Does 28 U.S.C. § 1782(a), which authorizes federal district courts to gather evidence “for use in a proceeding in a foreign or international tribunal,” authorize the gathering of evidence for use in a private international arbitration?
The case would have asked the Court to decide whether 28 U.S.C. § 1782(a) authorizes federal district courts to compel discovery for use in a private international arbitration. Petitioner Servotronics argued that a tribunal in a private international arbitration is a “foreign or international tribunal” within the meaning of Section 1782(a) and thus that the district court should have ordered discovery. In response, Rolls-Royce and Boeing argued that the language of Section 1782(a) only denotes a tribunal with authority derived from a sovereign, not a contract between private parties. The Court’s decision in this case would have affected the availability and efficiency of discovery in private international arbitrations and specified the extent of acceptable federal court involvement in private international arbitrations. The U.S. Supreme Court removed this case from its oral argument schedule on September 8, 2021, following Servotronics’ motion to dismiss.
Questions as Framed for the Court by the Parties
Whether the discretion granted to district courts in 28 U.S.C. § 1782(a) to render assistance in gathering evidence for use in “a foreign or international tribunal” encompasses private commercial arbitral tribunals, as the U.S. Courts of Appeals for the 4th and 6th Circuits have held, or excludes such tribunals without expressing an exclusionary intent, as the U.S. Courts of Appeals for the 2nd, 5th and, in the case below, the 7th Circuit, have held.
Rolls-Royce PLC (“Rolls-Royce”) sold a jet engine to the Boeing Company (“Boeing”), which Boeing intended to use on one of its 787 Dreamliner aircraft. Servotronics, Inc. v. Rolls-Royce PLC at 690. In January 2016, Boeing tested the aircraft at its facility in South Carolina. During testing, a piece of metal became lodged in an engine valve. Id. As a result, the engine caught fire and damaged the entire aircraft. Id. Boeing sought compensation for the damage from Rolls-Royce, and the two companies agreed to a settlement where Rolls-Royce would pay Boeing $12 million. Id. After the settlement, Rolls-Royce sought indemnification from Servotronics, the company that manufactured the engine valve. Id. at 690–91.
Rolls-Royce and Servotronics had a prior agreement dictating that when disputes between the companies cannot be resolved through negotiation or mediation, they must be resolved through arbitration in England. Id. at 691. After negotiations broke down, the parties agreed to meet for the arbitration in London. Id.
In the beginning stages of the arbitration proceeding, Servotronics applied to the U.S. District Court for the Northern District of Illinois, seeking a subpoena ordering Boeing to produce documents for its use in London under 28 U.S.C. 1782(a). Id. Section 1782(a) permits federal district courts to gather evidence “for use in a proceeding in a foreign or international tribunal.” Id. The court initially granted Servotronics’ application and ordered Boeing to produce the requested documents. Id. Rolls-Royce then intervened and moved to quash the subpoena. Id. Boeing joined Rolls-Royce’s motion to quash, which the district court ultimately granted. Id.
The district court determined that it did not have the authority to assist parties in private foreign arbitrations, such as the London arbitration between Servotronics and Rolls-Royce. Id. Servotronics appealed the Northern District of Illinois’ ruling to the Court of Appeals for the Seventh Circuit. Id. at 696. The Seventh Circuit affirmed, holding that—contrary to Servotronics’ position—Section 1782(a) is not available to aid discovery in private international arbitrations. Id. The Seventh Circuit held that Section 1782(a) is available only in aid of proceedings before a “state-sponsored, public, or quasi-governmental tribunal,” and not private arbitration proceedings. Id. Servotronics again appealed to the Supreme Court.
This case would have presented the Court with the opportunity to decide if 28 U.S.C. § 1782(a) authorizes federal district courts to compel discovery for use in a private international arbitration.
THE MEANING OF “FOREIGN OR INTERNATIONAL TRIBUNAL”
Petitioner Servotronics argues that a private arbitral tribunal is a “foreign or international tribunal” within the plain or ordinary meaning of that term as it existed in 1964, the year Congress enacted the current version of Section 1782(a). Brief for Petitioner Servotronics, Inc. at 10–14. Servotronics contends that the Seventh Circuit erred by concluding that a review of dictionary definitions of “tribunal” available in 1964 was “inconclusive” as to whether the term applied only to tribunals constituted by sovereigns. Id. at 10. Servotronics concedes that dictionaries available in 1964 did not unanimously define “tribunal” to encompass private decision-making bodies but denies that dictionary unanimity is necessary to establish the plain meaning of a term. Id. at 11. Instead, Servotronics argues that it suffices to establish the plain meaning of “tribunal” in 1964 that “some dictionaries” defined the term to include a private arbitral panel. Id. Servotronics also argues that the Supreme Court’s own usage of “tribunal” is evidence that the term encompasses a private arbitral tribunal. Id. at 11–14. Servotronics observes, for example, that the Court in Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc. used the terms “arbitration tribunal,” “arbitral tribunal,” and “tribunal” to describe the decision-maker in an arbitration arising from an agreement between private parties. Id. at 6.
