Tuesday, September 22, 2020

U.S. Court of Appeals for the Seventh Circuit, Servotronics, Inc. v. Rolls-Royce PLC and The Boeing Company, Docket No. 19-1847

Discovery

 

Evidence

Application to Obtain Discovery for Use in Foreign Proceedings

In Private Foreign Arbitrations?

Ex Parte Application

Letter Rogatory

Letter of Request

Subpoena

Motion to Quash

 

Circuit Split: Section 1782(a) of Title 28 does not authorize the district courts to compel discovery for use in private foreign arbitrations (Second, Fifth and Seventh Circuit).

 

 

Section 1782(a) of Title 28 authorizes the district court to order a person within the district to give testimony or produce documents “for use in a proceeding in a foreign or international tribunal.” This case asks whether a private foreign arbitration is “a proceeding in a foreign or international tribunal” within the meaning of the statute.

 

Two decades ago, the Second and Fifth Circuits answered this question “no,” holding that § 1782(a) authorizes the district court to provide discovery assistance only to state-sponsored foreign tribunals, not private foreign arbitrations. Nat’l Broad. Co. v. Bear Stearns & Co., 165 F.3d 184, 191 (2d Cir. 1999); Republic of Kazakhstan v. Biedermann Int’l, 168 F.3d 880, 883 (5th Cir. 1999).

 

More recently, the Sixth Circuit reached the opposite conclusion, Abdul Latif Jameel Transp. Co. v. FedEx Corp. (In re Application to Obtain Discovery for Use in Foreign Proceedings), 939 F.3d 710, 714 (6th Cir. 2019), and the Fourth Circuit agreed, Servotronics, Inc. v. Boeing Co., 954 F.3d 209, 214 (4th Cir. 2020). We join the Second and Fifth Circuits and hold that § 1782(a) does not authorize the district court to compel discovery for use in a private foreign arbitration.

 

(…) The parties agreed to conduct the arbitration in London.

 

Servotronics thereafter filed an ex parte application in the U.S. District Court for the Northern District of Illinois asking the court to issue a subpoena compelling Boeing to produce documents for use in the London arbitration. The application invoked 28 U.S.C. § 1782(a), and the judge initially granted it and issued the requested subpoena. Rolls-Royce intervened and moved to quash the subpoena, arguing that § 1782(a) does not permit a district court to order discovery for use in a private foreign commercial arbitration. Boeing intervened and joined the motion to quash. The judge reversed course and quashed the subpoena. She agreed with Rolls-Royce and Boeing that § 1782(a) does not authorize the court to provide discovery assistance in private foreign arbitrations. Servotronics appealed. Rolls-Royce and Boeing jointly defend the judge’s ruling.

 

Sections 1781 and 1782 of Title 28 govern the district court’s authority to provide discovery assistance in litigation in foreign and international tribunals. Section 1781 describes a formal judicial instrument known as a “letter rogatory”—a letter of request “issued by one court to a foreign court, requesting that the foreign court (1) take evidence from a specific person within the foreign jurisdiction ... and (2) return [it] ... for use in a pending case.” Letter of Request, BLACK’S LAW DICTIONARY (11th ed. 2019).

 

Letters rogatory are transmitted through diplomatic agencies; the statute provides that the State Department may, either “directly, or through suitable channels, ... receive a letter rogatory issued, or request made, by a foreign or international tribunal, to transmit it to the tribunal, officer, or agency in the United States to whom it is addressed,” and “receive and return it after execution.” 28 U.S.C. § 1781(a)(1). The assistance is reciprocal; tribunals in the United States may issue letters rogatory through the State Department to a “foreign or international tribunal, officer, or agency.” Id. § 1781(a)(2).

 

(…) The order may be made pursuant to a letter rogatory issued, or request made, by a foreign or international tribunal or upon the applica- tion of any interested person and may direct that the testimony or statement be given, or the document or other thing be produced, before a person appointed by the court.

 

(…) For several reasons, we side with the Second and Fifth Circuits in this interpretive debate. First, the word “tribunal” is not defined in the statute, and dictionary definitions do not unambiguously resolve whether private arbitral panels are included in the specific sense in which the term is used here. (…) In short, canvassing dictionary definitions is inconclusive. In both common and legal parlance, the phrase “foreign or international tribunal” can be understood to mean only state-sponsored tribunals, but it also can be understood to include private arbitration panels. Both interpretations are plausible.

 

(…) Harmonizing this statutory language and reading it as a coherent whole suggests that a more limited reading of § 1782(a) is probably the correct one: a “foreign tribunal” in this context means a governmental, administrative, or quasi-governmental tribunal operating pursuant to the foreign country’s “practice and procedure.” Private foreign arbitrations, in other words, are not included.

 

(…) The discovery assistance authorized by § 1782(a) is notably broader than that authorized by the FAA. Most significantly, the FAA permits the arbitration panel—but not the parties—to summon witnesses before the panel to testify and produce documents and to petition the district court to enforce the summons. 9 U.S.C. § 7. Section 1782(a), in contrast, permits both foreign tribunals and litigants (as well as other “interested persons”) to obtain discovery orders from district courts. If § 1782(a) were construed to permit federal courts to provide discovery assistance in private foreign arbitrations, then litigants in foreign arbitrations would have access to much more expansive discovery than litigants in domestic arbitrations. It’s hard to conjure a rationale for giving parties to private foreign arbitrations such broad access to federal-court discovery assistance in the United States while precluding such discovery assistance for litigants in domestic arbitrations.

 

(…) For the foregoing reasons, we join the Second and Fifth Circuits in concluding that § 1782(a) does not authorize the district courts to compel discovery for use in private foreign arbitrations.

 

 

(U.S. Court of Appeals for the Seventh Circuit, September 22, 2020, Servotronics, Inc. v. Rolls-Royce PLC and The Boeing Company, Docket No. 19-1847)

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