March 29, 2021
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On March 22, 2020, the U.S. Supreme Court agreed to hear Servotronics, Inc. v. Rolls-Royce PLC and the Boeing Co., Case No. 20-794, a case that raises the question of whether a commercial arbitration tribunal is a “foreign or international tribunal” within the meaning of 28 U.S.C. § 1782 (“Section 1782”). Section 1782 is a federal statute that allows parties to petition U.S. federal courts for discovery assistance—including the production of documents and taking of depositions—in aid of a “foreign or international tribunal.” Such assistance can be a powerful tool for parties requiring discovery from parties that are outside the jurisdiction of an arbitral tribunal.
Servotronics’ request for Section 1782 assistance relates to a London-based arbitration in which Rolls Royce is seeking reimbursement of U.S.$12.8 million from Servotronics following Rolls Royce’s settlement of a related dispute with Boeing over an accident involving a Rolls Royce engine. Servotronics filed two Section 1782 applications to serve document and deposition subpoenas on Boeing, one in the Northern District of Illinois, where Boeing is headquartered, and one in the District of South Carolina, where certain Boeing employees were based. The district court in the Northern District of Illinois granted Servotronics’ application. After the subpoena was served, however, Rolls Royce and Boeing successfully moved to vacate and quash the subpoena. The Seventh Circuit affirmed the district court’s order.
The Supreme Court’s decision to hear this case arises out of a split among U.S. Circuit courts as to whether Section 1782 can be used in the context of a private commercial arbitration. The Fourth and Sixth Circuit courts of appeals have expressly held that commercial arbitration tribunals are “foreign tribunals” for purposes of Section 1782. By contrast, the Second, Fifth, and Seventh Circuit courts of appeals have held that Section 1782 assistance cannot be provided in aid of a private commercial arbitration. The Circuits’ holding that Section 1782 may not be used to support a private commercial arbitration have principally focused on the distinction between tribunals that act with the authority of the state and those that are the result of a contractual agreement between the parties. According to these Circuits, Section 1782 can be used only to support proceedings in which the “foreign tribunal” acts with governmental, administrative or quasi-governmental authority, which includes foreign courts, administrative bodies and arbitral tribunals established by treaty (such as ICSID tribunals). These same courts have found, however, that private commercial arbitration tribunals do not act with such authority, even though they operate in accordance with domestic arbitration laws and, in many cases, under the umbrella of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
The Supreme Court’s decision will clarify an issue that is the subject of significant debate and controversy in the United States and which is watched closely by the wider international arbitration community.