Response to application from respondent Luxshare, Ltd. — ZF Automotive US, Inc., et al., Applicants v. Luxshare, Ltd.

Supreme Court briefOct 21, 2021

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NO. 21A80

______________

IN THE

Supreme Court of the United States

______________

ZF AUTOMOTIVE US, INC., GERALD DEKKER, AND CHRISTOPHE MARNAT,

Applicants,

LUXSHARE, LTD.,

Respondent.

RESPONSE TO APPLICATION DIRECTED TO THE HONORABLE BRETT M. KAVANAUGH

FOR STAY AND REQUEST FOR IMMEDIATE ADMINISTRATIVE STAY

Andrew Rhys Davies

Counsel of Record

Bradley S. Pensyl

Kendall R. Pauley

ALLEN & OVERY LLP

1221 Avenue of the Americas

New York, New York 10020

(212) 610-6300

andrewrhys.davies@allenovery.com

October 21, 2021

Attorneys for Respondent

RULE 29.6 DISCLOSURE STATEMENT

Pursuant to Rule 29.6 of the Rules of this Court, respondent Luxshare Ltd.

hereby states that it has no parent company and that no publicly held company owns

10% or more of its stock.

TABLE OF CONTENTS

RULE 29.6 DISCLOSURE STATEMENT................................................................i

TABLE OF AUTHORITIES ....................................................................................iv

INTRODUCTION .....................................................................................................1

BACKGROUND .......................................................................................................3

Statutory Background ......................................................................................3

II.

Factual Background .........................................................................................5

III.

Applicant ZF US Defrauds Respondent Luxshare................................5

To Avoid Statute-of-Limitation Issues, Luxshare Should Initiate

an Expedited Arbitration Proceeding in Germany by the End of

2021 .......................................................................................................6

Procedural Background ...................................................................................7

The District Court Permits Luxshare to Take Limited Discovery

Under 28 U.S.C. § 1782(a) for Use Before the German Arbitral

Tribunal .................................................................................................7

The District Court Compels Applicants to Comply with the

§ 1782(a) Subpoenas, and Denies a Stay Pending Appeal ...................8

Applicants File an Appeal and Seek a Stay, Petition for Certiorari

Before Judgment, and Seek Summary Affirmance in Their Own

Appeal Following the Court of Appeals’ Denial of a Stay ...................9

REASONS FOR DENYING THE REQUESTED STAY.......................................11

Applicants Have Not Shown that They Will Be Irreparably Injured

Absent a Stay of the Order Compelling Discovery .......................................13

II.

Applicants Have Not Made a Strong Showing that this Court Is Likely

to Grant Certiorari Before Judgment and Rule in Applicants’ Favor on

the Question of Civil Procedure Presented Here ...........................................20

III.

Applicants Have Not Shown a Reasonable Probability that this

Court Will Grant Their Petition for Writ of Certiorari Before

Judgment to Address this Discovery Dispute .....................................21

Applicants Have Also Not Shown a Significant Possibility that

this Court Will Overrule the Sixth Circuit’s Holding that 28

U.S.C. § 1782(a) Encompasses Foreign Arbitral Tribunals ...............28

A Stay Should Be Denied for the Additional Reasons that It Would

Injure Luxshare and Disserve the Public Interest ..........................................30

A Stay Would Require Luxshare to Prosecute Its Claims Without

the § 1782(a) Evidence of ZF US’s Fraudulent Intent ........................31

Granting a Stay would Frustrate the Purpose of 28 U.S.C.

§ 1782(a) and Immunize ZF US’s Fraud ............................................33

CONCLUSION ........................................................................................................36

iii

TABLE OF AUTHORITIES

Cases

Page(s)

Al Otro Lado v. Wolf,

952 F.3d 999 (9th Cir. 2020) ..............................................................................19

Barclaysamerican Corp. v. Kane,

746 F.2d 653 (10th Cir. 1984) ............................................................................17

Barnes v. E-Sys., Inc. Grp. Hosp. Med. & Surgical Ins. Plan,

501 U.S. 1301 (1991) ........................................................................12, 13, 20, 31

Bouvier v. Adelson (In re Accent Delight Int’l Ltd.),

869 F.3d 121 (2d Cir. 2017) ...............................................................................15

Chafin v. Chafin,

568 U.S. 165 (2013) ................................................................................18, 19, 20

Church of Scientology of Calif. v. United States,

506 U.S. 9 (1992) ................................................................................................19

Coleman v. Paccar, Inc.,

424 U.S. 1301 (1976) ..........................................................................................21

FTC v. Standard Oil Co. of Calif.,

449 U.S. 232 (1980) ............................................................................................15

Garrison v. Hudson,

468 U.S. 1301 (1984) ..........................................................................................18

Graham v. Goodcell,

282 U.S. 409 (1931) ............................................................................................25

Gratz v. Bollinger,

539 U.S. 244 (2003) ............................................................................................26

Hannah v. Larche,

363 U.S. 420 (1960) ......................................................................................25, 26

Hilton v. Braunskill,

481 U.S. 770 (1987) ............................................................................................12

Hollingsworth v. Perry,

558 U.S. 183 (2010) ......................................................................................13, 21

In re Application to Obtain Discovery for Use in Foreign Proceedings

(Abdul Latif Jameel Transp. Co. v. FedEx Corp.),

939 F.3d 710 (6th Cir. 2019) .......................................................................passim

In re Gorsoan Ltd.,

No. 18-MC-431 (RA) (KNF), 2020 WL 4194822

(S.D.N.Y. July 21, 2020) ...............................................................................17

In re Pro. Direct Ins. Co.,

578 F.3d 432 (6th Cir. 2009) ..............................................................................17

In re Swift Transp. Co.,

830 F.3d 913 (9th Cir. 2006) ..............................................................................16

In re von Bulow,

828 F.2d 94 (2d Cir. 1987) .................................................................................17

Intel Corp. v. Advanced Micro Devices, Inc.,

542 U.S. 258 (2004) .....................................................................................passim

John Doe Agency v. John Doe Corp.,

488 U.S. 1306 (1989) ..........................................................................................18

Johnson v. U.S. Shipping Bd. Emergency Fleet Corp.,

280 U.S. 320 (1930) ............................................................................................25

JSC MCC EuroChem v. Chauhan,

No. 18-5890, 2018 WL 9650037 (6th Cir. Sept. 14, 2018)..........................14, 32

Lancaster Factoring Co. v. Mangone (In re Lancaster Factoring Co.),

90 F.3d 38 (2d Cir. 1996) ...................................................................................15

Lee v. Tam,

137 S. Ct. 30 (2016) ............................................................................................23

Little v. Reclaim Idaho,

140 S. Ct. 2616 (2020) ............................................................................13, 19, 20

McCulloch v. Sociedad Nacional de Marineros de Hond.,

372 U.S. 10 (1963) ..............................................................................................25

McElroy v. U.S. ex rel. Guagliardo,

361 U.S. 281 (1960) ............................................................................................25

Mount Soledad Mem’l Ass’n v. Trunk,

573 U.S. 954 (2014) ............................................................................................21

New Haven Inclusion Cases,

399 U.S. 392 (1970) ......................................................................................25, 26

New York v. Kleppe,

429 U.S. 1307 (1976) ..........................................................................................18

Nken v. Holder,

556 U.S. 418 (2009) ..........................................................................11, 12, 13, 30

Ohio Citizens for Responsible Energy, Inc. v. Nuclear Regul.

Comm’n,

479 U.S. 1312 (1986) ....................................................................................12, 13

Pallares v. Kohn (In re Chevron Corp.),

650 F.3d 276 (3d Cir. 2011) ...............................................................................15

Phillip Morris USA Inc. v. Scott,

561 U.S. 1301 (2010) ..........................................................................................16

Porter v. Dicken,

328 U.S. 252 (1946) ......................................................................................24, 25

Porter v. Lee,

328 U.S. 246 (1946) ......................................................................................24, 25

Pro-Football, Inc. v. Blackhorse,

137 S. Ct. 44 (2016) ............................................................................................23

Reid v. Covert,

354 U.S. 1 (1957) ................................................................................................25

Republic of Philippines v. Westinghouse Elec. Corp.,

949 F.2d 653 (3d Cir. 1991) ...............................................................................18

Sampson v. Murray,

415 U.S. 61 (1974) ..............................................................................................16

Trump v. Int’l Refugee Assistance Project,

137 S. Ct. 2080 (2017) ......................................................................10, 12, 20, 30

United States v. Amlani,

169 F.3d 1189 (9th Cir. 1999) ............................................................................17

United States v. Booker,

543 U.S. 220 (2005) ............................................................................................26

United States v. Thomas,

361 U.S. 950 (1960) ............................................................................................26

Virginian Ry. Co. v. United States,

272 U.S. 658 (1926) ......................................................................................11, 13

White v. Mechs.’ Sec. Corp.,

269 U.S. 283 (1925) ............................................................................................25

Williams v. Zbaraz,

442 U.S. 1309 (1979) ..........................................................................................14

Statutes

28 U.S.C. § 1651 ........................................................................................................1

28 U.S.C. § 1253 ......................................................................................................26

28 U.S.C. § 1782(a) ..........................................................................................passim

28 U.S.C. § 2101(f) ..................................................................................................13

Rules

Fed. R. Civ. P. 72(a)...................................................................................................8

S. Ct. R. 11 .........................................................................................................21, 22

S. Ct. R. 20 ...............................................................................................................25

vii

Other Authorities

S. Shapiro, et al., Supreme Court Practice

(11th ed. 2019, online) ..................................................................................22, 24

viii

INTRODUCTION

Applicants move under the All-Writs Act, 28 U.S.C. § 1651, for a stay

pending certiorari before judgment in a case that comprises nothing but a civil

discovery dispute. No basis exists for that extraordinary relief. The application

should be denied.

A year ago, the district court authorized respondent Luxshare Ltd. to issue

subpoenas under 28 U.S.C. § 1782(a), seeking discovery for use before an arbitral

tribunal in Germany. Applicants have fought tooth and nail to resist turning over

evidence of a fraud they committed in connection with a billion-dollar corporate

transaction. After losing five rounds of motion practice in the district court and the

court of appeals, including two motions to stay, Applicants must comply with the

subpoenas by October 27, 2021.

In a last-ditch attempt to continue the concealment of their wrongdoing,

Applicants now seek certiorari before judgment to review whether § 1782(a)

encompasses foreign arbitral tribunals, and an All-Writs Act stay from this Court in

the meantime. It is past time for Applicants to comply with the subpoenas. The stay

should be denied.

Turning to the stay factors, the court of appeals correctly determined that

Applicants will not be irreparably harmed by providing the “minimal and

nonconfidential discovery” the district court ordered—3,400 documents and a single

deposition. To be sure, Applicants will lose the arbitration when the tribunal sees the

evidence of their fraud, but that is not a judicially cognizable injury. Applicants’

evident wish to conceal their fraud from the arbitral tribunal does not warrant a stay.

Luxshare, on the other hand, would be significantly injured by a stay.

