U.S. Supreme Court decision on arbitration and discovery proceedings


U.S. Supreme Court issued a recent decision[i] on arbitration proceedings abroad and the usage of discovery proceeding to produce evidence for use in a proceeding in a foreign or international tribunal.

In ZF Automotive US, Inc. v. Luxshare, Ltd. case, the parties chose a private dispute-resolution organization based in Berlin and before beginning the arbitration proceeding, Luxshares filed an application under 28 U. S. C. § 1782(a)[ii] to obtain a district court order to produce evidence to use in the arbitration.

In AlixPartners, LLP, et al. v. Fundo For Protection of Investors’ Right in Foreign States, the parties chose an ad hoc arbitration according with Arbitration Rules of United Nations Commission on International Trade Law under a bilateral investment treaty between Lithuania and Russia. After initiating arbitration, the Fund filed an application under § 1782(a) seeking for information about a temporary administrator of AB Bankas Snoras that was an insolvent bank nationalized by Lithuanian authorities.

Both counterparties resisted discovery arguing that the private dispute-resolution organization and the ad hoc arbitration were not considered a “foreign or international tribunal” under § 1782(a).

The Supreme Court considered that the word “tribunal” in the context of “foreign” of § 1782’s phrase must be understood to refer to an adjudicative body, which exercises governmental authority, although the word “tribunal” standing alone can be used as synonym of any adjudicatory body that does not need to be a formal “court”.

On the other hand, the word “tribunal” in the context of “international” of § 1782’s phrase must be understood as a tribunal that involves two or more nations, which imbued the tribunal with “official power to adjudicate disputes.”

Thus, 28 U. S. C. § 1782 (a) focus on governmental and intergovernmental tribunals and excludes private dispute-resolution organizations and non-pre-existing bodies as ad hoc arbitration panel.

can be used as a synonym for “court”, which refers to a governmental adjudicative body.

This US Supreme Court decision is against the modern vision of international commercial arbitration, which considers that the arbitrators do adjudicate a dispute-resolution by virtue of an agreement executed by the parties, but the local law assigns them the due jurisdiction to solve the dispute in such a way that the Arbitration Tribunal has a hybrid nature.

Besides that, in Brazil it is possible to say that the law assigns legal jurisdiction to arbitrators in such a way that their decision is considered a judicial decision according to article 515, VII, of Brazilian Civil Procedure Code. How could US Courts decide the usage of discovery proceeding in a case like Brazilian Arbitration regulation? That question shall be answered in the near future.

[i] Nº 21-401, ZF Automotive US, Inc. et al. v. Luxshare, Ltd. and Nº 21-518, Alix Partners, LLP, et al. v. Fundo for Protection of Investors’ Rights in Foreign States.

[ii] “(a)The district court 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, including criminal investigations conducted before formal accusation. The order may be made pursuant to a letter rogatory issued, or request made, by a foreign or international tribunal or upon the application of any interested person and may direct that the testimony or statement be given, or the document or other thing be produced, before a person appointed by the court. By virtue of his appointment, the person appointed has power to administer any necessary oath and take the testimony or statement. The order may prescribe the practice and procedure, which may be in whole or part the practice and procedure of the foreign country or the international tribunal, for taking the testimony or statement or producing the document or other thing. To the extent that the order does not prescribe otherwise, the testimony or statement shall be taken, and the document or other thing produced, in accordance with the Federal Rules of Civil Procedure.

A person may not be compelled to give his testimony or statement or to produce a document or other thing in violation of any legally applicable privilege.”