United States Code Title 28 Section 1782(a) is well-known to practitioners who have participated in international arbitral proceedings involving U.S. parties. The provision governs the judicial assistance U.S. federal courts can provide in foreign discovery. It states, in relevant part, that federal trial courts “of the district in which a person resides or is found may order him to give his testimony or statement or to produce a document or other thing for use in a proceeding in a foreign or international tribunal….” The court may issue the order “pursuant to a letter rogatory issued, or request made, by a foreign or international tribunal, or upon the application of any interested person….”

In a recent decision, the U.S. District Court for the Northern District of Illinois ruled that a “private” international arbitration tribunal was not entitled to judicial assistance under Section 1782 because it is not a “foreign or international tribunal.” An appeal from that decision is pending before the U.S. Court of Appeals for the 7th Circuit. As Lucy Reed noted in a previous post, U.S. court rulings are inconsistent on the eligibility of international tribunals for discovery assistance under the statute. An affirmation of the District Court’s decision may lend support to the view that only certain tribunals are eligible for such assistance, and affect the choice of forum by parties to international arbitration.

Specifically, in In re Arbitration in London, England between Norfolk Southern Corp. et al. and Ace Bermuda Ltd., (“Norfolk”) one of the parties to an ICC arbitration filed a motion under Section 1782 with the U.S. District Court for the Northern District of Illinois, asking the court to order the deposition of the other party’s former counsel. The court reviewed the motion against the backdrop of the most recent, and leading, U.S. Supreme Court case on Section 1782(a), Intel v. Advanced Micro Devices, 542 U.S. 241 (2004) (“Intel”).

Notably, the Supreme Court in Intel did not address directly the question of whether private arbitral tribunals fall within Section 1782. As the Norfolk court recognized, however, in the wake of Intel, most federal courts in the United States have adopted a liberal interpretation of “foreign or international tribunal,” and have considered private arbitral tribunals as such. Still, the Norfolk court sought to curb the scope of 1782 by reading certain limitations into the statute, and by drawing a distinction between the “foreign tribunal” in Intel (European Commission Directorate General-Competition) and the tribunal in the case before it (International Chamber of Commerce arbitral tribunal).

According to the Norfolk court, Section 1782 covers only “state-sponsored” arbitration. To illustrate the meaning of that term, the court noted that “a reasoned distinction can be made between arbitrations such as those conducted by UNCITRAL … and purely private arbitrations established by private contract.” The distinction, according to the court, is that UNCITRAL is “a body operating under the United Nations and established by its member states.” This is sufficient to render UNCITRAL arbitration “state-sponsored,” and therefore within the purview of the statute. Furthermore, Norfolk found that the Supreme Court in Intel had “emphasized” the availability of judicial review as a factor in determining whether the administrative agency before it was a “foreign or international tribunal.” Since judicial review of private arbitral awards is very limited, the court reasoned that private arbitral tribunals are not contemplated by Section 1782.

Whatever its merits, if upheld, this ruling could affect the choice of forum by arbitration parties planning to obtain evidence or witness testimony from the United States. To ensure the availability of Section 1782 discovery, such parties might seek actively to arbitrate under the auspices of “state-sponsored” organizations— although further clarification likely will be necessary as to the meaning of “state-sponsored” in light of the Norfolk court’s example regarding UNCITRAL. As its mandate suggests, UNCITRAL is a UN administrative body, not a government-founded forum for the resolution of disputes in the mold of, say, ICSID or the Permanent Court of Arbitration. This leaves open to question, among others, whether the court in Norfolk meant that the mere use of arbitral rules established by any state-founded or -affiliated institution, legislative/administrative body, or arbitral forum, extends the “state sponsorship” mantle over the entire arbitration for purposes of Section 1782.

The Norfolk ruling also touches upon a public policy debate regarding the grounds for, and the desirability of, Section 1782 discovery in private international arbitral proceedings. This debate likely will influence the decision of the 7th Circuit, before which the issue is now pending. For its part, the court in Norfolk appears focused on the notion, which finds some support in the origins of Section 1782, that discovery under the statute is meant as a discretionary act of comity by the United States judiciary towards other jurisdictions. Such jurisdictions can be national or supra-national (e.g. European Union, United Nations), but they must be based on the exercise or relegation of sovereign authority. Jurisdiction by purely private fiat (e.g. private contract) is not entitled to the statutory benefits of Section 1782.

