Supreme Court Holds in ZF Automotive That Section 1782 Does Not Apply to International Arbitration

The Supreme Court held today that Section 1782 does not apply to international arbitration—neither international commercial arbitration nor investor-state arbitration. Writing for a unanimous Court, Justice Barrett held that only governmental or intergovernmental adjudicative bodies fall within the scope of the provision.

Section 1782 authorizes federal district courts to order persons residing or found within their districts to provide discovery “for use in a proceeding in a foreign or international tribunal.” In Intel v. Advanced Micro Devices (2004), the Supreme Court interpreted Section 1782 broadly, while listing factors to guide the district court’s discretion. The question in ZF Automotive v. Luxshare was whether Section 1782 applies to international commercial arbitration, whereas the question in AlixPartners v. Fund for Protection of Investors’ Rights in Foreign States was whether it applies to international investment arbitration. As Andrea Wang reported at TLB, it was unclear from oral argument which way the Court would go.

In the end, the Supreme Court came down strongly against applying Section 1782 to arbitration. The Court reasoned that a “foreign tribunal” refers more naturally to a tribunal belonging to a foreign nation than to a tribunal that is simply located in a foreign nation. Similarly, “international tribunal” refers more naturally to one that two or more nations have imbued with official power to decide disputes. In short, to fall within the scope of Section 1782, a tribunal must be exercising governmental power.

Neither of the arbitral tribunals before the Court met this test. The tribunal in ZF Automotive was created by private parties and administered by a private organization. The fact that courts play a role in enforcing arbitral agreements and awards did not make it governmental. The tribunal in AlixPartners presented a harder question because there was a sovereign on one side of the dispute and the option to arbitrate was created by a treaty. But the Court concluded that the treaty did not reflect an intention to confer governmental authority on the ad hoc tribunal.

Lower courts had divided on whether Section 1782 applies to international commercial arbitration but had consistently held that it applies to investor state arbitration. With respect to the latter, the Supreme Court’s decision changes the law substantially.

TLB will have further expert analysis of these decisions in the coming days.