In a recent decision, In re Grupo Unidos Por El Canal, S.A., No. 14-mc-00226 (D. Col. Apr. 17, 2015), a magistrate judge in Colorado district court held that Section 1782 may not be used in aid of private international arbitration.
The controversy underlying this proceeding is the project for the expansion of the Panama Canal. When a dispute arose relating to that project, it led to an arbitration in Florida under the Rules of the ICC. One of the parties to the arbitration brought this proceeding seeking evidence under 28 U.S.C. § 1782 (“Section 1782”), the statute that authorizes discovery in aid of foreign proceedings.
The first issue for the court was whether a private ICC arbitration qualified as an “international tribunal” under the language of the statute. The court noted that, in recent years, courts had split over whether purely private, contractually bargained for arbitrations — as distinguished from investor state arbitration — qualify for Section 1782 assistance. The split was brought about by the Supreme Court’s decision in Intel Corp. v. Advanced Micro Devices, Inc., which quoted from a law journal article and seemed to imply that “international arbitration” was included within the ambit of Section 1782. The court here was persuaded by the two circuit court cases that had been decided before Intel and that held that Section 1782 does not authorize discovery in aid of private arbitrations.
A second issue before the court was whether the arbitration proceeding behind the Section 1782 request was “international” because it was being conducted in Florida. The petitioner argued that the arbitration should be considered international because none of the parties to the arbitration are U.S. citizens and the subject matter of the proceeding concerns a dispute over a project located in Panama, involving construction on Panamanian land, pursuant to a contract governed by Panamanian law, with performance in Panama. The court noted that all of the other cases that it referred to in its opinion involved arbitrations that were conducted outside the U.S. The court then said that, because it had held that 1782 discovery is not available in aid of private arbitration, it did not have to decide this issue.
A third issue that arose in this case was whether 1782 could be used to obtain documents located outside the U.S. The court said that it agreed with the logic and conclusions of earlier cases that held that Section 1782 should be limited to documents located in the U.S. Thus, the court said, “even if the ICC arbitration proceedings were an appropriate international tribunal under § 1782, it would be outside the jurisdictional reach of the statute to compel CH2M Hill-US to produce the documents that are physically in Panama, regarding conduct in Panama concerning construction on the Panama Canal, and where electronic documents are accessible just as easily in Panama as from the parent company in the United States. Therefore the Petitioner’s application should be denied on this basis as well.”
A version of this post originally appeared in the May 2015 edition of Baker & McKenzie’s International Litigation & Arbitration Newsletter, which is edited by David Zaslowsky and Grant Hanessian.