Applicants have already delayed complying with the subpoenas for a year. To avoid

statute-of-limitations issues, Luxshare should file the arbitration by December 31,

2021. Applicants sought to neutralize this factor by attaching to their application a

purported waiver of the German statute of limitation. But the annexed declaration of

Heidelberg University Professor Dr. Dr. h.c. Thomas Pfeiffer, an expert in German,

private international and comparative law, explains that there is a considerable risk

that the arbitral tribunal will determine the proffered waiver to be invalid and

ineffective. In light of that risk and given the magnitude of the claim, which runs

into the hundreds of millions of dollars, Luxshare formally rejects the proffered

waiver due to the absence of proof of authority and intends to initiate the arbitration

by December 31, 2021.

Moreover, the applicable arbitration process is so expedited and the

opportunities to submit evidence to the tribunal so limited that Luxshare should—if

at all possible—incorporate the evidence sought through this § 1782 proceeding into

its December 2021 request for arbitration. And it is likely that the arbitration process

will conclude before this Court could issue a decision on the question presented. As

a practical matter, a stay will likely deny Luxshare the ability to use the evidence of

Applicants’ fraud to pursue its claims against them.

Further, a stay should be denied because Applicants have not shown either

that this Court is likely to grant certiorari before judgment, or that it is likely to

reverse the Sixth Circuit’s 2019 ruling that § 1782(a) encompasses foreign arbitral

tribunals. Cognizant that they cannot possibly satisfy the demanding standard for

certiorari before judgment, Applicants recently asked the court of appeals to grant a

summary affirmance against themselves, on the basis that its 2019 ruling dooms their

appeal. That was obvious from the time the subpoenas were issued, but it did not

stop Applicants from litigating in the district court and in the court of appeals, and

thereby securing a year of delay. This Court should not reward their gamesmanship

with a stay.

Applicants’ delay tactics have run their course. The discovery is due by

October 27, 2021. This Court should permit no further delay. The application should

be denied.

BACKGROUND

Statutory Background

28 U.S.C. § 1782(a) authorizes a district court to order a person “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, including criminal investigations

conducted before formal accusation.” 28 U.S.C. § 1782(a) (emphasis added).

In In re Application to Obtain Discovery for Use in Foreign Proceedings

(Abdul Latif Jameel Transportation Co. v. FedEx Corp.), 939 F.3d 710 (6th Cir.

2019), the United States Court of Appeals for the Sixth Circuit performed a thorough

analysis of the statutory language and context, and concluded that § 1782(a)

encompasses foreign arbitral tribunals. See id. at 717–31.

Earlier this year, this Court granted certiorari to resolve a circuit split on the

applicability of § 1782(a) to foreign arbitral tribunals, but that case was recently

dismissed by stipulation. Servotronics v. Rolls-Royce PLC, No. 20-794, cert.

granted, 141 S. Ct. 1684 (2021), cert. dismissed, No. (R46-44 / OT 2020), 2021 WL

4619271 (U.S. Sept. 29, 2021). Earlier this month, a petition for writ of certiorari

was filed in another case that presents the question of whether § 1782(a)

encompasses foreign arbitral tribunals, and that seemingly presents no mootness

concerns.1

AlixPartners, LLP v. The Fund for Prot. of Inv. Rights in Foreign States, pet.

for cert. docketed, No. 21-518 (Oct. 7, 2021).

II.

Factual Background

Applicant ZF US Defrauds Respondent Luxshare

Respondent Luxshare is a Hong Kong limited liability company. Dkt. No. 15 at 1 (¶ 3).2 Through its equity investments, Luxshare engages in manufacturing in

the areas of consumer electronics, communications, and automotive. Id. Applicant

ZF Automotive US Inc. (“ZF US”) is a Michigan-based manufacturer of automotive

parts. Dkt. No. 1-6 at 2–3 (¶ 6); see App’n at 6. Applicants Marnat and Dekker are

Michigan residents, and, respectively, current and former senior officers of ZF US.

Dkt. No. 1-6 at 3 (¶¶ 7–8), No. 1-7 at 3 (¶ 7); see App’n at 6.

In August 2017, Luxshare purchased two business units from ZF US for

approximately $1 billion. Dkt. No. 1-5 at 2 (¶ 5). The parties entered into the German

law-governed purchase agreement in Germany. Id.; Dkt. No. 6-2 (PageID.266)

(¶ 20.10.1). The transaction closed in Germany in April 2018. Dkt. No. 1-5 at 6

(¶ 18).

Luxshare subsequently learned that ZF US had concealed material negative

developments concerning several of the acquired businesses’ largest customers. Dkt.

Citations to “Dkt. No. __” refer to documents filed below in In re Application

for an Order Pursuant to 28 U.S.C. § 1782 to Conduct Discovery for Use in Foreign

Proceedings, No. 2:20-mc-51245 (E.D. Mich.). Citations to “CA6 ECF No. __” refer

to documents filed in Luxshare, Ltd. v. ZF Automotive US, Inc., No. 21-2736 (6th

Cir.). The application for a stay is cited as “App’n” and the exhibits to the application

are cited as “App’n Ex. __”.

No. 1-5 at 3 (¶ 7), 6 (¶ 19), No. 1-7 at 4–9 (¶¶ 9–22). Applicants Dekker and Marnat

were directly involved in the due diligence process and they were aware of at least

some of the undisclosed information. Dkt. No. 1-5 at 8 (¶ 24), No. 1-6 (¶ 9), No. 17 at 6 (¶ 17), 8 (¶ 20). ZF US’s concealment of material negative information

violated the applicable German law and inflated the purchase price paid by Luxshare

by hundreds of millions of dollars. Dkt. No. 13-1 at 2 (¶ 3).

To Avoid Statute-of-Limitation Issues, Luxshare Should Initiate an

Expedited Arbitration Proceeding in Germany by the End of 2021

Pursuant to the purchase agreement, Luxshare’s claims must be arbitrated in

Munich, Germany, under the fast-track Supplementary Rules for Expedited

Proceedings of the Arbitration Rules of the German Institution of Arbitration e.V.

(known as the “DIS Rules”). Dkt. No. 1-6 at 6 (¶ 18); see Dkt. No. 6-2 (PageID.266)

(¶ 20.10.2). Luxshare intends to initiate that arbitration. Dkt. No. 1-6 at 5 (¶ 14), 10

(¶¶ 28–30). To avoid statute-of-limitation issues, the request for arbitration should

be filed by December 31, 2021. Dkt. No. 13-2 at 14–15 (¶ 32).

Once Luxshare has filed its request for arbitration and ZF US has answered,

the parties are limited to one written submission each, and there will be only one oral

hearing. Dkt. No. 1-6 at 7 (¶ 19), No. 13-2 at 13–14 (¶ 29). The tribunal should

render its award within six months of the case management conference. Dkt. No. 16 at 7 (¶ 19), No. 13-2 at 13–14 (¶ 29). As a practical matter, the expedited process

requires that Luxshare’s December 2021 request for arbitration—if at all possible—

incorporate the evidence in support of Luxshare’s case, including the evidence to be

gathered through this § 1782 proceeding. Dkt. No. 13-2 at 13–14 (¶ 29).

III.

Procedural Background

The District Court Permits Luxshare to Take Limited Discovery

Under 28 U.S.C. § 1782(a) for Use Before the German Arbitral

Tribunal

In October 2020, the district court authorized Luxshare to issue subpoenas to

Applicants pursuant to 28 U.S.C. § 1782(a), to secure evidence pertaining to ZF

US’s concealment of material information from Luxshare. App’n Ex. A; see Dkt.

No. 1-6 (¶ 15). ZF US asserts that Luxshare will not prevail on its claims without

the evidence of fraudulent intent that Luxshare seeks through this § 1782 proceeding.

Dkt. No. 6-2 (PageID.258) (¶ 18); see also Dkt. No. 1-6 at 7 (¶ 19).

In May 2021, a magistrate judge granted in part and denied in part Applicants’

motion to quash the subpoenas. App’n Ex. B. The magistrate judge weighed the

discretionary “factors that bear consideration in ruling on a § 1782(a) request,” Intel

Corp. v. Advanced Micro Devices, Inc., 542 U.S. 258, 264–66 (2004), and rejected

Applicants’ contention that those factors required the denial of discovery. App’n Ex.

B at 9–35. Instead, the magistrate judge determined that, under the facts and

circumstances of this case, the “Intel” factors militated in favor of limiting the scope

of discovery from that requested. App’n Ex. B at 28–35. Therefore, Luxshare would

be permitted to depose Dekker or Marnat, but not both, and document discovery

would be limited in several ways, including through the imposition of a narrowed

time frame and search terms, and by limiting the search to the emails of two

custodians and documents held on ZF US’s shared drives. App’n Ex. B at 30–35. 3

In July 2021, the district court rejected Applicants’ objections to the

magistrate judge’s ruling. App’n Ex. C at 1–17. The district court also affirmed the

magistrate judge’s decision not to stay the proceeding pending this Court’s decision

in Servotronics, Inc. v. Rolls-Royce PLC, No. 20-794, as to whether § 1782(a)

authorizes assistance in gathering evidence for use before a foreign arbitral tribunal.

App’n Ex. C at 17–19. The district court noted, in particular, the imminent expiration

of the German limitation period, and the significant limitations the magistrate judge

imposed on the scope of the discovery. Id. at 18.

The District Court Compels Applicants to Comply with the

§ 1782(a) Subpoenas, and Denies a Stay Pending Appeal

Even after the district court declined to quash the § 1782 subpoenas,

Applicants refused to comply with them. Therefore, in July 2021, Luxshare filed a

The magistrate judge also rejected Applicants’ argument that § 1782(a) is

inapplicable because Luxshare has not yet commenced an arbitration. As the

magistrate judge correctly held, § 1782 is satisfied because Luxshare’s arbitration is

“‘within reasonable contemplation.’” App’n Ex. B at 6 (emphasis in original) (citing

Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 258–59 (2004)). Under

Federal Rule of Civil Procedure 72(a), Applicants waived any objection to that

ruling by not raising it with the district judge. Dkt. No. 27.

motion to compel, Dkt. No. 31, which the district court granted in August 2021,

App’n Ex. D.

For their part, in July 2021, Applicants moved for a stay pending appeal, Dkt.

No. 30, which the district court denied in August 2021, App’n Ex. D. In doing so,

the district court recognized the harm that Luxshare would suffer if it does not

receive the requested discovery in time for the expedited arbitration, id. at 10–11,

and aptly determined that “[f]or a multi-billion company like ZF US, the time and

money required to produce a limited category of emails and conduct a single

deposition is clearly not irreparable harm,” id. at 8.

Applicants File an Appeal and Seek a Stay, Petition for Certiorari

Before Judgment, and Seek Summary Affirmance in Their Own

Appeal Following the Court of Appeals’ Denial of a Stay

Without waiting for the district court to rule on their motion for a stay pending

appeal, in July 2021, Applicants filed a notice of appeal, Dkt. No. 32, and sought a

stay pending appeal from the court of appeals, CA6 ECF No. 8.

