narrowly tailored so that the application is not viewed as a “fishing expedition.”  The statute specifically precludes discovery “in violation of any legally applicable privilege.” 28 U.S.C. §1782(a).  Accordingly, the §1782 application should be narrowly tailored and the need for discovery should be demonstrably compelling.

As an aside, the §1782 application has some overlap with the Hague Evidence Convention, in which the U.S. is a participant.  However, §1782 may be the preferred course for an international party to obtain discovery because, unlike the Hague Evidence Convention, there is no need to have first requested the discovery in the international tribunal and it can sometimes be obtained even before an international proceeding is commenced.

Soon, the United States Supreme Court may weigh in on the question of whether private arbitrations are “tribunals” for purposes of the statute given the different approaches utilized by the circuit courts.  Two recent Supreme Court decisions indicate a decidedly pro-arbitration trend.  In Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S.Ct. 524 (2019) the court held that where a contract delegates the question of arbitrability to the arbitrator, the court may not override the contract even if the argument for arbitration is “wholly groundless.”   In New Prime Inc. v. Oliveira, 139 S.Ct. 532 (2019) the Court reasoned that delegation of arbitrability to the arbitrator is enforceable under the Federal Arbitration Act (“FAA”), provided the delegation provision is written in a contract involving commerce and does not otherwise run afoul of the FAA’s exclusions, such as employment contracts.  See 9 U.S.C. §1.

In this legal environment, parties in international tribunals may find the §1782 application to be an effective technique in obtaining discovery in alternative (non-governmentally sponsored) tribunals.  Indeed, depending on the rules of the tribunal, it may be the only way to obtain discovery.  Certainly, the district court may still exercise its discretion to deny applications where the discovery target is a party in the international tribunal.  However, this does not necessarily diminish a §1782 application as an effective technique.  Quite the contrary.  A third party is often the best source of useful discovery.

The district courts within the  U.S. Court of Appeals for the Third Circuit, containing Pennsylvania, New Jersey and Delaware, are ripe venues for §1782 applications.  Indeed, over 1 million businesses, representing 50% of the publicly traded companies in the United States and 64% of the Fortune 500 are incorporated in Delaware.  Pennsylvania boasts 20 Fortune 500 companies including Rite Aid, Kraft Heinz and Aramark.  New Jersey also has 20 Fortune 500 companies including Johnson & Johnson, Prudential Financial, Merck and Honeywell.

Earp Cohn P.C. is strategically located within the Third Circuit.  We have offices in Philadelphia, Pennsylvania and Cherry Hill, New Jersey, making the Eastern District of Pennsylvania and the District of New Jersey just minutes from our offices.  In addition, the District of Delaware is less than an hour’s drive from both offices.  Our litigators are seasoned and routinely practice in the district courts of the Third Circuit.

Please call or email to discuss how Earp Cohn P.C. can obtain discovery for use in your international tribunal.