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    Locke Lord QuickStudy: Foreign Arbitrations and the Use of Section 44(2)(a) of the Arbitration Act 1996

    Locke Lord Publications

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    International ArbitrationA previous QuickStudy explored the deep divide among the U.S. courts regarding whether 28 USC §1782’s use of “foreign tribunal” encompasses private commercial arbitration tribunals.1 The Sixth and Fourth Circuits of the United States Courts of Appeals take an expansive view of the definition. In those Circuits, discovery from a non-party is available in aid of a private commercial arbitration if the applicant satisfies the mandatory and discretionary factors set forth in Intel Corporation v. Advance MicroDevices, Inc.

    Recently, the Court of Appeal of England and Wales grappled with the converse question – may an English court order discovery of a non-party in aid of a private commercial arbitration seated in New York? The answer is “yes.”

    At issue in A and B v. C, D, and E 3 was specifically whether Section 44(2)(a) of the Arbitration Act 1996 (“Act”) empowered the court to order a non-party resident of England to provide a deposition for use in a New York arbitration. The New York seated arbitration involved a contract dispute between petitioners A and B and respondents C and D. During the arbitration, A and B sought evidence from non-party E, who was a lead negotiator for the contracts at issue in the arbitration. Non-party E refused to travel to New York to give evidence. The New York tribunal, in the face of that refusal, permitted A and B to seek an order from the English court to take non-party E’s deposition. Although the English lower court denied A and B’s application based on prior authority, it noted

    “I can see considerable force in the arguments advanced in favour of the view that the jurisdiction under s.44 could, in an appropriate case, be exercised against a non-party.”

    The Court of Appeal undertook a detailed analysis of the interplay among Sections 1, 2, 4, 38, 43, 44, and 82 of the Act. The Court reached the conclusion that the Section 44(2)(a) of the Act gives a court the power to make an order for the taking of evidence by way of deposition from a non-party witness in aid of a foreign arbitration.

    The Court noted two main limitations on this power. The first limitation is the opening words of section 44(1)—“unless otherwise agreed by the parties.”  The second limitation is found in Section 44(4) of the Act:

    (4) If the case is not one of urgency, the court shall act only on the application of a party to the arbitral proceedings (upon notice to the other parties and to the tribunal) made with the permission of the tribunal or the agreement in writing of the other parties.

    In this instance, there was no agreement of the parties limiting the Court’s power and notice to the parties and permission from the tribunal had occurred. Because these thresholds were satisfied, nothing restricted the Court’s power “to make whatever Order in relation to the taking of evidence from witnesses it could have made in civil proceedings in the High Court or the county court, which clearly includes the power under CPR 34.8 to make an Order for evidence to be taken by deposition.”

    Thus, the English Court of Appeal, like the Fourth and Sixth Circuit United States Courts of Appeals, holds that evidence may in some circumstances be given by a non-party in aid of a foreign commercial arbitration. The use of §1782 in the courts of the United States has seen rapid growth. Whether the English courts will experience the same growth based on Section 44(2)(a) remains to be seen. What is known is that there now exists a vehicle on both sides of the Atlantic potentially to obtain discovery for use in foreign commercial arbitrations.

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    1. See Locke Lord QuickStudy: Private Arbitrations and the Use of 28 U.S.C. §1782: A Patchwork of Availability.
    2. Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241 (2004).  There are four threshold requirements: (1) the request must be made “by a foreign or international tribunal,” or by “any interested person” and an “interested person” need not be a litigant; (2) the request must seek evidence, whether it be the “testimony or statement” of a person or the production of “a document or other thing”; (3) the evidence must be “for use in a proceeding in a foreign or international tribunal”; and (4) the person from whom discovery is sought must reside or be found in the district of the district court ruling on the application for assistance.  In addition, there are five discretion factors to consider even if the four threshold requirements are met, to wit: (1) Is the person from whom discovery sought a participant in the foreign proceeding?; (2) considering the nature and character of the foreign proceeding is judicial assistance appropriate?; (3) Will the foreign government, court or agency be receptive to U.S. federal-court judicial assistance?; (4) Is the discovery request a veiled attempt to avoid foreign evidence gathering restrictions or other policies?; and (5) Is the request is unduly intrusive and burdensome?
    3. A and B v. C, D, and E [2020] EWCA Civ 409 (19 March 2020)

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