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Senior Associate Ryan Cable and Associate Alasdair Marshall discuss the U.S. Supreme Court’s ruling that Section 1782 cannot be used to obtain evidence for foreign private commercial or investor- State arbitrations.

The U.S. Supreme Court has ruled that Section 1782 of the U.S. Code cannot be used to obtain evidence for foreign private commercial or investor- State arbitrations. Whilst Section 1782 remains available in support of foreign litigation, the decision removes a useful tool in international arbitration.

Section 1782 had been used by litigants in proceedings outside the U.S. to apply to a federal court to obtain evidence from entities in that court’s district using document production requests for use in proceedings before a “foreign or international tribunal”. However, federal courts have become increasingly divided in their interpretation of Section 1782, with the Fourth and Sixth circuits previously ruling that Section 1782 can be used in private commercial arbitration abroad, but the Second, Fifth and Seventh circuits ruling it could not.

In a unanimous decision (9-0) in the ZF Automotive US v Luxshare test case, widely followed internationally, the U.S. Supreme Court ruled that a ‘foreign tribunal’ referred “more naturally” to a tribunal “belonging to a foreign nation”, such that it possessed sovereign authority conferred by that nation – rather than a tribunal “simply located in a foreign nation”. In turn, an ‘international tribunal’ referred to a tribunal imbued with governmental authority by multiple nations.

The U.S. Supreme Court’s decision removes any inconsistency of how s 1782 is applied between federal courts in different districts, thereby providing welcome clarity. However, although Section 1782 remains available in support of foreign litigation proceedings, the decision regrettably removes the opportunity for comparable discovery in international arbitration proceedings, where it has long been a useful tool. This is reflected in the increased number of petitions made under Section 1782 in recent years.

In particular, whilst the debate had previously focused on whether Section 1782 should be available in private commercial arbitrations, its use had not been considered controversial with respect to investor-State disputes: federal courts had generally agreed that investor- State arbitrations satisfied the ‘foreign or international tribunal’ test. However, the U.S. Supreme Court went further than expected in ruling that an ‘international tribunal’ refers only to a tribunal given official power to adjudicate disputes by two or more nations, thereby making clear an investor- State tribunal would not qualify.