The Meaning of Arbitral Tribunal “Consent” in Section 1782 Discovery

By:

Courtesy Tony Webster. Wikimedia Commons.

Section 1782 of Title 28 of the United States Code allows a federal district court to order discovery from a person or entity found in its district “for use in a foreign or international tribunal” at the request of the tribunal, or “upon the application of any interested person.” A “powerful tool,” Section 1782 has long been the “weapon of choice” for litigants hoping to obtain evidence in the United States for use in foreign proceedings. And in the wake of the Supreme Court’s 2004 decision to expand the application of Section 1782 in Intel Corp. v. Advanced Micro Devices, Section 1782 discovery has increasingly—and controversially—been sought and ordered in aid of private foreign arbitral proceedings as well.

While the law governing Section 1782’s application to private foreign arbitration remains unsettled, among those commentators in favor of its application, there is a general consensus that, after an arbitral tribunal has been constituted, Section 1782 discovery should only be granted with the “consent” of the tribunal. However, this consensus invites a deeper question: What, precisely, does arbitral tribunal “consent” mean in this context? Is it sufficient that arbitrators simply not object to a party’s stated intention to seek 1782 discovery, or must a higher burden be met? Arguably, tribunal consent should only be found where arbitrators affirmatively approve of a party’s stated intention to seek Section 1782 discovery, or even the very scope and text of the discovery being sought. Without an answer to this question, parties to foreign arbitral proceedings will often be uncertain whether a district court will grant Section 1782 discovery, undermining the efficacy of international arbitration and Section 1782 itself.

To date there has been little analysis of this important issue, and where the line should be drawn is a very close question. Some guidance, however, may be found in the Supreme Court’s decision in Intel and by considering the special concerns raised by the application of Section 1782 to international arbitration.

The Intel Factors and District Court Discretion in Applying Section 1782

To begin exploring the meaning of consent in the context of Section 1782, it is important to first understand the factors courts take into account when deciding to grant Section 1782 discovery. District courts—assuming the statutory requirements of Section 1782 are met—have discretion over whether to grant Section 1782 discovery. In exercising their discretion, courts consider the twin aims of Section 1782— “providing efficient assistance to participants in international litigation and encouraging foreign countries by example to provide similar assistance”—as well as a wide range of additional factors. Of particular importance, the Supreme Court enumerated four discretionary factors in Intel that district courts must consider prior to granting 1782 discovery. Of these four discretionary factors, two deserve special weight when exploring the meaning of arbitral consent: (1) “the nature of the foreign tribunal, the character of the proceedings underway, and the receptivity of the foreign government or the court or agency abroad to U.S. federal-court jurisdictional assistance,” and (2) whether the discovery requests are “unduly intrusive or burdensome.”

Of the several considerations identified above, the “receptivity” factor best justifies a prima facie consent requirement. The receptivity factor asks the district court to consider whether the arbitral tribunal would “reject evidence obtained with the aid of Section 1782.” Consistent with this requirement, several district courts have granted Section 1782 discovery in private foreign arbitral proceedings only after considering whether the tribunals overseeing the proceedings were receptive to assistance.

However, the receptivity factor is limited in the extent to which it can establish the parameters of any affirmative consent requirement. In the context of foreign litigations and administrative proceedings, Section 1782 case law provides for a presumption in favor of receptivity that can only be overcome by “authoritative proof” that the tribunal is not receptive to assistance. To overcome such a presumption, the party resisting Section 1782 discovery typically needs to provide evidence of the tribunals hostility to such discovery, and perhaps even evidence that the tribunal would explicitly reject any evidence obtained pursuant to Section 1782. Recently, district courts have expressed some hesitation in “impos[ing] the burden of ‘non-receptivity’” on the respondent to a Section 1728 application in aid of foreign arbitral proceeding; however, the focus of case law related to the receptivity factor has not been otherwise broadened. In turn, while Intel’s receptivity factor arguably should require—especially in the international arbitration context—that the district court satisfy itself that the tribunal has not objected to a party seeking Section 1782 discovery, it seems insufficient to justify a requirement that arbitral tribunals affirmatively consent to such discovery. Requiring affirmative consent based solely of off the receptivity factor would mark too great a departure from Section 1782 precedent more generally.

The receptivity factor, however, is not the only justification for a consent requirement. As mentioned above, one aim of Section 1782 is to provide “efficient assistance,” and in exercising their discretion, district courts must consider whether any discovery order would be too “unduly intrusive or burdensome.” Consequently, in looking to ensure that their assistance to tribunals is efficient and, ultimately, helpful, district courts have reason to make their application of Section 1782 simple, and in line with the wishes of the tribunal. Doing so can help avoid “inefficiency and waste,” and is consistent with the statute’s purpose. As explained by the Supreme Court in Intel, Section 1782 aims “to assist foreign tribunals in obtaining relevant information that the tribunals may find useful . . . .” In turn, where district courts order Section 1782 discovery over information that arbitrators have expressed no interest in—and which might be intrusive and burdensome—they can “undermine the statute’s objective.” However, while these considerations suggest that arbitral tribunal consent is an important factor to consider, there again remains the question of whether this argument justifies a requirement that tribunals affirmatively consent, particularly in light of Section 1782’s history of application in foreign litigations and administrative proceedings.

