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Supreme Court Asked to Resolve Circuit Split Over Discovery in Aid of Private Commercial Arbitration Seated Outside the United States

by J. Alexander Lawrence, Craig Celniker, Timothy Blakely, Sarah Thomas, David Hambrick, Daniel Levison, Geary Choe

December 2020

This article first appeared on the Morrison Foerster webpage, here.

On December 7, 2020, Servotronics, Inc. filed a petition for writ of certiorari asking the United States Supreme Court to decide whether parties may seek discovery in the United States for use in commercial arbitration proceedings seated outside the United States under 28 U.S.C. § 1782 (“Section 1782”), a vigorously debated question that has increasingly divided lower courts.

Under Section 1782, a petitioner may obtain evidence through U.S. federal district courts for use in a proceeding before a “foreign or international tribunal.” Importantly, Section 1782 does not define what qualifies as a “foreign or international tribunal.” Federal courts are increasingly divided on whether the definition includes private commercial arbitral tribunals. 

A recent decision handed down by the U.S. Court of Appeals for the Seventh Circuit in September widened an existing circuit court split regarding whether parties may seek discovery in the United States for use in commercial arbitration proceedings seated outside the United States. In Servotronics, Inc. v. Rolls-Royce PLC, 975 F.3d 689 (7th Cir. 2020), the Seventh Circuit held that a district court may not authorize discovery under Section 1782 for use in private commercial arbitrations. The decision is especially noteworthy because, in a sister case arising from the same facts, the Fourth Circuit reached the opposite result, permitting Servotronics to seek discovery under Section 1782.

With the decision, the Seventh Circuit joined the Second and Fifth Circuits in rejecting the use of Section 1782 to obtain discovery in aid of private commercial arbitrations seated outside the United States.[1] The Fourth and Sixth Circuits, on the other hand, are of the view that Section 1782 permits such applications.[2]  As of this writing, the Third and Ninth Circuit Courts of Appeals have cases pending on this very issue.[3]

With the widening circuit split on this issue, it seemed only a matter of time before the Supreme Court would be asked to weigh in to finally resolve the question of what qualifies as a “foreign or international tribunal.” Servotronics’ petition for writ of certiorari in the Supreme Court comes as no surprise. As discussed below, the company has found itself in an absurd situation that is ripe for Supreme Court review.

Section 1782 Discovery

Section 1782 empowers federal district courts to grant applicants the authority to issue subpoenas in the United States to obtain documents and/or testimony in aid of foreign proceedings. Specifically, an applicant pursuing Section 1782 discovery must establish that:

a) the discovery is for use in an actual or contemplated proceeding before a “foreign or international tribunal”;

b) the applicant is an “interested person” in that proceeding; and

c) the person from whom the discovery is sought resides or is otherwise found in the district of the court where the application is filed.[4]

If the applicant satisfies all of these statutory requirements, a district court has the discretion to grant or deny the application after considering the following factors established by the U.S. Supreme Court in Intel Corp. v. Advanced Micro Devices, Inc.:

  • whether the discovery sought is within the foreign tribunal’s jurisdictional reach and, thus, accessible without resort to Section 1782;
  • the nature of the foreign tribunal, the character of the proceedings abroad, and the receptivity of the foreign government or the court or agency abroad to U.S. federal court judicial assistance;
  • whether the applicant’s request conceals an attempt to circumvent foreign proof-gathering restrictions or other policies of a foreign country or the United States; and
  • whether the request is unduly intrusive or burdensome.[5]

The relevant issue for parties to an international arbitration proceeding seeking U.S. discovery is whether a private commercial arbitration outside the United States qualifies as a “foreign or international tribunal” within the meaning of Section 1782.[6] The statute’s failure to define those terms and disagreement regarding the correct interpretation is the source of the current 3–2 circuit split.

