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The Supreme Court ends discovery for use in foreign arbitrations – or does it?
By Kennen D. Hagen and Jonathan Tompkins
International arbitration has long been a favored form of dispute resolution because of its efficiency, finality, and other salient features. Still, many parties in arbitration find situations that demand discovery akin to that available in U.S. judicial proceedings. One federal statute—28 U.S.C. § 1782 – has been used by parties in commercial and investor-state arbitrations seated outside the United States to use U.S. district courts to obtain discovery from persons and entities located in the U.S. However, the days of freewheeling discovery under Section 1782 now appear to be over.
On June 13, 2022, the U.S. Supreme Court, in a highly anticipated decision, resolved a multi-Circuit split over whether Section 1782 applies to private foreign or international arbitrations. In a unanimous decision written by Justice Amy Coney Barrett, the Court ruled that Section 1782, which authorizes discovery “for use in a proceeding in a foreign or international tribunal,” does not permit discovery for use in arbitration proceedings unless they are “governmental or intergovernmental” in nature. ZF Automotive US, Inc. v. Luxshare, Ltd., at 1. Accordingly, the Court found that neither of the two arbitration panels in the two consolidated cases before it – a private commercial arbitral tribunal operating under the rules of the German Institute of Arbitration and an ad hoc investor-state arbitral tribunal formed under a bilateral investment treaty between Lithuania and Russia and operating in accordance with the Rules of the United Nations Commission on International Trade Law (“UNCITRAL”) – “fit the bill.”
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