The General Aviation Manufacturers Association (GAMA) and the Aerospace Industries Association of America, Inc. filed their brief with the U.S. Supreme Court recognizing that the Court’s decision in the Servotronics case has implications for the use of private, contract-based international arbitration in the aviation and aerospace industries. Servotronics, Inc. v. Rolls-Royce PLC, 141 S.Ct. 1684 (2021). GAMA and AIA support the Respondents’ positions in this appeal. Importantly, they both emphasized that private international arbitration offers several benefits uniquely applicable to disputes involving aviation and aerospace companies, including confidentiality of proprietary and sensitive information and circumscribed discovery as agreed upon by the parties. They contend that applying 28 USC s. 1782 (Sec. 1782) to private international commercial arbitrations, would actually circumvent the discovery restrictions parties bargain for in contracting to participate in arbitration outside the U.S.
Further, because “flying—by design—is a uniquely interstate and international act, transcending jurisdictional boundaries” the aviation and aerospace industries seek to avoid the uncertainty of being subject to litigation in various jurisdictions when they contract to privately arbitrate. GAMA and AIA assert that the application of Sec. 1782 would make disputes more unpredictable and inefficient, due to collateral litigation across the United States over discovery. They conclude that it would be to the disadvantage of the aviation and aerospace industries to apply Sec. 1782 to private, international commercial arbitration.
The Reply Brief recently filed by the Petitioner in the case, Servotronics, contends that the Respondents have resorted to “false alarms” of the “parade of horribles” around opening the floodgates to unfettered discovery in private, international commercial arbitration, but that these issues have no basis in fact. They argue that the parties may still restrict discovery by contracting, if they so choose, and the application of Sec. 1782 would not open discovery up beyond these contractual limitations. The Petitioner reiterates the primary argument that the only logical, workable interpretation of the term “foreign or international tribunals” in Sec. 1782 is one that includes private commercial arbitral tribunals. In fact, there is no dispute that the language includes public investment treatment arbitral tribunals. They argue it is impossible to draw a bright-line distinction between tribunals that are “states-ponsored, public, or quasi-governmental” and those that are “private.” They conclude that a “commercial arbitral tribunal is unquestionably a body of persons with authority to hear and decide disputes so as to bind the disputants,” which falls under the definition, and thus arbitral tribunals are not excluded by the statute.
The Reply Brief also addressed the issue of inconsistent outcomes in various federal court districts on the discovery issues, and noted that the issue before the Court (of applying Sec. 1782 to private international commercial arbitrations) does not create or increase any inconsistency. In other words, even if the statute was not applied to private arbitrations, the variability of discovery assistance would remain unaffected from its current state– it does not increase uncertainty. Rather, it decreases the uncertainty as to which types of arbitration Sec. 1782 actually applies.
On the separate mootness issue raised by the Respondents (not in GAMA and AIA’s brief), the Petitioner reminds the Court that the arbitral tribunal has not rendered their award in the current action, and even if their final award is rendered, challenges to its enforcement and validity under the English Arbitration Act will likely ensue. Thus, the U.S. Supreme Court still has a case or controversy and the issue is not moot.
The arguments will be heard on this case on October 5, 2021.
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