Servotronics, Inc. and the Circuit Split

On March 30, 2020, in Servotronics, Inc. v. Boeing Co., the Fourth Circuit cited the Sixth Circuit’s first federal appellate decision to permit Section 1782 discovery in aid of a foreign-seated private commercial arbitration[7] with approval and reached the same result.[8] The Fourth Circuit considered whether a party to a private arbitration in the United Kingdom could obtain testimony from residents of South Carolina for use in the arbitration.[9] The Fourth Circuit also adopted the Sixth Circuit’s holding that district courts remain empowered with wide discretion to administer and manage the discovery process so as to avoid unduly burdening the target of discovery.[10]

Despite its success in the Fourth Circuit, Servotronics faced a completely opposite outcome in the Seventh Circuit. In a sister case arising from the same facts as Servotronics, Inc. v. Boeing Co., the Seventh Circuit blocked Servotronics from obtaining testimony from residents of Illinois under Section 1782 for use in a private arbitration in the United Kingdom.[11] With this decision, the Seventh Circuit joined the Second and Fifth Circuits in concluding that Section 1782 does not authorize discovery for use in private foreign arbitrations.[12]

Ripe for the Supreme Court’s Review

The two Servotronics cases involved the same parties and the same set of facts, and yet the outcomes could not be more different. The Seventh Circuit squarely rejected the Third Circuit’s finding from just six months ago. With the Fourth and Sixth Circuits on one side and the Second, Fifth, and Seventh Circuits on the other, the time may be ripe for the Supreme Court to clarify this increasingly divisive question. It remains to be seen if the Supreme Court grants certiorari. If it does, arguments would likely occur in Fall 2021, and the Supreme Court would then decide once and for all if Section 1782 allows federal district courts to order discovery to be used in foreign arbitral proceedings. 


[1] Nat’l Broad. Co., Inc. v. Bear Stearns & Co., Inc., 165 F.3d 184, 188, 190–91 (2d Cir. 1999); Guo v. Deutsche Bank Securities, Inc., 965 F.3d 96 (2d Cir. 2020); Republic of Kazakhstan v. Biedermann Int’l, 168 F.3d 880, 882–83 (5th Cir. 1999). For more in-depth discussions of the cases, our prior client alerts are available at https://www.mofo.com/resources/insights/200309-ca-district-court-discovery-foreign-arbitration.html and https://www.mofo.com/resources/insights/200714-international-arbitration-update.html.

[2] Abdul Latif Jameel Transportation Co. Ltd. v. FedEx Corp., 939 F.3d 710 (6th Cir. 2019); Servotronics, Inc. v. Boeing Co., 954 F.3d 209 (4th Cir. 2020). For more in-depth discussions of the cases, our prior client alerts are available at https://www.mofo.com/resources/insights/191002-international-commercial-arbitration.html and https://www.mofo.com/resources/insights/200406-international-arbitration-update.html.

[3] HRC-Hainan Holding Co., LLC v. Yihan Hu, No. 19-mc-80277-TSH, 2020 U.S. Dist. LEXIS 32125, at *2 (N.D. Cal. Feb. 25, 2020), appeal filed sub nom. In re: Application of HRC-Hainan Holding Co., LLC, No. 20-15371 (9th Cir. Feb. 28, 2020); In re Storag Etzel GmbH, No. CV 19-MC-209-CFC, 2020 WL 1849714 (D. Del. Apr. 13, 2020), appeal filed sub nom. In re: Application of Storag Etzel GmbH, No. 20-01833 (3d Cir. May 7, 2020); In re EWE Gasspeicher GmbH, No. CV 19-MC-109-RGA, 2020 WL 1272612 (D. Del. Mar. 17, 2020), appeal filed sub nom. In re: Application of EWE Gasspeicher GmbH, No. 20-01830 (3d Cir. May 8, 2020).

[4] 28 U.S.C. § 1782(a). 

[5] 542 U.S. 241, 264–65 (2004) (internal quotations and citations omitted).

[6] It is also possible for international parties to seat their arbitrations inside the United States. Some commentators have argued that such proceedings should be considered proceedings “in an international tribunal” for purposes of Section 1782.  See, e.g., Hans Smit, American Assistance to Litigation in Foreign and International Tribunals: Section 1782 of Title 28 of the U.S.C. Revisited, 25 Syracuse J. Int’l L. & Com. 1, 5 (1998) (“a tribunal is international in the sense of Section 1782 when any of the parties before it, or any of the arbitrators, is not a citizen or resident of the United States.”). At least one court has considered this issue but declined to decide it after holding more generally that private arbitrations are not covered under Section 1782. See In re Dubey, 949 F. Supp. 2d 990 (C.D. Cal. 2013).

