On June 13, 2022, the Supreme Court issued its highly anticipated decision on the issue of whether 28 U.S.C. § 1782 permits district courts to order discovery for use in international commercial arbitration or ad hoc investment arbitration. See ZF Automotive, Inc. v. Luxshare, Ltd., 142 S.Ct. 2078 (2022). In a unanimous opinion authored by Justice Amy Coney Barrett, the Court held that section 1782 does not authorize discovery for use in those two forms of international arbitration because only a governmental or intergovernmental adjudicative body qualifies as a “foreign or international tribunal.”Continue Reading The Supreme Court Rules That § 1782 Does Not Apply to Private Arbitrations
Shin Hahn
Shin Hahn is an associate in the Business Trial Practice Group in the firm's New York office.
Supreme Court May Be Asked to Decide Whether State Insurance Laws Reverse-Preempt the New York Convention
On August 12, 2021, the Ninth Circuit Court of Appeals decided whether Washington state law reverse-preempts the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”), in which case the state law would bar the enforcement of arbitration clauses in insurance contracts in states with similar anti-arbitration laws. CLMS Management Services LP et al. v. Amwins Brokerage of Georgia LLC et al., –F.4th—, 2021 WL 3557591 (9th Cir. 2021). While the Ninth Circuit agreed with the defendants that state law does not reverse-preempt the Convention, plaintiffs have indicated that they will seek review in the U.S. Supreme Court. Plaintiffs point to a circuit split, since the Second Circuit has previously held that an anti-arbitration provision in Kentucky insurance law trumps the New York Convention. If plaintiffs follow through with their intended petition for certiorari, and if the High Court grants review, the Court’s decision should provide insurance companies clearer guidance with respect to the arbitration clauses in their non-domestic policies, as companies should be able to determine whether they can invoke international arbitration in states that bar arbitration clauses in insurance contracts.
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SCOTUS Finally Agrees to Address Discovery for Use in Foreign Arbitration
On March 22, 2021, the U.S. Supreme Court granted certiorari in the case brought by Servotronics Inc., where it challenged the Seventh Circuit’s decision to reject discovery pursuant to 28 U.S.C. § 1782 for use in a private arbitration brought by Rolls-Royce PLC in London. The Supreme Court’s decision should resolve the current circuit split on the question of whether Section 1782 can be used for private international arbitration, which has been an ongoing topic of interest among international arbitration practitioners and scholars.
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The Singapore International Arbitration Center Opens Office in New York
The Singapore International Arbitration Centre (“SIAC”) opened its first office outside of Asia in New York on December 3, 2020. According to SIAC, US parties are consistently among the top foreign users of SIAC and in 2020 alone, over 500 US parties have arbitrated under SIAC’s Rules. According to SIAC’s 2019 Annual Report, U.S. was the fourth top foreign user of SIAC, coming after India, Philippines, and China.[1] As an increasingly popular arbitral institution, not just amongst parties located in Asia but worldwide, SIAC has taken the leap to become a global institution, aiming to have a greater presence in the Americas. In 2020, despite the global pandemic, there have been more than 1,000 cases filed with SIAC, marking a new record for the institution since its establishment in 1991.
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Rolls-Royce Seeks to Resolve Circuit Split on Whether District Courts Can Order Discovery For Use in Private Arbitration
As discussed in our previous blog, many foreign companies favor private international arbitration for dispute resolution purposes in order to avoid being haled into a U.S. court and to avoid U.S.-style discovery. That calculus may change if the Supreme Court decides to consider whether a district court has authority to order discovery under 28 U.S.C. § 1782 for use in private commercial arbitration, which would resolve the current split amongst Circuit Courts.
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Pursuing and Responding to Discovery Requests Under 28 U.S.C. § 1782
As discussed in a previous blog post, an interested party in a foreign or international proceeding may apply to a United States District Court for discovery from an individual or corporation who resides or is found in the district. This blog describes the procedural steps for pursuing or responding to discovery requests under 28 U.S.C. § 1782. The operative language of section 1782(a) provides:
The district court of the district in which a person resides or is found may order him to give his testimony or statement or to produce a document or other thing for use in a proceeding in a foreign or international tribunal, including criminal investigations conducted before formal accusation. The order may be made pursuant to a letter rogatory issued, or request made, by a foreign or international tribunal or upon the application of any interested person and may direct that the testimony or statement be given, or the document or other thing be produced, before a person appointed by the court.
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US Law Allows Discovery for Foreign Proceedings
Fearing the burdens of U.S. court litigation, many foreign companies doing business with American counter-parties insist on forum selection clauses that call for resolution of disputes outside of U.S. courts, either in foreign courts or international arbitration. High on the list of objectives may be avoiding U.S.-style discovery, which can justifiably strike fear into the hearts of non-U.S. companies. However, before congratulating themselves too heartily, such companies should consider the often overlooked provisions of a U.S. statute that authorizes U.S. courts to order discovery for use in certain foreign legal proceedings.
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