As many people are aware, the Panama Canal expansion is one of the largest "megaprojects" going on in the world today. In January of 2014, the joint-venture contractor called GUPC (which stands for Grupo Unidos Por El Canal, S.A.) announced that cost overruns required $1.6 billion in additional money to be paid to it by the Panamanian government. Then, in December of 2014, the GUPC consortium stated that it had additional claims totaling $737 million.
Of course, in the world of the international construction lawyer, this means arbitration. GUPC filed its arbitration in December of 2013 under the International Chamber of Commerce ("ICC") rules in Miami, Florida, in accordance with the contractual dispute resolution clause. Discovery in the case is being conducted under the International Bar Association Rules on the Taking of Evidence in International Commercial Arbitration -- the IBA Rules.
In that arbitration, GUPC seeks compensation for its cost overruns and other damages from Autoridad del Canal de Panama -- the Panama Canal Authority, or ACP. ACP contracted with CH2M Hill Panama, S. de R.L., for CH2M Hill-Panama to serve as ACP's program manager for the Canal expansion.
GUPC believed that CH2M Hill-Panama would have documents necessary for its arbitration with GUPC and served a request for production of documents under 28 U.S.C. § 1782 on CH2M Hill-USA in Colorado as a result. CH2M Hill-USA refused to provide the documents.
The result of that subpoena ended up in a battle in the United States District Court for the District of Colorado. In re Application of Grupo Unidos Por El Canal, S.A., Civil Action No. 14-mc-00226-MSK-KMT (D. Colo. April 17, 2015). Bear in mind that this opinion is a magistrate's recommendation to the District Court, so this is by no means a final decision.
CH2M Hill-USA made five major arguments. First, CH2M Hill-USA argued that the ICC arbitration was not a tribunal as that term is defined under §1782. Second, CH2M Hill-USA claimed that the ICC arbitration is not a "foreign or international tribunal" as is required by § 1782. Third, CH2M Hill-USA stated that they do not have possession or control of the documents -- CH2M Hill-Panama does -- and, further, that the documents are located outside the United States. Fourth, CH2M Hill-USA argued that the subpoena was unduly burdensome and intrusive. Finally, CH2M Hill argued that the subpoena in federal court was an attempt to circumvent discovery limitations imposed in the ICC arbitration.
In the end, the magistrate agreed with CH2M Hill-USA on all of its arguments. First, the ICC arbitration was not a "tribunal" because it arose out of a private agreement to decide claims using certain rules. Even though those rules may lend the appearance of being a quasi-judicial proceeding, the court was not persuaded that voluntarily agreeing to those rules created a "tribunal" for purposes of §1782.
Second, the court held that private arbitration does not fall under the meaning of "foreign or international tribunal" under §1782. The distinction drawn is that arbitral proceedings that are the product of contractual agreements differ from state-sponsored proceedings in foreign courts. The magistrate was persuaded that enforcing the subpoena "would defeat the timeliness and cost-effectiveness of arbitration, and would place a heavy burden on the federal courts to determine discovery requests." Slip Op. at 16. Further, the magistrate was not persuaded that this was an international arbitration because it was being held in the United States, but she did not rule on the issue because it was not necessary to do so.
Third, as to the location of the documents, the magistrate cited to the fact that Congress likely meant for the reach of §1782 to apply only to evidence located inside the United States. After all, it would be outside the Court's jurisdictional reach to compel CH2M Hill-USA to produce documents physically located in Panama.
Fourth, in analyzing the burden issue on CH2M Hill-USA, the magistrate considered the factors set forth in Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241 (2004). Even though the magistrate was not required to reach these factors, the court noted that if the statutory requirements under §1782 had been met, she still would have denied production. Under Intel, certain discretionary factors such as burden come into play. Here, production would have required CH2M-Panama to produce 89 boxes of paper and 1.6575 terabytes of information -- which works out to approximately 80,000 boxes of documents. Thus, the magistrate held that on that fact alone, it is likely that the requests were too broad.
Finally, the magistrate agreed that the subpoena was an effort to circumvent the ICC panel's authority related to discovery. GUPC neither sought nor received approval from the arbitration panel to obtain the information requested. This fact led the magistrate to believe that the delay associated with such a "grandiose document production" would not be well received by the Panel. As such, for every reason possible -- both statutory and those within the court's discretion -- the request for the subpoena to be enforced was denied.