Decision by US Court makes way for discovery in international arbitration

A provision in the United States Code allows for discovery proceedings in the US in support of foreign legal proceedings. In a recent decision given by United States Court of Appeals for the Sixth Circuit, the court took the view that the provision also extends to foreign/international arbitration. The decision could allow for discovery procedures in the US in support of Norwegian arbitration proceedings as well as Norwegian court proceedings.

Most disputes which go to trial or arbitration are ultimately decided based on the facts presented to the judges or arbitrators. Equal access to evidence, by way of documents or witness statements, is therefore key to ensure a fair trial. In international disputes it may prove crucial that the parties are able to access evidence located abroad, even if the counterparty or a third party does not voluntarily offer access to such evidence.

In international disputes, the Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters allows judicial authorities in one country to obtain evidence from another country, given that both countries are members to the convention. Thus, the convention is regularly applied by parties seeking to obtain evidence from parties as well as non-parties in international disputes. However, the convention requires requests for taking of evidence to be made by the relevant judicial authority and then processed by a central authority in the relevant jurisdiction. This can sometimes be a lengthy, inflexible and costly process.

An alternative: US discovery available in aid of Norwegian legal proceedings

In the US, parties in civil lawsuits can obtain evidence from each other and non-parties trough what is ordinarily referred to as rules of discovery. United States Code, Title 28, Section 1782 (a), allows for discovery proceedings in the US in support of foreign legal proceedings. The provision allows foreign courts or private litigants involved in foreign litigations to apply directly to a United States federal court for an order directing a person or entity in the United States to “produce documents or other things” for use in the proceedings. Hence, Section 1782 (a) gives parties involved in a non-US dispute access to US discovery and taking of witness statements in the US.

Compared to the Hague convention, an application under Section 1782 (a) is generally perceived to be processed faster, more flexible and more cost-effective, as the application does not have to be channelled through governmental authorities. Section 1782 (a), therefore, has commonly been perceived as a supplement to the Hague Convention when obtaining evidence in the US, but only in cases before the courts. It follows from Section 1782 (a) that the discovery must be “for use in a proceeding in a foreign or international tribunal”. Until the recent decision from the Sixth Circuit, US courts have largely rejected requests from non-US private arbitrations on the grounds that arbitration is not covered by the phrase “foreign or international tribunal”.

However, in its recent decision, the United States Court of Appeals for the Sixth Circuit takes the view that Section 1782 (a) can be used to obtain discovery not only in foreign court proceedings, but also foreign/international arbitration proceedings.

Potentially wide ranging consequences

The Sixth Circuit’s decision is believed to potentially have wide ranging consequences for the use of US discovery in international private arbitration, and could also affect Norwegian arbitration proceedings where one of the parties wishes to obtain evidence in the US.

As a result of the decision, US discovery may be available for parties in international private arbitration, including parties in arbitration conducted in Norway. However, the Sixth Circuit’s decision is binding only on courts within its jurisdiction. As an application under Section 1782 (a) must be brought before “district court of the district in which a person resides or is found”, the decision primarily opens for discovery applications made against persons or companies who reside or is found within the Sixth Circuit’s jurisdiction.

Further to that, the decision is in direct conflict with earlier decisions by the Second and Fifth Circuits having held that Section 1782 (a) does not include private arbitration. The Sixth Circuit’s decision thus establishes a circuit split, which increases the chances that the US Supreme court will weigh in to resolve the issue. There is therefore the possibility of further development in this matter.

The option to utilise US discovery in aid of Norwegian legal proceedings is nevertheless a relevant consideration in Norwegian disputes where evidence may be obtained by way of such discovery proceedings. As a result of the Sixth Circuit’s decision, parties should also be aware that this option may be available in support of arbitration proceedings conducted in Norway.