Inherent Power of International Tribunals: How the Supreme Court Views Private Arbitration and Governmental Authority in ZF Automotive v. Luxshare

Abstract

In 2022, the Supreme Court held in ZF Automotive v. Luxshare that the federal statute on assistance to foreign and international tribunals does not include private international arbitration panels.^[1] Specifically, the Court determined that the statute required a tribunal to be “imbued with governmental authority” to count as a “foreign or international tribunal” within the context of the statute and that private arbitrations do not meet this definition.^[2] While the Court intended the holding to resolve a circuit split and provide clarification on an earlier decision, it left behind more ambiguity and questions about what “imbued with governmental authority” actually means.^[3] This Comment explores the Court’s reasoning in ZF Automotive v. Luxshare and whether it reflects the reality of private international arbitration. It concludes that the Court’s holding ignores the pervasiveness of international law and governance in private international arbitration and is inconsistent with the treatment of international arbitration in other contexts.

I. Introduction

International arbitration as a method of conflict resolution has continued to increase as large-scale investments and transactions cross international borders every day. Arbitration agreements protect parties from being dragged into litigation in foreign courts, where they are unfamiliar with the procedures, and provide a neutral forum for all parties.^[4] While discovery in international arbitration is traditionally not as extensive as in U.S. courts, document production is still a robust process to the extent necessary for tribunals to fairly evaluate the facts of the case.^[5] The U.S. Supreme Court decided ZF Automotive v. Luxshare in 2022, which limited the use of 28 U.S.C. § 1782—a federal statute meant to provide discovery assistance to foreign or international tribunals.^[6] The Court held that private international arbitration tribunals did not meet the definition of a “foreign or international tribunal” in the text of the statute because they are not “imbued with governmental authority.”^[7]

This Comment seeks to explore the Court’s holding in ZF Automotive and push back on its conclusion that private international arbitration tribunals lack governmental authority. Part II of this Comment explains the current state of U.S. discovery in international arbitration by summarizing the statutory background of § 1782, the case law leading up to ZF Automotive, the substantive and procedural history of ZF Automotive, and some ambiguity following the Court’s decision. Part III of this Comment explores the authority underlying private international arbitration in international law, the goals of international arbitration, and the use of discovery in international arbitration in order to assess the validity of the Court’s view. This Comment concludes that the Court’s decision in ZF Automotive contradicts the reality of private international arbitration and its treatment by the Court in other contexts.

II. The State of Discovery in International Arbitration and “Foreign or International Tribunals” Under 28 U.S.C. § 1782

Title 28, § 1782 of the U.S. Code governs discovery in foreign proceedings, including international arbitration proceedings.^[8] Until recently, the case law related to § 1782 primarily centered around Intel Corp. v. Advanced Micro Devices, Inc., a 2004 Supreme Court case that expanded the applicability of § 1782.^[9] In 2022, nearly two decades after Intel Corp., the Supreme Court handed down ZF Automotive v. Luxshare, which severely limited the use of § 1782 in international arbitration proceedings.^[10] This part will briefly describe the statutory background of § 1782 and its expansion by Intel Corp., explain the effect of the ZF Automotive decision on the applicability of § 1782, and highlight some potential ambiguity that remains following ZF Automotive.

A. The Statutory Background and the Intel Corp. Case

In the wake of World War II and with globalization on the rise, the U.S. Congress codified § 1782 in 1948, which allowed for witnesses residing in the United States to be deposed for civil actions in the foreign courts of countries that the United States was at peace with.^[11] Congress updated the Act in 1949 and again in 1958 in order to meet modern needs and widen its discovery assistance.^[12] Later, a congressional commission conducted a six-year study and passed a revised statute in 1964 that would promote even wider judicial assistance and equitable procedures for international tribunals and litigation proceedings.^[13] In 1996, the statute was updated for use in criminal investigations prior to formal accusations.^[14] In its current form, the statute provides that “[t]he 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.”^[15] The update history of § 1782 and its current form reflect a congressional intent to provide as much assistance to foreign and international tribunals as reasonably possible.^[16]

The U.S. Supreme Court expanded the use of § 1782 for foreign and international proceedings in June of 2004 in Intel Corp. v. Advanced Micro Devices, Inc.^[17] This case provided clarification on the applicability of § 1782 and resolved a circuit split regarding the requisite status of a proceeding before a foreign tribunal in order for the statute to apply. It also addressed whether a party seeking discovery has the burden of proving that the requested document or testimony would be discoverable in the foreign or international proceeding (the “foreign-discoverability” requirement).^[18]

