© 2022 Eric S. Sherby
A mere two hours after our firm uploaded to this blog (on June 13) a piece on section 1782 discovery (28 U.S.C. § 1782), the U.S. Supreme Court issued its decision in the consolidated cases of ZF Automotive US, Inc. v. Luxshare, Ltd. and AlixPartners, LLP, et al. v. Fund for Protection of Investors’ Rights in Foreign States (No. 21-401). The Court held that Section 1782 is not applicable to arbitration.
In other words, the position that I had advocated lost.
Putting aside whether one is of the view that the Court decided the issue in ZF Automotive correctly, there is one aspect of that decision on which I believe all would agree – it is remarkable how the ZF Automotive decision is silent on the origin of the controversy regarding the proper interpretation of the statutory term “tribunal.”
Prior to the 2004 decision of the Supreme Court in Intel v. ADM, 542 U.S. 241 (2004), there had been two appellate cases (NBC and Biedermann) holding that Section 1782 does not apply to arbitrations. At that stage, the appellate case law was unanimous, and there was little controversy on the issue of whether Section 1782 applies to arbitration.
But then Intel was decided.
Although Intel did not directly address the issue of an arbitrator as a tribunal, Intel did plant the seeds for several courts to conclude that a non-U.S. arbitrator is a tribunal within the section. The main seed was a reference by the Supreme Court in Intel to a law review article written by Professor Hans Smit. In discussing the history of the 1964 amendments to the statute, the Court stated as follows:
The Rules Commission’s draft, which Congress adopted, replaced [the term “any judicial proceeding”] with “a proceeding in a foreign or international tribunal.” . . . Congress understood that change to “provid[e] the possibility of U.S. judicial assistance in connection with [administrative and quasi- judicial proceedings abroad].” S.Rep. No. 1580, at 7–8, U.S.Code Cong. & Admin. News 1964, pp. 3782, 3788; see Smit, International Litigation 1026–1027, and nn. 71, 73 (“[t]he term ‘tribunal’ . . . includes investigating magistrates, administrative and arbitral tribunals, and quasi-judicial agencies, as well as conventional civil, commercial, criminal, and administrative courts” . . .).
542 U.S. at 258. In summary, in Intel the Supreme Court cited to one of Professor Smit’s law review articles and his relatively broad definition of tribunal – a definition that includes an arbitral tribunal. Because of that quote, to many observers, the Intel Court appeared to endorse the proposition that an arbitral tribunal is a “tribunal” within the meaning of Section 1782.
The district courts in Roz Trading, Hallmark Capital, and In re Babcock Borsig AG all joined the “Smit Camp” — expressing the view that the Supreme Court “all but stated” that Section 1782 applies to arbitrators.
Other courts (the “Anti-Smit Camp”) disagreed. In 2008, the Southern District of Texas was explicit in rejecting the contention that the Supreme Court’s quote of Professor Smit had any bearing on the issue of arbitration and Section 1782:
The Supreme Court was only making use of this quoted sentence from the article for the proposition that § 1782 applies to quasi-judicial agencies and administrative courts, following as it did the Court’s actual quoting of Congressional pronouncements in the text of the opinion itself to the same effect. Smit does not speak for the Supreme Court. Until, and, if, the Supreme Court itself adopts Hans Smit’s statements as its own within the text of the opinion itself, Hans Smit’s opinions on arbitral tribunals has no more weight and authority than any other article. Smit’s opinion is not even Supreme Court dicta.
La Comision Ejecutiva Hidroelecctrica Del Rio Lempa, v. El Pasp Corp., 617 F. Supp.2d 481, 486 (S.D. Tex. 2008; emphasis added). In so concluding that the Supreme Court gave no more weight to an article written by Professor Smit than “any other article,” the district court in El Paso appeared to be going out on a limb – the Intel decision quoted three different articles authored by Professor Smit, and the decision even referenced a legal opinion (in the form of an expert declaration) that he had filed in a district court case.
It is not every day that the Supreme Court cites, in one decision, four different works authored by one law professor.
At the least, it did appear that the Supreme Court in Intel respected Professor Smit’s views regarding interpretation of the statute. Nonetheless, in El Paso the district court clearly rejected the view of the Smit Camp.
On appeal, the Fifth Circuit affirmed, stating as follows:
Nothing in the context of the quote suggests that the Court was adopting Smit’s definition of “tribunal” in whole.
El Pasp Corp. v. La Comision Ejecutiva Hidroelecctrica Del Rio Lempa, 2009 WL 2407189 at *2 (5th Cir. 2009).
Other appellate courts followed, echoing the Fifth Circuit’s view – such as Servotronics (Seventh Circuit) and Hanwei Guo (Second Circuit).
Although the ZF Automotive decision adopts the view contrary to that of the Smit Camp, the decision is silent as to the Smit quotation – there is not a word in the ZF Automotive decision acknowledging that the controversy arose from the quotation, in Intel, of Professor Smit’s law review article that suggests that the term “tribunal” includes arbitrator.
In light of the extensive citation in Intel to multiple works of Professor Smit, it seems strange (at the least) that the decision in ZF Automotive says nothing about (a) Smit, (b) his definition of a tribunal, or (c) the disagreement that was engendered by the quotation of Smit in Intel.
In summary, twice the Supreme Court has addressed Section 1782. The first time, the Court appeared to give considerable weight to the views of Professor Smit, and the second time, the Court completely ignored him – even though the controversy before the Court arose (largely) from one of his writings.
Perhaps the polar opposite approaches to the relevance of Professor Smit’s views concerning Section 1782 are related to the respective authors of those two opinions. The Intel decision was authored by Justice Ginsburg, who passed away in 2020, and the ZF Automotive decision was authored by Justice Coney Barrett, who replaced Justice Ginsburg.
There are probably observers in the Anti-Smit Camp who had hoped that the Supreme Court in ZF Automotive would state clearly and unambiguously that the inclusion by the majority in Intel of a quotation from Professor Smit that appeared to suggest that the definition of “tribunal” includes arbitrator was negligent drafting. But making such a strong statement risked giving the impression of being critical of Justice Ginsburg, and it is likely that, of all the current justices on the Court, Justice Coney Barrett had the least interest in appearing to be critical of Justice Ginsburg.
Prior to ZF Automotive, lower courts had cited to Professor Smit’s writings on Section 1782 regarding several issues other than the applicability of the statute to arbitration (one such issue is the extraterritorial applicability of the statute). It remains to be seen whether Smit’s failure to make even a cameo appearance in ZF Automotive will have any effect on section 1782 jurisprudence.