Section 1782 Discovery in Foreign Litigations and Administrative Proceedings

Case law governing the application of Section 1782 to foreign litigations and administrative proceedings provides support for the position that a looser Section 1782 consent requirement is appropriate. As mentioned above, outside of the arbitral context, courts have routinely required “authoritative proof” that the “foreign or international tribunal” is not receptive to Section 1782 discovery. Further, in the foreign litigation and administrative proceeding context, lower courts have held that disclosure under Section 1782 may be ordered at the request of a party to the proceedings, as opposed to the actual tribunal.

Both of these lines of precedent support the position that an affirmative consent requirement of any kind would be inappropriate. There is nothing in Section 1782 itself that provides that different types of adjudicative proceedings should be treated differently, and absent such, it arguably follows that all courts should follow the same practices, regardless of whether the tribunal is administrative, litigious, or arbitral in nature.

While this argument is compelling, two counterpoints stand strongly against giving it too much weight. First, as noted above, the Supreme Court has confirmed the need for courts to exercise discretion in ordering Section 1782 discovery, and one of the Intel discretionary factors even asks courts to take into account “the nature of the foreign tribunal” and “the character of the proceedings underway.” Second, in light of district courts’ discretion to consider the nature of the tribunal and character of the proceedings, the very nature of international arbitration suggests that courts should apply Section 1782 more discriminately to arbitral proceedings in comparison to foreign litigations and administrative proceedings.

Section 1782 Discovery in the International Arbitration Context

The particularized characteristics of international arbitration, on the other hand, provide support for a stricter construction of Section 1782’s consent requirement. International arbitration is routinely treated differently than litigation in the United States, and many U.S. Courts have a tradition of handling discovery issues in international arbitration with caution.

Courts, especially in recent years, have begun expressly adjusting their application of the Intel discretionary factors where Section 1782 discovery is requested in aid of private foreign arbitral proceedings. Further, U.S. courts are accustomed to managing discovery issues differently in the arbitration context, and to showing deference to arbitrators. There is no overriding reason for district courts to depart from this standard when applying Section 1782—especially when the Supreme Court has reaffirmed the discretion courts have in deciding whether to grant Section 1782 discovery.

Indeed, the very nature of international arbitration justifies this showing of deference by district courts. International arbitration is favored, in part, because it allows for the parties and tribunal, in consultation, to tailor the scope of discovery for each particular case—ideally ensuring more efficient proceedings. In turn, subject to the procedure agreed upon by the parties prior to arbitration, arbitral tribunals typically take extensive control over discovery in order to tailor and limit the scope of disclosures. This is in sharp contrast to U.S. federal litigation, where parties are usually subject to limited court oversight. Given this disparity, district courts are often loath to intrude too far into the realm of the arbitral tribunal, with one court noting that, as “international arbitrators usually control the discovery process, this court believes it should exercise at least some restraint before granting the instant section 1782 application.”

If Section 1782 is routinely used to open international arbitration to broad discovery, one of the very goals of international arbitration—the specifically tailored disclosure of evidence—will be undermined. As noted by the original drafter of Section 1782: “The purpose of Section 1782 is to provide liberal assistance to foreign and international tribunals, but this assistance should not be provided when it would interfere with the orderly processes of the foreign or international tribunal.” In turn, it is important that Section 1782 be applied carefully in international arbitration, less it “distort it,” rather than assist it—and one way to ensure its careful application is for district courts to refrain from granting Section 1782 discovery absent the affirmative consent of the tribunal.

Conclusion

That consent is a prerequisite to Section 1782 discovery in private foreign arbitral proceedings in all but the most extreme cases is well established. But what, exactly, consent requires is less clear. Courts and parties to foreign arbitral proceedings would benefit from guidance on this issue from the U.S. Appellate Courts. In the meantime, district courts should look to the Intel factors, as well established case law surrounding discovery in international arbitration for guidance. The above examination of these considerations suggests that district courts should—as an exercise of their discretion—refrain from granting Section 1782 discovery absent an affirmative request from the arbitral tribunal. However, given the case law governing Section 1782 discovery in foreign litigation and administrative proceedings, as well as the flexibility courts have to address concerns raised by the application of Section 1782 to international arbitration through their exercise of discretion, it would be wrong to claim affirmative consent is required—at least absent further guidance from higher courts.