Private arbitral panel fits definition of ‘tribunal’

In an issue of first impression, the court joined the Sixth Circuit in holding a private arbitral panel is a “tribunal” under 28 U.S.C. § 1782(a), which allows a district court to order testimony or documents for use in the “tribunal.” There is now a deep split among the circuits, with the Second and Fifth Circuits holding private arbitral bodies are not “tribunals” under § 1782(a).

Background

Servotronics Inc. supplied a valve to Rolls-Royce PLC that Rolls-Royce installed in an engine that it manufactured and supplied to The Boeing Company for installation on a new Boeing 787 Dreamliner aircraft. In January 2016, while testing the engine at Boeing’s plant in South Carolina, the engine caught fire, causing significant damage to Boeing’s aircraft. After Rolls-Royce settled Boeing’s claim for damages, it sought indemnification in the amount of $12.8 million from Servotronics, contending that a malfunction of Servotronics’ valve caused the fire. On Servotronics’ rejection of the claim, Rolls-Royce commenced an arbitration proceeding in the United Kingdom, as required by the parties’ contract.

To obtain evidence for use in the UK arbitration, Servotronics filed an application in the district court under 28 U.S.C. § 1782 to obtain testimony from three Boeing employees residing in South Carolina. Section 1782(a) provides that a U.S. district court may, on the request of an interested party, provide assistance in connection with a proceeding before “a foreign or international tribunal.”

Relying on National Broadcasting Company, Inc. v. Bear Stearns & Co., Inc., 165 F.3d 184 (2d Cir. 1999), and Republic of Kazakhstan v. Biedermann International, 168 F.3d 880 (5th Cir. 1999), both of which held that private arbitral bodies are not “tribunals” as used in § 1782(a), the district court denied Servotronics’ application. After the district court’s ruling, the Sixth Circuit issued a decision concluding that the language of § 1782(a) unambiguously “includes private commercial arbitral panels established pursuant to contract and having the authority to issue decisions that bind the parties.” In re Application to Obtain Discovery for Use in Foreign Proceedings, 939 F.3d 710, 723 (6th Cir. 2019).

Analysis

Servotronics argues that the district court’s reliance on Bear Stearns and Biedermann was inappropriate because the Supreme Court’s subsequent decision in Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241 (2004), placed those two decisions in doubt. In re Application to Obtain Discovery is the only court of appeals decision to have addressed the issue since Intel. We have never addressed the issue, either before or after Intel.

The current version of the statute, as amended in 1964, manifests Congress’ policy to increase international cooperation by providing U.S. assistance in resolving disputes before not only foreign courts but before all foreign and international tribunals. Notwithstanding Congress’ articulated purpose for increasing such foreign assistance, Boeing maintains that “tribunal,” as used in § 1782(a), still refers only to “an entity that exercise[s] government-conferred authority.”

And from this premise, it reasons that because arbitration is a private proceeding “deriv[ing] its authority not from the government, but from the parties’ agreement,” an arbitral panel is not a “tribunal.” We conclude, however, that Boeing’s argument represents too narrow an understanding of arbitration, whether it is conducted in the United Kingdom or the United States.

We conclude that the UK arbitral panel convened to address the dispute between Servotronics and Rolls-Royce is a “foreign or international tribunal” under § 1782(a) and, therefore, that the district court has authority to provide, in its discretion, assistance in connection with the UK arbitration. Accordingly, we reverse the district court’s Nov. 6, 2018, order and remand for the court to conduct further proceedings on Servotronics’ § 1782 application.

Servotronics seeks to avoid remand, urging that we exercise the discretion conferred on the district court and order the court to issue the three subpoenas attached to its application. But because § 1782 confers discretion on the district courts in the first instance to manage any assistance that may be provided to a foreign tribunal, we decline to preempt that role.

Reversed and remanded.

Servotronics Inc. v. The Boeing Co., Appeal No. 18-2454, March 30, 2020. 4th Cir. (Niemeyer), from DSC at Charleston (Norton). Stephen Richard Stegich III for Appellant, Michael Sylvain Paisner for Appellees. VLW 020-2-079. 14 pp.