The debate and decisions around 28 U.S.C. § 1782 does not seem to end, and could well end up in front of the U.S. Supreme Court. What is at stake is the use of U.S. style discovery in litigation or arbitrations outside of the United States. The latest judgement by the Second Circuit in the case In re Application and Petition of Hanwei Guo (Hanwei Guo) held that Section 1782 does not provide for discovery in aid of private arbitrations. This is consistent with the Fifth Circuit, but not the Fourth or Sixth Circuits where they have held that it does provide for discovery in aid of private arbitrations.
This article by the team at Sidley Austin looks at this conundrum and what it means for businesses considered how, if and where to use 28 U.S.C. § 1782. As the article states you can in Kentucky, Maryland, Michigan, North Carolina, Ohio, South Carolina, Tennessee, Virginia, or West Virginia; but not in Connecticut, Louisiana, Mississippi, New York, Texas or Vermont.
Not being a lawyer, I am not going to comment on the legal issues of this conundrum, which the authors cover in the article. But I believe it is a useful tool for anyone to consider if they are seeking to obtain documents for a matter outside of U.S. legal proceedings.
Although, there are obviously two sides to every matter, so people should be equally prepared for this to be used against them and to have appropriate counter arguments prepared. It is obviously not going to be used in every matter, but where it can be, it is always best to be prepared. Be ready to arm or defend.
Regardless of the use or non-use of this provision, we are seeing an increase in discovery-related work associated with international arbitration matters - be it in the form of helping formulate and respond to issues, managing relevant document sets - specifically looking for documents to be exhibited, or analysing complex and disparate data sets to build models used during expert evidence by the relevant accountants and/or economists.
Data and documents can be central to any legal proceeding regardless of whether there is a common law discovery or disclosure process, and it is essential that these are appropriately collected, managed and analysed to avoid subsequent issues due to incompleteness, inaccuracy or error!
Recent decisions indicate that it is possible to obtain discovery in aid of an overseas arbitration from the English courts. Therefore, litigants may wish to consider whether the optimal target for discovery is located in the United States or the United Kingdom. In a high-stakes arbitration, it may even be useful to pursue discovery in both countries. It also remains a fairly open question whether Section 1782 discovery is available to aid investor-state arbitration, which is typically based on government-to-government treaties, even in circuits that have held that it does not apply to private commercial arbitrations outside of the United States. Section 1782 against entities located in the United States remains a potentially powerful tool to gain strategic advantages in litigation and arbitration proceedings outside the United States. To deploy a successful Section 1782 discovery strategy, parties in a non-U.S. arbitration should consider carefully where the discovery target is located and what information it may have that is useful for the arbitration.