[7] Abdul Latif Jameel Transp. Co. Ltd. v. FedEx Corp., 939 F.3d 710 (6th Cir. 2019). For a more in-depth discussion of the case, our prior client alert is available at https://www.mofo.com/resources/insights/191002-international-commercial-arbitration.html.

[8] 954 F.3d 209 (4th Cir. 2020). For a more in-depth discussion of the case, our prior client alert is available at https://www.mofo.com/resources/insights/200406-international-arbitration-update.html.

[9] Id. at 210.

[10] Id. at 215.

[11] Servotronics, Inc. v. Rolls-Royce PLC, 975 F.3d 689, 690–91 (7th Cir. 2020).

[12] Id. at 696. For a more in-depth discussion of the case, our prior client alert is available at https://www.mofo.com/resources/insights/200926-seventh-circuit-discovery-arbitration.html.

 

J. Alexander Lawrence

Alex advises on all aspects of complex commercial litigation in federal and state trial and appellate courts and in arbitration. He has represented U.S. and international clients in actions involving intellectual property rights, trade secrets, securities laws, and a wide array of complex commercial disputes.

 

Alex regularly advises clients on e-discovery issues and best practices as co-chair of our E-Discovery Task Force. He also serves as co-chair of our Commercial Litigation Group’s Technology Transactions Working Group and has been a member of the Standing Committee on the Judiciary of the Association of the Bar of the City of New York. Before joining our team, he practiced labor and employment law for a large international firm, representing clients in federal and state courts throughout the country.

 

Alex has appeared in theNational Law Journal’s2015 and 2017 Pro Bono Hot List for his work protecting reproductive rights and appeared again in 2018 for his work protecting individuals who were jailed for their inability to pay court fees and fines.

 

He also has won the JD Supra Readers’ Choice Award for 2016 as the top author in the area of e-discovery. He has written extensively on legal issues in publications such asLaw360Intellectual Property StrategistIP LitigatorLicensing JournalBloomberg BNAACC DocketSan Francisco Daily JournalFinancier WorldwideMealey’s Litigation Report, and Socially Aware: The Social Media Law Update. He also has been featured or quoted in articles in theWall Street JournalNew York TimesHouston ChronicleAustin American–StatesmanAssociated PressBloombergForbesHuffington PostLaw360ElleAmerican Lawyer, and National Law Journal.

Craig Celniker

Craig leads MoFo’s global international arbitration and Asia dispute resolution practices. He has more than 25 years of experience in international commercial litigation and arbitration, and more than 15 years of experience in commercial litigation and arbitration in Asia.

 

Craig has been described as an exceptional strategist on both the legal and business levels, and as “a world-class lawyer—highly experienced, knowledgeable and business-minded. His strategies make you feel safe.” He is renowned for his ability to assess difficult situations, strike the right tone, and effectively manage the parties. He represents clients from every continent and across diverse industries on their most challenging litigation issues. He is particularly well-versed in matters that involve Japan, China, and Southeast Asia.

 

His experience covers intellectual property, commercial disputes, and investigations before courts, administrative agencies, and arbitral tribunals. He is well respected for his deep experience in IP litigation, and he regularly arbitrates IP disputes. Intellectual Asset Managementdescribed him as a “bona fide IP authority.”

 

Craig has led more than 80 international arbitrations before the world’s leading tribunals. He has drafted hundreds of arbitration clauses and advises clients on a wide range of arbitration issues including jurisdiction, the benefits of arbitration under different regimes, and the enforcement of awards. Craig is an experienced arbitrator and a panel member of the following tribunals:

 

  • The Japan Central Court of Arbitration
  • The Shenzhen Court of International Arbitration
  • The Shanghai International Arbitration Center
  • The Singapore International Arbitration Court (IP Panel)
  • The International Arbitrators of the Pacific International Arbitration Centre, Vietnam
Timothy Blakely

Tim is the managing partner of Morrison & Foerster’s Hong Kong office. He is also head of the firm’s Hong Kong Litigation Department. Tim’s practice focuses on government and internal investigations and complex commercial litigation and international arbitration matters.