In support of their motion to stay, Applicants contended that the district court

committed three errors that required reversal, independent of the question of whether

§ 1782(a) encompasses foreign arbitral tribunals: (1) the district judge applied the

wrong standard of review to the magistrate judge’s ruling—an issue that, according

to Applicants “may well be outcome-determinative;” and (2) the district court erred

in its consideration of two of the Intel discretionary factors: (a) the receptivity of the

German arbitral tribunal to § 1782 discovery, and (b) whether Luxshare is seeking

to evade foreign proof-gathering restrictions. CA6 ECF No. 8 at 16–17; see also

CA6 ECF No. 19. In support of their stay request, Applicants told the court of

appeals that each of these arguments “provides an independent basis” to vacate the

grant of § 1782 discovery. CA6 ECF No. 8 at 13–15.

Without waiting for the court of appeals to rule on the motion to stay, on

September 10, 2021, Applicants filed their petition for a writ of certiorari before

judgment, seeking review of whether § 1782(a) encompasses foreign arbitral

tribunals. Luxshare opposed on October 14, 2021, without seeking an extension of

time.

On October 13, 2021, the court of appeals denied Applicants’ motion to stay

because Applicants satisfied neither of the two principal requirements for a stay.

App’n Ex. E. The “minimal and nonconfidential discovery” required by the district

court’s order did not constitute irreparable harm. Id. at 3. And Applicants had “not

shown the requisite likelihood of success on the merits of [their] appeal.” Id. As the

court of appeals noted, to warrant a stay, Applicants needed to demonstrate “‘a

significant possibility’” that this Court would disagree with the Sixth Circuit’s

decision in Abdul Latif, 939 F.3d 710, supra at 4, and determine that § 1782(a)

excludes foreign arbitral tribunals. App’n Ex. E at 2–3 (quoting Trump v. Int’l

Refugee Assistance Project, 137 S. Ct. 2080, 2089 (2017) (Thomas, J., joined by

Alito and Gorsuch, JJ., concurring in part and dissenting in part)).

Immediately after the court of appeals denied a stay, on October 14, 2021,

Applicants filed a “time-sensitive” motion asking the court of appeals to enter a

summary affirmance of the district court’s decision “to more efficiently seek

Supreme Court review.” CA6 ECF No. 32 at 2. The following day, Applicants filed

the present application for a stay pending certiorari before judgment.

On October 21, 2021, Luxshare responded to the motion seeking summary

affirmance. CA6 ECF No. 33. Although Luxshare does not oppose affirmance, it

notes that instead of moving in July 2021 for summary affirmance as a means to seek

review by this Court, Applicants prosecuted a stay motion before the court of

appeals, based in large part on the “independent” arguments that they have now

abandoned, and thereby secured several months of delay. Id. Luxshare has therefore

cross-moved the court of appeals for an award of fees under 28 U.S.C. § 1912, due

to the unnecessary delay caused by Applicants’ appeal and motion to stay. Id.

REASONS FOR DENYING THE REQUESTED STAY

A stay is “‘an exercise of judicial discretion,’” not a “‘matter of right,’” and

should not be granted “reflexively.” Nken v. Holder, 556 U.S. 418, 427 (2009)

(quoting Virginian Ry. Co. v. United States, 272 U.S. 658, 672 (1926)). The

applicant “bears the burden of showing that the circumstances justify an exercise of

that discretion.” Id. at 433–34.

Ordinarily, this Court considers four factors to guide the exercise of its

discretion: (1) whether the applicant “has made a strong showing that he is likely to

succeed on the merits; (2) whether the applicant will be irreparably injured absent a

stay; (3) whether issuance of the stay will substantially injure the other parties

interested in the proceeding; and (4) where the public interest lies.” Id. at 434

(quoting Hilton v. Braunskill, 481 U.S. 770, 776 (1987)). The first two factors are

“the most critical.” Id. The third and fourth factors come into play only if the

applicant satisfies the first two. Id. at 435.4

However, “significantly higher justification” is required when—as here—the

stay is sought under the All-Writs Act, 28 U.S.C. § 1651. See App’n at 1; Ohio

Citizens for Responsible Energy, Inc. v. Nuclear Regul. Comm’n, 479 U.S. 1312,

1312 (1986) (Scalia, J., in chambers). “The Circuit Justice’s injunctive power is to

be used sparingly and only in the most critical and exigent circumstances,” “where

See also Trump v. Int’l Refugee Assistance Project, 137 S. Ct. 2080, 2089

(2017) (Thomas, J., joined by Alito and Gorsuch, JJ., concurring in part and

dissenting in part) (“When we determine that those critical factors are satisfied, we

must ‘balance the equities’ by ‘explor[ing] the relative harms to applicant and

respondent, as well as the interests of the public at large.’”) (alterations in original)

(quoting Barnes v. E-Sys., Inc. Grp. Hosp. Med. & Surgical Ins. Plan, 501 U.S. 1301,

1305 (1991) (Scalia, J., in chambers)).

the legal rights at issue are indisputably clear.” Id. (citations and quotation marks

omitted).

A stay should be denied here because, even under the standard that applies to

ordinary stays under 28 U.S.C. § 2101(f), Applicants satisfy neither of the two “most

critical” factors, and the remaining factors confirm that a stay is unwarranted. Much

less do Applicants satisfy the “significantly higher” standard for the “extraordinary

relief” of a stay under the All-Writs Act. Ohio Citizens for Responsible Energy, Inc.,

479 U.S. at 1312 (denying stay under the All-Writs Act where counsel, as here,

“neither specifically requested it nor addressed the peculiar requirements for its

issuance”).

Applicants Have Not Shown that They Will Be Irreparably Injured

Absent a Stay of the Order Compelling Discovery

An appellant is not entitled to a stay, “‘even if irreparable injury might

otherwise result to the appellant.’” Nken, 556 U.S. at 433 (quoting Virginian Ry. Co.,

272 U.S. at 672). However, the absence of irreparable injury to the movant requires

that a stay be denied. See id. at 434–35; see also Little v. Reclaim Idaho, 140 S. Ct.

2616, 2616 (2020) (Roberts, C.J., joined by Alito, Gorsuch, and Kavanaugh, JJ.,

concurring in the grant of stay) (applicant for stay pending certiorari must show,

inter alia, “a ‘likelihood that irreparable harm will result from the denial of a stay’”)

(quoting Hollingsworth v. Perry, 558 U.S. 183, 190 (2010) (per curiam)). 5

Here, the court of appeals determined that the requirement to provide

“minimal and nonconfidential discovery” would not cause Applicants irreparable

harm. App’n Ex. E at 3 (emphasis added). Similarly, the district court observed that

“[f]or a multi-billion company like ZF US, the time and money required to produce

a limited category of emails and conduct a single deposition is clearly not irreparable

harm.” App’n Ex. D at 8. When, as here, the lower court has assessed the irreparableinjury factor, “its decision is entitled to weight and should not be lightly disturbed.”

Williams v. Zbaraz, 442 U.S. 1309, 1312 (1979) (Stevens, J., in chambers).

There is no basis to disturb the lower courts’ determinations that Applicants

will suffer no irreparable injury absent a stay. Sitting for a single deposition and

turning over 3,400 non-confidential documents that may be used in a confidential

arbitral process to which Respondents agreed in the context of a billion-dollar

transaction, supra at 5, does not constitute irreparable injury.

Because the production of non-confidential, non-privileged discovery does

not constitute irreparable injury, examples abound of appellate courts declining to

See also Barnes, 501 U.S. at 1302 (Scalia, J., in chambers) (showing of

irreparable harm is among the “conditions that must be met before issuance of a [28

U.S.C.] § 2101(f) stay is appropriate”) (emphasis added).

stay § 1782(a) discovery orders pending appeal. 6 Indeed, this Court recently

declined to stay such an order. See Rolls-Royce PLC v. Servotronics, Inc., No.

20A160, 2021 WL 1618133 (U.S. Apr. 27, 2021). To be sure, Applicants have

located a handful of examples of stays being granted without explanation, 7 but that

does not support their contention that § 1782(a) orders are “routinely” stayed

pending appeal. App’n at 27.

Applicants are mistaken that the “time and expense” of complying with

the district court’s discovery order constitutes irreparable injury, App’n at 27,

certainly in light of the very significant legal resources they have devoted to fighting

that discovery. As this Court has recognized in another context: “Mere litigation

See, e.g., Order, Rothe v. Aballi, No. 20-12543 (11th Cir. Oct. 28, 2020);

Order, In re ex Porsche Automobil Holding SE v. John Hancock Life Ins. Co., No.

20-1239 (1st Cir. Aug. 10, 2020); JSC MCC EuroChem v. Chauhan, No. 18-5890,

2018 WL 9650037, at *1 (6th Cir. Sept. 14, 2018); Motion Order, Mangouras v.

Squire Patton Boggs, No. 17-3633 (2d Cir. Dec. 7, 2017), ECF No. 60; Order, Dep’t

of Caldas v. Diageo PLC, No. 17-15267 (11th Cir. Mar. 8, 2018); Order, Catalyst

Managerial Servs., DMCC v. Libya Afr. Inv. Portfolio, No. 16-2653 (2d Cir. Sept.

21, 2016), ECF No. 44; Order, In re Application of Kate O’Keeffe, No. 16-1004

(2d Cir. May 12, 2016), ECF No. 56; Order, Gissin v. Freedman, No. 16-370

(2d Cir. Mar. 25, 2016), ECF No. 58; Order, Weber v. Finker, 08-13372 (11th Cir.

Aug. 4, 2008). Additional examples appear at CA6 ECF No. 13 at 12, n.2.

See Bouvier v. Adelson (In re Accent Delight Int’l Ltd.), 869 F.3d 121, 127

(2d Cir. 2017); Lancaster Factoring Co. v. Mangone (In re Lancaster Factoring

Co.), 90 F.3d 38, 41 (2d Cir. 1996); Order, Khrapunov v. Prosyankin, No. 18-16254

(9th Cir. Aug. 2, 2018), ECF No. 7. Pallares v. Kohn (In re Chevron Corp.), 650

F.3d 276 (3d Cir. 2011), in particular, does not support the notion that § 1782(a)

orders are stayed as a matter of course, because that appeal turned on whether the

discovery was privileged, see id. at 286, 288–95.

expense, even substantial and unrecoupable cost, does not constitute irreparable

injury.” FTC v. Standard Oil Co. of Calif., 449 U.S. 232, 244 (1980) (issuance of an

administrative complaint is not subject to judicial review before the administrative

process concludes). 8 Given the very modest obligations the discovery order imposes

on them, Applicants misplace their reliance on a case in which this Court stayed a

judgment requiring the immediate payment of over $250 million, a substantial

portion of which was to be distributed to class members before this Court could

adjudicate the case. See Phillip Morris USA Inc. v. Scott, 561 U.S. 1301, 1304–05

(2010) (Scalia, J., in chambers).

Applicants are also incorrect that Luxshare’s “intention to quickly use”

the information for purposes of the foreign arbitration threatens irreparable injury.

