Republic of Kazakhstan v. Biedermann Intern.

• Decision Date: 17 March 1999
• Docket Number: No. 98-21072,98-21072
• Citation: 168 F.3d 880
• Parties: Application of the REPUBLIC OF KAZAKHSTAN, Petitioner-Appellee, v. BIEDERMANN INTERNATIONAL, Claimant-Appellant. Summary Calendar.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 880

168 F.3d 880

Application of the REPUBLIC OF KAZAKHSTAN, Petitioner-Appellee, v. BIEDERMANN INTERNATIONAL, Claimant-Appellant.

No. 98-21072

Summary Calendar.

United States Court of Appeals Fifth Circuit.

March 17, 1999.

James Samuel Ellis Cowan, Michael K. Swan, Akin, Gump, Strauss, Hauer & Feld, Houston, TX, for Petitioner-Appellee.

David Patrick Long, Kevin D. Green, Patton Boggs, Dallas, TX, for Claimant-Appellant.

Appeal from the United States District Court for the Southern District of Texas.

Before HIGGINBOTHAM, JONES and BARKSDALE, Circuit Judges.

EDITH H. JONES, Circuit Judge:

In support of a proceeding before the Arbitration Institute of the Stockholm Chamber of Commerce, the Republic of Kazakhstan ("Kazakhstan") instituted the underlying action in the Southern District of Texas for assistance in discovery pursuant to 28 U.S.C. § 1782. Kazakhstan requested that the district court order Murdock Baker, Jr., not a party to the arbitration, to submit to a deposition and produce certain documents related to Kazakhstan's opponent Biedermann International ("Biedermann"). The district court ordered the requested discovery and denied Biedermann's request for reconsideration and motion for emergency stay. On expedited appeal of the district court's final order, ¹ this court stayed the discovery. Having reviewed the parties' submissions and examined the language and history of § 1782, we elect to follow the Second Circuit's recent decision that § 1782 does not apply to private international arbitrations. See National Broad. Co. v. Bear Stearns & Co., 165 F.3d 184 (2d Cir.1999).

Review of the scope of § 1782 is de novo. See Pritchard v. U.S. Trustee (In re England), 153 F.3d 232, 234 (5th Cir.1998). When interpreting a statute, this court examines the plain, common sense meaning of the statute's language. See id. at 235 ("Courts properly assume, absent sufficient indication to the contrary, that Congress intends the words in its enactments to carry their ordinary, contemporary, common meaning.") (internal punctuation and citations omitted). If this language is unambiguous, the inquiry is ended. See United States v. Investment Enters., Inc., 10 F.3d 263, 274 (5th Cir.1993) ("Except in rare circumstances, judicial inquiry is complete when the terms of a statute are unambiguous."). As the Second Circuit observed, however, the meaning of "foreign or international tribunal" is ambiguous and must be construed in light of the background and purpose of the statute.

From its adoption in 1855 through its amendment in 1964, § 1782 permitted a district court to provide discovery assistance only to a party involved in judicial proceedings pending before a "court in a foreign country." ² In 1964, Congress amended the statute. Section 1782 now reads, in pertinent part:

The district court of the district in which a person resides or is found may order him to give his testimony or statement or to produce a document or other thing for use in a proceeding in a foreign or international tribunal. The order may be made ... upon the application of any interested person....

28 U.S.C. § 1782 (emphasis added). The decision to substitute the term "tribunal" for "court" was deliberate, evidencing Congress's intention to expand the discovery provision beyond "conventional courts" to include "foreign administrative and quasi-judicial agenc[ies]." See S.Rep. No. 1580, § 9 (1963), reprinted in 1964 U.S.C.C.A.N. 3782, 3788.

But the new version of § 1782 was drafted to meld its predecessor with other statutes which facilitated discovery for international government-sanctioned tribunals. See, e.g., National Broad. Co., 165 F.3d 184 at 188-90 (discussing combination of § 1782 with 22 U.S.C. §§ 270-270g). Neither the report of the Commission that recommended what became the 1964 version of § 1782 ³ nor contemporaneous reports of the Commission's director ⁴ ever specifically goes beyond these types of proceedings to discuss private commercial arbitrations. There is no contemporaneous evidence that Congress contemplated extending § 1782 to the then-novel arena of international commercial arbitration. ⁵ References in the United States Code to "arbitral tribunals" almost uniformly concern an adjunct of a foreign government or international agency. ⁶

