Sidley recently achieved a significant victory on behalf of Lars Windhorst when the Southern District of Indiana vacated its prior order granting discovery under 28 U.S.C. § 1782 in aid of foreign proceedings. The court vacated its order and denied the Section 1782 application on the basis that no foreign proceeding was within reasonable contemplation, though the Section 1782 applicant alleged that he intended to file proceedings against Mr. Windhorst in the United Kingdom. The court also expressed concern that the applicant in fact sought discovery for ongoing arbitration seated in the United States, not for any contemplated litigation in the United Kingdom. The decision shows that U.S. courts will strictly interpret the requirement that a foreign proceeding be within reasonable contemplation and, further, that a purported proceeding cannot be a pretext for obtaining Section 1782 discovery impermissibly for international arbitration proceedings. The Sidley team consisted of partners Tai-Heng Cheng and Martin Jackson and associates Gaëlle Tribié, Kierstin Fowler, and Cassandra Liu (all in New York).
Section 1782 is a hot topic in the arbitration space. A recent decision of the Second Circuit confirming that Section 1782 cannot be used in aid of international arbitration has magnified a Circuit split on this issue. This issue is also pending before the Seventh Circuit. Courts are divided on whether Section 1782’s wide and unilateral discovery in aid of foreign proceedings applies to international arbitration.