The discovery process is a key tool in U.S. trial law to prepare for a trial.
It allows each party to systematically obtain evidence and information from the other party in order to strengthen its own case or expose weaknesses in the other party's argument. This is done, among other things, through interrogatories, requests for production of documents, requests for confessions, and testimony. Subpoenas can also be used to obtain evidence from non-parties.
The U.S. Supreme Court has ruled in the lawsuit ZF Automotive US, Inc., et al. v. Luxshare, Ltd. on June 13, 2022, held that parties to arbitration in U.S. federal courts cannot seek discovery assistance under 28 U.S. Code § 1782(a) if the place of arbitration is outside the United States.
28 U.S. Code § 1782(a ) reads:
"The district court of the district in which a person resides or is found may order him to give his testimony or statement or to produce a document or other thing for use in a proceeding in a foreign or international tribunal, including criminal investigations conducted before formal accusation."
In the proceedings, the arbitration claimant Luxshare, of Hong Kong, asserted post-M&A claims against ZF Automotive, a Michigan-based automotive supplier and subsidiary of a German company. The company purchase agreement provided that all disputes were to be settled under the Arbitration Rules of the German Institution of Arbitration (DIS). To prepare for DIS arbitration against ZF, Luxshare filed a motion with the appropriate U.S. federal court under 28 U.S. Code § 1782(a) and requested information from ZF and its officers.
The Court essentially based its decision on a plain language interpretation of 28 U.S. Code § 1782(a):
"Foreign tribunal" more naturally refers to a tribunal belonging to a foreign nation than to a tribunal that is simply located in a foreign nation. And for a tribunal to belong to a foreign nation, the tribunal must possess sovereign authority conferred by that nation.
Conclusion
If the place of arbitration is abroad, the way to obtain evidence in the U.S. for international arbitration via 28 U.S. Code § 1782(a) will be closed in the future.
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