The Second Circuit recently held that a request for discovery under section 1782 cannot be made in connection with private international commercial arbitration, deepening an existing division among the federal circuits. From 2012 to 2013, Petitioner-Appellant Hanwei Guo invested approximately $26 million in companies known as Ocean Technology, Ocean Music, and Ocean Culture, all of which were founded by Guomin Xie, a music executive and lawyer, and operated in the Chinese music streaming market. Through a series of transactions that Guo asserted were "misleading, extortionate, and fraudulent," Guo sold his shares in the three Ocean entities for less than they were allegedly worth. Ocean Music then became part of Tencent Music, one of the world's largest music streaming services, following a series of mergers. Shortly before Tencent Music's American initial public offering, in September 2018, Guo initiated arbitration against Xie, Tencent Music, and other entities before the China International Economic and Trade Arbitration Commission (CIETAC). Guo claimed that Xie and others defrauded him and that "he was entitled to be paid compensation and to have his equity stake restored."
Subsequently, Guo filed a petition for discovery pursuant to 28 U.S.C. § 1782(a) in the US District Court for the Southern District of New York. Guo's petition sought discovery from four investment banks related to their work as underwriters in the Tencent Music initial public offering. Section 1782 of Title 28 of the US Code authorizes federal courts to compel the production of materials "for use in a proceeding in a foreign or international tribunal." The district court denied Guo's application, finding inter alia that CIETAC was "closer to a private arbitral body than it is to a 'governmental . . . tribunal[]' or 'other state sponsored adjudicatory bod[y]." Guo timely appealed and asked the court to revisit its holding in National Broadcasting Co. v. Bear Stearns & Co., 165 F.3d 184 (2d Cir. 1999) (NBC), in light of the subsequent holding in Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241 (2004) (Intel). In NBC, the Second Circuit had held that the phrase "foreign or international tribunal" did not encompass "arbitral bod[ies] established by private parties." Guo argued that private arbitrations are within the scope of section 1782(a) and that Intel's discussion of section 1782's legislative history and general principles of statutory construction undermined the court's prior decision in NBC that the phrase "foreign or international tribunal" did not encompass private arbitrations.
The Second Circuit affirmed the district court's denial of Guo's petition, holding the arbitration at issue was a non-covered, private, international commercial arbitration, and nothing in Intel alters the Second Circuit's prior conclusion in NBC that Section 1782(a) does not extend to private international commercial arbitrations. While that decision is consistent with the Fifth Circuit's interpretation of 28 U.S.C. § 1782, it appears to conflict with Fourth and Sixth Circuit decisions allowing parties to conduct discovery in the U.S. for use in private foreign arbitrations.
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