 

Tim represents companies and individuals in, among other matters:

 

  • Government investigations
  • Regulatory enforcement proceedings
  • Internal investigations
  • International arbitrations
  • Securities class action lawsuits
  • Complex dispute-related matters
  • Regulatory compliance issues

 

Tim has represented multinational and Chinese clients in various industries, including telecommunications, biotechnology, publishing, pharmaceuticals, and financial services.

 

Tim also is a member of both the firm’s FCPA + Global Anti-Corruption and Global Ethics + Compliance teams. He conducts internal investigations throughout Asia of potential violations of anti-corruption laws, leads pre-acquisition anti-corruption-related due diligence and post-closing remediation, and regularly provides advice, counseling, and training to clients about FCPA and anti-corruption related issues.

 

Tim has deep experience representing companies and individuals in high-stakes contentious matters involving U.S. and Hong Kong law. Before relocating to Hong Kong in 2011, he spent 10 years practicing in New York and California, handling fraud, misrepresentation, breach of contract, securities litigation, investment disputes, commercial arbitration, and enforcement-related matters, from inception through trial. His practice continues to have a strong U.S. nexus, and he regularly advises clients facing disputes and enforcement actions originating in the U.S. and involving U.S. law.

 

As a Hong Kong solicitor, Tim has been instructed by clients in key contentious proceedings and arbitration-related matters before Hong Kong courts, as well in proceedings with Hong Kong regulators and statutory tribunals. He has advised clients in investigations by, inter alia, the Securities & Futures Commission, and in proceedings before the Telecommunications (Competition Provisions) Appeal Board. He regularly acts for clients in Hong Kong-seated, international arbitration proceedings.

 

Chambers Asia-Pacific quotes clients saying that Tim “is incredibly intelligent and always well prepared. He is an excellent interviewer and his depth of knowledge of the subject matter is outstanding” and that he “knows Western practices but also appreciates and understands the peculiarity of Chinese laws and practice.”


Sarah Thomas is a partner in Morrison & Foerster’s Hong Kong office. Her practice focuses on international arbitration, internal investigations and commercial litigation throughout the Asia-Pacific region, and she has particular experience in matters relating to China, Hong Kong, India, Singapore, Malaysia, and Japan.

 

She regularly advises clients on complex disputes and investigations across a wide range of industries, including technology, engineering, manufacturing, healthcare/pharmaceuticals, automotive, insurance, and telecoms. Ms. Thomas is qualified in New York, England & Wales, and Hong Kong. She received her LL.B. from the London School of Economics and her J.D. from Columbia Law School.

 

Ms. Thomas has in-depth knowledge of the arbitration legislation of all the major seats and the seats in the Asia-Pacific region and has represented clients in arbitrations seated in a variety of locations, with particular frequency in Hong Kong, London, Singapore, and Mainland China. She is experienced representing clients in both ad hoc and administered proceedings and under a variety of procedural rules, including those of the International Chamber of Commerce (ICC), the London Court of International Arbitration (LCIA), the Hong Kong International Arbitration Centre (HKIAC), the Singapore International Arbitration Centre (SIAC), the China International Economic and Trade Arbitration Commission (CIETAC) and the American Arbitration Association (AAA), in addition to the UNCITRAL Arbitration Rules.

 

Ms. Thomas was named a “Dispute Resolution Star” for International Arbitration by Benchmark Litigation in its Asia-Pacific 2019 rankings.

 

She is fluent in English and highly proficient in German.


David Hambrick is a disputes and compliance associate in Morrison & Foerster’s Singapore office. He advises and represents clients in high-value international arbitration proceedings and complex litigations, with a particular focus on energy, insurance, construction, joint venture, sovereign wealth fund, and general commercial disputes. 

 

Mr. Hambrick’s practice also includes multijurisdictional investigations, regulatory matters, and compliance reviews involving financial institutions and global companies.

 

Mr. Hambrick regularly provides transactional and pre-dispute advice to clients on a wide range of issues such as the construction of arbitration clauses in commercial contracts, third-party funding, risk analysis and mitigation, and sovereign immunity.

 

Prior to joining Morrison & Foerster, Mr. Hambrick was an international arbitration and litigation associate in the London, Paris, and New York offices of another leading international law firm. He served as a law clerk to the Honorable Andrew J. Peck of the United States District Court for the Southern District of New York in 2009.

