30 August 20233 minute read

Federal court confirms 28 U.S.C. § 1782 does not apply to ICSID arbitrations following Supreme Court ruling

Yet another district court within the Second Circuit has ruled that an ICSID arbitration panel is not a foreign or international tribunal within the meaning of Section 1782.

The case of In re Alpene, Ltd., No. 21MC2547MKBRML, 2023 WL 5237336 (E.D.N.Y. Aug. 15, 2023) arises out of an ongoing ICSID arbitration brought by Hong Kong-based company Alpene Ltd. against Malta. Alpene indirectly owns 100 percent of Pilatus Bank plc in Malta and claims that Malta breached the China-Malta bilateral investment treaty (BIT) by revoking Pilatus’s banking license. In support of its ICSID claim, Alpene sought an order authorizing the issuance of subpoenas for documents and testimony to Elizabeth McCaul – who, according to Alpene, worked with the Malta Financial Services Authority to appoint the head of the Bank following its takeover – pursuant to Section 1782.

Magistrate Judge Robert M. Levy initially stayed Alpene’s application pending the Supreme Court’s decision in AlixPartners – one of two cases taken up by the Supreme Court to resolve the question of whether international arbitration proceedings qualify as “foreign or international tribunals” within the meaning of Section 1782. In its March 23, 2022, AlixPartners decision, the Supreme Court ultimately found that the underlying ad hoc treaty arbitration panel was not a governmental adjudicatory body and thus that Section 1782 discovery was unavailable. However, the decision did not directly address whether ICSID arbitrations – conducted under the auspices of the World Bank and which thus afford member state governments some degree of control and influence over administrative matters – qualify for Section 1782 assistance.

Following the Supreme Court’s decision in AlixPartners, Alpene and McCaul submitted supplemental briefing. On October 27, 2022, Magistrate Judge Levy adopted the Supreme Court’s reasoning to find that the ICSID arbitration panel appointed by Alpene and Malta likewise did not qualify as a foreign or international tribunal under Section 1782, because neither Malta nor China intended to imbue the panel with governmental authority.

On August 15, 2023, following Alpene’s objection to Magistrate Judge Levy’s October 2022 Order, the court issued an opinion agreeing with Judge Levy’s determination. The court found that the ICSID panel here – which, like the ad hoc panel at issue in AlixPartners, was created by a treaty among sovereign nations and derives its power from the consent of the parties (Alpene and Malta) – was not a foreign or international tribunal within the meaning of Section 1782. The Court also found that, as in AlixPartners, the ICSID panel was one of several options – including the “competent court” of either China or Malta – from which Alpene and Malta could choose to litigate their dispute under the BIT, and that the existence of this option evidenced the member states’ intention to provide for the choice of bringing disputes before a pre-existing governmental body, not to imbue the ICSID panel with governmental authority.

This latest decision follows a December 19, 2022, decision in In re Webuild S.P.A., No. 22-MC-140 (LAK), 2022 WL 17807321 (S.D.N.Y. Dec. 19, 2022), where the Southern District of New York found that an ICSID tribunal constituted under the Italy-Panama BIT likewise did not qualify as a “foreign or international tribunal” within the meaning of Section 1782. These cases confirm the nonavailability of Section 1782 discovery in aid of ICSID arbitrations in New York and may also foreshadow the approach that may be taken by other lower courts to ICSID arbitration panels as they seek to chart the way forward on this question.

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