Moreover, the term "tribunal" lacks precision and demands judicial interpretation consistent with the statute's purpose. "Tribunal" has been held not to include even certain types of fact-finding proceedings, like those enforcing tax assessment and currency exchange regulations, conducted under the auspices of foreign governments. See, e.g., Fonseca v. Blumenthal, 620 F.2d 322, 323 (2d Cir.1980) (Superintendent of Exchange Control of Colombia); In re Letters Rogatory Issued by Dir. of Inspection of Gov't of India, 385 F.2d 1017, 1020-22 (2d Cir.1967) (Indian income tax officer) (Friendly, J.); see also Okubo, 16 F.3d at 1018-19 (Tokyo District Prosecutor's Office not "tribunal"). To the extent that these cases distinguished between an impartial adjudicative proceeding, the type covered by § 1782, and the inquiry of an officer with "an institutional interest in a particular result", ⁷ one might infer that private international arbitrations ought to be covered. The opinions, however, also demonstrate inherent limits on the nature of a "tribunal"; thus, not every conceivable fact-finding or adjudicative body is covered, even when the body operates under the imprimatur of a foreign government.

Skepticism about extending § 1782 to private international arbitrations also results from a comparison with domestic United States arbitration procedure. As other courts have noted, ⁸ domestically constituted arbitration panels, but not any "interested party," can invoke federal court jurisdiction to compel discovery in limited circumstances. Further, federal courts have a duty to enforce arbitrators' summonses only within the federal district in which the arbitrators, or a majority of them, are sitting. See 9 U.S.C. § 7. It is not likely that Congress would have chosen to authorize federal courts to assure broader discovery in aid of foreign private arbitration than is afforded its domestic dispute-resolution counterpart. There is also a possibility that Federal Arbitration Act § 7 and 28 U.S.C. § 1782 conflict, if the latter section encompasses foreign and international private arbitrations. Section 7 is a "residual" provision, to the extent not inconsistent with the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 9 U.S.C. § 201, 208, and the Inter-American Convention on International Commercial Arbitration, 9 U.S.C. §§ 301, 307. The Second Circuit aptly noted that the differences in available discovery could "create an entirely new category of disputes concerning the appointment of arbitrators and the characterization of arbitration disputes as domestic, foreign, or international." See National Broad. Co., 165 F.3d at 188-90.

Empowering arbitrators or, worse, the parties, in private international disputes to seek ancillary discovery through the federal courts does not benefit the arbitration process. Arbitration is intended as a speedy, economical, and effective means of dispute resolution. The course of the litigation before us suggests that arbitration's principal advantages may be destroyed if the parties succumb to fighting over burdensome discovery requests far from the place of arbitration. Moreover, as a creature of contract, both the substance and procedure for arbitration can be agreed upon in advance. The parties may pre-arrange discovery mechanisms directly or by selecting an established forum or body of governing principles in which the conventions of discovery are settled. ⁹ Resort to § 1782 in the teeth of such agreements suggests a party's attempt to manipulate United States court processes for tactical advantage. ¹⁰ Section 1782 need not be construed to demand a result that thwarts private international arbitration's greatest benefits.

For the foregoing reasons, we conclude that the term "foreign and international tribunals" in § 1782 was not intended to authorize resort to United States federal courts to assist discovery in private international arbitrations. The provision was enlarged to further comity among nations, not to complicate and undermine the salutary device of private international arbitration.

REVERSED.

1 See 28 U.S.C. § 1291; Okubo v. Reynolds (In re Letters Rogatory from the Tokyo Dist. Prosecutor's Office), 16 F.3d 1016, 1018 n. 1 (9th Cir.1994).

2 Act of May 24, 1949, ch. 139, § 93, 63 Stat. 89, 103 (1949); see also Act of June 25, 1948, ch. 646, § 1782, 62 Stat. 869, 949 (1948) ("any civil action pending in any court in a foreign country"); Act of March 3, 1863, ch. 95, § 1, 12 Stat. 769, 769 (1863) ("in any suit for the recovery of money or property ... in any foreign court ... in which a government of such foreign country shall be a party"); Act of March 2, 1855, ch. 140, § 2, 10 Stat. 630, 630 (1855) ("from any court of a foreign country"). For an extensive discussion of § 1782's legislative history, see National Broad. Co., 165 F.3d at 188-91, and In re: Application of Nat'l Broad. Co., No. M-77 (RWS), 1998 WL 19994, at * 4-7 (S.D.N.Y. Jan. 21, 1998).

3 Section 1782's amendment in 1964 arose from recommendations of the Commission and Advisory Committee on International Rules of Judicial Procedure. See Act of Sept. 2, 1958, Pub.L. No. 85-906, 72 Stat. 1743, 1743-45 (1958); see also National Broad. Co., 165 F.3d at 188-89.

4 Professor Hans Smit directed the Commission's work. Following Congress's 1964 amendment of § 1782, Smit noted the expansion of the statute to include, inter alia, "international arbitral tribunals." See Hans Smit, International Litigation Under the United States Code, 65 Colum. L.Rev. 1015, 1027 n. 73 (1965); see also id. at 1026 n. 71 (" 'tribunal' embraces all bodies exercising adjudicatory powers, and...