App’n at 27–30. The district court saw this argument for what it is: “Reading

between the lines, ZF US seems to be concerned about the harm that might accrue

to ZF US if Luxshare discovers evidence supportive of its claims and uses it against

ZF US in the arbitration.” App’n Ex. E at 9. Luxshare will prevail when it proves

See also Sampson v. Murray, 415 U.S. 61, 90 (1974) (vacating a preliminary

injunction issued to enjoin the termination of a government employee pending an

administrative appeal, holding that “[m]ere injuries, however substantial, in terms of

money, time and energy necessarily expended in the absence of a stay are not

enough”) (internal citation omitted); In re Swift Transp. Co., 830 F.3d 913, 916 (9th

Cir. 2006) (per curiam) (ordinary litigation expenses did not warrant a writ of

mandamus to compel the district court to vacate its case-management order and

decide a petition to compel arbitration).

Applicants’ wrongdoing through the discovery the district court has ordered, but that

is not a judicially cognizable injury. Applicants’ desire to conceal their fraud from

the arbitral tribunal does not warrant a stay.

Tellingly, Applicants offer no support for their argument that Luxshare’s use

of the § 1782(a) discovery would constitute irreparable injury. They misplace their

reliance on cases recognizing that the holder of privileged information would be

irreparably injured by its compelled disclosure and use in a public litigation. See

App’n at 28–29. 9 Those cases are wholly inapposite here, where the situation is

reversed—the

challenged

discovery

order

compels

the

production

“nonconfidential” information, App’n Ex. F at 3 (emphasis added), for use in a

private arbitration proceeding.

Finally, Applicants are not assisted by their mootness argument—that

they face irreparable injury because once the discovery has been produced and used

before the German arbitral tribunal, “United States courts are powerless to order the

See In re Pro. Direct Ins. Co., 578 F.3d 432, 438 (6th Cir. 2009) (mandamus

to vacate a discovery order compelling the production of privileged materials);

United States v. Amlani, 169 F.3d 1189, 1192–96 (9th Cir. 1999) (same); In re von

Bulow, 828 F.2d 94, 98–99 (2d Cir. 1987) (same); Barclaysamerican Corp. v. Kane,

746 F.2d 653, 655 (10th Cir. 1984) (same).

Applicants’ reliance on In re Gorsoan Ltd. is also misplaced. App’n at 27.

Contrary to Applicants’ suggestion, in Gorsoan it was the abridgment of the

respondent’s Fifth Amendment rights that constituted irreparable harm warranting a

stay. No. 18-MC-431 (RA) (KNF), 2020 WL 4194822, at *7 (S.D.N.Y. July 21,

2020).

DIS panel to ignore it,” even if it is later determined that § 1782(a) does not apply

to foreign arbitral tribunals. App’n at 26–28.

Contrary to Applicants’ contention, App’n at 26, a “possibility of mootness”

does not automatically warrant a stay without regard to the gravity of the threatened

injury. See Republic of Philippines v. Westinghouse Elec. Corp., 949 F.2d 653, 658

(3d Cir. 1991) (risk of mootness “alone does not justify pretermitting an examination

of the nature of the irreparable injury alleged and the particular harm that will befall

the appellant should the stay not be granted”). Notably, in the cases that Applicants

cite, see App’n at 26, this Court granted stays because, in those cases, mootness

would have threatened significant public harm, including “jeopardizing an important

ongoing grand jury investigation,” John Doe Agency v. John Doe Corp., 488 U.S.

1306, 1308–09 (1989) (Marshall, J., in chambers), and requiring the imminent

release or retrial of a convicted felon, Garrison v. Hudson, 468 U.S. 1301, 1302

(1984) (Burger, C.J., in chambers).10 Here, Applicants have articulated no such

injury.

Moreover, also contrary to Applicants’ assertion, App’n at 26, this Court did

not suggest in Chafin v. Chafin, 568 U.S. 165 (2013), that “the threat of mootness

warrants ‘stays as a matter of course.’” To the contrary, Chafin requires that the

Cf. New York v. Kleppe, 429 U.S. 1307, 1307 (1976) (Marshall, J., in

chambers) (the need to “preserve a question for review by the full Court” did not

warrant dissolution of stay because the movant would not suffer irreparable injury).

mootness doctrine be applied sparingly, precisely so that courts will not seek to avoid

mootness by issuing “stays as a matter of course.” Id. at 178. And here, Applicants’

unsupported assertions do not establish that their appeal will necessarily be moot

once the discovery is turned over to Luxshare. Applicants correctly note that they

can ask the arbitral tribunal to ignore the discovery—hardly an injurious or unjust

remedy, given that Applicants agreed to arbitrate as part of a transaction that saw

them paid a billion dollars. Supra at 5–6. Moreover, the court of appeals perceived

that it could “mitigate any harms from the discovery as the circumstances allow,” in

the event the discovery order was later vacated. App’n Ex. E at 4 (citation omitted).11

Applicants worry that the likelihood of effective relief is reduced if the arbitration

proceeding concludes before this Court rules on the scope of § 1782(a), App’n at

25–26, but that is a self-inflicted and therefore non-cognizable injury, resulting from

and exacerbated by Applicants’ delay tactics in the district court and in the court of

appeals. Supra at 8–11; infra at 26–28.12 In any event, uncertainty about the

This Court has held, for example, that compliance with an IRS summons does

not moot an appeal from an order to compel because the court can order the return

of the documents. Church of Scientology of Calif. v. United States, 506 U.S. 9, 12–

13 (1992).

Cf. Little v. Reclaim Idaho, 140 S. Ct. 2616, 2616 (2020) (Roberts, C.J., joined

by Alito, Gorsuch, and Kavanaugh, JJ., concurring in the grant of stay) (“While a

stay may preclude this particular initiative from appearing on the ballot this

November, that consequence is attributable at least in part to Reclaim Idaho, which

delayed unnecessarily its pursuit of relief until more than a month after the deadline

for submitting signatures.) (citation and quotation marks omitted); see also Al Otro

effectiveness of potential future relief “does not typically render cases moot. Courts

often adjudicate disputes where the practical impact of any decision is not assured.”

Chafin, 568 U.S. at 175.

As Luxshare demonstrates below, infra at 30–32, it is actually Luxshare—not

Applicants—that will be concretely injured if this case is mooted as a result of the

issuance of a stay. Because the expedited arbitration should be filed by December

31, 2021 and concluded within six months of the procedural hearing, a stay will

effectively deprive Luxshare of the ability to make any use of the information in the

arbitration. Infra at 31–32. There is no basis for a stay.

II.

Applicants Have Not Made a Strong Showing that this Court Is Likely to

Grant Certiorari Before Judgment and Rule in Applicants’ Favor on the

Question of Civil Procedure Presented Here

In the context of a stay pending certiorari, the success-on-the-merits factor

requires the applicant to show “both ‘a reasonable probability that certiorari will be

granted’ and ‘a significant possibility that the judgment below will be reversed.’”

Trump v. Int’l Refugee Assistance Project, 137 S. Ct. 2080, 2089 (2017) (Thomas,

J., joined by Alito and Gorsuch, JJ., concurring in part and dissenting in part)

Lado v. Wolf, 952 F.3d 999, 1008 (9th Cir. 2020) (“[S]elf-inflicted wounds are not

irreparable injury.”) (alteration in original; citation and quotation marks omitted).

(quoting Barnes, 501 U.S. at 1302 (Scalia, J., in chambers)).13 Applicants have made

neither of those showings.

Applicants Have Not Shown a Reasonable Probability that this

Court Will Grant Their Petition for Writ of Certiorari Before

Judgment to Address this Discovery Dispute

Luxshare has already shown that this Court should deny the petition for writ

of certiorari before judgment. See ZF Automotive Br. in Opp. to Cert. (No. 21-401).

This case does not satisfy the demanding standard for certiorari before judgment.

See id. at 9–14. In addition, this case is a poor vehicle to address the question

presented, as it is likely to be moot before this Court can rule. See id. at 17–20.

Moreover, a petition for writ of certiorari is already pending in another case that

seemingly offers a superior vehicle to address the question presented. See id. at 19–

20.

This case and the question of whether § 1782(a) encompasses foreign

arbitral tribunals cannot satisfy the “very demanding standard” for certiorari before

judgment. Mount Soledad Mem’l Ass’n v. Trunk, 573 U.S. 954, 954 (2014) (Alito,

J., respecting denial of certiorari before judgment). A grant of certiorari before

See also Little v. Reclaim Idaho, 140 S. Ct. 2616, 2616 (2020) (Roberts, C.J.,

joined by Alito, Gorsuch, and Kavanaugh, JJ., concurring in the grant of stay)

(applicant for stay pending certiorari must show, inter alia, “a ‘reasonable

probability’ that this Court will grant certiorari, [and] (2) a ‘fair prospect’ that the

Court will reverse the judgment below”) (quoting Hollingsworth v. Perry, 558 U.S.

183, 190 (2010) (per curiam)).

judgment is an “extremely rare occurrence,” Coleman v. Paccar, Inc., 424 U.S.

1301, 1304 n.* (1976) (Rehnquist, J., in chambers), reserved for cases that are “of

such imperative public importance as to justify deviation from normal appellate

practice and to require immediate determination in this Court,” S. Ct. R. 11. See ZF

Automotive Br. in Opp. to Cert. at 9–13.

Contrary to Applicants’ contention, App’n at 18–19, the present discovery

dispute and the esoteric question of civil procedure it presents pale alongside the

momentous cases in which this Court had granted certiorari before judgment. See

ZF Automotive Br. in Opp. to Cert. at 9–13. Those were cases of “great constitutional

significance” or that had “extraordinary national importance for other reasons.” S.

Shapiro, et al., Supreme Court Practice § 4.20 (11th ed. 2019, online) (collecting

cases). See ZF Automotive Br. in Opp. to Cert. at 9–13. This case cannot compare to

any of them.

Even if Applicants could satisfy the demanding standard for certiorari

before judgment, this case is a poor vehicle to address the question of whether

§ 1782(a) encompasses foreign arbitral tribunals. See id. at 14–20. As in

Servotronics—this case is likely to become moot before this Court can decide the

question presented. To avoid statute-of-limitation issues, the request for arbitration

should be filed by December 31, 2021. Supra at 6. Once Luxshare has filed its

request for arbitration and ZF US has answered, the parties are limited to one written

submission each, and there will be only one oral hearing. Supra at 6. Given the

expedited process, as a practical matter Luxshare needs—if at all possible—to

incorporate the discovery sought under § 1782(a) into its December 2021 filing.

Supra at 6. The arbitrators should render their award within six months of the

procedural hearing. Supra at 6. Doubtless, Applicants would oppose any request to

extend the six-month deadline to wait for the § 1782(a) discovery, and there can be

no guarantee that the arbitral tribunal would grant such an extension. Therefore, it is

not likely that this Court will be able to render a decision on the question presented

in time for the § 1782 discovery to be used before the arbitral tribunal.

