Alpene Ltd. ("Alpene") commenced this case on August 30, 2021, seeking an order authorizing it to issue subpoenas for documents and testimony to Elizabeth McCaul ("McCaul") in aid of a foreign proceeding, pursuant to 28 U.S.C. § 1782. By order dated September 9, 2021, the Honorable Margo K. Brodie, United States District Judge, referred the application to me. On September 20, 2021, I granted the request. (See Order, dated Sept. 20, 2021.) McCaul filed the instant motion to vacate, and for an order quashing and granting a protective order with respect to the document and deposition subpoenas, on November 11, 2021. (See motion to vacate, dated Nov. 11, 2021, Dkt. No. 14; Memorandum of Law in Support of motion to vacate Order Granting Discovery Pursuant to 28 U.S.C. § 1782, dated Nov. 11, 2021, Dkt. No. 15.)
Because the United States Supreme Court had granted certiorari in AlixPartners, LLP v. The Fund for Protection of Investors' Rights in Foreign States, 142 S. Ct. 638 (2021), cert. granted, No. 21-518, 2021 WL 5858633 (U.S. Dec. 10, 2021), which had the potential to affect the outcome of this matter, I stayed the application pending the Court's decision. (See Memorandum & Order, dated Feb. 3, 2022 (the "M&O"), Dkt. No. 26.) On June 13, 2022, the Supreme Court issued a unanimous decision in AlixPartners, which was consolidated with a case called ZF Automotive US, Inc. v. Luxshare, Ltd. See ZF Auto. US, Inc. v. Luxshare, Ltd., 142 S. Ct. 2078 (2022) ("AlixPartners"). The parties then briefed the question of how the Court's decision impacts this case. (See Supplemental Memorandum of Law in Support of Motion to Vacate Order Granting Discovery Pursuant to 28 U.S.C. § 1782, and for Related Relief, dated July 1, 2022, Dkt. No. 28; Supplemental Memorandum of Law in Support of Application of Alpene Ltd. for an Order Directing Discovery from Elizabeth McCaul Pursuant to 28 U.S.C. §1782, dated July 22, 2022, Dkt. No. 30; Reply Supplemental Memorandum of Law in Further Support of Motion to Vacate Order Granting Discovery Pursuant to 28 U.S.C. § 1782, and for Related Relief, dated Aug. 5, 2022, Dkt. No. 31.)
The Bilateral Investment Treaty between Malta and China provides that a dispute between an investor and one of the contracting parties that is not resolved through negotiations can be submitted at the investor's choice to: (1) a court of appropriate jurisdiction in the country that is a party to the dispute (here, Malta); (2) arbitration under the auspices of the ICSID, or (3) ad hoc arbitration under the Arbitration Rules of the United Nations Commission on International Trade Law ("UNCITRAL"), like the arbitration panel in AlixPartners. (See Agreement Between the Government of Malta and the Government of the People's Republic of China on the Promotion and Protection of Investments, dated Feb. 22, 2009 ("Treaty"), annexed to the Declaration of Michael C. Keats, Esq., dated Nov. 11, 2021, as Ex. 3, Dkt. No. 16-3, art. 9(2), at 8.) In other words, the ICSID is one of several options an investor could elect to resolve a dispute. As the Court explained in AlixPartners, "[t]the inclusion of courts on the list" reflects Malta's and China's "intent to give investors the choice of bringing their disputes before a pre-existing governmental body" or to "one formed for the purpose of adjudicating investor state disputes." 142 S. Ct. at 2090. In other words, the inclusion of domestic courts as one option undercut the contention that the arbitration panel had governmental authority. However, the Court left open the possibility that sovereigns might imbue such an arbitration panel with official authority. Id. at 2091 ("Governmental and intergovernmental bodies may take many forms, and we do not attempt to prescribe how they should be structured.").
Alpene chose to initiate an arbitration under the ICSID. (Declaration of Edward Baldwin, Esq., dated Aug. 30, 2021, Dkt. No. 4-1, ¶¶ 5-6, Ex. 1.) As McCaul points out, the ICSID is an independent, self-contained system. The ICSID operates under the authority of the World Bank, an intergovernmental organization, and is an international arbitration institution established in 1966 for legal dispute resolution and conciliation between states and investors who are nationals of other states. (See About ICSID, ICSID, https://icsid.worldbank.org/About/ICSID (last visited Oct. 6, 2022). As was the case with the ad hoc arbitration panel in AlixPartners, the applicable treaty did not itself create the ICSID panel, which "consists of individuals chosen by the parties and lacking any official affiliation with [the treaty nations.]" AlixPartners, 142 S. Ct. at 2090. (See Treaty, art. 9(6) at 9; Supplemental Declaration of Michael C. Keats, Esq., dated July 1, 2022, Dkt. No. 29, Exs. 35 & 36.) The treaty is also silent as to whether it was the parties' intent "to imbue [the ICSID] with governmental authority." 142 S. Ct. at 2091.
However, there are some significant differences between the ICSID and the ad hoc panel at issue in AlixPartners. As Alpene emphasizes, the ICSID has over 150 member states,1 including Malta and China, which ratified the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the "ICSID Convention"). Member states can designate individuals to serve on the ICSID Panels of Arbitrators and Conciliators.2 (See Convention on the Settlement of Investment Disputes between States and Nationals of Other States, Dkt. No. 30-3, Art. 13; MEMBERS OF THE PANELS OF CONCILIATORS AND OF ARBITRATORS, Dkt. No. 30-6.) In addition, each member state has a representative on the ICSID Administrative Council, which meets annually to adopt administrative and financial regulations and approve rules for ICSID-administered cases. (Id.) Indeed, the legal framework of the ICSID Convention creates a permanent institution, and provides that the resulting awards shall have the status of final judgments and are binding as a matter of public law in all ICSID member states. ICSID awards are also entitled to full faith and credit in U.S. courts. Tethyan Copper Co. Pty Ltd. v. Islamic Republic of Pakistan, No. 19 CV 2424, 2022 WL 715215, at *3 (D.D.C. Mar. 10, 2022). However, the fact that courts play a role in enforcing arbitration agreements and awards does not give an arbitral panel "governmental authority." AlixPartners, 142 S. Ct. at 2089.
The Court in AlixPartners also referred to the need to interpret § 1782 in harmony with the Federal Arbitration Act, which authorizes discovery in U.S. arbitration proceedings only in narrow circumstances. It noted that construing § 1782 to reach foreign arbitrations would create a "notable mismatch between foreign and domestic arbitration." Id. at 2088 ("[I]t's hard to conjure a rationale for giving parties to private foreign arbitrations such broad access to federal-court discovery assistance in the United States while precluding such discovery assistance for litigants in domestic arbitrations.") (quoting Servotronics, Inc. v. Rolls-Royce PLC, 975 F.3d 689, 695 (7th Cir. 2020)). The same "mismatch" would apply here, were this court to permit Alpene to take discovery from McCaul.
Dated: Brooklyn, New York
October 27, 2022
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