In further support of rendering Section 1782 unavailable to parties in private arbitration, other U.S. courts have raised the potentially adverse impact of U.S.-style discovery on the arbitration parties’ choice of procedural rules, including limited discovery. If Section 1782 were to be used indiscriminately in private arbitration, it could serve as an end run around mutually agreed discovery limitations. Moreover, by violating party autonomy, broad discovery under Section 1782 can be disruptive and burdensome, thereby undermining the very assistance it is meant to provide.

Finally, the liberal use of Section 1782 could end up inundating U.S. courts with discovery requests. International arbitration is still expanding at a high rate, with the strong support of several legal systems, including in the United States. A commensurately increasing number of requests for production of evidence under Section 1782 eventually may cause U.S courts to shoulder a significant logistical burden—a result that pro-arbitration policies generally aim to avoid.

The above arguments illustrate one side of the issue—and do not necessarily carry the day. Despite its emphasis on “state-sponsored” proceedings, Norfolk did not elaborate sufficiently on which proceedings may qualify as “state-sponsored” (perhaps deferring to the judgment of the Court of Appeals). Nor did the court address the argument that private international arbitration is also in a sense “state-sponsored” through the numerous national laws that support it, and the enforcement of arbitral awards by national courts.

Moreover, arguments concerning the potential for abuse of Section 1782 seem to underestimate the abilities of U.S. judges, who possess wide latitude to limit requests under the statute; and the astuteness of arbitrators, who can decipher which evidence to admit and/or to consider. As for the criticism that a widely construed Section 1782 would “open the floodgates” of discovery requests, it requires further empirical substantiation, and ignores the fact that U.S. courts receive such requests routinely from parties before them. Increased access to discovery in arbitration might simply encourage parties keen on broad discovery to pursue arbitration and to rely on the courts merely for discovery requests—thereby decreasing, rather than increasing, the courts’ overall costs. At any rate, the debate over logistical costs may be more relevant in the context of future congressional debates on the statute (which Norfolk may instigate), and not of court judgments that must interpret the statute as currently worded.

Finally, perhaps the strongest argument in favor of using Section 1782 in all arbitrations is that it allows parties to avail themselves of the U.S. federal court system—one of the most open and transparent in the world—to gather the best evidence possible for their case. So long as the parties behave responsibly, U.S. courts exercise their discretion prudently, and arbitral tribunals supervise the process, Section 1782 can be a tool for the fair, effective, and swift resolution of arbitral disputes.

In conclusion, five years after the Supreme Court’s decision in Intel, certain important issues remain unsettled with respect to Section 1782. In attempting to resolve one of these issues, the court in Norfolk issued a decision with significant implications for parties to arbitration. Pending the 7th Circuit’s opinion, the question remains: should Section 1782 be available to private international tribunals, and if not, what connection should such tribunals have with “state-sponsored” proceedings to avail themselves of the statute?

Tribunals in investment arbitrations currently impose a fairly consistent set of restrictions to the submissions of amici curiae in proceedings before them, such as short page limits, no access to the arbitral record, etc. The question is whether there are instances where these restrictions need to be tempered.

Over the past ten years, tribunals in investment arbitrations have become increasingly flexible in allowing non-parties to make written submissions as amici curiae. This trend is already reflected in certain arbitral rules. Under ICSID Rule 37(2), for example, third parties may be allowed to file amicus submissions subject to certain requirements. The UNCITRAL Rules have also been interpreted to allow such submissions. A recent report by Jan Paulsson and Georgios Petrochilos, commissioned by the UNCITRAL Secretariat, has called for the formal adoption of a new UNCITRAL rule that would permit amicus submissions explicitly, similar to ICSID Rule 37(2). The UNCITRAL Working Group on Arbitration and Conciliation is currently considering the proposal.

Even in cases where they have allowed amicus submissions, however, tribunals typically have limited them to a fixed number of pages (in recent decisions between 30 and 50). Accompanying exhibits or other evidence may not be attached absent a request from the tribunal. Moreover, amici usually have been denied access to the evidentiary record and, in some cases, to the disputing parties’ submissions as well. Finally, amici have not been allowed to make oral submissions, or to attend the proceedings if they are closed to the general public. See, e.g., Biwater Gauff v. Tanzania, ICSID Case No. ARB/05/22, Procedural Order No. 5.