Meanwhile, other cases that are pending in or that have recently been resolved

by the courts of appeals may present this Court with one or more appropriate vehicles

to decide the question presented. See ZF Automotive Br. in Opp. to Cert. at 16–17,

19–20. In particular, a petition for writ of certiorari was recently filed in

AlixPartners, LLP v. The Fund for Protection of Investor Rights in Foreign States,

pet. for cert. docketed, No. 21-518 (Oct. 7, 2021), raising the question of whether

§ 1782(a) applies to arbitral tribunals. 14 The parties in AlixPartners have entered into

This Court recently denied certiorari before judgment when—as here—

another case presented the same questions in the context of an ordinary postjudgment petition for writ of certiorari. See Pro-Football, Inc. v. Blackhorse, 137 S.

Ct. 44 (2016) (mem.) (denying certiorari before judgment); Lee v. Tam, 137 S. Ct.

30 (2016) (mem.) (granting certiorari).

a stipulation that obviates the mootness risk that caused the dismissal of Servotronics

and that very likely will afflict the present case. See AlixPartners Pet. at 22–23.15

Applicants advance several meritless arguments in support of what

even they concede is an “atypical” request for certiorari before judgment. App’n at

3. First, there is no basis for Applicants’ novel argument that this Court should grant

certiorari before judgment so that this case can serve as a vehicle to answer the

question that Servotronics presented before it was dismissed. App’n at 16–19.

Contrary to Applicants’ contention, this case is not “analogous” to a handful of cases

in which this Court has granted certiorari before judgment “‘when a similar or

identical question of constitutional or other importance was before the Court in

another case,’” and where granting review in a second case would facilitate review

of the question presented in the first case. App’n at 18 (quoting Supreme Court

Practice, supra, ¶ 4.20). None of those examples involved a grant of certiorari before

judgment to permit review of a question presented in a prior case that had been

dismissed. In particular, and contrary to Applicants’ theory, App’n at 19, this Court

granted certiorari before judgment in Porter v. Dicken, 328 U.S. 252 (1946), not

Applicants assert without explanation that AlixPartners “will not necessarily”

resolve the question presented because it concerns an investor-state arbitration.

App’n at 21–21 n.3. To the contrary, granting certiorari in AlixPartners will afford

this Court the opportunity to address the applicability of § 1782(a) to foreign arbitral

tribunals and to address any additional considerations presented by investor-state

arbitrations, all with the benefit of the Second Circuit’s ruling. See ZF Automotive

Br. in Opp. to Cert. at 19–20.

because the first case, Porter v. Lee, 328 U.S. 246 (1946), was moot, but rather “by

reason of the close relationship of the important question raised to the question

presented in [Lee].” Dicken, 328 U.S. at 254.16 See ZF Automotive Br. in Opp. to

Cert. at 12–14.

Moreover, even if Servotronics were still pending, the examples that

Applicants reference do not support the issuance of a writ of certiorari here. Most of

those examples involved cases that formed part of a single overarching controversy,

arising from a single event or course of conduct, or involving the same or

overlapping parties. 17 See ZF Automotive Br. in Opp. to Cert. at 12–13. In at least

Porter v. Lee, 328 U.S. 246 (1946), and Porter v. Dicken, 328 U.S. 252 (1946),

involved cases brought by the same petitioner, the Price Administrator, to vindicate

his powers under the Emergency Price Control Act. Id. at 253; Lee, 328 U.S. at 249.

See New Haven Inclusion Cases, 399 U.S. 392, 398, 413–18 (1970) (two cases

presenting related issues arising from the same railroad merger); McCulloch v.

Sociedad Nacional de Marineros de Hond., 372 U.S. 10, 12 & n.1 (1963) (two cases

challenging related NLRB determinations); Hannah v. Larche, 363 U.S. 420, 421–

22 & n.3 (1960) (two cases challenging the conduct of the Commission on Civil

Rights in Louisiana); McElroy v. U.S. ex rel. Guagliardo, 361 U.S. 281, 307 (1960)

(two cases challenging the armed forces’ application of the Uniform Code of

Military Justice to civilian employees); Reid v. Covert, 354 U.S. 1, 3–5 (1957) (two

cases challenging the armed forces’ application of the Uniform Code of Military

Justice to the spouses of service members); Graham v. Goodcell, 282 U.S. 409

(1931) (several taxpayer cases pressing the same argument against the Internal

Revenue Service); Johnson v. U.S. Shipping Bd. Emergency Fleet Corp., 280 U.S.

320, 322–25 (1930) (three cases presenting the applicability of the Suits in

Admiralty Act to vessels owned by the United States); White v. Mechs.’ Sec. Corp.,

269 U.S. 283, 298–99 (1925) (several cases challenging the availability of funds

held by the U.S. government to satisfy debts of the Imperial German government).

The last three examples also pre-date the 1954 addition of the “imperative public

two of those instances, certiorari before judgment was granted because the first case

was a direct appeal from a three-judge district court under 28 U.S.C. § 1253, and

therefore arrived in this Court while the second, related case was in the court of

appeals.18 See ZF Automotive Br. in Opp. to Cert. at 13–14. These examples offer no

support for Applicants’ request for certiorari before judgment to take up this case

that—save for the legal question presented—has nothing to do with any other case

before this Court. In the remaining examples, the “second” case, App’n at 19, would

independently satisfy Rule 11’s strict standard by raising urgent constitutional

questions of imperative public importance. 19 See ZF Automotive Br. in Opp. to Cert.

at 14. The present discovery dispute raises no such question.

Second, Applicants are mistaken that their recent procedural maneuvers have

remedied the infirmities in their petition as filed. For the reasons set forth below,

infra at 32–33, the eleventh-hour declaration that Applicants have proffered on the

topic of tolling the statute of limitation does not remove Luxshare’s risk of dismissal

importance” requirement to the predecessor of Rule 11. S. Ct. R. 20, 346 U.S. 968

(adopted April 12, 1954, effective July 1, 1954).

n. 3.

See New Haven Inclusion Cases, 399 U.S. at 418; Hannah, 363 U.S. at 422 &

See United States v. Booker, 543 U.S. 220, 229 (2005) (permissibility of

imposing an enhanced sentence based on facts not found by a jury or admitted by

the defendant); Gratz v. Bollinger, 539 U.S. 244, 259–60 (2003) (use of racial

preferences in college admissions); United States v. Thomas, 361 U.S. 950, 950

(1960) (obstruction of minority voter registration).

on time-bar grounds, and therefore does not remove the specter of mootness. Given

the dire risks of waiting and the scale of the claim, Luxshare intends to initiate the

arbitration by December 31, 2021.

Applicants’ pending motion for summary affirmance on their own appeal

fares no better. To be sure, that motion abandons the three “independent” arguments

that Applicants previously told the court of appeals required a stay, even if § 1782(a)

encompasses foreign arbitral tribunals. Supra at 9–10. By limiting the case to a

dispute over the reach of § 1782(a), Applicants have addressed one of the two

reasons that this case is a poor vehicle—that a ruling on the question presented might

not be dispositive or necessary. Supra at 22–23; See ZF Automotive Br. in Opp. to

Cert. at 15–17. But that narrowing of the issues in dispute does not transform this

case into a suitable vehicle to address the question presented because this case is still

likely to become moot before this Court can rule. Supra at 22–23.

More fundamentally, however, this Court should not reward Applicants’

procedural gamesmanship with a stay. In a last-ditch effort to secure review and a

stay from this Court, Applicants now belatedly recognize that the court of appeals’

2019 decision in In re Application to Obtain Discovery for Use in Foreign

Proceedings (Abdul Latif Jameel Transport. Co. v. FedEx Corp.), 939 F.3d 710 (6th

Cir. 2019), dooms their prospects of success in the district court and in the court of

appeals. But that was obvious a year ago, when the district court authorized the

§ 1782(a) subpoenas. Instead of accepting that reality and seeking review by this

Court at that time, Applicants adopted a strategy of running out the clock so that

Luxshare would have to file the arbitration without the § 1782(a) discovery,

requiring four rounds of motion practice in the district court, and a motion to stay in

the court of appeals. Supra at 8–11. This achieved over a year of delay, including

several months of delay occasioned by filing a motion to stay in the court of appeals,

a motion that was based in significant part on the “independent” arguments that

Applicants now jettison so cavalierly. Supra at 9–10. 20

As Applicants acknowledge, their delay tactics have run their course, and the

discovery must be turned over by October 27, 2021. That is over a year since the

district court authorized issuance of the § 1782(a) subpoenas, and months after the

district court compelled production. This Court should award no further delay.

Applicants Have Also Not Shown a Significant Possibility that this

Court Will Overrule the Sixth Circuit’s Holding that 28 U.S.C.

§ 1782(a) Encompasses Foreign Arbitral Tribunals

Section 1782(a) authorizes discovery “for use in a foreign or international

tribunal.” A stay is unwarranted here because Applicants have not shown that this

Contrary to Applicants’ suggestion, App’n at 19, it surely did not take the

court of appeals’ October 2021 denial of their motion to stay to inform Applicants

that they were not likely to prevail by challenging the district court’s application of

the discretionary Intel factors. And by July 2021, Applicants could not genuinely

have been holding out for a ruling in Servotronics, given that they acknowledge it

was clear long before July 2021 that Servotronics was likely moot. App’n at 16.

Court is likely to reverse the court of appeals’ decision in Abdul Latif, 939 F.3d 710,

that § 1782(a) encompasses foreign arbitral tribunals.

As the court of appeals determined in Abdul Latif, “the text, context, and

structure of § 1782(a) provide no reason to doubt that the word ‘tribunal’ includes

private commercial arbitral panels established pursuant to contract and having the

authority to issue decisions that bind the parties.” Id. at 723. First, contrary to

Applicants’ contentions, App’n at 21–23, dictionaries and legal sources pre- and

post-dating the enactment of § 1782 in 1964 confirm that foreign arbitral tribunals

are encompassed within the ordinary meaning of the plain statutory language

“foreign or international tribunal.” Abdul Latif, 939 F.3d at 717–22. Moreover, this

Court’s decision in Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241

(2004), “determined that § 1782(a) provides for discovery assistance in non-judicial

proceedings,” Abdul Latif, 939 F.3d at 723, undermining Applicants’ notion that

Congress used “tribunal” as a synonym for “courts of their equivalents.” App’n at

22. Second, also contrary to Applicants’ contentions, App’n at 24, the “overall

context and structure of the statute” confirm that § 1782(a) encompasses foreign

arbitral tribunals. Abdul Latif, 939 F.3d at 722–23.

Further, the Sixth Circuit considered the contrary decisions of other courts of

appeals, and determined that they erred in four respects. First, they improperly and

unnecessarily considered legislative history to interpret the unambiguous statutory

language of § 1782(a). Id. at 726–27. Second, those other courts misapprehended the

legislative history. Id. at 727–28. Contrary to the argument that Applicants advance,

App’n at 23–24, the congressional reports “make clear Congress’s intent to expand

§ 1782(a)’s applicability” beyond courts, and “the legislative history does not

indicate that the expansion stopped short of private arbitration.” Abdul Latif, 939

F.3d at 727–28 (emphasis in original). Third, the other courts of appeals improperly

allowed their policy preferences to interfere with their interpretation of the statute

that Congress enacted. Id. at 728. Fourth, and contrary to Applicants’ argument,

App’n at 24–25, holding that § 1782(a) encompasses foreign arbitral tribunals does

not conflict with the Federal Arbitration Act. Abdul Latif, 939 F.3d at 729

(“Applying Intel’s reasoning, we decline to conclude that simply because similar

discovery devices may not be available in domestic private arbitration, § 1782(a)

categorically does not apply to foreign or international private arbitration.”).

