July, 2020 - US Second Circuit confirms discovery procedures not available in aid of private international arbitrations
- Date: 28/07/2020
US Second Circuit confirms discovery procedures not available in aid of private international arbitrations
The US Second Circuit has held that discovery statute §1782 is not available in aid of private international arbitrations. Other US Circuits have taken a different view.
In a decision issued this month (In Re: Application and Petition of Hanwei Guo for an Order to take Discovery for Use in a Foreign Proceeding Pursuant to 28 U.S.C. 1782 (2d Cir. 8th July, 2020), the US Second Circuit of Appeals held that the terms of a US statute, §1782, which provides a mechanism for parties to seek discovery of information and materials located within the US in aid of foreign proceedings, does not apply to private international arbitrations.
In Hanwei Guo, the Second Circuit affirmed the District Court's denial of a petition for discovery pursuant to 28 U.S.C. 1782(a) from four investment banks related to their work as underwriters in an IPO, for potential use in a CIETAC arbitration. The decision highlights a split among the US Circuit Courts on the issue. In particular, while the US Fifth Circuit has taken a position consistent with that of the Second Circuit, both the Sixth Circuit and, more recently, the Fourth Circuit came to the contrary conclusion. For example, in Servotronics Inc. v. Boeing Co. the Fourth Circuit held that §1782 does apply to private arbitrations in UK such as those brought under the UK Arbitration Act 1996.
§1782 can be a useful discovery tool to non-US parties in need of information and materials located within the US to support positions taken in international proceedings. Despite the Circuit split and the Second Circuit’s decision in Hanwei Guo, if certain basic statutory requirements are satisfied, then the remedy is still available to litigants in support of international proceedings before courts and other government-sponsored tribunals falling within the meaning of the statute. It also appears to remain, at least for the time being, a likely option, outside the Second and Fifth Circuits, to those seeking such discovery in aid of private international arbitrations.