United States District Court, D. New Jersey
In Re Application of OWL SHIPPING, LLC & ORIOLE SHIPPING, LLC, Applicants Pursuant to 28 U.S.C. § 1782 for Judicial Assistance in Obtaining Evidence from DALIAN SUNTIME INTERNATIONAL TRANSPORTATION (USA), INC., SUNTIME AMERICA, INC., AND MS. MAGIC SUN for Use in a Foreign Proceeding
MEMORANDUM OPINION AND ORDER
DOUGLAS E. ARPERT, Magistrate Judge.
This matter comes before the Court on an ex parte Application by Owl Shipping, LLC and Oriole Shipping, LLC (collectively "Petitioners") for the issuance of subpoenas to Dalian Suntime International Transportation (USA), Inc. ("Dalian USA), Suntime America, Inc. ("Suntime America"), and Ms. Magic Sun (collectively "Respondents") pursuant to 28 U.S.C. § 1782(a). The proposed subpoenas seek depositions and the production of documents from Respondents for use in a proceeding before the London Maritime Arbitrators Association ("LMAA") between Petitioners and Dalian Suntime International Transportation Company Limited ("Dalian International"). For the reasons set forth below, Petitioners' Application is GRANTED.
Owl Shipping LLC ("Owl") and Oriole Shipping LLC ("Oriole") are the owners of the vessels, the M/V Owl and the M/V Oriole, respectively. Dkt. No. 1, Underhill Decl. ¶ 3. Dalian International entered into time-charter agreements with Petitioners for the Owl (the "Owl Charter Agreement") and the Oriole (the "Oriole Charter Agreement") (collectively the "Charter Agreements"). Id. at ¶¶ 4, 9, 10. According to Petitioners, the Owl was delivered to Dalian International on June 19, 2014 in accordance the Owl Charter Agreement. Id. at ¶ 13. Petitioners claim that despite receiving invoices and notices, Dalian International failed to pay hire and pay for the bunkers as required by the Owl Charter Agreement. Id. at ¶¶ 15-18. As a consequence of the alleged breach, Owl was forced to terminate the charter party and withdraw the vessel. Id. at ¶ 18. According to Petitioners, there remains a total outstanding amount due under the Owl Charter Agreement of $1, 546, 336.00. Id. at ¶ 40.
As to the Oriole Charter Agreement, Petitioners claim the Oriole was delivered to Dalian International on June 15, 2014. Id. at ¶ 19. According to Petitioners, despite receiving invoices and notices, Dalian International also failed to pay the invoices as required by the Oriole Charter Agreement. Id. at ¶¶ 23-35. Although Dalian International has made partial payment, Petitioners allege there remains a total outstanding amount due of $1, 166, 915.11 under the Oriole Charter Agreement. Id . at ¶ 40.
The Charter Agreements for both the Owl and Oriole contain virtually identical terms and Clause 45 of both Agreements calls for arbitration of all disputes arising out of the contract in London under English law. Id. at ¶ 11, 12. Petitioners have filed notices of arbitration before the London Maritime Arbitrators Association ("LMAA") in order to address Dalian International's alleged breach of the Charter Agreements. Id. at ¶ 37.
Petitioners now seek documents from Respondents they believe will be necessary to substantiate their claims before the LMAA. Specifically, Petitioners seek evidence related to Dalian International's financial situation at the time they entered into the Charter Agreements in order to prove that Dalian International entered into the Agreements in bad faith and knowing it did not have the funds to make the required payments. Id. at ¶ 6. Petitioners believe that Respondents, as affiliates of Dalian International, possess highly relevant financial information that Petitioners will not be able to obtain from Dalian International through the LMAA proceedings.
II. LEGAL STANDARD
Under 28 U.S.C. § 1782(a), "[t]he district court in which a person resides or is found may order him to give his testimony or statement or to produce a document or other thing for use in a proceeding in a foreign or international tribunal... [t]he order may be made... upon the application of any interested person and may direct that the testimony or statement be given, or the document or other thing be produced before a person appointed by the court." A district court is authorized to grant an application under § 1782 if the following three statutory requirements are met:
(1) the person from whom discovery is sought resides or is found within the district; (2) the discovery is for use in a proceeding before a foreign or international tribunal; and (3) the application is made by a foreign or international tribunal or any interested person.
In re Application of Microsoft Corp., 428 F.Supp.2d 188, 192 (S.D.N.Y. 2006).
If the statutory requirements are met, a district court may, in its discretion, grant the application. The Supreme Court has identified four discretionary factors that the district court can consider when ruling on a § 1782(a) request":
(1) whether the person from whom the discovery is sought is a participant in the foreign proceeding; (2) the nature of the foreign tribunal, the character or the proceedings underway abroad, and the receptivity of the foreign government or the court or agency abroad to U.S. federal-court judicial assistance; (3) whether the § 1782 request conceals an attempt to circumvent foreign proof-gathering restrictions or other policies of a foreign county or ...