III.

A Stay Should Be Denied for the Additional Reasons that It Would Injure

Luxshare and Disserve the Public Interest

Applicants’ failure to satisfy either of the “most critical” factors requires the

denial of their application for a stay. Nken, 556 U.S. at 434. This Court therefore

need not proceed to the remaining factors, which require the court to “‘balance the

equities’ by ‘explor[ing] the relative harms to applicant and respondent, as well as

the interests of the public at large.’” Trump v. Int’l Refugee Assistance Project, 137

S. Ct. 2080, 2089 (2017) (Thomas, J., joined by Alito and Gorsuch, JJ., concurring

in part and dissenting in part) (alterations in original) (quoting Barnes v. E-Sys., Inc.

Grp. Hosp. Med. & Surgical Ins. Plan, 501 U.S. 1301, 1302 (1991) (Scalia, J., in

chambers)). Here, however, the equities confirm that a stay should be denied.

A Stay Would Require Luxshare to Prosecute Its Claims Without

the § 1782(a) Evidence of ZF US’s Fraudulent Intent

Under the circumstances of this case, involving an expedited arbitration

proceeding that, for statute-of-limitation reasons, should be initiated by the end of

2021, the district court correctly found that “Luxshare could be substantially injured

if it is denied access to discovery it is ultimately entitled to.” App’n Ex. D at 11.

To avoid statute-of-limitation issues, Luxshare should file its request for

arbitration by December 31, 2021. Supra at 6. Once Luxshare has filed that request

and ZF US has answered, the parties are limited to one written submission each, and

there will be only one oral hearing. Supra at 6. Given the expedited process, as a

practical matter Luxshare needs—if at all possible—to incorporate the § 1782(a)

discovery into its December 2021 filing. Supra at 6.21 The arbitrators should render

their award within six months of the procedural hearing. Supra at 6. Doubtless,

Applicants will oppose any request to extend the six-month deadline to wait for the

§ 1782(a) discovery, and there can be no guarantee that the arbitral tribunal would

Because Luxshare intends to incorporate the § 1782(a) discovery into its

request for arbitration, Applicants have it backwards with their argument that a stay

would cause Luxshare no harm because it has not yet filed its request for arbitration.

App’n at 31.

grant such an extension. Therefore, it is not likely that this Court will be able to

render a decision on the question presented in time for the § 1782 discovery to be

used before the arbitral tribunal.

As a practical matter, therefore, a stay is likely to preclude Luxshare from

making any use of the § 1782(a) discovery, even if this Court later determines that

§ 1782(a) encompasses foreign arbitral tribunals. Due to the imminent filing

deadline and the expedited nature of the arbitration proceeding, a stay creates the

risk that this case will become moot before this Court can rule, as in Servotronics.

Supra at 22–23. It is Luxshare that faces irreparable harm, because a stay will deny

Luxshare the basic right to have its fraud claims against ZF US adjudicated based

on the evidence. A stay should therefore be denied. See JSC MCC EuroChem v.

Chauhan, No. 18-5890, 2018 WL 9650037, at *2 (6th Cir. Sept. 14, 2018) (denying

stay of § 1782(a) discovery that would have caused an “inability to present

evidence” to the foreign tribunal).

Tacitly recognizing that Luxshare’s December 31, 2021 filing deadline

precludes a stay, ZF US now proffers a purported “commitment” to waive the

German statute of limitation, conditioned upon this Court’s grant of a stay. App’n at

31; id. Ex. F (¶ 8). This is the latest in a long line of ever-shifting waivers that ZF

US has suggested. See ZF Automotive Br. in Opp. to Cert. at 18–19. Luxshare has

no assurance that the arbitral tribunal will determine this most iteration to be

effective.

Professor Dr. Dr. h.c. Thomas Pfeiffer, a recognized expert on German and

private international law, explains in the annexed declaration that there is a

considerable risk that the arbitral tribunal will determine the proffered waiver of the

statute of limitation to be invalid and ineffective for two reasons. See Addendum,

Ex. 1. First, the purported waiver is invalid under German law because it is

conditional upon the discretionary act of a third party, i.e., upon this Court’s grant

of a stay. Id. ¶¶ 15, 17, 29–36. Second, the purported waiver is not effective because

there is no evidence beyond the declarant’s ipse dixit that he has the necessary

corporate authorization to effect a waiver of the statute of limitation on behalf of ZF

US. Id. ¶¶ 15, 18, 37–42. Given the very large sum at stake and the real risk that the

arbitral tribunal will determine the purported waiver of the statute of limitation to be

invalid due to its conditionality, and given Luxshare’s rejection of the proffered

waiver due to the absence of proof of authority, id. ¶¶ 19, 42, Luxshare intends to

initiate the arbitration by December 31, 2021.

Granting a Stay would Frustrate the Purpose of 28 U.S.C. § 1782(a)

and Immunize ZF US’s Fraud

The requested stay should be denied for the additional reason that it would

disserve the public interest, by both frustrating Congress’s purpose in enacting

§ 1782(a) and permitting fraud to go unremedied.

As this Court has recognized, a core legislative aim behind the enactment of

§ 1782(a) was the wish to “provid[e] efficient assistance to participants in

international litigation.” Intel Corp. v. Adv. Micro Devices, Inc., 542 U.S. 241, 252

(2004) (emphasis added). Further delaying Applicants’ compliance with § 1782(a)

subpoenas the district court authorized a year ago would disserve that laudable

purpose. Applicants have achieved a year of delay by requiring Luxshare to litigate

three discovery motions and two motions to stay. Supra at 8–11. Indeed, they

secured a multi-month delay by filing an appeal in respect of which they now seek

summary affirmance on the ground that they lack any viable argument under Sixth

Circuit law. Supra at 9–11. Enough is enough. No further delay is warranted.

Moreover, ZF US takes the position that Luxshare will not prevail on its

claims without the evidence of fraudulent intent that Luxshare seeks through this

§ 1782(a) proceeding. Supra at 7. As much as Applicants may wish to conceal their

wrongdoing from the arbitral tribunal, there is no public interest in allowing fraud to

go unremedied.

Finally, Applicants are incorrect that a stay should be granted to promote the

public interest in making this case the “vehicle” to decide the question presented

concerning the scope of § 1782(a). App’n at 30. Any such generalized public interest

does not outweigh the concrete harm that Luxshare would suffer if a stay were

granted. And in any event, as Luxshare has shown, this case is a poor vehicle to

review the question presented because it is likely to be mooted before this Court can

rule. See ZF Automotive Br. in Opp. to Cert. at 18–19; see supra at 22–23. However,

other cases that raise the question presented are pending in or have recently been

decided by the courts of appeals, see ZF Automotive Br. in Opp. to Cert. at 17,

including AlixPartners, LLP v. Fund for Protection of Investor Rights in Foreign

States, No. 21-518 (docketed Oct. 5, 2021), where the parties have reportedly

consented to a stay, thereby alleviating the mootness problem that required the

dismissal of Servotronics and that will likely drive this case to the same outcome.

CONCLUSION

The applications for a stay and administrative stay should be denied.

Respectfully submitted,

Andrew Rhys Davies

Counsel of Record

Bradley S. Pensyl

Kendall R. Pauley

ALLEN & OVERY LLP

1221 Avenue of the Americas

New York, New York 10020

Tel: (212) 610-6300

andrewrhys.davies@allenovery.com

Attorneys for Respondent

October 21, 2021

ADDENDUM

EXHIBIT 1

DECLARATION OF PROFESSOR DR. DR. H.C. THOMAS PFEIFFER

Professor Dr. Dr. h.c. Thomas Pfeiffer, pursuant to 28 U.S.C. § 1746 hereby declares as

follows:

I am full professor of law at Heidelberg University, Germany, since 2002, and

director of this Faculty’s Institute for Comparative Law, Conflict of Laws and

International Business Law. I teach general civil law, conflict of laws, comparative

law and international dispute resolution and conduct research in these areas.

Prior to teaching in Heidelberg, I served as a full Professor at Bielefeld University,

Germany (1994-2002) and as a judge at the Oberlandesgericht Hamm (1996-2002),

a court of appeals for the eastern part of the German state of NorthrhineWestfalia. Among other credentials, I hold a Dr. iur. (summa cum laude),

Germany, and a post-doc law degree (“Habilitation”) from the University of

Frankfurt am Main.

I have been a visiting professor at the Georgetown Law Center, Washington

DC(2005, 2010, 2019), at Hong Kong City University (2006), at the Straus

Institute for Dispute Resolution, Malibu, Ca., USA (2014) and at the Universities

of Leuven, Belgium (2015) and Verona, Italy (2016). I taught at The Hague

Academy for International Law (2009) and gave guest lectures at various foreign

universities and am continuously invited as speaker to international conferences. I

spent 9 months as a visiting scholar at Yale Law School, New Haven, Connecticut,

U.S.A., in the years 1989/90.

I have edited, authored or co-authored more than 400 publications in the fields of

civil law, private international law, international dispute resolution, civil

procedure and comparative law. I am also editor of several legal periodicals.

I am a member of “Deutscher Rat für Internationales Privatrecht” (German

Council for Private International Law), which is the advisory committee of the

German Federal Ministry of Justice for conflict of laws legislation, and a Board

Member of the “Zivilrechtslehrervereinigung”, i.e. the association of private law

professors of Germany, Austria and Switzerland. I am also Vice-President of the

Deutsch-Amerikanische

Juristenvereinigung

(“German

American

Lawyers’

Association”) and a fellow of the European Law Institute and coordinator of this

organization’s special interest group on dispute resolution.

I have been involved in more than forty national or international arbitration cases

as an arbitrator (sole arbitrator, president of the tribunal or co-arbitrator) or legal

expert.

I have given oral or written expert testimony on German, European or

International law in several court cases (both State and Federal) and one

arbitration case in the United States. I have also given written or oral expert

testimony in the courts of the United Kingdom, Australia (New South Wales),

Jamaica, and France as well as in arbitration proceedings, inter alia, in Singapore,

Stockholm (Sweden), Lausanne, and Zurich (Switzerland). I am continuously

appointed as a neutral expert on various foreign laws by German courts.

For my merits in the areas of international law and international academic

exchange, I was awarded with the Order of Rio Branco by the Federal Republic of

Brazil in 2010 and with an Honorary Doctor Iuris by the International Hellenic

University, Thessaloniki, Greece, in 2015.

I am qualified to give expert testimony in relation to all German or European law

questions addressed in this opinion.

10. I submit this Declaration in connection with Luxshare Ltd.’s (“Luxshare”) response

to an application for a stay of an order requiring the Applicants to provide

discovery for use before a German arbitral tribunal (“Application”).

