The Supreme Court is (once again) slated to decide the issue of whether a private commercial arbitral panel constitutes a “foreign or international tribunal” under 28 U.S.C. § 1782, in the matter of ZF Automotive US, Inc., Gerald Dekker, and Christophe Marnat v. Luxshare, Ltd. (Docket No. 21-401). The ZF Automotive US Petitioners (collectively “ZF US”) presented the Court with a rare procedural posture, asking for a writ of certiorari prior to judgment (Petition). The ZF US appeal was taken from an order granting Luxshare’s request for discovery under 28 U.S.C. § 1782 issued by the United States District Court for the Eastern District of Michigan, to the United States Court of Appeals for the Sixth Circuit.

This matter has also been consolidated for decision with AlixPartners LLP v. Fund for Protection of Investor Rights in Foreign States, which concerns whether an arbitration between an investor and a foreign state constitutes a “foreign or international tribunal” under § 1782.

ZF US filed the Petition while a pending matter with the same legal question was before the Court, Servotronics, Inc. v. Rolls-Royce PLC, et al, but the issue of mootness, which ultimately led to the dismissal of Servotronics, had already become apparent. ZF US rests a large part of their argument for certiorari to be granted on this fact, but in this instance without the mootness issue.

The document governing the parties’ relationship, a Master Purchase Agreement, provided that any disputes “shall be determined according to the Arbitration Rules of the German Institution of Arbitration e.V. (DIS).” Under the DIS rules, there was a three-year statute of limitations for commencing an arbitration proceeding, and a six-month limitation on the time from commencement to the arbitrators’ decision. The Petition comes to the Court before discovery has been produced, and even before the commencement of the foreign arbitration proceeding. Relying on this fact, ZF US is confident in their position that mootness will not be a factor as it was in Servotronics.

Furthermore, ZF US unconditionally agreed with Luxshare to toll the enforcement of the governing statute of limitations for the commencement of arbitration until at least four months after the Court rules on the question presented. ZF US also represented to the Court that if Luxshare were to commence an arbitration proceeding during the pendency of the Court’s review, ZF US would waive the governing six-month decision timeline, in order to avoid any possible issue of mootness.

In further support of their petition, ZF US discussed the circuit court split surrounding § 1782 and analyzed the Sixth Circuit’s position that a private commercial arbitral panel is a foreign or international tribunal as incorrect. They cited  the amicus briefs in the Servotronics matter and “the statute’s text, contemporaneous dictionary definitions, this Court’s precedent, legal scholarship, and compelling policy concerns.” Pet. Br. pp. 19-20. The policy concerns, voiced often in regard to this particular issue, emphasize the importance of consistency of interpretation of the Federal Arbitration Act (FAA). ZF US argued that if § 1782 were read to encompass private commercial arbitrations, then permissible discovery under its provisions would be far broader than allowable under the FAA.

In responding to Luxshare’s arguments, ZF US pointed out that Luxshare does not deny § 1782 warrants the Court’s review. Luxshare’s primary argument regarded the standards for a writ of certiorari before judgment, which ZF US addressed by pointing to the judgment of the Sixth Circuit. In fact, both ZF US and Luxshare asked the Sixth Circuit to issue judgment in favor of Luxshare, since there is binding precedent on this very issue. See Abdul Latif Jameel Transportation Co. v. FedEx Corp. (In re Application to Obtain Discovery for Use in Foreign Proceedings), 939 F.3d 710 (6th Cir. 2019). The Sixth Circuit, along with the Fourth, have previously allowed discovery in private commercial arbitrations (with which ZF US disagrees). Servotronics, Inc. v. Boeing Co., 954 F.3d 209, 210 (4th Cir. 2020); In re Application, 939 F.3d 710. Accordingly, ZF US asserted the Sixth Circuit must issue an order affirming judgment in favor of Luxshare, which alleviates the concerns of a writ prior to judgment.

Ultimately, the Court was convinced by the Petitioner’s position, and the writ of certiorari was granted. Oral arguments have been set for March 23, 2022.

The Cranfill International Business Law group will be posting on this topic regularly over the next few weeks as the oral arguments approach, and we will take a dive into the key legal issues.