Is an ICSID arbitration panel a “foreign or international tribunal” within the meaning of 28 U.S.C. § 1782?

“It is hard to imagine how it would [be]” conceded United States Magistrate Judge Robert M. Levy, on 27 October 2022, when granting an order to quash his prior decision to authorise subpoenas for documents and testimony in aid of ICSID arbitration proceedings between a Hong Kong based corporation and the Republic of Malta.

In doing so, the Magistrate Judge considered that there was “insufficient support for the argument that Malta and China intended to imbue the ICSID arbitration panel with governmental authority. It therefore does not qualify as a “foreign or international tribunal” under § 1782.”

However, it was not always hard to imagine that § 1782 discovery should be available for both commercial and investor-state arbitration. In the past, federal courts have held that investor-state arbitrations were eligible for § 1782 discovery and, twenty years earlier, even the US Supreme Court had indicated in Intel Corp. v. Advanced Micro Devices, Inc that § 1782 could be used to obtain evidence in aid of foreign commercial arbitrations.

But the winds of change started gathering when the US Supreme Court agreed to hear the appeal in ZF Automotive US Inc v Luxshare Ltd to resolve a split that had emerged among lower appellate courts over what the phrase “foreign or international tribunal” means in § 1782. And so, it seems the Magistrate Judge made the correct choice when he decided to stay the proceedings pending before him while awaiting the outcome of that appeal.

On 13 June 2022, the US Supreme Court opted for an apparent about-face – departing from its remarks in Intel ­and instead signalling “a desire to limit the availability of discovery in U.S. courts for international commercial arbitrations.” [TAO’s detailed report on the US Supreme Court’s decision in that regard is available here.]

While in doing so, the US Supreme Court laid out the general principles that it considered to be relevant to the determination of whether an adjudicative body is the kind of “foreign or international tribunal” covered by § 1782, it did not address ICSID investor-state arbitrations specifically.

In any event, however, “the relevant question” according to the US Supreme Court was always “whether the nations intended that the [arbitral] panel exercise governmental authority.”

So, in deciding whether to quash his prior decision to authorise subpoenas for documents and testimony in aid of ICSID arbitration proceedings, Magistrate Judge Robert M. Levy had to determine whether, by establishing an international arbitration institution operating under the authority of the World Bank to resolve disputes between states and investors, the signatories to the ICSID Convention intended to imbue ICSID arbitration panels with governmental authority.

Although the Magistrate Judge noted that the ICSID Convention’s legal framework “creates a permanent institution, and provides that the resulting awards shall have the status of final judgments and are binding as a matter of public law in all ICSID member states” and that “ICSID awards are also entitled to full faith and credit in U.S. courts,” he could not escape from “the fact that courts play a role in enforcing arbitration agreements and awards does not give an arbitral panel “governmental authority.””

Instead, taking his cue from the US Supreme Court, the Magistrate Judge accepted that the animating purpose of § 1782 is comity to foreign and international governmental bodies.

“The statute was intended to promote assistance and cooperation between the United States and foreign countries,” he explained. And even though the ICSID (and investor-state arbitration generally) did not yet exist in 1964 (when § 1782 was amended to include the phrase “foreign or international tribunals”) it is now difficult to see how granting discovery requests to parties in arbitrations before the ICSID would “promote respect for foreign governments and encourage reciprocal assistance.”

In fact, “ICSID arbitral tribunals have no authority to provide reciprocal discovery assistance for United States proceedings” the Magistrate Judge conceded.

In addition, the Magistrate Judge considered the fact that the claimant in the ICSID arbitration proceedings had chosen to initiate ICSID arbitration proceedings over court proceedings – despite, the BIT Malta - China 2009 providing for the submission of a dispute to a court of appropriate jurisdiction in the country that is a party to the dispute, “undercut the contention” that either of the parties intended to imbue the ICSID tribunal with governmental authority.

The inclusion of courts on the among the parties’ potential dispute resolution options had likewise informed the US Supreme Court’s decision in in ZF Automotive, where the stark contrast between the choice to submit a dispute to “a pre-existing governmental body” or to “one formed for the purpose of adjudicating investor state disputes” was considered confirmation that the parties had decision to forgo governmental authority in favour of their own autonomy.

That being said, however, where the intention to imbue foreign proceedings with governmental authority is clear, it seems US courts will not hesitate to grant a request for §1782 discovery – as the US District Court for the Southern District of New York did on 14 September 2022 in support of Nigeria’s efforts to set aside the recognition and enforcement of the USD 6.6 billion arbitral award on fraud allegations, even where successive or simultaneous requests are made involving the same parties.

Background

Alpene, a Hong Kong corporation, is a claimant in an investor-state treaty arbitration against the Republic of Malta before the International Centre for the Settlement of Investment Disputes (“ICSID”).

It was in connection with those ICSID arbitration proceedings that Alpene had sought an order from the Magistrate Judge authorising the issue of subpoenas for documents and testimony from a New York resident.

The Magistrate Judge granted that request on 30 September 2021.

However, in response, the New York resident filed an application for an order to vacate that decision on 11 November 2021.

In light of the US Supreme Court granting certiorari in AlixPartners, LLP v. The Fund for Protection of Investors’ Rights in Foreign States 142 S. Ct. 638 (2021) which had the potential to affect the outcome of the application for an order to vacate, the Magistrate Judge stayed the application pending the US Supreme Court’s decision.

AlixPartners, LLP v. The Fund for Protection of Investors’ Rights in Foreign States was later consolidated with the case of ZF Automotive US, Inc. v. Luxshare, Ltd. 142 S. Ct. 2078 (2022).

On 13 June 2022, the US Supreme Court issued a unanimous decision in ZF Automotive US, and the Magistrate Judge asked the parties to submit briefs on the question of how the decision impacted the application for an order to vacate.

After finding that an ICSID arbitration panel does not qualify as a “foreign or international tribunal” under § 1782, the Magistrate Judge granted the application to vacate and also granted an order for a protective order with respect to the previous document and deposition subpoenas.