Section 1782 of Title 28 of the U.S. Code is a powerful, but probably much underutilized, weapon in the arsenal of those who practice in the international litigation arena. Over the past few years, there has been much written about whether Section 1782 may be used in connection with an international arbitration proceeding. Recently, the International Commercial Disputes Committee of the City Bar Association (of which the authors are members) issued a report that analyzed this issue and recommended a number of “best practices.” This article discusses certain highlights of that Report.[1]    

The Background of Section 1782

First, some background. As the Report describes, the history of Section 1782 can be traced to an 1855 statute that provided that, in response to a letter rogatory from a foreign court, a circuit court was authorized to “designate” a “commissioner” to “compel . . . witnesses to appear and depose in the same manner as to appear and testify in court.”[2] Later, a second strand of legislation developed that authorized members of certain “international tribunals” to issue subpoenas to compel testimony and the production of documents.[3]

In the late 1950s, Congress called for a complete overhaul of Section 1782, resulting, in 1964, in a new Section 1782(a), which remains at the heart of the current version of the statute. Section 1782 provides, broadly speaking, that if discovery is sought in a federal district court for use “in a proceeding in a foreign or international tribunal,” the court is authorized to order the production of documents, as well as depositions of witnesses, located within that court’s district. An application under Section 1782 may be brought by “an interested person” (including a party to the foreign proceeding) and is typically made ex parte. The statute does not require that the foreign proceeding be pending at the time of the application.

The question has arisen as to whether an arbitral tribunal qualifies as an “international tribunal” under Section 1782. In Nat’l Broad. Co., Inc. v. Bear Stearns & Co., Inc.,[4] the Second Circuit answered this question in the negative. The Fifth Circuit, in Republic of Kazahkstan v. Beidermann,[5] reached the same conclusion, holding that Section 1782 had been drafted to facilitate discovery for international government-sanctioned tribunals, not private arbitration tribunals. 

In 2004, the Supreme Court addressed Section 1782 for the first time. In its opinion, the Supreme Court stated, in dictum, as follows:

[T]he term ‘tribunal’ . . . includes investigating magistrates, administrative and arbitral tribunals, and quasi-judicial agencies, as well as conventional . . . courts.

Intel Corp. v. Advanced Micro Devices, Inc.[6] This language was a quotation from a 1965 article by Professor Hans Smit, the primary drafter of the current version of the statute.[7] This statement led numerous commentators to predict that the lower courts would revisit the issue of the applicability of Section 1782 to international arbitration proceedings. And, in fact, some courts have permitted 1782 discovery in connection with foreign arbitrations.[8] It was against this jurisprudential background that the International Commercial Disputes Committee issued its Report.

The Arguments on the Two Sides 

The fundamental issue to be addressed in an analysis of the applicability of Section 1782 to arbitration is whether the language of Section 1782 - “proceeding[s] in a foreign or international tribunal” - was intended to refer to international arbitration. The Committee concluded that it was. This conclusion was informed first by the plain meaning of the language of the statute. U.S. courts have consistently interpreted the word “tribunal” to include arbitral tribunals, and, in common usage (e.g., Black’s Law Dictionary), the word “tribunal” is often defined as including private commercial arbitral tribunals. Another example is the use by the New York Code of Professional Responsibility of the term “tribunal” to include arbitrators.[9] 

Second, although the Supreme Court did not address in Intel the issue of whether an arbitral tribunal can be “a foreign or international tribunal” under Section 1782, it did interpret the term “a proceeding in a foreign or international tribunal” to extend to a quasi-judicial agency that serves as a “first-instance decisionmaker.”[10] An arbitral tribunal clearly acts as a “first-instance decisionmaker,” and, indeed, because of the practical effect of the limitation on the bases for challenging arbitral awards under the New York Convention, arbitral tribunals are “final decisionmakers” in the overwhelming majority of arbitrations.

Third, prior to the 1964 revisions, Section 1782 offered limited assistance to proceedings before a foreign “court.” The current version extends the section’s assistance to a “proceeding in a foreign or international tribunal.” Importantly, Congress explicitly left to district court discretion the determination of whether a specific “international tribunal” qualifies for assistance under Section 1782.[11] This legislative change bolsters the Intel Court’s emphatic rejection of “categorical limitations . . . on the statute’s reach.”[12] For these reasons, the Committee concluded that Section 1782 should be interpreted to include a private international arbitral tribunal as an “international tribunal.” 