The Supreme Court made three main conclusions about § 1782 in Intel Corp. First, there is no “foreign-discoverability” requirement in § 1782.^[19] The Court reasoned that the statute allows for district court discretion, the text and legislative history of § 1782 do not suggest that Congress intended such a rule, and it was senseless to have a foreign-discoverability rule “[w]hen the foreign tribunal would readily accept relevant information discovered in the United States.”^[20] Second, discovery is available to complainants that do not have the status of private litigants or sovereign agents. In other words, the discovery does not need to arise directly from a foreign court of law.^[21] Third, the proceeding before a foreign tribunal does not need to be pending or imminent to successfully invoke § 1782(a).^[22]

The Court also provided several factors for the district courts to consider when contemplating a § 1782(a) request: whether the person that the discovery is sought from is a participant or nonparticipant in the matter abroad, the nature of the foreign or international tribunal, and its receptivity to U.S. judicial assistance.^[23] While Intel Corp. expanded § 1782 beyond foreign courts of law and opened “the possibility of U.S. judicial assistance in connection with [administrative and quasi-judicial proceedings abroad],” the Court did not provide much detail on what constitutes a “foreign or international tribunal” that would fall under § 1782.^[24] Thus, in the years following Intel Corp., a circuit split formed on whether private adjudicatory bodies, such as those in private international arbitration, count.^[25]

B. ZF Automotive and the “Foreign or International Tribunal” Requirement

In an effort to resolve the circuit split over private adjudicatory bodies and provide clarification on what counts as a foreign or international tribunal under § 1782, the Supreme Court decided ZF Automotive v. Luxshare in 2022.^[26] The decision consolidated two disputes which were decided based on § 1782 and the Intel factors: Luxshare v. ZF Automotive, a case from the Eastern District of Michigan,^[27] and Fund for Protection of Investor Rights v. AlixPartners, LLP, a case from the Second Circuit.^[28]

1. Luxshare v. ZF Automotive Case

In the Eastern District of Michigan case, ZF Automotive, a Michigan-based subsidiary of a German corporation, sold two business units to Luxshare. Luxshare, a Hong Kong-based company, claimed that ZF Automotive had concealed information about the business units, causing Luxshare to overpay by hundreds of millions of dollars.^[29] In the contract for the sale of the business units, the parties had agreed that all disputes would be “exclusively and finally settled by three (3) arbitrators in accordance with the Arbitration Rules of the German Institution of Arbitration e.V. (DIS).”^[30] The German Institution of Arbitration is an independent association that has led arbitrations for national and international commercial disputes in Germany for over one hundred years.^[31] Intending to initiate an expedited arbitration against ZF Automotive, Luxshare filed an ex parte application in the Eastern District of Michigan under § 1782, seeking subpoenas for documents and for depositions of two senior officers of ZF Automotive.^[32]

ZF Automotive moved to quash the summons, in part by objecting to a private, commercial arbitral tribunal as being considered a foreign or international tribunal under § 1782.^[33] The magistrate judge ordered production of documents and the district court judge overruled ZF Automotive’s objections.^[34] The district court acknowledged the circuit split and that the Supreme Court had a case before it that considered whether private, commercial arbitral tribunals should be included or excluded under § 1782(a).^[35] Still, the district court followed the Sixth Circuit precedent that private arbitrations are included under § 1782 discovery.^[36] The Sixth Circuit denied ZF Automotive a stay pending appeal because it did not meet its burden to show sufficient likelihood for success on appeal.^[37]

2. The Fund v. AlixPartners Case

The Second Circuit case involved a private bank, AB bankas SNORAS (Snoras), which was nationalized by the Bank of Lithuania after Snoras became unable to meet its obligations.^[38] Lithuania appointed the current CEO of the consulting firm AlixPartners, LLP, as a temporary administrator.^[39] A Russian national with controlling shares in Snoras assigned the Fund for the Protection of Investor Rights in Foreign States (the Fund) to seek compensation for the expropriation of the shares by Lithuania.^[40] The Fund commenced arbitration against Lithuania under a bilateral investment treaty, the Agreement Between the Government of the Republic of Lithuania on the Promotion and Reciprocal Protection of the Investments (the Lithuania-Russia Investment Treaty).^[41] The Lithuania–Russia Investment Treaty provides that disputes which are unable to be settled amicably within six months will be handled in one of four options at the choice of the investor.^[42] The Fund chose the fourth option of an ad hoc arbitration^[43] in accordance with the Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL).^[44]