11. I make this declaration based on personal knowledge and on my review of the

documents noted herein. Where the facts and matters are stated as within my own

knowledge, I know and believe them to be true. Where they are not within my own

personal knowledge, they are true to the best of my information and belief, and

such facts and matters are supported by contemporaneous documents and

information that I have reviewed.

12. Luxshare has asked me to review the Declaration of Michael J. Way

(“Declaration”) submitted in support of the Application and to provide my

professional opinion, based on my qualifications and experience, as to whether the

German arbitral tribunal is likely to accept the Declaration as a valid, binding,

and enforceable waiver of the statute of limitation.

13. I will be compensated for providing this declaration at an hourly rate of 450 Euros.

My compensation is not dependent on my expressing any particular opinion or on

the outcome of this matter, and I have no other financial interest in the outcome of

this matter.

14. I have reviewed the Application, the Declaration, and the Master Purchase

Agreement (“MPA”) dated August 28/29, 2017, between ZF Automotive US, Inc.

(“ZF US”), formerly known as TRW Automotive Inc., and Luxshare, and a

document titled “ANNUAL REPORT - For use by FOREIGN PROFIT

CORPORATION”, dated 5 May 2021 and filed by Michael J. Way as an

“authorized agent” on behalf of ZF US with the Michigan Department of Licensing

and Regulatory Affairs. I have also been instructed that Luxshare has stated its

intent to commence arbitration proceedings under MPA Clause 20.10.2 (the

“Contemplated Arbitration”)

OPINION

Summary

15. My opinion will address the validity of the Declaration as a waiver under two

aspects: (i) the circumstance that the statement made therein is contingent to a

condition precedent (that is, the waiver is conditioned upon the U.S. court granting

a stay) and (ii) that Luxshare has a right to reject the waiver because the author of

the Declaration (Mr. Way) did not present a letter of authorization. In relation to

these issues, I conclude as follows:

16. In the Contemplated Arbitration, a tribunal will apply German law in relation to

the MPA including the question whether the Declaration includes a valid waiver of

statutory limitation.

17. Under German law, the attempted waiver of statutory limitation in the

Declaration is legally invalid because it is contingent on the Supreme Court’s

decision in this case and, therefore, in the moment it was received by Luxshare,

brought about an uncertainty that is not acceptable.

18. If the matter were to be litigated in a German court, a German court would also

apply German law to Luxshare’s right to reject the Declaration because of a

lacking letter of authorization. Whereas an arbitral tribunal having its seat in

Munich is not bound by this position formally in a legal sense, a tribunal will most

likely take the same view and apply German law in this respect as well.

19. Pursuant to section 174 of the German Civil Code, Luxshare may reject the

Declaration because Mr. Way did not present a letter of authorization.

Legal Reasoning

I. Applicable Law

A. Waiver of limitation in general

20. German statutory law as well as the institutional arbitration rules of Deutsche

Institution für Schiedsgerichtsbarkeit (German Institute or Institution for

Arbitration – the “DIS”) recognize that parties, in their arbitration agreement, can

provide for a choice of the applicable substantive law. Since there is no indication

to the contrary, the choice of law clause in section 20.10.1 MPA is valid and

binding for an arbitration tribunal under Article 24.1 of the DIS Arbitration Rules

of 2018 (the “DIS Rules”) 1 and under section 1051 (1) sentence 1 of the German

Code of Civil Procedure (“Zivilprozessordnung” or “ZPO”).2 Article 24.1 DIS Rules

is applicable because parties of an arbitration agreement may validly agree to an

institutional choice of law provision in their arbitration agreement. Undoubted

principle under section 1051 (1) sentence 2 ZPO,3 see, e.g., Pfeiffer, Anwendbares

Recht (§ 15), in Trittmann/Salger, Internationale Schiedsverfahren, 2019, p. 426 et

seq., paragraph 41. Section 1051 ZPO is part of the German arbitration provisions,

which are set forth in the 10th Book of the ZPO, i.e. sections 1025-1066 ZPO.

German arbitration law is applicable, and its mandatory provisions are binding for

the contemplated arbitral tribunal, because the parties have validly agreed on

1 The English wording of this institutional provision is:

„The parties may agree upon the rules of law to be applied to the merits of the dispute.“

2 The English translation of this statutory provision is:

„The arbitral tribunal is to decide on the matter in dispute in accordance with the statutory

provisions that the parties have designated as being applicable to the content of the legal dispute.“

This English convenience translation was taken from a website sponsored by the German Ministry

of Justice. https://www.gesetze-im-internet.de/englisch_zpo/, last accessed on 19 October 2021. All

ZPO-provisions referred to in this report are taken from this website. In all cases however, I have

reviewed the wording and agree to it. I add that the translated text uses British and not American

spelling, which I have not changed.

3 English translation of the wording:

„Unless the parties to the dispute have expressly agreed otherwise, the designation of the laws or

the legal system of a specific state is to be understood as a direct referral to the rules of substantive

law of this state, and not to its rules relating to the conflict of laws.“

Munich, Germany, as their place of arbitration under sections 1025 (1) 4 and 1043

(1) sentence 15 ZPO in their arbitration agreement (Clause 20.10.2 MPA).

21. All of the above is binding for the tribunal of the Contemplated Arbitration since,

under German law, arbitral tribunals are bound by applicable legal rules, unless

the parties have authorized the tribunal to decide on the basis of general fairness

principles, for which there is no indication in the case at hand. Oberlandesgericht

München, 22. June 2005, Zeitschrift für Schiedsverfahren 6 (“SchiedsVZ”) 2005, pp.

308-310, at 309; see also Article 24.4 DIS Rules7 and section 1051 (3) ZPO. 8

22. As a consequence, the tribunal will apply German substantive law in relation to

the all claims arising under the MPA or in connection with the MPA.

23. Furthermore, questions of limitation qualify – without any doubt – as being

substantitive under German law. Consequently they fall in the scope of the choice

of law agreement in Clause 20.10.1 MPA. As regards the choice of law rules in

regular court proceedings, there is an express and binding statutory provision to

4 English translation of the wording:

„The rules of the present Book are to be applied where the venue of the arbitration proceedings in

the sense as defined by section 1043 (1) is located in Germany.“

5 English translation of the wording:

„The parties may make an agreement as to the venue of the arbitration proceedings.“

6 A law journal.

7 English wording:

„The arbitral tribunal may not decide ex aequo et bono or act as an amiable compositeur, unless the

parties have expressly agreed thereto.“

8 English translation of the wording:

“The arbitral tribunal is to take its decision based on considerations of what is fair and equitable

only if the parties to the dispute have expressly authorised it to do so. The authorisation may be

granted up until the time the arbitral tribunal takes such decision.”

the effect that matters of limitation are part of the applicable contract law. See

Article 12 (1) (d) Rome I Regulation. 9

24. According to the prevailing view, this provision (like the Rome I Regulation in

general) does not constitute formally binding law in arbitration proceedings

because choice of law in arbitration is governed by section 1051 ZPO and

institutional provisions such as Article 24.1 DIS Rules. Yet, arbitral tribunals will

refer to the provisions of the Rome I Regulation as a persuasive authority for

choice of law purposes if Germany is the seat of the arbitration. See e.g. Pfeiffer,

Anwendbares

Recht

(§

15),

Trittmann/Salger,

Internationale

Schiedsverfahren 10, 2019, p. 416, paragraph 11, and ibid. p. 429, paragraph 51;

Pfeiffer, Neues internationales Vertragsrecht, Zeitschrift für Europäisches

Wirtschaftsrecht (“EuZW”) 11 2008, 622, 623; Saenger, Zivilprozessordnung, 9th

edition

2021,

commentary 12

section

1051,

paragraph

Hausmann,

Anwendbares Recht vor deutschen und italienischen Schiedsgerichten - Bindung

an die Rom I-Verordnung oder Sonderkollisionsrecht?, in Kronke/Thorn (eds.),

9 REGULATION (EC) No 593/2008 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

of 17 June 2008 on the law applicable to contractual obligations (Rome I). The Rome I regulation is

an instrument of European law, which provides for the statutory choice of law rules for contractual

obligations in all EU Member states and, therefore, is directly applicable law in Germany. The

official English wording of Article 12 (1) (d) Rome I Regulation is:

„Article 12 Scope of the law applicable

1. The law applicable to a contract by virtue of this Regulation shall govern in particular:

(a)-(c) …

(d) the various ways of extinguishing obligations, and prescription and limitation of actions;

(e) ...“

10 A standard handbook for the practice of international arbitration. Standard handbooks or

commentaries are regularly referred to by German courts as important authorities, in particular if

no reliable case law is available.

11 A law journal.

12 In relation to the significance of commentaries see footnote 10.

Festschrift für Bernd von Hoffmann, pp. 971-986, at 973; Hartenstein, Das IPR der

Schiedsgerichte, Transprecht13 2010, pp. 261-268, at 267. As a consequence, under

German arbitration law and practice, a tribunal will apply German law to matters

of limitation if German law is applicable in relation to the underlying contractual

claim. Pfeiffer, Anwendbares Recht (§ 15), in Trittmann/Salger, Internationale

Schiedsverfahren, 2019, p. 431, paragraph 56. In this respect, issues of limitation

also include the question if, under which requirements and to which effects an

obligor may wave his right to invoke limitation. Such a waiver excludes the

obligor’s right to refuse performance which is the most essential legal effect of

limitation under German law (section 214 (1) of the German Civil Code 14

(“Bürgerliches Gesetzbuch” or “BGB”)). In relation to this legal effect and nature of

a waiver of limitation see Bundesgerichtshof (German Federal Court of Justice)

(“BGH”), 15 16 March 2009, Neue Juristische Wochenschrift (“NJW”) 16 2009, pp.

1598-1600, at 1599. Moreover, the statutory basis for such a waiver is section 202

BGB, a provision on statutory limitation. BGH, 16 March 2009, NJW 2009, pp

1598-1601, at paragraph 22.

13 A law journal.

14 English translation of the wording:

„After limitation occurs, the obligor is entitled to refuse performance.“

This English convenience translation was taken from a website sponsored by the German Ministry

of Justice. https://www.gesetze-im-internet.de/englisch_BGB/, last accessed on 20 October 2021. All

BGB-provisions referred to in this report were taken from this website. In all cases however, I have

reviewed the wording and agree to it.

15 The BGH is the highest judicial authority in civil law matters in Germany.

16 A law journal.

25. As a consequence of the above, it is not doubtful, in my view, that a tribunal in the

Contemplated Arbitration will apply German law to issues of limitation.

B. Applicable law in relation to Luxshare’s right to a reject the Declaration

26. Pursuant to section 174 BGB, 17 the addressee of a unilateral legal transaction has

a right to reject the transaction if a party was represented by an agent who did not

present a document of authorization. In relation to choice of law issues, the

question whether this statutory provision qualifies as a part of the applicable

contract law or the applicable agency laws or a matter of the form of contract was,

according to my knowledge and research, addressed in only one German highest

court decision. This decision states expressly that the right to reject falls in the

scope of the applicable contract law. Bundesarbeitsgericht (Federal Court of

Labour Law, i.e. the highest German court for labor law disputes, the “BAG”),

24 September 2015, NJW 2016, pp. 345-250, at paragraph 20. I add that BAG

decisions in employment disputes often address general contract law matters and

are referred to as a relevant and important source of case law in contractual

matters. This applies in particular if there is no BGH case law available.