Servotronics argues that Section 1782(a) would remain consistent with related statutes if “foreign or international tribunal” is defined to include private arbitral tribunals. Reply Brief for Petitioner Servotronics, Inc. at 16–17. Servotronics asserts, for example, that the meaning of “foreign or international tribunal,” as it appears in one related statute, 28 U.S.C. § 1696, is not limited to sovereign tribunals, but also encompasses “[f]oreign and international commercial arbitral tribunals.” Id. at 16. In addition, Servotronics cites the amicus brief of George A. Bermann, who argues that Sections 1696 and 1781 were not enacted solely to promote international comity. Id. at 17 (citing Brief of Amicus Curiae George A. Bermann, in Support of Petitioner at 19–20).
Respondents Rolls-Royce and Boeing reply by asserting that in 1964 the ordinary meaning of “foreign or international tribunal” did not encompass private arbitral panels. Brief for Respondent Rolls-Royce PLC at 14–15; Brief for Respondent The Boeing Company at 17. Rolls-Royce and Boeing contend that the weight of dictionary authority available in 1964 establishes that “tribunal” denoted an adjudicatory body with authority derived from a sovereign, not a contract between private parties. Brief for Rolls-Royce at 15; Brief for Boeing at 19. Rolls-Royce and Boeing assert that “tribunal,” as employed by Congress in legislation enacted both before and after 1964, was used as a synonym of a sovereign “court,” whereas terms such as “referees” or “arbitrators” were used to denote decision-makers in private arbitration. Brief for Rolls-Royce at 21, 23; Brief for Boeing at 20–21. Rolls-Royce argues, in addition, that judicial and academic usage of “tribunal” before 1964 confirms that the term did not apply to private arbitral panels. Brief for Rolls-Royce at 25, 29. Rolls-Royce asserts, for example, that the Supreme Court in Hilton v. Guyot and Rose v. Himely understood “foreign tribunal” to be a synonym for “foreign court.” Id. at 25–26.
Rolls-Royce and Boeing also argue that the statutory context of “foreign or international tribunal” makes clear that the term does not encompass private arbitral panels. Brief for Rolls-Royce at 31, 34–38; Brief for Boeing at 22–27. Rolls-Royce asserts, for example, that “a foreign or international tribunal,” as it appears in Section 1782(a) after the phrase “in a proceeding in,” is not naturally understood to denote an ad hoc panel convened by private parties to adjudicate a single dispute. Brief for Rolls-Royce at 32–33. Instead, Rolls-Royce argues, it is most naturally understood to denote “courts and other standing adjudicative bodies, which hear disputes on a rolling basis.” Id. Boeing likewise argues that a related statute, 28 U.S.C. § 1781, which authorizes the Department of State to receive letters rogatory from “a foreign or international tribunal,” indicates that “foreign or international tribunal” only encompasses “state sponsored tribunals,” not private arbitral panels, because letters rogatory rely upon the principle of international comity. Brief for Boeing at 24, 24 n.4.
SECTION 1782(a)’s HISTORY AND CONGRESSIONAL INTENT
Servotronics argues that a broad construction of “foreign or international tribunal” is most consistent with the history of Section 1782(a). Brief for Servotronics at 14–19. Servotronics observes that Congress has expanded the authority of federal courts to provide judicial assistance in foreign proceedings on three occasions already. Id. at 14–15. In 1948, Congress authorized judicial assistance in “any civil action” pending in the court of foreign country, not only, as had previously been the case, in proceedings to which a foreign government was a party. Id. Congress replaced “civil action” with “judicial proceeding” one year later. Id. at 15. In 1964, Congress authorized assistance in “a proceeding in a foreign or international tribunal.” Id. Servotronics argues that “the statute’s evolution” makes clear Congress’s intent that Section 1782(a) receive “a broad interpretation.” Id. at 16. Servotronics also draws attention to a 1998 pronouncement by Hans Smit, an academic who drafted the 1964 amendment to Section 1782(a), that “private arbitral tribunals come within the term” at issue. Id. Servotronics maintains that Professor Smit’s pronouncement is an “elaborat[ion]” on an article published contemporaneously with the statute’s enactment and so is good evidence of congressional intent. Id.