The Fund filed a § 1782 application in the Southern District of New York, seeking information from AlixPartners and its CEO about his role as temporary administrator.^[45] AlixPartners filed a response arguing that the ad hoc arbitration panel was a private adjudicative body and not a foreign or international tribunal under § 1782.^[46] Lithuania also sent a request to the arbitration tribunal for the panel to order the Fund to withdraw its § 1782 application; however, the panel ultimately rejected this request and declined to decide admissibility issues under Lithuanian law because it would be premature.^[47] The district court granted the discovery request and AlixPartners appealed.^[48] Although the Second Circuit previously held that a private arbitration panel does not constitute a “‘foreign or international tribunal’ under § 1782,”^[49] the court affirmed the district court’s ruling and held that the ad hoc panel was a “proceeding in a foreign or international tribunal” under § 1782.^[50] The Second Circuit found that the arbitration met its factors as a foreign or international tribunal because the arbitration arose out of a bilateral investment treaty and would take place before a panel established by the treaty.^[51]

3. The Supreme Court’s Holding

The Supreme Court unanimously reversed both cases, holding that § 1782 requires a foreign or international tribunal to be governmental or intergovernmental and that private adjudicatory bodies do not fall within § 1782.^[52] The adjudicatory bodies must have governmental authority conferred by one or more nations, and the Court did not find that either tribunal possessed such authority.^[53]

The ZF Automotive and Luxshare dispute was more straightforward because it was a private arbitration panel between two private parties operating under private arbitral rules of a private arbitrational organization.^[54] Thus, the Court held that the panel was not a “foreign tribunal” under § 1782. The Court rejected Luxshare’s argument that a panel would qualify as governmental if the law of the country where the panel sits “governs some aspects of arbitration and courts play a role in enforcing arbitration agreements” because that would “erase any distinction between private and governmental adjudicative bodies.”^[55]

The Fund’s dispute with Lithuania was more complex because it involved a sovereign on one side of the arbitration and the dispute arose out of an international treaty, not a private contract.^[56] However, the Court held that the nations did not “intend to confer governmental authority on an ad hoc panel formed pursuant to the treaty.”^[57] To reach this conclusion, the Court first considered the four dispute resolution options provided by the Lithuania–Russia Investment Treaty.^[58] Because the options include pre-existing governmental bodies, such as a competent court of the state in which the investor does business, the Court found that this reflected the intent of the signatory countries to give investors the choice of a forum affiliated with either Lithuania or Russia.^[59] The Court reasoned that, because the ad hoc panel was not a pre-existing body, there is nothing that reflects intent by Lithuania and Russia that the panel exercise government authority. Thus, the panel in the Fund’s dispute “is ‘materially indistinguishable in form and function’” from the panel between ZF Automotive and Luxshare.^[60]

C. Ambiguity Post-ZF Automotive: What Would Constitute an International Tribunal?

The Supreme Court established in ZF Automotive that, for purposes of determining whether an adjudicative body was a foreign or international tribunal under § 1782, “the inquiry is whether those [governmental] features and other evidence establish the intent of the relevant nations to imbue the body in question with governmental authority.”^[61] While the Court rejected both of the arbitral panels as being foreign or international under § 1782, the Court avoided explicitly providing an example about what would meet the foreign or international tribunal requirement. The closest the Court came to doing so was during its analysis of the Lithuania–Russia Treaty.^[62]

Part of the Fund’s argument in favor of the ad hoc arbitral tribunal in the dispute being intergovernmental was analogizing the tribunal to previous adjudicatory bodies. First, there was the dispute between the United States and Canada when the U.S. Coast Guard sunk the Canadian ship I’m Alone in 1929.^[63] When the two governments could not agree on whether the sinking of I’m Alone was legal or justified by the Liquor Convention of 1924, they submitted their arguments to Joint Commissioners under Article 4 of the Liquor Convention.^[64] Second, there was the Mixed Claims Commission, which was created from an agreement between the United States and Germany in 1922 to adjudicate the claims against Germany following World War I.^[65] While the Supreme Court claimed that it “need not decide the status of the I’m Alone and Mixed Claims commissions” in the ZF Automotive opinion, it did distinguish the dispute between the Fund and Lithuania from these commissions.^[66] The Court argued that the treaties at issue in I’m Alone and the Mixed Claims commissions specified the involvement of each sovereign in the formation of the adjudicatory bodies and how the commissions would be carried out.^[67] Therefore, it is likely that these commissions may be examples of “international tribunals” which were imbued with governmental authority under § 1782. Still, the Court declined to answer explicitly.

