‎28 U.S.C. § 1782: U.S. Supreme Court to Address Circuit Split‎

As previously reported on April 16, 2020, in “Private Arbitrations and the Use of 28 U.S.C. § 1782: A Patchwork of Availability,” there is a split among the Courts of Appeal as to whether the use of 28 U.S.C. §1782 extends to private commercial international arbitration. The legal community anticipated the split would be resolve when, the Supreme Court granted certiorari in Servotronics, Inc. v. Rolls-Royce PLC. The parties, however, resolved their ‎differences and the writ of certoriari was dismissed.

The Supreme Court is once again poised to address the circuit split. Currently pending before the Supreme Court are the consolidated cases of ZF ‎Automotive US, Inc., et al. v. Luxshare, Ltd. and AlixPartners, LLP, et al. v. The Fund for ‎Protection of Investors’ Rights in Foreign States, Case No. 21-401.  The Court granted writ of certiorari on 10 ‎December 2021, after earlier granting ZF Automotive’s request for a stay of the order issued by the ‎United States District Court for the Eastern District of Michigan requiring ZF Automotive to ‎produce discovery.

But, the issue to be decided, in fact, transcends the simple “private commercial arbitration” debate. In AlixPartners, the arbitration involves a private party and a foreign state. The parties, pursuant to an investment treaty, elected to resolve their dispute using ad hoc arbitration in accordance with the Arbitration Rules of the United Nations Commission on International Trade law. (UNCITRAL).   The arbitral tribunal panel does not does not exercise any governmental or quasi-governmental control authority.

The Second Circuit in In re Guo for an Order to take Discovery for Use in a Foreign Proceeding Pursuant to 28 U.S.C. 1782, 965 F.3d 96 (2d Cir. 2020), as amended (July 9, 2020) had previously held that Section 1782 does not extend to private commercial arbitrations. Nevertheless, in AlixPartners the Second Circuit held because the ad hoc arbitration was contemplated by a treaty, the arbitration does fall within the ambit of Section 1782.

In its petition for writ of certiorari, AlixPartners noted that the Second Circuit’s decision “afforded significance to the arbitral Panel’s governmental origins but no weight to its actual operation.”

The case is set for oral argument on Wednesday, March 22, 2022.