28 June 2022

Scope of Section 1782 regarding international arbitration

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Supreme Court Rules on scope of Section 1782 regarding international arbitration

On June 13, 2022, the U.S. Supreme Court unanimously decided that the Federal Statute 28 of the United States Code, Section 1782 (hereinafter "Section 1782") does not apply to foreign arbitral tribunals.

Section 1782 authorizes U.S. district courts to assist in the admission of evidence located in the United States that is necessary for use in foreign or international courts. Under Section 1782, a district court may order a witness to testify or produce evidence in a proceeding before a foreign court. Parties to international arbitrations have used Section 1782 to seek broad "US-style" discovery in the U.S.

Until now, there has been no Supreme Court decision on whether Section 1782 covers foreign arbitral tribunals. With the decision of the U.S. Supreme Court, this question has now been clarified.

The Supreme Court had to decide on two cases concerning arbitration proceedings, in which the question, whether Section 1782 also extends to foreign arbitral tribunals was disputed. One of the two arbitration proceedings was administered and conducted under the rules of the German Institution for Arbitration (DIS) and the other one was an ad hoc proceeding based on a Russian-Lithuanian bilateral investment treaty.

The Supreme Court ruled in both cases that the respective arbitral tribunal did not qualify as a foreign or international court according to Section 1782. According to the Supreme Court Section 1782 does not include private judicial bodies. Section 1782 can only be invoked for proceedings before state courts. To be qualified as a court according to Section 1782, the court must hold governmental authority. The Supreme Court qualified both arbitral tribunals as private judicial bodies without the necessary governmental authority. However, a state could endow an arbitral tribunal with governmental authority and then the tribunal would be qualified as a court according to Section 1782. This could especially be relevant for arbitral tribunals concerned with bilateral investment treaties.

In addition, it remains unclear whether an application of Section 1782 could become relevant in arbitration proceedings if the request for aid of channeled through the state courts at the seat of arbitration (in Switzerland pursuant to Art. 184 para. 2 PILA).