Considering the Court’s discussion of the I’m Alone and Mixed Claims commissions, some commenters on ZF Automotive question whether the International Centre for Settlement of Investment Disputes (ICSID) would be considered an international tribunal for the purposes of § 1782.^[68] While UNCITRAL is a commission of the United Nations,^[69] the ICSID was created by a specific treaty with more than 150 signatory countries.^[70] The ICSID Administrative Council has a representative from each member state, meets yearly to adopt regulations, approves rules for ICSID-administered cases, and has a council chair who designates individuals to serve as arbitrators.^[71]

However, recent cases from the Southern District of New York and Eastern District of New York have already held that these ICSID tribunals do not constitute international tribunals.^[72] The district judge in In re Webuild compared an ICSID panel, “which was convened pursuant to a [bilateral investment treaty] between Panama and Italy,” to the UNCITRAL arbitral panel in ZF Automotive and found that the panel was not imbued with governmental authority to qualify under § 1782(a).^[73] The claimant in In re Alpene, Ltd., argued that ICSID-arbitration proceedings differed from those in ZF Automotive and should qualify as intergovernmental tribunals under § 1782.^[74] Like the Southern District of New York, the Eastern District held that the ICSID-arbitration panel was not a foreign or international tribunal.^[75] Notably, the focus of the Supreme Court with the Russia–Lithuania treaty in ZF Automotive and the Eastern and Southern District of New York cases with the ICSID treaty was to treat these agreements like contracts between private parties.^[76]

The Second Circuit affirmed In re Webuild in 2024.^[77] It remains to be seen how the Supreme Court may rule on ICSID arbitrations or other arbitrations arising under international treaties and what kind of ad hoc arbitration tribunals will be considered to be “imbued with governmental authority.” However, this current ambiguity arose because of the Court’s perception of private international tribunals and view of arbitration as a contract between parties, diminishing its context in international law.

III. The Validity of the Supreme Court’s View on International Arbitration

The Supreme Court’s decision in ZF Automotive reflects its view of the relationship between international commercial arbitration and national court systems, resulting in the ambiguity about what counts as an international tribunal addressed in the previous part. This part will push back on the Supreme Court’s view on international arbitration by (1) describing the authority of international arbitration in the context of international and U.S. law; (2) exploring the goals and advantages of arbitration and the role of discovery in the arbitral process; and (3) analyzing the Court’s holding and underlying presumptions under traditional theories on international commercial arbitration.

A. The Role and Authority of International Arbitral Tribunals

The core holding in ZF Automotive was that private international tribunals are not imbued with governmental or intergovernmental authority.^[78] However, private arbitration is itself imbued in international authority because of its reliance on international treaties, and arbitral tribunals have certain powers recognized under international law.^[79] Professor Yanbai Andrea Wang submitted an amicus brief for ZF Automotive v. Luxshare that urged the Court not to draw an “artificial and ill-defined line between ‘public’ and ‘private’ arbitrations.”^[80] She argued that the line between public and private arbitrations is illusory because “virtually all international arbitration is conducted within the framework of international treaties or other inter-governmental agreements.”^[81]

The AlixPartners tribunal arose from the treaty between Lithuania and Russia which specifically provided for the option of an ad hoc arbitration.^[82] Even in private commercial arbitrations like ZF Automotive v. Luxshare, enforcement of arbitral awards arises under international treaty law with the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (commonly referred to as the “New York Convention”).^[83] In fact, the effectiveness of international arbitrations primarily relies on the New York Convention because it requires “Contracting States” to the agreement to “recognize arbitral awards as binding and enforce them in accordance with the rules of procedure of the territory where the award is relied upon.”^[84] While the focus is on enforcement, the entire treaty reflects binding international legal rules over the entire arbitration process.^[85] For example, the New York Convention establishes international choice of law rules for international arbitration agreements and imposes limits on invalidating the agreements to ensure Contracting States recognize their validity under international standards.^[86]

