In an arbitration, third-party discovery—i.e., seeking documents or testimony from non-parties—can raise thorny legal issues, particularly where the non-parties and the arbitrator are located in different jurisdictions. Practitioners seeking to enforce arbitral subpoenas need to consider personal jurisdiction and procedural requirements through the lens of both the Federal Arbitration Act (FAA) and the Federal Rules of Civil Procedure (FRCP). Senior U.S. District Court Judge Jed S. Rakoff for the Southern District of New York recently conducted a nuanced analysis of these issues in Broumand v. Joseph, 2021 WL 771387 (S.D.N.Y. Feb. 27, 2021), a subpoena enforcement proceeding where the out-of-state respondents successfully resisted arbitral subpoenas.

Background

In Broumand, the underlying arbitration involved the petitioner’s claim that two individuals diverted assets from a New York corporation in which the petitioner had an interest. The arbitrator issued subpoenas for documents and testimony to two non-parties who were officers of the corporation. The arbitrator was sitting in New York and the respondents were domiciled in Virginia and California. The arbitrator directed that the “hearing” would proceed via videoconference. After the respondents ignored the subpoenas, the petitioner filed a petition to compel their compliance.

Personal Jurisdiction