Update on U.S. Discovery for Use in Foreign Proceedings – Applicability to Private Arbitrations
By: Karen E. Clarke, Of Counsel
As discussed in our June 8, 2016 article, 28 U.S.C. § 1782 is a helpful U.S. statute that enables foreign litigants to obtain documentary or testimonial evidence from U.S. persons “for use in a proceeding in a foreign or international tribunal.” There is an ongoing debate over whether a private arbitration in a foreign country qualifies as “a foreign or international tribunal” within the scope of the statute. A recent decision from the Southern District of New York, In re Ex Parte Application of Kleimar N.V., No. 16-MC-355, 2016 WL 6906712 (S.D.N.Y. Nov. 16, 2016), adds to the number of courts saying yes.
In Application of Kleimar, the applicant sought discovery for use in a series of arbitrations pending before the London Maritime Arbitrators Association (“LMAA”) against Dalian Dongzhan Group. Judge Sullivan granted the ex parte application for a subpoena to Vale S.A. (“Vale”), a foreign mining company with an indirect New York subsidiary. Vale moved to quash the subpoena on several grounds, including that the § 1782 statutory requirements were not met because Vale does not reside and is not “found” within the Southern District of New York and because the London Arbitrations are not a “foreign tribunal” under § 1782. Judge Marrero rejected each of Vale’s arguments and denied the motion.
On the “foreign tribunal” issue, Judge Marrero briefly acknowledged that “the Second Circuit [the Court of Appeals governing the New York district courts] has previously excluded private foreign arbitrations from the scope of qualifying Section 1782 proceedings.” See Nat’l Broad. Co. v. Bear Stearns & Co., 165 F.3d 184, 190 (2d Cir. 1999).
He noted, however, that “dictum of the Supreme Court in Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 258 (2004), suggests the Supreme Court may consider private foreign arbitrations, in fact, within the scope of Section 1782,” and that post-Intel, the Second Circuit had declined to readdress the issue in Chevron Corp. v. Berlinger, 629 F.3d 297, 310-11 (2d Cir. 2011). Application of Kleimar, 2016 WL 6906712 at *2.
Judge Marrero noted that courts outside the Second Circuit, relying on Intel, have found that a private arbitral body is a “foreign tribunal” within the scope of § 1782. He cited the superseded Eleventh Circuit decision in Consorcio Ecuatoriano de Telecomunicaciones S.A. v. JAS Forwarding (USA), Inc., 685 F.3d 987, 994-97 (11th Cir. 2012), which applied a functional analysis (as described in our June 8, 2016 article), as well as two district courts that have specifically found the LMAA to be a “foreign tribunal,” In re Owl Shipping, LLC, No. 14-5655, 2014 WL 5320192, at *2 (D.N.J. Oct. 17, 2014), and In re Application of Winning (HK) Shipping Co. Ltd., No. 09-22659, 2010 WL 1796579, at *9-10 (S.D. Fla. Apr. 30, 2010). Persuaded by the reasoning of those courts, Judge Marrero similarly held § 1782 applicable to the LMAA and upheld the subpoena to Vale in full. 2016 WL 6906712 at *2-3.
This decision reflects the increasing trend in the Southern District of New York of treating private arbitrations as foreign tribunals under § 1782, despite the existing Second Circuit precedent to the contrary, on the strength of the Supreme Court dictum in Intel.
