Tradiverse Corporation v. Luzar Trading S.A.

Background

Tradiverse and Luzar were involved in two arbitrations. The parties also had related proceedings seeking confirmation or vacatur—meaning approval or cancellation—of the arbitration awards. Tradiverse applied for discovery concerning alleged arbitrator bias in both arbitrations.

Much of Tradiverse’s request concerned a separate “Clause 20” application to the North American Export Grain Association (NAEGA). That application sought a finding that Tradiverse’s failure to fully perform a contract was justified. An NAEGA committee rejected the application, but the March 2020 arbitration panel later found that the application should have been granted and ruled accordingly.

Discovery Requests and Court’s Analysis

Tradiverse sought to depose Gary Martin, Michael Kaye, and arbitrator Andrew Marting. It also sought information and documents concerning payments from Luzar to Archer-Daniels-Midland, materials designated as privileged by NAEGA, a joint defense agreement between NAEGA and Luzar, and a seminar in Japan involving NAEGA personnel and two people selected by Tradiverse to serve on arbitration panels.

The court explained that discovery in proceedings to confirm or vacate arbitration awards is available only in limited circumstances, when it is relevant and necessary to deciding an issue raised by the application. Courts must also limit discovery because arbitration is intended to be relatively prompt and inexpensive. Discovery directed at an arbitrator is especially restricted because it can interfere with the arbitrator’s quasi-judicial role.

The court concluded that most of Tradiverse’s requests related to the NAEGA proceeding rather than the two arbitrations. It found those requests irrelevant to the cases before it. The court also rejected Tradiverse’s effort to infer arbitrator bias from its disagreement with the arbitration awards. An incorrect or unfavorable award, by itself, did not justify discovery into possible bias.

The court found that the seminar in Japan did not provide a sufficient basis for discovery because NAEGA was not a party to either arbitration and Tradiverse’s theory of improper influence was speculative. As to the requested deposition of Marting, the court stated that an arbitrator may not be deposed without clear evidence of impropriety and found no such evidence here.

Disposition

Magistrate Judge Gabriel W. Gorenstein held that none of the requested discovery was necessary to the just and speedy resolution of the case or satisfied Federal Rule of Civil Procedure 26(b)(1). The court denied the application for discovery identified as Docket #13.