Furthermore, there is general deference in national and international law to arbitral tribunals enjoyed even by domestic arbitration. The International Court of Arbitration, which operates under the International Chamber of Commerce (ICC), also submitted an amicus curie brief to the Supreme Court for the ZF Automotive case.^[87] Although the brief was not in support of either party, the ICC emphasized that the Court should give heavy deference to tribunals and that the deference is supported under U.S. law and by the Intel Corp. factors.^[88] The brief also emphasized the policy considerations of that deference which are supported under the Federal Arbitration Act (FAA), citing to cases like AT&T Mobility LLC v. Concepcion.^[89] The ICC asserted that granting a § 1782 discovery motion should involve consideration of the views of the arbitral tribunals.^[90] The ICC views arbitral tribunals as the best place to assess discovery requests because of their authority and control over the arbitration.^[91] While the cases in ZF Automotive involved discovery attempts by a party prior to the involvement of a tribunal, the focus of the ICC is on the tribunal itself.^[92] However, the Supreme Court drew a line that blocked even requests supported by tribunals, not just attempts by one party to preempt discovery.^[93] If a court does not recognize an arbitral panel as a national or international tribunal, then the court cannot grant a § 1782 discovery request to compel production or deposition.^[94]

Underlying the general deference to arbitral tribunals, Article II of the New York Convention establishes the presumptive validity of arbitration agreements.^[95] The concept of kompetenz-kompetenz in international arbitration refers to the ability of an arbitrator or an arbitral tribunal to rule on its own jurisdiction, meaning an assessment of whether there was an agreement to arbitrate.^[96] This concept is reflected in international arbitration rules established by organizations like the ICC and UNCITRAL, which both emphasize that the tribunal continues to have jurisdiction even when the agreement underlying the claim is found to be null or void.^[97] The Supreme Court has additionally recognized a similar concept in domestic arbitration under the FAA.^[98]

If the Court recognizes the ability of a tribunal to rule on its own validity, it seems counterintuitive that even tribunal-supported discovery requests would be blocked under § 1782. Document production in international arbitration is still a significant process even if not as extensive as U.S. litigation.^[99] As the ICC pointed out in its brief, its own rules as well as other major arbitration rules recognize the authority of tribunals in overseeing the discovery process.^[100] For example, the International Bar Association (IBA) released its Rules on the Taking of Evidence in International Arbitration as guidelines for discovery procedures in international arbitration, whether institutional or ad hoc.^[101] The IBA’s rules, which have become a dominant choice for use in international arbitration,^[102] provide a detailed outline for discovery that is overseen by the tribunal.^[103]

When a party to an agreement with an arbitration clause refuses to comply and attempts to begin litigation in court, the remedy is that the courts uphold the arbitration clause and compel the party to arbitrate.^[104] When a party in an agreed-upon arbitration refuses to produce a document for discovery, the remedy is typically that the arbitration tribunal “infer that such evidence would be adverse to the interests” of the party refusing production.^[105] While this may be seen as a feature of arbitration, it nevertheless reduces the effectiveness and fairness of arbitration as a form of dispute resolution. Assuming that the evidence is “adverse to the interests” of a party may work when an issue is of a binary nature but could also be detrimental to an opposing party trying to prove certain elements in its case without proper support. Adverse inferences in international arbitration do not have a strong effect on the outcome like such inferences do in litigation and are therefore less likely to deter nonproduction.^[106] Thus, there needs to be a balance between deferring to the arbitration tribunal in protecting the interests of the parties and carrying out the arbitration process with maintaining the goals of international arbitration as an alternative form of dispute settlement.

B. The Goals of Arbitration and Discovery Abroad

There are two potential points in favor of the Supreme Court’s holding to exclude private adjudicatory bodies from § 1782. First, one goal of commercial arbitration is generally to be less costly and more efficient than traditional litigation, which typically means a less extensive discovery process.^[107] Second, discovery in international arbitration is not as extensive as U.S.-style discovery because it combines the expectations and interests of parties from many other countries.^[108] However, arbitration is not necessarily cheaper than litigation, especially in complex disputes like those in many international arbitrations, nor is cost a significant factor for parties choosing arbitration over litigation.^[109] Furthermore, contrary to the Court’s discussion in ZF Automotive,^[110] domestic arbitrations and international arbitrations are not so easily comparable.

