In HRC-Hainan Holding Co., LLC v. Yihan Hu, 2020 U.S. Dist. LEXIS 32125, at *11-12 (N.D. Cal. Feb. 25, 2020), the United States Court for the Northern District of California, which encompasses Silicon Valley, authorized Chinese and Delaware registered companies to take discovery for use in private arbitration before the China International Economic and Trade Arbitration Commission (“CIETAC”), from three persons, three California registered LLCs and Wells Fargo bank, all found within the Northern District of California. Significant business and asset related documents were ordered to be produced and the managers of the three LLCs were ordered to appear for deposition.
The Court noted the Ninth Circuit has not yet decided whether §1782 extends to foreign private arbitrations and recognized the Second and Fifth Circuits have held that §1782(a) applies to international arbitrations, but only governmental or inter-governmental arbitral tribunals, and not those established exclusively by private parties. However,the Sixth Circuit, very recently, broke with the Second and Fifth Circuits and held that §1782(a) does apply to strictly private, non-governmental arbitrations. See Abdul Latif Jameel Transp. Co. v. FedEx Corp. (In re Application to Obtain Discovery for Use in Foreign Proceedings), 939 F.3d 710, 717-731 (Sept. 19, 2019).
The California federal court agreed with the Sixth Circuit’s conclusion that the ordinary meaning of “tribunal” draws the conclusion that §1782(a) applies to private arbitral tribunals. Looking to legislative history the court, like the Sixth Circuit, did not find in the legislative history any clear signal that Congress intended to exclude private arbitral tribunals from “foreign and international tribunals.” HRC-Hainan Holding Co., LLC, 2020 U.S. Dist. LEXIS 32125, at *21-22. This case may have a significant impact on Silicon Valley technology companies with agreements to arbitrate disputes outside the Unites States.
Continuing the Sixth Circuit’s trend, is the recent decision by the Fourth Circuit in Servotronics, Inc. v. Boeing Co., 954 F.3d 209, 210 (4th Cir. 2020) which held that a private arbitration panel under the rules of the Chartered Institute of Arbitrators convened in England, is a “foreign or international tribunal” under § 1782(a) and, therefore, the district court has authority to permit discovery of Boeing employees in South Carolina in connection with that private arbitration.
28 U.S.C. §1782 is a very powerful litigation tool for parties to non-U.S. court proceedings, allowing them to obtain bank records, documents and witness testimony from sources within the U.S., even if such evidence is unobtainable through the home forum’s own discovery procedures. The types of evidence that can be obtained include International Wire Transaction Records (U.S. Dollar wires typically transit through the U.S.), emails, correspondence, phone and travel records, accounting, banking, credit card and corporate documents such as shareholder and board meeting records.
Thomas C. Sullivan is a senior attorney in the Philadelphia office of Marks & Sokolov LLC. Mr. Sullivan represents Western, Russian and Ukrainian clients in complex commercial disputes including civil RICO, securities fraud, Foreign Corrupt Practices Act, Convention on the International Sale of Goods and ICC Arbitration matters. He has litigated numerous Section 1782 discovery matters throughout the United States and was recently published in Obtaining U.S. Discovery For Use In Non-U.S. Tribunals Pursuant To 28 U.S.C. § 1782 (Chapter 7), Juris Publishing, LLC, 2020.
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