27. Furthermore, the position stated by the BAG has found support by leading

commentaries. E.g., Mankowski in beck-online GROSSKOMMENTAR, Update of 1

17 English translation of the wording:

„Section 174 Unilateral legal transaction by an authorisedgal transaction that an authorised

representative undertakes in relation to another is ineffective if the authorised representative does

not present a letter of authorisation and the other rejects the legal transaction without undue delay

for this reason. Rejection is excluded if the principal notified the other of the authorisation.“

October 2019, commentary to Article 8 of the Introductory Act to the German Civil

Code (“Einführungsgesetz zum Bürgerlichen Gesetzbuch” or “EGBGB”) paragraph

244; Spellenberg in Münchener Kommentar zum BGB, vol. 12, 8th 2020,

commentary to Article 8 EGBGB, paragraph 185; in the same sense also

Ostendorf, Kollisionsrechtliche Qualifikation von § 174 BGB, Recht der

Internationalen Wirtschaft (“RIW”) 18 2014, pp. 93-96, at 95. Although the

aforementioned BAG statement was an obiter dictum, it reflects a fair and

accurate view of what the actual law in Germany is. Moreover, I am not aware of

any German case law to the contrary. As a consequence, I conclude that a German

court would apply section 174 BGB as a provision of German contract law to the

case at hand.

28. Whereas a tribunal in the Contemplated Arbitration may not be bound legally by

the above stated case law, it will give even more weight to the choice of German

law by the parties in Clause 20.10.1 MPA. In my overall assessment, based also on

my practical experience in arbitration, I conclude that, most probably, a tribunal

in the Contemplated Arbitration will take the same position as a German court

and apply section 174 BGB as part of the applicable German contract law.

18 A law journal.

II. Effects of the Declaration under German law

A. Invalidity of a unilateral waiver if contingent to a condition precedent

29. Under German law, an obligor may waive the effects of limitation periods by way

of a so-called unilateral statement of intent. See as a recent example BGH, 17

December 2020, I ZR 239/19, GRUR-RS 2020, 44633, beck-online, 19 para 19;

furthermore, e.g., BGH, 16 March 2009, NJW 2009, 1598-1601, at paragraph 22.

30. In the light of the above, the statement that ZF US will not invoke the applicable

statute of limitations (paragraph 8 of the Declaration) is a purported waiver of the

effects of limitation in this sense. For reasons that will addressed in more detail

infra, there is a substantial risk that a waiver of statutory limitation is invalid if it

is made contingent to a condition precedent (section 158 (1) BGB). 20 The following

will (a) explain this legal risk, and subsequently (b) set forth that the Declaration

states a condition precedent in this sense.

1. The general rule

31. Under the principle of freedom of contract, parties are free to make their

contractual statements contingent to a condition precedent. However, in general,

German law does not accept a unilateral declaration of intent which is contingent

to a condition precedent if the declaration exercises a unilateral right to change

19 A legal database.

20 English translation of the wording:

„If a legal transaction is entered into subject to a condition precedent, the legal transaction that is

subject to the condition comes into effect when the condition is satisfied.“

the other party’s legal position to that party’s detriment (a so-called “unilateral

legal transaction” or, in German, “Gestaltungsgeschäft”), e.g. the termination of a

contract by unilateral notice. E.g., BGH, 21 March 1986, Entscheidungen des

Bundesgerichtshofs in Zivilsachen (“BGHZ”) 21 vol. 97, pp. 264-269, at juris 22

paragraph 16 et seq. The reason behind this legal principle is that any exercise of

such rights requires utmost clarity so that the addressee cannot be in doubt as to

whether its legal position was actually changed by the declaration or not. If the

declaration is contingent on a condition (i.e. a future uncertain event) the

addressee cannot be certain of its legal position. For this definition of the term

“condition” see, e.g., BGH, 18 December 1990, case X ZR 57/89 (juris paragraph

21). In this respect, the critical point in time is the moment when the declaration is

received by the addressee because, according to section 130 (1) BGB, 23 the validity

of a declaration is determined in this moment so that it is of no help that certainty

might be achieved later, i.e. when and if this Court should indeed grant the

requested stay.

32. These principles also apply to limitation periods. In this respect, it is critical that

limitation periods, unlike other defenses, may not be applied by courts on their

21 Official collection of BGH decisions.

A legal database.

23 English translation of the wording:

“A declaration of intent that is to be made to another becomes effective, if made in his absence, at

the point of time when this declaration reaches him. It does not become effective if a revocation

reaches the other previously or at the same time.”

own motion, but have to be invoked by the obligor. 24 As a consequence, the lapse of

a limitation period does not constitute a valid defense if it is invoked contingent to

a condition. E.g. Schmidt-Räntsch, a BGH judge who is, in her former capacity as

an official in the German ministry of Justice, known as the author of Germany’s

statutory limitation law, in Erman, BGB, 16th edition 2020, commentary to § 214

BGB, paragraph 3; furthermore, e.g., Bach in beck-online Großkommentar, update

of 1 August 2021, commentary to § 214 BGB, paragraph 39; Peters/Jacoby in

Staudinger, Bürgerliches Gesetzbuch, new edition 2019, commentary to section

214 BGB paragraph 9.

33. Whereas, usually, a waiver of limitation periods operates in favor of the obligee so

that the question whether it is invalid because of a condition precedent does not

become an issue, the situation is different in the case at hand because ZF US

attempts to use the waiver as an argument against Luxshare. At least in this

unusual situation, i.e. because the waiver may also operate to the detriment of

Luxshare, it is relevant that, according to the aforementioned principles, a waiver

of limitation rights constitutes a unilateral legal transaction in the above stated

sense. E.g., Bach in beck-online Großkommentar, update of 1 August 2021,

commentary to § 214 BGB, paragraph 61 et seq. As a consequence, a waiver of a

limitation period is invalid if it is made contingent to a condition precedent.

Practically speaking, based on the Declaration, it is unclear for Luxshare whether

This is because section 214 (1) BGB only provides for a refusal right of the obligor. English

translation of the wording of this provision:

„After limitation occurs, the obligor is entitled to refuse performance.“

or not its rights will be enforceable after the lapse of the applicable limitation

period (which, as I have been instructed, may lapse by the end of this year). As a

result of the Declaration, Luxshare does not and cannot know whether or not it

has to continue its preparations for the Contemplated Arbitration or not. It is the

rationale of the above stated rules that one party (ZF US) cannot impose such

uncertainty the other (Luxshare). Thus, I conclude that this rule must apply here

and the waiver has to be considered invalid because it is contingent to a condition

precedent. At best its validity is unclear for this reason.

2. The Declaration includes a condition precedent

34. Pursuant to section 158 (1) BGB25 a condition is defined as a future uncertain

event. If a certain legal effect is made contingent to a future decision of a court, the

latter constitutes a future uncertain event. See, e.g., BGH, 18 December 1990, case

X ZR 57/89 (juris paragraph 21).

35. A different conclusion may be drawn only in two exceptional cases. The first

exception applies if the “condition” does not actually bring about any uncertainty

because it only depends on the intent of the other party, which is not the case here;

the second exception applies if the condition refers to a certain “objective” legal

situation and not to a decision based, e.g., on the court’s discretion. BGH, 15. May

1968, case VIII ZR 29/66 (juris paragraph 80). In the case at hand, the Declaration

declares a waiver that does not depend on a certain “objective” legal situation but

25 See supra footnote 20.

on the granting of a stay of proceedings which, as I understand, is subject to the

court’s discretion. This exception does, thus, not apply either.

36. It follows from the above that the reference to the possible granting of a stay of

proceedings in paragraph 8 of the Declaration is a condition precedent that, under

the general rules explained supra (paragraphs 31.-33.), constitutes a considerable

risk that the waiver is considered to be invalid under German law.

B. Luxshare’s right to reject the Declaration

37. Pursuant to section 174 BGB 26 the addressee of a unilateral legal transaction,

stated by an agent, that brings about a change of legal rights may reject the

declaration if the agent did not present a letter of authorization. The rationale of

this provision is, again, to avoid any lack of clarity for the addressee of unilateral

transaction; consequently, the requirements for an application of this provision are

clear and easy to determine as well.

38. Firstly, it applies to all unilateral transactions such as the waiver of limitation

periods. See supra paragraph 33. Therefore, section 174 BGB is applicable in case

of a waiver of limitation periods.

39. Secondly, the relevant declaration has to made by an authorized representative,

i.e. an authorized agent. However, the provision has also been applied by way of

analogy to declarations of an officer of a company in cases of legitimate

uncertainty, inter alia in relation to an officer of a US corporation in a German

26 See footnote 17.

case. Oberlandesgericht (an appeals court) Cologne, 13 August 2015, case18 U

153/14, BeckRS 2016, 8158, beck-online. In the case at hand, the “ANNUAL

Report of ZF US”, dated 5 May 2021, indicates that Mr. Way acted as an

authorized agent of ZF for purposes of filing that document, and also indicates that

he is not an officer or director. In any event, section 174 BGB applies to the issue

whether there was appropriate documentation of his authorization.

40. The document of authorization has to be presented in the moment (or prior to the

moment) of execution of the unilateral transaction at issue. Schubert (a BGH

judge) in Münchener Kommentar zum BGB, 9th edition 2021, commentary to

section 174 BGB, paragraph 9. Furthermore, an original document is required so

that, e.g., a copy is insufficient. BGH, 17 October 2000, NJW 2001, pp. 289-291.

41. As a consequence, Luxshare as the addresse of the Declaration had a right to reject

the Declaration without undue delay. A “rejection” in this sense is a counterdeclaration from the addressee to the author that a declaration is rejected because

a document of authorization had not been presented. Pursuant to the requirement

to reject “without undue delay”, the rejection has to be stated speedily, but not

immediately. This means, e.g., the addressee is granted sufficient time to obtain

legal advice if the case requires that. E.g., BGH, 27 October 2000, NJW 2001, pp.

220-221, at 221. In general, in such a case a rejection within one week does not

constitute undue delay, under special circumstances a longer period may apply.

E.g., BAG, 8 December 2011, Neue Zeitschrift für Arbeitsrecht 2012 27 , pp. 495-499,

at para 33.

42. In the case at and, Luxshare received the Declaration as an attachment to the

Application, dated 15 October 2021. I have been instructed that Luxshare will

submit its reply to the application on 21 October 2021, i.e. within less than a week.

lf Luxshare includes a rejection in this reply, this would be without undue delay as

required by section 174 BGB. In case of a rejection, the unilateral legal transaction

(here: the waiver) is legally invalid. This means that, if Luxshare states a rejection

in its reply to the application, the waiver has no legal effects and does not result in

any extension of limitation periods.

I declare under penalty of perjury under the laws of the United States of America that

the foregoing is true and correct. Executed on 21

tober 2021 at Dreieich, Federal

Republic of Germany.

Professor Dr. Dr. h.c. Thomas Pfeiffer

A law journal.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.