1. Costs of Arbitration

While simple arbitration proceedings can save parties significant time and money compared to traditional litigation, complex agreements or controversies that involve large amounts of money may not be as cost-saving. Empirical research comparing the costs of arbitration and litigation is difficult because no two cases are alike, but an analysis performed by Christopher R. Drahozal demonstrated that upfront costs, such as administrative costs and arbitrator fees, will be more expensive than litigation.^[111] This is largely because costs in litigation are essentially “subsidized” by the government through the court system.^[112] Thus, in order for arbitration to be cheaper than litigation, parties will need to cut costs on attorney’s fees and other third-party expenses.^[113] While these fees in arbitration might be cheaper for smaller and mid-sized claims, arbitration may be more expensive than litigation in larger claims because of the administrative and arbitrator fees.^[114] This follows that parties are willing to spend more on attorney’s fees and other legal costs in order to defend large monetary claims regardless of the choice in dispute resolution.

International arbitration costs are likely to be even more expensive than domestic arbitration costs by nature of its global scale. The administrative costs of arbitration include the arbitrators’ fees and expenses, institutional fees, and logistical expenses (hotels, flights, etc.), among other costs.^[115] Travel expenses, for example, would be costlier than for domestic arbitrations and will need to include the arbitrators, witnesses, translators or interpreters, court reporters, and the parties themselves.^[116] The use of remote hearings, which substantially increased following the COVID-19 pandemic, has helped lower some of these administrative costs like travel expenses.^[117] However, in-person hearings are still preferred, likely due to concerns about cybersecurity, breach of confidentiality, and other perceived disadvantages of virtual hearings depending on the nature of the dispute.^[118]

Christian Bühring-Uhle did an empirical analysis on the advantages of international arbitration, which is subject to the same constraints as research on domestic arbitration.^[119] Bühring-Uhle, with the help of other scholars, sent a questionnaire to a sample group of practitioners from a variety of countries with “extensive experience in international business disputes” with the goal of determining the function of international arbitration and why parties choose it over litigation.^[120] While significant advantages of arbitration tended to be the neutrality of the forum and guaranteed international enforcement of the awards under the New York Convention, the presumably lower costs of arbitration was generally regarded as irrelevant or non-existing.^[121] When asked about the costs of arbitration, 41% of respondents considered arbitration “generally less expensive,” 43% considered arbitration “generally not less expensive,” and the remaining respondents felt that arbitration was only less expensive compared to litigation in certain countries or certain types of cases.^[122] Overall, international arbitration can be an expensive process and cost is not a primary reason for choosing to arbitrate claims.^[123]

2. Discovery in International Arbitration

International arbitration involves parties from a variety of jurisdictions, including common law and civil law jurisdictions, and generally does not involve as much discovery as typical U.S. litigation.^[124] However, as discussed previously, many international arbitration rules like those of the ICC and the IBA include detailed procedures over document production as overseen by the arbitrators.^[125] Thus, discovery in international arbitration has started to get more expansive.^[126] The document disclosure phase in arbitration can drag out the proceedings due to the numerous exchanges and disputes between the parties.^[127]

Even without considering how much more or less expansive discovery is in international arbitration than traditional litigation, it is unlikely that parties choose international arbitration over litigation primarily because of discovery procedures. While limited discovery was considered an advantage in Bühring-Uhle’s survey, it scored lower than other categories like the neutrality of the forum, treaty-ensured enforcement, and confidentiality.^[128] In fact, the American participants in the survey were the ones that assigned the most weight to limited discovery compared to the other groups.^[129] In contrast, the German participants considered limited discovery to be the least important.^[130] This reflects that German practitioners are not confronted with discovery in German courts the same way that American practitioners are in U.S. courts.^[131]

Furthermore, just because American practitioners view a less extensive discovery process as an advantage does not mean they necessarily want to block themselves from access to U.S. discovery completely. Nor would parties from other countries want to lose that access, given that the parties seeking discovery in ZF Automotive were both foreign entities.^[132] The other advantages to arbitration, particularly the neutrality of the forum, are more likely to drive parties in choosing arbitration over litigation. There may be legitimate concerns over abuse of the U.S. court system in international arbitration,^[133] but this abuse exists regardless of whether private international tribunals count under § 1782.^[134] The ineffectiveness of the Intel factors was arguably from their ambiguity in guiding judicial discretion in permitting discovery, not the breadth of cases to which § 1782 could be applied.

