by Andrew Flake

Visiting for a close friend’s wedding, I had a chance this weekend to walk around the beautiful mountain community of Black Mountain, North Carolina. There’s a little pond there, “Lake Susan,” fed by mountain springs, that a local told me years ago was the neighborhood pool. But swimming has been forbidden for years, as delightful as it looks, so if you didn’t grow up here, you missed the chance. Today, swimming in Lake Susan is just an interesting story.

Relegation to story status appears to be the fate of another activity: applying to a federal district court for discovery documents or depositions in a private international arbitration. In June of this year, the Supreme Court surprised a lot of us, the author included, with ZF Automotive U.S., Inc. v. Luxshare, Ltd., which definitively resolved a major split among Circuit Court of Appeals on the scope of 28 U.S.C. Section 1782.

Readers will recall that we’ve followed this question, diving deeper from time to time, and that we almost had a decision in the Servotronics case earlier this year. The background and question there as here, is this:

A specialized statute, 28 U.S.C. Section 1782, lets parties to certain foreign-country disputes obtain discovery under the U.S. rules. The statute applies to foreign “tribunals,” and an open question, decided differently over time by different federal Courts of Appeals, is what “tribunal” means. Specifically, does the term includes private international arbitration, as opposed to proceedings in a foreign court? Making the topic more interesting, in 2004, the Supreme Court in its Intel decision looked at the meaning of “tribunal,” leaving some clues about, but not directly considering, whether it includes private international arbitration.

How big of a deal was this? I was part of a great panel this week in Atlanta, at the 11th Annual AtlAS arbitration conference, and I likened it to the release of a new George Martin “Game of Thrones” book — something we’ve been watching in the dispute resolution world for a long time, and something that has been a long time coming.

There are interesting policy arguments on both sides that you can ready more about here, but what the short version of what changed with ZF Automotive is this: If you are in a private commercial arbitration seated outside of the United States, you do not have the ability to seek discovery from U.S. witnesses, whether in the form of document requests or depositions.

Justice Barrett got there by reading the phrase “foreign or international tribunal” quite narrowly. Our panel, along with most commercial arbitration practitioners in the room, were either somewhat surprised, or somewhat disappointed with the result, or both.

Reasonable minds can differ, I think, on the reasoning of the opinion, but it definitely trims the flexibility that parties and arbitrators have in international arbitrations to commission more expansive discovery.

It’s worth reading the statute, which is short and to the point, and considering this yourself.

Looking forward, one of the open questions from here on out, which will have to be developed on a case by case basis, is what constitutes an “international tribunal”? Just what institutions fit this definition. For now, we know private commercial arbitration — and even investor-state arbitration, an issued considered in ZF Automotive as part of a consolidated appeal — does not fit the bill.

It will also be interesting to get feedback from colleagues abroad. Will they be disappointed? Is this even an issue of concern, and of course, given the orientation of international arbitration toward a more compact and focused process of discovery, should we be pursuing US discovery in our international arbitrations in the first place?

There is plenty of play in the joints here, and I don’t think we’ve seen the last of the interesting issues that Section 1782 throws off to the courts.