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      Proskauer on International Litigation and Arbitration:
       Managing, Resolving, and Avoiding Cross-Border Business or Regulatory Disputes
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F. Increasing Attention to Discovery in the US for non-US Proceedings

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  1. There was a flurry of judicial activity in 2008 interpreting and applying 28 USC § 1782.  This important discovery device, which allows parties in non-US proceedings to obtain discovery in the US, was discussed in the 2008 Trends Report and is treated at length in the Guide.  
  2. The bulk of the § 1782 activity in 2008 was at the district court level and principally included two important issues, which are highlighted below.
  3. First, the cases emphasize the holding in the US Supreme Court's decision in Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241 (2004) that § 1782 discovery is not mandatory, even the three applicability requirements are met.

    (a) It is common ground that, even when each of the three requisites for § 1782 applicability are met - (1) the discovery is sought from a person who resides or is found in the same district as the court where the application is made; (2) the discovery is for use in a proceeding before a foreign tribunal; and (3) the applicant is a foreign or international tribunal or an "interested person" - the statute nonetheless merely authorizes but does not require the district court to grant the application for discovery. 

    (b) In In re Application of Babcock Borsig AG, 2008 WL 4748208 (D. Mass. 10/30/08), the District Court of Massachusetts denied a § 1782 discovery request until the requesting party provided some indication that the non-US tribunal would be receptive the requested material. 

    (i) The district court identified the concern, addressed by in Intel, that discovery sought might "conceal an attempt to circumvent foreign proof-gathering restrictions or other policies of a foreign country or the United States" (quoting Intel at 265).  The district court relied on the two general facts identified in Intel that district courts should consider in determining whether an application satisfying the § 1782 requisites should be granted:  (i) whether the person from whom discovery is sought is a participant in the foreign proceedings; and (ii) the nature of the foreign tribunal, the character of the proceedings under way abroad, and the receptivity of the foreign tribunal to judicial assistance.

    (ii) See also In re Intel Corp. Micro Processor Anti Trust Litigation, 2008 WL4861544 (D. Del 11/7/08) (adopting the report of a special master and denying requested discovery).
  4. The second important issue addressed in 2008 is what constitutes a "tribunal" for purposes of invoking the discovery provisions of § 1782(a).  In Intel, the Court held that the Commission of the European communities constituted such a "tribunal". 

    (a) That was not a difficult conclusion to draw.  But what about other less formal "tribunals"?  What about arbitral tribunals?

    (i) In In re Application of Babcock Borsig AG, 2008 WL 4748208 (D. Mass. 10/30/08), the district court held that a "private arbitral" body, like the ICC, qualified as a "tribunal" under § 1782.  In that regard, the district court followed two other district court cases decided after Intel, which held that private arbitral panels were "tribunals" sufficient to invoke the provisions of § 1782.

    (ii) Accord Comision Ejecutiva, Hidroelectrica Del Rio Lempa v. Nejapa Power Co., 2008 WL 4809035 (D. Del. 10/14/08) ("Section 1782 does indeed apply to private foreign arbitrations").

    (b) The conclusion reached in Babcock Borsig, however, is not universally shared.  See, e.g., La Comision Ejecutiva Hidroelectrica del Rio Lempa v. El Paso Corp., 2008 WL5070119 (S.D. Tex. 11/20/08). (holding that Intel did not change the prior law that private arbitral tribunals are not "tribunals" for purposes of § 1782).

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