Supreme Court Grants Cert in Servotronics Dispute; Likely to Resolve Circuit Split On Key International Arbitration Question

by Andrew Flake

On March 22, the Supreme Court granted cert in the ongoing Servotronics litigation, presenting the likely opportunity for the justices to decide an ongoing and important important question for parties to international commercial arbitrations: whether or not they have a statutory means to take discovery in the United States.

I have written before that cert was likely on the question, and with one more Court of Appeals joining the fray, at least four justices seem to agree. In September of last year, considering an application filed under 28 U.S.C. Section 1782 and a corresponding subpoena to Boeing, the Seventh Circuit came down on the side of those Courts of Appeals who interpret Section 1782 more narrowly. That circuit’s statutory reading, after reviewing a 1964 dictionary definition of “tribunal,” can be summarized as follows:

Harmonizing this statutory language and reading it as a coherent whole suggests that a more limited reading of § 1782(a) is probably the correct one: a “foreign tribunal” in this context means a governmental, administrative, or quasi-governmental tribunal operating pursuant to the foreign country’s “practice and procedure.” Private foreign arbitrations, in other words, are not included.

Servotronics, Inc. v. Rolls-Royce PLC, 975 F.3d 689, 695 (7th Cir. 2020). Chief Judge Sykes adds his view that this interpretation avoids a conflict with the Federal Arbitration Act. Why, he asks, would parties to a foreign arbitration have broader discovery rights (i.e., use of the full range of discovery tools under federal civil practice), than parties to domestic arbitrations?

The Seventh Circuit also rejects as “mistaken” the view that arbitration under statutes like the FAA and the UK’s arbitration act are state-sponsored, deeming them purely private:

Contractual arbitration is private dispute resolution. The source of a private arbitral panel’s adjudicative authority is found in the parties’ contract, not a governmental grant of power. A private arbitral body does not exercise governmental or quasi-governmental authority. But we need not explore this point further. No one here argues that arbitration in the United Kingdom (or the United States) is the product of government-conferred authority.

Id. at 693. The Fourth Circuit (in the underlying Servotronics case) took the opposite view; along with expanding on the Supreme Court’s own Intel opinion from 2004, I expect this discussion of whether national arbitration statutes and the New York Convention treaty regime confer state-sponsorship on private arbitrations will be key part of the Supreme Court’s analysis.

[The case is Servotronics, Inc. v. Rolls-Royce PLC, 975 F.3d 689, 693 (7th Cir. 2020), cert. granted, 20-794, 2021 WL 1072280 (U.S. Mar. 22, 2021).]

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