Arbitration- USA
In the United States, 28 United States Code (USC) Section 1782 allows a private litigant to seek discovery from a person residing or found in the United States for use in proceedings "in a foreign or international tribunal". There has been an ongoing debate as to whether this includes foreign arbitral proceedings.
By an order dated April 2 2007, Chief Judge Garrett E Brown of the US District Court for the District of New Jersey affirmed the ruling of Magistrate Judge Hughes, dated August 11 2006, who had held that Section 1782 allowed discovery for use in a foreign arbitration commenced under a bilateral investment treaty between the United Kingdom and Kyrgyzstan.(1)
The application was made by Oxus Gold plc, which is the claimant in a bilateral investment treaty arbitration against Kyrgyzstan. The arbitration concerns alleged violations of the treaty relating to the cancellation of Oxus's mining licence and the granting of a new licence to Global Gold GmbH of Austria. The application was made against Jack Barbanel, a US citizen, who is the managing director of Strategic Investment Group and represents Global Gold and its ultimate, secret shareholders. Oxus requested documents and a deposition from Barbanel. He opposed the application, principally arguing that the arbitration was a purely private commercial matter and that its panel was not a 'foreign tribunal' for purposes of the statute.
The Second and Fifth Circuits had previously held that private international arbitrations do not constitute foreign tribunals under Section 1782.(2) However, Oxus argued that the cases in question were decided before the US Supreme Court's decision in Intel Corp v Advanced Micro Devices, Inc, (3) which made clear that the operative inquiry into whether a proceeding is pending before a foreign tribunal is whether the tribunal in question is performing an adjudicatory function. Extrapolating from Intel, Oxus submitted that an arbitration proceeding fulfilled such an adjudicatory function and, as such, Section 1782 should be applied.
Ultimately, on appeal, the court did not need to reach this issue. Instead, it distinguished the preceding cases by focusing on the fact that the Oxus arbitration was conducted pursuant to a bilateral investment treaty, rather than a private commercial agreement. The court concluded that in the case at hand, Article 8 of the bilateral investment treaty between the United Kingdom and Kyrgyzstan:
"specifically mandates that disputes between nationals of the two countries would be resolved by arbitration governed by international law. The arbitration at issue in this case, between admittedly private litigants, is thus being conducted within a framework defined by two nations and is governed by the Arbitration Rules of the United Nations Commission on International Trade Law. In light of these facts, this court concludes that the magistrate judge's holding that the arbitration panel in the case at bar constituted a 'foreign tribunal' for the purposes of a 28 USC Section 1782 analysis was not clearly erroneous or contrary to law."(4)
The court also found in favour of Oxus on a number of other issues. For example, it held that:
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on the facts, Barbanel resided or could be found in the district, even though his principal residence was in Moscow;
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a respondent need not be party to the foreign proceedings, and that significant evidence on the facts tied Barbanel to the events which gave rise to the proceedings;(5) and
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the information sought was not unduly intrusive or burdensome.(6)
Oxus had also made an application under 28 USC Section 1783 to serve the discovery request authorized under Section 1782 on Barbanel outside the United States. The magistrate judge had held that it was a requirement of Section 1783 that the proceedings to which the subpoena relates be pending in the United States. On appeal, Oxus's cross-appeal was denied and the earlier decision was confirmed. Therefore, Oxus must serve Barbanel with its subpoena under Section 1782 while he is in the United States.(7)
The magistrate judge's decision, confirmed on appeal, is believed to be the first in which a US court has issued a Section 1782 order in support of a foreign arbitration. In 2006, after the first decision in the Oxus Case in August of that year, a US federal court in Atlanta granted a discovery request against The Coca-Cola Company in support of a commercial arbitration of a contract dispute taking place in Austria.(8)
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