On September 22, 2020, the US Court of Appeals for the Seventh Circuit, in Servotronics, Inc. v. Rolls-Royce PLC, held that an international private commercial arbitration panel is not a "foreign or international tribunal," and that US district courts may not provide discovery assistance under 28 U.S.C. § 1782 for use in a private arbitration ( (7th Cir. Sept. 22, 2020)). The court joined the US Courts of Appeals for the Second and Fifth Circuits but deepened the circuit split with the US Courts of Appeals in the Fourth and Sixth Circuits.

The underlying arbitration and facts are the same as the proceeding recently addressed in the Fourth Circuit, which arrived at the opposite conclusion (see Legal Update, International Private Arbitration Panel is a "Foreign Tribunal" Under 28 U.S.C. § 1782: Fourth Circuit). The case involves an indemnification dispute over losses incurred after an engine manufactured by Rolls-Royce caught fire during testing in a Boeing aircraft. Rolls-Royce and Boeing settled Boeing's damages claims and Rolls-Royce sought indemnification from Servotronics, which manufactured the malfunctioning valve used in the engine.

After Rolls-Royce commenced arbitration against Servotronics in England as required by the parties' agreement, Servotronics filed an ex parte application under 28 U.S.C. § 1782(a) in the US District Court for the Northern District of Illinois asking the court to issue a subpoena compelling Boeing to produce documents for use in arbitration.

Section 1782 permits parties involved in proceedings before a "foreign or international tribunal" to apply to a US federal district court for an order compelling evidence from a person or entity residing or located in the court's district. However, there is circuit split over whether the statutory phrase "foreign or international tribunal" includes private foreign arbitrations or is limited to state-sponsored foreign tribunals (compare (Nat'l Broad. Co. v. Bear Stearns & Co., 165 F.3d 184, 191 (2d Cir. 1999) and Republic of Kazakhstan v. Biedermann Int'l, 168 F.3d 880, 883 (5th Cir. 1999) with Abdul Latif Jameel Transp. Co. v. FedEx Corp., 939 F.3d 710, 714 (6th Cir. 2019) and Servotronics, Inc. v. Boeing Co., 954 F.3d 209, 214 (4th Cir. 2020)).

The district court initially granted the application and issued the requested subpoena but Rolls-Royce and Boeing each intervened and moved to quash the subpoena, arguing that § 1782(a) does not permit the district court to order discovery for use in a private foreign commercial arbitration. The district court quashed the subpoenas and Servotronics appealed.

The Seventh Circuit, in a matter of first impression in the circuit, agreed with Rolls-Royce and Boeing, and held that § 1782(a) limits "foreign or international tribunal" to a state-sponsored, public or quasi-governmental tribunal, and does not include private foreign arbitrations. In support of its ruling, the court examined the statutory context of that language and the Federal Arbitration Act (FAA) for conflicts.

Looking at § 1782(a)'s statutory context, the court first noted the absence of any instruction related to judicial assistance to private foreign arbitration in Congress's original 1958 statutory charge to the Commission on International Rules of Judicial Procedure. Next, the court looked at Congress's 1964 revisions to § 1782 and two other sections (pertaining to service of process in foreign litigation and letters rogatory, respectively), which all use the phrase "foreign or international tribunal." Based on the presumption that the phrase has the same meaning across the related statutes, the court concluded that the phrase can only apply to state-sponsored tribunals and not private arbitrations because the sections pertaining to service of process assistance and letters rogatory are matters of comity between governments.

Finally, the Seventh Circuit found that the narrower interpretation of the phrase avoids serious conflicts with the FAA. If the court construed § 1782(a) to include private foreign arbitrations, then parties in foreign arbitrations would have access to more expansive discovery than parties in domestic arbitrations. The FAA permits only the arbitral tribunal to summon witnesses to testify or produce documents while § 1782(a) permits both foreign tribunals and parties to seek a summons to obtain discovery. The FAA also applies to some foreign arbitrations under implementing legislation for the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) and the Inter-American Convention on International Commercial Arbitration (Panama Convention). Reading § 1782(a) broadly would allow for greater court involvement with discovery to support foreign arbitrations than domestic arbitrations, a result Congress hardly could have intended.

For these reasons, the court concluded that § 1782(a) does not authorize district courts to compel discovery for use in private foreign arbitrations and affirmed the district court decision.