Enter to open, tab to navigate, enter to select
California District Court grants 28 U.S.C. § 1782 application in Ecuador matter
Practical Law Legal Update 0-503-4735 (Approx. 3 pages)
California District Court grants 28 U.S.C. § 1782 application in Ecuador matter
| Published on 29 Sep 2010 • International, USA |
Abby Cohen Smutny (Partner) and Lee A. Steven (Counsel), Lauren Mandell (Associate), White & Case LLP
The District Court for the Northern District of California has granted the latest application for discovery of evidence under 28 U.S.C. § 1782 for use in the ongoing UNCITRAL arbitration between the Republic of Ecuador and Chevron Corporation.
In In re the Republic of Ecuador, (N.D. Cal. Sept. 15, 2010), the Republic of Ecuador filed an ex parte application for the issuance of a subpoena to Diego Fernando Borja Sanchez pursuant to 28 U.S.C. § 1782.
In the application, Ecuador asserted that it wished to subpoena Mr. Borja to obtain evidence to defend against claims brought by Chevron Corporation in an international arbitration under the UNCITRAL Rules. In that arbitration, Chevron has alleged that Ecuador violated the US-Ecuador bilateral investment treaty by denying Chevron its rights under Ecuadorean and international law in a lawsuit brought against Chevron by the indigenous peoples in the city of Lago Agrio related to the environmental impact of Chevron's investment. According to Ecuador, Chevron has implicated Mr. Borja as a potential witness in support of its allegations, but Mr. Borja is an interested party whom Chevron will pay for favourable testimony. Ecuador wished to request testimony and documents from Mr. Borja to challenge his relationship with Chevron.
This appears to be the first section 1782 application filed by Ecuador regarding the Ecuador-Chevron arbitration, but Chevron has filed numerous such applications. Here, the court relied on decisions on those other applications for their analysis of the law. Most significantly, the court cited a recent decision from the District Court for the Southern District of New York in determining that a tribunal created under the auspices of an investment treaty is a "foreign or international tribunal" under section 1782, which is an often-contested issue.
Having identified the statutory basis, the court then held that the balance of discretionary factors favoured issuing the subpoena:
- Mr. Borja was not a party to the arbitration, and thus beyond the jurisdictional reach of the tribunal, which weighed in Ecuador's favour.
- There was no evidence that Ecuador was seeking to circumvent the tribunal's control of the proceedings.
- Ecuador made a prima facie showing that the requested discovery was relevant, which reduced the concern that the subpoena would result in undue intrusion or burden to Mr. Borja.
Due to the frequency of section 1782 applications regarding the Ecuador-Chevron arbitration, this arbitration may well shape the law governing such applications. For advocates of a broad reading of the statute, this is good news, as these cases have consistently held that section 1782 applications may be granted in aid of investment arbitrations.