Following the United States Supreme Court decision in ZF Auto. US, Inc. v. Luxshare, Ltd. (“ZF Auto”), where the Supreme Court found that 28 U.S.C. § 1782 (“§ 1782”) did not apply to private international tribunals, the question has remained whether certain international tribunals can be sufficiently imbued with government authority to be considered foreign or international tribunals warranting discovery under § 1782.
A Magistrate Judge for the United States District Court for the Eastern District of New York recently held that a World Bank International Centre for the Settlement of Investment Disputes (“ICSID”) arbitral tribunal did not qualify as a foreign or international tribunal following ZF Auto and denied discovery in aid of the ICSID arbitration. In In re Alpene Ltd., the claimant Alpene Ltd. (“Alpene”), a Hong Kong corporation, was seeking discovery from a New York resident for an investor-state arbitration against the Republic of Malta. The Bilateral Investment Treaty between China and Malta allows for disputes between investors and the signatory states to be resolved through the applicable courts, an ICSID arbitration, or an ad hoc arbitration using the UNCITRAL Rules. The parties chose ICSID arbitration to resolve the dispute.
Alpene sought to compel discovery from a U.S. witness, in late 2021. As the Supreme Court had already agreed to hear ZF Auto, the Court stayed the petition pending the Supreme Court’s decision, which came down in June 2022. Applying ZF Auto, the Magistrate Judge held that China and Malta had not intended to imbue the ICSID tribunal with governmental authority and, therefore, the tribunal did not qualify as a foreign or international tribunal under Section 1782.
The Court reached its conclusion by reviewing elements the Supreme Court analyzed in ZF Auto: (1) indications of nations’ intent for the arbitral tribunal to exercise governmental authority; (2) the tribunal functioning independently of, and not affiliated with treaty nations; (3) arbitrators chosen by parties and lacking official affiliation with treaty nations; (4) the tribunal receiving no government funding and parties responsible for all costs; and (5) proceedings being confidential. The Court found ICSID was an independent, self-contained system that operates under the authority of the World Bank, and, thus, is independent of the treaty nations. While the Court acknowledged China and Malta are both signatories to the ICSID Convention, and have representatives on the ICSID Administrative Counsel, that was not sufficient to find an ICSID tribunal had been imbued with government authority.
As additional grounds for finding § 1782 did not apply to an ICSID tribunal, the Court found that the principal comity (mutual courtesy between nations) would not be served as ICSID tribunals cannot provide reciprocal discovery to U.S. courts. Moreover, allowing discovery in an ICSID arbitration would give it preferential treatment over a domestic arbitration, where access to U.S. courts to compel discovery is generally not permitted. For all these reasons, the Magistrate Judge found that an ICSID tribunal was not a foreign or international tribunal under § 1782 and entered a protective order with respect to the documents and depositions sought by Alpene.