Congress has long allowed federal courts to assist foreign or international adjudicative bodies in evidence gathering. Federal law permits district courts to order testimony or the production of evidence “for use in a proceeding in a foreign or international tribunal.” 28 U.S.C. § 1782. Can this statute be used to obtain discovery to aid a pending private arbitration in a foreign country? At the very end of the 2022 term, the Supreme Court ruled that such discovery was not available. ZF Automotive US, Inc. v. Luxshare, Ltd. (2022).
The case involved a $ 1 billion business deal between two automotive companies that went sour; the transaction contract required arbitration before three private arbitrators in Munich, Germany to be overseen by a private German arbitration company. One of the parties filed an application under the statute to obtain discovery in aid of the anticipated arbitration.
The Supreme Court held that this application should be denied. The statutory phrase foreign or international tribunal means “an adjudicative body that exercises governmental authority.” A “foreign tribunal” is one that exercises sovereign authority from a single country; and “international tribunal” exercises sovereign authority from multiple countries. The private arbitration board in Germany did not qualify, so the application for discovery would have to be denied.
Parties choosing arbitration panels for contractual disputes in a foreign country may wish to take the non-availability of U.S. discovery into account.
The case involved a $ 1 billion business deal between two automotive companies that went sour; the transaction contract required arbitration before three private arbitrators in Munich, Germany to be overseen by a private German arbitration company. One of the parties filed an application under the statute to obtain discovery in aid of the anticipated arbitration.
The Supreme Court held that this application should be denied. The statutory phrase foreign or international tribunal means “an adjudicative body that exercises governmental authority.” A “foreign tribunal” is one that exercises sovereign authority from a single country; and “international tribunal” exercises sovereign authority from multiple countries. The private arbitration board in Germany did not qualify, so the application for discovery would have to be denied.
Parties choosing arbitration panels for contractual disputes in a foreign country may wish to take the non-availability of U.S. discovery into account.