Expanding Disclosure in International Arbitration: Sixth Circuit Rules That 28 U.S.C. § 1782 Permits Parties to Pursue Discovery in Support of Private Commercial International Arbitrations

Abdul Latif Jameel Trans. Co. v. FedEx Corp., No. 19-5315 (6th Cir. Sept. 19, 2019).

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Albert Bates Jr.
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Robert A. Gallagher
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R. Zachary Torres-Fowler

In the world of international arbitration, where document disclosure is already relatively limited compared to practices in federal and state court, 28 U.S.C. § 1782 — titled “Assistance to foreign and international tribunals and to litigants before such tribunals” — has been a commonly overlooked tool for obtaining useful evidence in support of an international arbitration. In broad strokes, the statute permits a federal district court to require a person within the district to provide documents or testimony for use in a proceeding in a “foreign or international tribunal.”

Historically, as a result of precedent from multiple U.S. courts of appeal, the U.S. courts have interpreted the term “foreign or international tribunal” to exclude private commercial arbitral tribunals — thus, limiting the impact that § 1782 might otherwise have on international commercial arbitration proceedings.  However, the U.S. Court of Appeals for the Sixth Circuit recently broke from its sister circuits in the case of Abdul Latif Jameel Transportation Co. v. FedEx Corp., holding that the term “foreign and international tribunal” included private commercial arbitral tribunals.  In doing so, not only has the Sixth Circuit created a circuit split that is likely to only be resolved by the U.S. Supreme Court, as explained below, the court’s expansion of the scope of § 1782 may have significant consequences for international arbitration.

On September 19, 2019, the Sixth Circuit, in Abdul Latif Jameel, overruled a lower court decision that denied a discovery application under § 1782(a) to subpoena documents from a U.S.-based entity — FedEx Corporation — in support of an ongoing international arbitration seated in Dubai. The dispute centered on the meaning of “foreign or international tribunal” in § 1782 and arose out of a failed supply-chain logistics partnership in Saudi Arabia between the Saudi corporation, Abdul Latif Jameel (ALJ), and an international subsidiary of FedEx Corp., FedEx International.

ALJ and FedEx International commenced two separate international arbitration proceedings against one another — one seated in Saudi Arabia under the rules and laws of that country and the other seated in Dubai under the rules of the Dubai International Financial Centre-London Court of International Arbitration.  On May 14, 2018, ALJ filed a discovery application pursuant to § 1782(a) to subpoena documents from FedEx Corp. in the Western District of Tennessee, where FedEx Corp. is headquartered.  ALJ sought to compel the production of documents from FedEx Corp. and to subpoena deposition testimony from a corporate representative of FedEx Corp. to secure evidence in support of its case before the arbitrations.  The district court denied ALJ’s application, holding that the phase “foreign or international tribunal” in § 1782(a) did not encompass foreign private commercial arbitral tribunals — ALJ appealed.

On appeal, after consideration of the statutory text, the meaning of the language based on common definitions, and the usage of the terminology at issue, the Sixth Circuit overruled the lower court decision and held that § 1782 should be interpreted to permit discovery for use in private commercial arbitrations. Specifically, as the Sixth Circuit explained, “the text, context, and structure of § 1782(a) provide no reason to doubt that the word ‘tribunal’ includes private commercial arbitral panels established pursuant to contract and having the authority to issue decisions that bind the parties.” In doing so, the Sixth Circuit departed from longstanding precedent in the Second and Fifth Circuits, which held that the term “foreign or international tribunal” only referred to “governmental or intergovernmental arbitral tribunals and conventional courts, and other state-sponsored adjudicatory bodies,” not private commercial arbitral tribunals.

The Sixth Circuit’s rule carries at least two potentially significant implications for international arbitration practice.

First, by extending the scope of § 1782 to practically all international commercial arbitration proceedings, the Sixth Circuit created a broad avenue to seek discovery from the U.S. courts beyond what might otherwise be available in an international arbitration proceeding.  Indeed, for international arbitration, a practice that prides itself on the virtues of offering parties an alternative to expansive and costly U.S. discovery practices, the Sixth Circuit’s decision may, in fact, undermine the more limited disclosure practices utilized in international arbitration. Even if an arbitral tribunal were to deny document disclosure requests in an arbitration proceeding, according to the Sixth Circuit’s decision, parties could revert to the U.S. courts to secure additional documentary and testimonial evidence under § 1782.  To many commentators, the Sixth Circuit’s decision represents the ongoing encroachment of U.S.-styled discovery practices into the world of international arbitration.

Second, the Sixth Circuit’s ruling creates a problematic asymmetry in international arbitration proceedings that could place U.S.-based individuals or entities at a strategic disadvantage. According to Abdul Latif Jameel, in cases where only one party maintains a presence in the United States, § 1782 might require that party to disclosure greater amounts of evidence, while a foreign-based counterpart would not be subject to a reciprocal obligation. If the Sixth Circuit’s decision survives Supreme Court review, it may render international arbitration a much less palatable option for U.S.-based individuals and entities.

While the U.S. Supreme Court is likely to grant certiorari to resolve the circuit split, until then, parties to international arbitration proceedings will likely use the Sixth Circuit’s precedent as persuasive authority to pursue discovery in support of international arbitrations through the U.S. courts. As a result, parties, tribunals, and arbitral centers must think creatively to address the problems created by the Sixth Circuit’s broad interpretation of § 1782.

To view the full text of the court’s decision, courtesy of Bloomberg Law, click here.