 

Mr. Hambrick received his J.D. from Columbia Law School, where he was a Harlan Fiske Stone Scholar, recipient of the Parker School Certificate for Achievement in International and Comparative Law, and Editor-in-Chief of theColumbia Journal of Transnational Law. He received his A.B. from Harvard University. He is admitted to the New York bar. ?


Daniel Levison is a partner in Morrison & Foerster’s Singapore office, where he heads its Litigation Department and is also the head of the firm’s Ethics + Compliance regional practice in Asia. Dan counsels clients regarding compliance matters and conducts internal investigations and compliance reviews across the Asia-Pacific region, where he has over 20 years of experience. His practice has included work in many countries in Southeast Asia and beyond, including Malaysia, Thailand, Indonesia, Vietnam, the Philippines, and Singapore, as well as India, Nepal, Australia, New Zealand, Japan, Korea, and China.

 

Clients say that Dan is “very thoughtful and thorough, and extremely focused on giving high-quality advice across a broad range of issues.” Clients rely on his experience with highly sensitive matters, which have included fraud and corruption, cartel and other competition matters, anti-money laundering, export control, privacy, and data security, and regulatory and product safety investigations. In addition, he assists clients with pre-acquisition and third-party compliance due diligence and developing, reviewing, and implementing compliance policies, procedures, and training programs.

 

Dan also focuses on complex commercial litigation and arbitration matters, with particular emphasis on the resolution of multi-jurisdictional disputes, and has developed particular expertise regarding cross-border electronic discovery matters. He has counseled clients in a range of matters involving contract disputes, business torts, antitrust, product liability, intellectual property, and other issues. Dan has represented clients in a variety of industries, including electronics and manufacturing, software, consulting and professional services, consumer goods, electronic commerce, chemicals, pharmaceuticals and healthcare, sports and entertainment, transportation, construction and real estate, hospitality, insurance, and banking and financial services, among others. Dan is also a member of MoFo’s COVID-19 Task Force.

 

Before moving to Singapore, Dan spent more than 12 years in MoFo’s Tokyo office, and clients continue to rely on him for his Japan-related expertise, for which he has been recognized by Chambers Global.

 

Dan has been listed by Chambers Asia-Pacific every year for the last three years as a top practitioner (Band 1) in his field for Corporate Investigations/Anti-corruption. He was also recommended as a global leader in Investigations in Singapore by Who’s Who Legal/Global Investigations Review 2020.

 

Dan is also a sought-after speaker and thought leader on anti-corruption, investigations, and compliance-related topics. Some recent engagements include:

 

  • Asia Pacific Summit on Anti-Corruption
  • Centre for a New American Security — Future Trends in Tariffs, Sanctions, and Investment Restrictions
  • GIR Live Singapore
  • Thailand and Southeast Asia: Annual International Arbitration & Regulatory Global Summit
  • Ethics and Compliance Leadership Programme — INSEAD | ethiXbase
  • Business Ethics Leadership Alliance — Ethisphere
  • The International Association of Privacy Professionals — Asia Privacy Forum 2019
  • Centre for a New American Security — North Korea Sanctions workshop

 

In addition to his practice, Dan serves on MoFo’s Board of Directors and on MoFo’s Diversity Strategy Committee and plays a leadership role in some of MoFo’s diversity initiatives, notably, as a member of the Board of Directors of MoFo’s pro bono client, Lawyers for LGBT & Allies Network, and he has been highly commended by Chambers for an Asia-Pacific Diversity & Inclusion Award 2020.


Geary Choe is a litigation associate in the firm’s Tokyo office.

 

Mr. Choe received his J.D. from Cornell Law School, where he was an Articles Editor of the Cornell Journal of Law & Public Policy. He holds a B.S. from Cornell University and a Master of International Studies from Seoul National University.

 

Before joining the firm, Mr. Choe worked as a law clerk for Justice Anne M. Patterson on the Supreme Court of New Jersey and as an associate at a Seoul-based law firm.

 

He is admitted to practice in the District of Columbia.

The views expressed by authors are their own and do not necessarily reflect the views of Resourceful Internet Solutions, Inc., Arbitrate.com or of reviewing editors.
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