This Report summarizes an opinion issued on December 10, 2021 (Part I); and cases granted review on December 10 and 15, 2021 (Part II).
Cases Granted Review: ZF Automotive US, Inc. v. Luxshare, Ltd., 21-401; AlixPartners, LLC v. Fund for Protection of Investor Rights in Foreign States, 21-518
ZF Automotive US, Inc. v. Luxshare, Ltd., 21-401; AlixPartners, LLC v. Fund for Protection of Investor Rights in Foreign States, 21-518. At issue in these consolidated cases is “[w]hether 28 U.S.C. §1782(a), which permits litigants to invoke the authority of United States courts to render assistance in gathering evidence for use in ‘a foreign or international tribunal,’ encompasses private commercial arbitral tribunals . . . or excludes such tribunals[.]” In ZF Automotive US, ZF Friedrichshafen AG (ZF AG), a German corporation headquartered in Germany, sold its Global Body Control Systems business unit to respondent Luxshare, a Hong Kong limited liability company. The Master Purchase Agreement provides that it is to be governed by German law, and requires that all disputes be resolved “by three (3) arbitrators in accordance with the Arbitration Rules of the German Institution of Arbitration (DIS).” Luxshare alleges that “[a]fter the [April 2018] [c]losing” of its deal with ZF AG, it learned that ZF US―a Michigan-based automotive parts manufacturer and an indirect subsidiary of ZF AG―fraudulently concealed information during the negotiation and diligence process. In October 2020, Luxshare filed an ex parte application for discovery under §1782. The district court granted the application, after which Luxshare served petitioners (ZF US and several of its officers) with subpoenas. Petitioners moved to quash the subpoenas on various grounds, including that the application should have been denied in its entirety because, inter alia, the DIS arbitration was not a “tribunal” within the meaning of §1782. The magistrate judge partially granted and partially denied petitioners’ motion to quash, and the district court deferred to the magistrate judge’s conclusions. Petitioners appealed to the Sixth Circuit, whose circuit precedent establishes that the DIS arbitration is a “tribunal” within the meaning of §1782. The Supreme Court granted certiorari before judgment in the Sixth Circuit.
Petitioners contend that the Sixth Circuit precedent is wrong, and that private commercial arbitral tribunals such as the DIS tribunal is not a “tribunal” within the meaning of §1782. They argue that the “statute’s text, contemporaneous dictionary definitions, th[e] Court’s precedent, legal scholarship, and compelling policy concerns . . . confirm that a ‘foreign or international tribunal’ under Section 1782 includes only governmental or intergovernmental adjudicative bodies, and excludes private arbitrators that have no sovereign authority.” Petitioners insist that “[a]s those sources have explained, at the time Section 1782 was enacted in 1964, dictionaries consistently defined a ‘tribunal’ as a court or other governmental adjudicator—a definition that plainly excludes private arbitrators, who exercise no sovereign authority.” And they maintain that when §1782’s language was broadened to refer to “tribunals,” and not just “courts,” it was done to “permit United States courts to assist the many varieties of quasi-judicial bodies operating in foreign countries. But they contain no hint at all that Congress intended to allow the conscription of United States courts to aid purely private foreign arbitrators.”
[Editor’s note: Some of the language in the background section of the summary above was taken from the petition for writ of certiorari and brief in opposition.]