Burr & Forman

02.25.2013   |   Articles / Publications

Burr Alert: Doctrinal Split Over Nonparty Discovery in Arbitration Continues

The Federal Arbitration Act (FAA) was enacted to ensure the enforceability and validity of arbitration agreements. Through the enactment of this sweeping legislation, Congress signaled its approval of arbitration as a form of alternative dispute resolution and ushered in a national policy favoring arbitration. Currently, however, this national policy is frustrated by a circuit split regarding arbitrators’ ability to issue nonparty subpoenas when not incident to an actual arbitration hearing.
The split specifically concerns Section 7 of the FAA and whether, by its vague language, the section permits an arbitrator to compel pre-hearing discovery depositions and document production from nonparties. Section 7 states in pertinent part:

The arbitratorsā€¦or a majority of them, may summon in writing any person to attend before them or any of them as a witness and in proper case to bring with him or them any book, record, document or paper which may be deemed material as evidence in the caseā€¦.1

Thus, while arbitrators have indubitable authority to summon witnesses and documents attendant to an actual arbitration hearing, the split arises because courts disagree as to whether this authority extends to nonparties where discovery is sought prior to the hearing. Two primary, and distinctly different, approaches to the matter have evolved through the circuits’ decisions: the implicit powers approach and the express language approach. In formulating the two approaches, the circuits favoring the implicit powers approach have relied upon arbitration’s general goals of efficiency and cost-effectiveness to support the finding of an inherent power to compel pre-hearing discovery from nonparties while the circuits adopting the express language approach have focused on the plain language of Section 7 to conclude that the statute does not grant such authority.

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