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A disturbing trend in private arbitrations is the use of 28 U.S.C. § 1782 to compel discovery through federal court subpoenas.

Subpoenaed companies and individuals have ample defenses to protect against such costly, intrusive, and often untoward schemes.

The Roz court curiously read Intel to have changed the landscape, even though the Supreme Court’s decision did not and had no reason to consider § 1782’s use in private arbitrations.  Even more surprising is that other courts have embraced the Roz rationale over the well-reasoned holdings of the Second and Fifth Circuits.

In the Summer 2007 edition of Arbitration World, we noted that, after Intel, federal courts in New Jersey (In re Oxus Gold) and Georgia (In re Roz Trading) had interpreted Section 1782 to apply to international arbitrations. Recently, courts in Minnesota, Massachusetts and Delaware have followed suit, while a court in Texas has disagreed.

Although the weight of post-Intel legal authority suggests that participants in foreign arbitrations can now successfully apply for discovery in the U.S. under Section 1782, there remains a conflict in the federal district courts. Until the scope of Section 1782 is clarified by Circuit Courts of Appeals or the United States Supreme Court, a party to foreign arbitration who hopes to discover evidence in the U.S. cannot predict with certainty whether it will meet the first requirement: a recognition of the arbitral body as a “tribunal.” However, based upon the recent trend, it is likely that this hurdle will be cleared – unless the evidence lies in Texas