Nevertheless, the restrictions that tribunals have imposed in previous cases, and which function as the current benchmark, were fashioned in response to petitions mostly by NGOs-organizations that claim to be impartial to the outcome of the dispute but interested in preserving transparency and openness in the proceedings and alerting the tribunal to certain collateral effects, externalities, or consequences stemming from the dispute itself or its potential remedies.

It is not clear that the same restrictions should apply, mutatis mutandis, to amici with a significant, direct, and legally protectable interest in the outcome of the dispute.

Cases presenting an amicus with a substantial legal interest in the arbitration are rare. One such case arose recently in the context of a dispute under the Energy Charter Treaty (”ECT”), between a British investor and Hungary. In the ICSID arbitration AES Summit Generation v. Hungary, the European Commission (”EC”) filed an unprecedented petition to appear as amicus curiae. Unfortunately, the relevant facts and tribunal holdings in AES are discernible only through news accounts because the tribunal’s ruling has not been made public. See Global Arbitration Review, News Briefing, Dec. 15, 2008.

The EC’s petition was based on its finding, after an investigation it conducted, that the contract between the parties violated EU competition law. Since aspects of the underlying contract were regulated by the EC under EU law, the EC sought to challenge the tribunal’s jurisdiction to resolve the dispute under the ECT alone.

The AES tribunal treated the EC’s petition consistently with past ICSID decisions on amicus participation. Thus, the tribunal allowed the EC to file a submission but not to access the parties’ pleadings. The tribunal limited the EC’s submission to 30 pages and confined the submission’s scope to abstract legal discussion on, inter alia, the relationship between EU law and the ECT. The tribunal, furthermore, declined to allow the EC to challenge the tribunal’s jurisdiction, apparently because neither of the disputing parties had mounted such a challenge.

The nature of the EC’s interest in this case was broader and more substantial than ensuring that the tribunal was aware of, say, environmental or cultural implications of the project at issue. The EC sought to assert the relevance of its legally prescribed regulatory mandate, which is replete with policy implications for the entire European Union, and to address the consequences of a conflict between that mandate and the tribunal’s jurisdiction.

Given the nature of its interest in the dispute, a more effective legal recourse for the EC arguably would have been intervention, not an amicus submission. However, party autonomy and jurisdictional concerns usually prevent tribunals from allowing third parties to participate as interveners-subject to limited exceptions in the commercial arbitration context. See, e.g., LCIA Rule 22(h). In any event, intervention was not an option for the EC in AES.

Given the unavailability of intervention in investment arbitration, participation as amicus is, in effect, the only recourse an interested third party has to participate in the proceedings. AES shows that an amicus can have a significant, direct, legally protectable interest in the outcome of the case that the disputing parties have not addressed, or have no incentive to address. The proper defense of that interest from the position of amicus might require a pleading of more than 30 pages, backed by evidence, and perhaps even targeted access to the record or the parties’ pleadings.

A relaxation of the current restrictions on amicus participation in the case of legally interested third parties would not only serve better the interests of those parties. Tribunals may also be able to achieve more comprehensive resolutions of the disputes before them, with greater likelihood of enforcement of the resulting award. To revert to the AES example, if the EC’s arguments were inadequately addressed in the arbitration, this could have had ramifications in a challenge of the award before a Hungarian or any other court bound by EU law.

At the antipode of this argument lies, of course, the additional time and money that the disputing parties must expend to address third party arguments that may be new, more expansive, and/or better informed than current practice allows for. Especially when such arguments support one side’s position over the other (as was the case, for example, in AES, where Hungary stood to benefit from the EC’s jurisdictional objection), tribunals will be wary of any prejudice introduced by increased amicus participation.

Although the answer seems highly contextual, then, it seems worth posing the question:

Would it be desirable for tribunals faced with amicus petitioners with a high legal stake in the outcome of the dispute, such as the EC in AES, to expand the degree of amicus participation to include longer submissions and access to relevant portions of the record and the parties’ pleadings?