The Committee’s conclusion was reached in recognition that there are reasonable arguments in support of a more limited interpretation of Section 1782. For example, in many domestic arbitrations, discovery is governed by Section 7 of the Federal Arbitration Act (”FAA”). But, the subpoena power under Section 7 is available only to the arbitrators, whereas, under Section 1782 “interested persons” (including the parties to the arbitration) may bring applications. Furthermore, Section 1782 allows pre-hearing document discovery and pre-hearing depositions, whereas, at best, the courts are split on whether Section 7 permits them. Thus, courts have, in denying Section 1782 discovery in aid of arbitration, observed that there is no justification for discovery to be broader in an international arbitration than it is in domestic arbitration.[13]

Another objection to the use of Section 1782 in international arbitration is that the broad discovery potentially available under it is inconsistent with the general understanding that arbitration is intended to be efficient and cost-effective. According to this view, allowing arbitrators or the arbitrating parties to seek discovery under Section 1782 would burden the arbitral process and increase the cost of arbitration.

A third argument concerns the lack of reciprocity in discovery assistance between the United States and other countries. Applying Section 1782 to foreign arbitration, this argument goes, would mean that foreign tribunals would have access to a procedure that is not available under the laws of other countries. To the extent that foreign companies are not subject to the jurisdiction of a U.S. district court they may have, under Section 1782, a weapon against U.S. companies that those companies would typically not have against the foreign companies.

The Report: Conclusions and Best Practices

The Report presents responses to each of these arguments. To the extent that there are asymmetries between Section 1782 and Section 7 of the FAA, they should be understood and accepted as the result of the different language used in the two statutes. The plain meaning of Section 1782 should not be interpretively strained to try to create consistency with Section 7 of the FAA or with U.S. case law. Indeed, an argument can be made that the absence of parallel assistance under domestic law (Section 7) should not act as a bar to the application of Section 1782, but as a catalyst for changing the scope of discovery available in aid of domestic arbitrations. 

With respect to the efficiency and cost of arbitration, the simple reality is that it is incorrect to say that there is no disclosure in international arbitration. As just one example, the IBA Rules on the Taking of Evidence in International Commercial Arbitration, which are being used with increasing frequency in international arbitration, specifically contemplate a certain amount of document disclosure. As for the reciprocity argument, the lack of reciprocity between the United States and other countries already exists in the litigation context, where arguments based on it have been rejected.

Also significant is the Report’s recommendation that federal district courts follow a number of “best practices,” which, if applied, would address many of the arguments against using Section 1782 in aid of international arbitration. These recommended practices are important because district courts are given broad discretion in treating applications under Section 1782. It is well established that a district court is not required to grant a Section 1782 application simply because it has the authority to do so and that “the permissive language of § 1782 vests district courts with discretion to grant, limit or deny discovery.”[14]

The most important best practice recommended in the Report is that Section 1782 discovery should be granted only if the request is made by the arbitrators, or with the consent of the arbitrators. If this practice is followed, it would nullify the criticism concerning the asymmetry between Section 1782 and Section 7 as to who, the arbitrators or the parties, may issue subpoenas. The exercise by courts of their discretion in this way would also address the concern that allowing discovery under Section 1782 would be contrary to the efficient conduct of the arbitration. It would be unnecessarily paternalistic for a court to deny a discovery request under Section 1782 on the ground that it has a better understanding than the arbitrators making or authorizing the discovery request as to what would best serve the interests of the arbitrating parties.

Another important recommended practice concerns the issue of whether Section 1782 should apply to an arbitration that, for example, is seated in New York and is “international” or “foreign” in the sense that it involves foreign parties or a project or contract performed abroad. There is jurisprudence that has already developed in the context of the New York Convention’s treatment of foreign and “non-domestic” awards rendered in the United States that suggests that the award in such a situation could be considered “foreign” and thus subject to the New York Convention.[15] Should this body of decisional law be used as a framework for applying Section 1782? The view of a majority of the Committee was that this jurisprudence under the New York Convention should not be extended to Section 1782 and that discovery in aid of foreign arbitration should be available only if the seat of the arbitration is outside the United States. This conclusion was informed in large part by a desire to have a bright-line rule and thus help avoid the potential for protracted litigation over the “international” or “foreign” character of the arbitration in question.

* * *

Since Intel, no circuit court has addressed the use of Section 1782 in aid of international arbitration. Most significantly, neither the Second nor the Fifth Circuit (nor district courts within either circuit) has been called upon to decide if its 1782 jurisprudence is still good law. Thus, the issue remains to be dealt with by the courts. In the meantime, the Committee that issued the Report suggests to the district courts that there are reasonable and sensible practices that they should consider applying in allowing Section 1782 to be used in connection with international arbitral proceedings.