US Supreme Court restricts §1782 for foreign seated arbitrations
In a case which will be of great interest to clients and arbitration practitioners globally, the United States Supreme Court today handed down its decision in ZF Automotive US, Inc. v Luxshare on the powers that US federal district courts can exercise under 28 U.S.C. §1782 to order discovery in support of foreign arbitrations.
28 U.S.C. §1782 is a US enactment which empowers US federal district courts to order persons residing in the United States to give American-style discovery in proceeding in a foreign or international tribunal. This enactment is often used to obtain discovery in the US to support litigation before courts in the UK and globally. For several years, there has been significant controversy (which has split the circuits in the US) over whether this section empowered US federal district courts to order discovery in support of foreign seated arbitration tribunals.
In a unanimous holding, the US Supreme Court found that 28 U.S.C. §1782 does not apply to either private commercial arbitration or to ad hoc investor-state arbitration under a bilateral investment treaty. This decision removes a much favoured and useful tool for parties to international arbitration seeking to obtain discovery from US entities in support of arbitrations.
The position in the United States now stands in contrast to the position in England. In A v C [2020] 1 WLR 3504, the (English) Court of Appeal held that parties to a foreign seated arbitration may use section 44 of the Arbitration Act 1996 to obtain an order from the English courts for the taking of evidence of witnesses in support of that foreign arbitration.
While the scope of the evidence taking powers under s.44 remains somewhat uncertain, parties to international arbitrations (whether seated in England or not) will now find that s.44 (if not excluded by their agreement) will often provide an effective and preferred means of obtaining evidence in support of their position in an arbitration.
Barristers at 4 Pump Court are regularly instructed in international arbitrations and associated court proceedings in the English courts and abroad in support of international arbitrations. Members have experience with applications under s.44 and regularly act in proceedings which cross over between the US and UK.