C. The Court’s View on International Arbitration

The previous sections sought to establish that international arbitration, even private commercial arbitration, is a product of international law and that traditional views of arbitration do not guide the increased inclination towards international arbitration. In light of these conclusions, this section considers the Court’s approach in ZF Automotive in the context of the various traditional views on international arbitration.

Scholars have established four different theories on the nature of arbitration: the jurisdictional theory, the contractual theory, the hybrid theory, and the autonomous theory.^[135] The jurisdictional theory maintains that arbitrations are regulated and enforced by the national laws of the country where its recognition or enforcement is sought.^[136] Thus, national courts have a supervisory role over arbitrators because the arbitrators’ powers are conferred by national law.^[137] The contractual theory focuses mainly on the agreement between the parties to arbitrate, generally without the interference of national law or the state judicial system.^[138] The hybrid theory, as the name implies, views international arbitration as a mixture of jurisdictional and contractual theory.^[139] While arbitration is a product of private agreement between the parties, it must be conducted within national legal regimes to ensure the validity of the agreements and enforceability of awards.^[140] The autonomous theory rejects the notions of jurisdictional and contractual theories and places international arbitration on a “supra-national” level.^[141] In order to meet the needs of international arbitration, an autonomous view considers arbitration as a standalone international institution with its own autonomy under international law.^[142]

As discussed previously, the Court’s decision to draw a line between private tribunals and those imbued with governmental authority leads to a questionable result in the context of international law.^[143] In particular, in the Fund v. AlixPartners dispute, which arose under a bilateral treaty, the Court did not consider the tribunal to be imbued in governmental authority.^[144] When analyzing whether the ad hoc arbitration constituted an international tribunal under § 1782, the Court focused on the intent of the countries in drafting the dispute resolution clause of the treaty.^[145] This analysis is akin to a “meeting of the minds” approach to understanding the intent of parties in contract law,^[146] reflecting the Court’s view on international arbitration as a seemingly contractual theory. If this view is indeed a pure contractual theory, then the holding in ZF Automotive is consistent and coherent. Under contractual theory, the relationship between the arbitrators and the parties is completely private.^[147] Arbitrators are not delegated authority from the national court system like in a jurisdictional theory, and the arbitration awards are enforced under contract law.^[148] Thus, an international arbitration tribunal would not be “imbued with governmental authority” because it is purely a private matter.

However, there are issues with this contractual view on the relationship between arbitrators and the parties as well as enforcement of arbitration awards. The contractual theory struggles to define the relationship between arbitrators and the parties in the context of a contract. Some contractualists view arbitrators as agents of the parties, even though arbitrators are supposed to work independently and impartially.^[149] Also, arbitration awards are enforced through the New York Convention, an international treaty, and not purely local contract law.^[150] Therefore, it is unlikely that the Court’s view of international arbitration can be a pure contractualist view.

The other theories on international arbitration support the idea that private international commercial arbitration is imbued with governmental authority. The jurisdictional and hybrid theories view arbitrators as an extension of the national courts because their authority is derived from the rules of law of the state where enforcement of an award is sought.^[151] As discussed previously, the Court has upheld the arbitrators’ ability to decide the validity of an arbitration agreement.^[152] This deference to the arbitration tribunal by the Court aligns more with a jurisdictional or hybrid view of arbitration because there is arguably some delegation of authority. Under the autonomous theory, an institution of international commercial arbitration would itself be an intergovernmental entity that would likely fall under § 1782. Thus, while the Supreme Court implied that international arbitration is detached from governmental or intergovernmental authority in its ruling, the reality of international arbitration and its treatment by the Court in other contexts does not support that implication.

IV. Conclusion

The Court’s holding in ZF Automotive that adjudicatory bodies must be “imbued with governmental authority” to be considered a “foreign or international tribunal” under 28 U.S.C. § 1782 contrasts with the treatment of international arbitration under national and international law. International arbitration is largely a creature of international treaty law and derives support and validity from enforcement by national governments, including the U.S. courts. The attempt to draw a line between private and public tribunals contradicts the reality of international arbitration and leaves behind further ambiguity about what counts. This divide contrasts with the spirit of § 1782 as it historically developed to provide as much assistance to foreign and international tribunals as possible.

Madison Oswald