The Dogs that Didn’t Bark in ZF Automotive
June 14, 2022
I confess I’m not big on blogs. They often do more mischief than good, and posts can distract folks from their day jobs (whether research or deaning). Then again, who can say no to a friendly request from good people like Maggie, Ingrid, Bill and John? Plus, several of us appeared in the case (George Bermann in his personal capacity, me in a representative capacity – though I wish to make clear that my views expressed here are my own). So, why not indulge a little fun, take a walk on the wild side and post something.
“Don’t confuse textualism with literalism.” That might well be the subtitle of the Court’s unanimous (and correct) opinion in ZF Automotive US, Inc. v. Luxshare, Ltd. Its conclusion that an arbitral tribunal did not constitute a “foreign or international tribunal” for purposes of 28 U.S.C. §1782 followed easily from a careful, close reading of the statutory language, structure and historical context. Indeed, the most surprising part of the Court’s opinion were several dogs that didn’t bark – more on them later.
But first, the textualism story. Advocates for a broader interpretation of Section 1782 offered a near-syllogistic argument: (1) tribunal means “x”; (2) arbitral bodies contain the qualities of “x”; (3) therefore, arbitral bodies are “tribunals” within the meaning of Section 1782.
The fundamental flaw in this argument was that it divorced the term “tribunal” from its statutory context and unmoored it from its historical underpinnings. The surrounding statutory sections (especially 28 U.S.C. Sections 1691, 1781 and Section 7 of the Federal Arbitration Act) all cast doubt on whether Congress actually gave the term “tribunal” the wide reach advanced by the respondents in ZF Automotive. Moreover, the statutory antecedents to Section 1782, dating back over a century, clearly illustrated that its historical use was limited to courts and, in some cases, intergovernmental adjudicative bodies.
That history made AlixPartners, LLP v. Fund for Protection of Investors’ Rights in Foreign States (the Bilateral Investment Treaty (BIT) case with which ZF Automotive was consolidated) a much harder question than ZF Automotive (a purely private commercial arbitration), a reality that the Court itself acknowledged. Ultimately, though, the Court cast the BIT arbitration provision as a form of an “offer to arbitrate” (which, once accepted, does not materially differ from a private contractual arbitration). Interestingly, having rejected the analogy between BIT arbitral panels and classic intergovernmental panels (like the Mixed Claims Commissions), the Court did not quite go so far as to bless those intergovernmental panels as falling within Section 1782’s clear ambit (though it noted a consensus that they so qualified).
Dogs that Didn’t Bark
Statutory interpretation arguments aside, the Court’s opinion in ZF Automotive is especially noteworthy for what it didn’t say. Four points bear emphasis.
First, gone is the deference to Professor Smit. Followers of the Section 1782 issue will recall that dicta contained in the Supreme Court’s decision in Intel Corp. v. Advanced Micro Devices, Inc. had detonated a relatively harmonious view among federal courts that, prior to Intel, had held that private arbitral tribunals did not qualify under Section 1782. That dicta rested on a stray quote from an article by Professor Smit. Here, one scours the Court’s opinion in vain for any reference to Professor Smit, much less an acknowledgement of the mess created by the Intel dicta, suggesting that the Court was happy to put the matter to rest.
Second, noticeably absent is any consideration for the draft Restatement of the U.S. Law of International Commercial and Investor-State Arbitration. Some briefs, especially that of Professor Bermann, laid weight on the alignment between a broad interpretation of Section 1782 and the view taken in the draft Restatement. Here too, the Court basically gave that entire strand of argument short shrift, suggesting that the Restatement’s position was just that, a position, and not a view particularly entitled to deference because of its genesis.
Third, perhaps most striking was the death of discretion. Followers of this area will recall that Intel rejected a series of categorical limits on Section 1782, preferring instead broad definitions with discretionary factors. The Court had that option here – defining tribunal broadly and letting district courts apply Intel’s discretionary factors in particular cases (such as whether the tribunal rather than an individual had requested the evidence). Here too, the Court saw the value of bright lines as opposed to taking the path trod by Intel.
Fourth, deference to the U.S. Government did not weigh heavily. Although the Court certainly cited the Government’s brief (and opted for a holding in alignment with the Government’s litigating position), it would be a mistake to conclude that the Court somehow “deferred” to that position. The Court has shown a reticence to defer to the Government’s interpretation of statutes just because those statutes might touch on foreign relations (think of Republic of Austria v.Altmann), though it remains more receptive to case-specific arguments for deference or even abstention. Rather than wander into that morass, the Court opted for a straightforward (and, again, correct in my view) approach to statutory interpretation.
One final point – nitpickers might complain that the Court’s reasoning was not sufficiently probing or responsive to some nuanced argument. I find such complaints misplaced. Unlike the complainers, authors of the Court’s opinions must write for five (or, in this case, nine). Consequently, sometimes authors must forgo taking opinions down rabbit holes in order to avoid fracturing the Court. I suspect that’s what happened here. There was inherent value in a unanimous decision, and so writing the opinion in a way to preserve that unanimity was a small price to pay, even it meant leaving unturned a few stones laid by clever academics or advocates.