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Pre-Hearing Discovery From Non-Party To An Arbitration Disallowed.The Second Circuit has held that Section 7 of the Federal Arbitration Act does not authorize an arbitrator to compel pre-hearing document discovery from non-parties to an arbitration.  Life Receivables Trust v. Syndicate 102, 549 F.3d 210 (2d Cir. 2008).  Reversing the district court’s grant of a motion to enforce a discovery subpoena, the court of appeals concluded that documents are discoverable in arbitration proceedings only when brought before the arbitrators by a testifying witness.  The court declined to find exceptions for either closely-related entities or for parties to the arbitration agreement that are not parties to the arbitration itself.  In reaching this result, the Second Circuit followed the Third Circuit, but split with the Eighth Circuit.

Discovery On Behalf Of Foreign Tribunals Does Not Encompass Arbitrations.The Southern District of Texas has held that 28 U.S.C. § 1782, which authorizes a district court to order persons residing in the district to give discovery “for use in a proceeding in a foreign or international tribunal,” does not encompass private, international arbitration proceedings.  La Comision Ejecutiva Hidroelecctrica Del Rio Lempa v. El Paso Corp., No. H-08-335, 2008 WL 5070119 (S.D. Tex. Nov. 20, 2008).  The court declined to follow the other district courts that have held to the contrary.  In holding section 1782 inapplicable, the court noted that arbitration is intended as a speedy and economical means of dispute resolution, and that extensive discovery through federal courts would harm international comity.

Williams Industrial Services, LLC v. Steel Equipment Corp., CA NO: 2:08-MC-179-AJS (W.D. Pa. June 24, 2008).

III. The Application of §1782 to Private International Arbitration

Subsequent to the Supreme Court’s decision in Intel, various courts have granted §1782 discovery in aid of private arbitral matters. In In re Hallmark Capital Corp., the court granted discovery for use in a private Israeli arbitration proceeding. By its Order dated September 13, 2007 denying the discovery target’s motion for reconsideration, the court bypassed National Broadcasting by relying upon Intel’s rejection of restrictive definitional exclusions.39 In In re Application Roz Trading, the court granted an application requesting the production of documents for use before an arbitral panel of the International Arbitral Centre of the Austrian Federal Economic Chamber in Vienna.40 In Williams Industrial Services, LLC v. Steel Equipment Corp., in the absence of opposition the court granted document discovery for use in a private arbitration matter before the International Chamber of Commerce in Paris, France.41

Section 1782.  District court holds that Section 1782 discovery may be used in aid of private international arbitration.   In re: Application of Babcock Borsig AG for Assistance Before a Foreign Tribunal, Case No. 08-mc-10128-DPW (D. Mass. 2008) [click for opinion]

Section 1782.  District court holds that Section 1782 discovery may not be used in aid of private international arbitration.    La Comision Ejecutiva Hidroelecctrica del Rio Lempa v. El Paso Corp., 2008 U.S. Dist. LEXIS 94395 (S.D. Tex. Nov. 20, 2008) [click for opinion]

The Appellants are shareholders in Itera Group, Ltd., a Cypriot corporation, who all reside in Jacksonville, Florida (“Florida shareholders”).

The Florida shareholders appeal the Magistrate Judge’s April 15, 2008 Order granting in part and denying in part Galina Weber’s Motion to Compel Discovery, and thedistrict court’s May 20, 2008 affirmance of that Order.

Weber is a citizen of Switzerland and a resident of Monaco. Like the Florida shareholders, she is a shareholder of Itera Group.