Rolls-Royce and Boeing reply that Congress’s replacement in 1964 of “judicial proceeding” with “proceeding in a foreign or international tribunal” was intended to authorize courts to provide judicial assistance to what the House and Senate reports accompanying the legislation called “administrative and quasi-judicial proceedings.” Brief for Rolls-Royce at 45; Brief for Boeing at 20–21. Boeing asserts that Congress’s intent in using this language was to ensure that judicial assistance was not limited to a foreign country’s “conventional courts.” Brief for Boeing at 28. Rolls-Royce and Boeing maintain, however, that private arbitral panels were not within Congress’s contemplation. Brief for Rolls-Royce at 44–46; Brief for Boeing at 28–29. Boeing argues that, in fact, it is extremely unlikely that Congress in 1964 would have understood “foreign or international tribunal” to denote a private arbitral panel, when it had not yet ratified the New York Convention, which provides for the domestic enforcement of foreign arbitral awards. Brief for Boeing at 29. In addition, Rolls-Royce denies that Professor Smit’s pronouncement in 1998 that “foreign or international tribunal” encompasses private arbitral tribunals is probative of the intent of Congress in 1964. Brief for Rolls-Royce at 46. Rolls-Royce observes that Professor Smit’s “putative clarification came thirty-four years after section 1782’s enactment,” in 1998. Id.
CONFLICT WITH THE FEDERAL ARBITRATION ACT
Servotronics argues that interpreting “foreign or international tribunal” to encompass private arbitral tribunals would not cause a conflict with the discovery regime established by the Federal Arbitration Act (FAA), which regulates domestic arbitrations. Petitioner’s Reply Brief at 19–20. First, Servotronics asserts that Section 1782(a) would not govern private arbitrations between international parties located in the United States. Id. at 19. Servotronics observes that the Supreme Court held in Intel Corp. v. Advanced Micro Devices, Inc. that “Section 1782 is a provision for assistance to tribunals abroad.” Id. Servotronics argues, therefore, that assistance in evidence-taking under Section 1782(a) is available only to tribunals abroad, but not to domestic tribunals governed by the FAA. Id. Second, Servotronics argues that, just as Section 1782(a) is unavailable in aid of domestic arbitrations, the FAA is unavailable in aid of foreign arbitrations. Id. Servotronics concludes, therefore, that no conflict between the statutes would arise in arbitrations located in a foreign jurisdiction. Id. at 19–20.
Rolls-Royce and Boeing, by contrast, argue that allowing discovery in these cases would create an unacceptable conflict with the discovery regime established by the FAA. Brief for Rolls-Royce at 40; Brief for Boeing at 30. Rolls-Royce asserts that, because the “seat of an ‘international tribunal’ is irrelevant” under Section 1782(a), an arbitration between international parties located in the United States would be subject to both the FAA and Section 1782(a). Brief for Rolls-Royce at 41. Boeing argues that three inconsistencies would then arise. Brief for Boeing at 30–31. First, whereas the FAA authorizes arbitrators to issue subpoenas, Section 1782(a) authorizes ex parte applications to a district court for evidence-taking. Id. Second, whereas the FAA authorizes only the district courts in the district in which the arbitration is seated to enforce arbitral subpoenas, Section 1782(a) allows discovery in any district in which the evidence is located. Id. at 31. Third, whereas the FAA does not authorize the production of evidence in pre-hearing discovery, Section 1782(a) recognizes no such limit. Id.
Prior to settlement, the Court received a handful of amicus briefs which sought to point out to the Court the various ramifications of the potential outcomes in this case.
MAINTAINING THE EFFICIENCY AND COMPARATIVE EXPEDIENCY OF ARBITRATION
Professor George A. Bermann (“Professor Bermann”), in support of Servotronics, argues that reversal would not “erode the . . . efficiency of arbitration.” Brief of Amicus Curiae George A. Bermann, in Support of Petitioner at 23. Professor Bermann contends that arbitral tribunals have sufficient safeguards to ensure efficiency, claiming that federal courts’ involvement in the discovery process will not impede the integrity of international arbitration. Id. Professor Bermann suggests arbitral tribunals can inform U.S. courts in advance that they are not interested in evidence discovered via Section 1782(a). Id. at 24. Furthermore, Professor Bermann adds that, even if U.S. courts ignore such advance notice, the tribunals are still free to exclude evidence discovered via Section 1782(a). Id. at 23–24.
Dr. Xu Guojian (“Dr. Guojian”), in support of Rolls-Royce, counters that streamlined discovery is an essential characteristic of private arbitration. Brief of Amici Curiae Xu Guojian et al., in Support of Respondent at 12. Dr. Guojian claims that parties in arbitration are not meant to have all possible information at their disposal. Id. at 12–13. Dr. Guojian contends that parties to an arbitration are traditionally limited in discovery; the benefit of this limitation is that a party is only required to disclose certain evidence, which reduces cost. Id. Thus, allowing courts in the United States to influence the discovery process, he maintains, could substantially inhibit efficiency: one of the core reasons parties agree to resolve their disputes through arbitration. Id. The United States Department of Justice (“DOJ”) raises similar points, noting that the relatively barebones discovery in arbitration proceedings is a feature of, rather than a problem with, arbitration. Brief for the United States as Amicus Curiae (“DOJ”), in Support of Respondents at 27. The DOJ emphasizes that limited discovery is one of the main reasons why arbitration is substantially less costly than resolving disputes through litigation. Id.
MAINTAINING TRIBUNAL INDEPENDENCE IN INTERNATIONAL ARBITRATION
Professor Bermann argues that reversal would not reduce the independence of private international arbitral tribunals. Brief of George A. Bermann at 23. This, he claims, is because United States courts give strong weight to arbitral tribunals’ autonomy and are accordingly careful when granting Section 1782(a) discovery applications. Id. at 25–26. Furthermore, Professor Bermann points out that Section 1782(a) requests in international commercial arbitration are nothing new, yet “arbitration remains the mode of choice for the resolution of international disputes.” Id. at 26. Professor Bermann suggests that if those requests were a significant problem, their continued use would cause a reduction in cases resolved through international arbitration. Id. Since the number of cases resolved by international arbitration has continued to increase, Professor Bermann concludes that the permissible use of Section 1782(a) requests must not be detrimental to the independence of arbitral tribunals. Id.
The DOJ argues that reversal could substantially erode the independence of private arbitral tribunals. Brief of DOJ at 32. The DOJ notes that investors may be upset by a reduction in the predictability of international arbitration. Id. More specifically, the DOJ points out that granting Section 1782(a) applications interferes with the rules that private parties to an arbitration have agreed to impose upon one another. Id. Allowing U.S. courts to assist in discovery in such cases, according to the DOJ, may effectively permit one or both parties to circumvent the rules to which they already settled upon. Id. The DOJ also mentions that private international arbitration became popular in part because it “depoliticized the dispute-resolution process and reduced friction between nations.” Id. at 31. As a result, the DOJ contends that allowing U.S. discovery rules to intrude upon private international arbitrations may have the effect of increasing international tensions. See id.
CONSEQUENCES OF THE DISMISSAL OF THE CASE
Danielle Morris and Sam Winter-Barker contend that now that this case has been removed from the October argument calendar, the future of Section 1782(a) proceedings remains clouded with uncertainty. Morris and Winter-Barker. Linda Martin, Kate Apostolova and Eric Brandon (“Martin et al.”) note that the existing circuit split on Section 1782(a) matters is likely to worsen, as both the Third and Ninth Circuit must now decide similar pending cases without the guidance of the Supreme Court. Martin et al. Martin et al. further state that the circuit split may last for a long time, as the underlying arbitrations to Section 1782(a) disputes are often resolved before the litigation progresses too far. Id. Martin et al. conclude that the Supreme Court will only be able to resolve this issue when another case arises that meets two criteria: (1) the parties want to continue litigating after reaching a settlement; and (2) the courts do not render the case moot despite the resolution of the underlying arbitration (or courts find that Section 1782(a) issues are an exception to the mootness doctrine). Id.
Danielle Morris and Sam Winter-Barker, Will the Uncertainty Around the Availability of Section 1782 Discovery in International Arbitration Proceedings Ever Be Resolved?, JDSupra (Sep. 20, 2021)
Linda H. Martin et al., The Circuit Split on the Scope of Section 1782 Discovery in the United States: Will it Ever Get Resolved?, Kluwer Arbitration Blog (Sep. 14, 2021).