In commercial litigation, third-party discovery subpoenas are routine and the authority of the parties and courts to issue them is well-recognized. Given the public policy favoring arbitration, one might assume that third-party discovery subpoenas in arbitration are equally routine. Not so, however. As this article explains, the majority of courts to consider the issue have held that in an arbitration governed by the Federal Arbitration Act (FAA), arbitrators may not compel a third party's compliance with a pre-hearing discovery subpoena. This constitutes a significant departure from commercial litigation practice in state and federal court and has serious implications for any litigator as they prepare for and proceed with arbitration.

Compelling Third-Party Discovery Before a Hearing Under Federal Law. The source of confusion concerning the inability of arbitrators to compel pre-hearing discovery from non-parties stems from §7 of the FAA, which provides, in pertinent part, that "arbitrators … may summon in writing any person to attend before them or any of them as a witness and in a proper case to bring with him or them any book, record, document, or paper which may be deemed material as evidence in the case." 9 U.S.C. §7. Until the U.S. Court of Appeals for the Second Circuit addressed this issue head-on in Life Receivables Trust v. Syndicate 102 at Lloyd's of London, 549 F.3d 210 (2d Cir. 2008), many New York litigants were of the view that an arbitrator could compel a non-party to produce documents prior to an arbitral hearing, just as courts and parties could do in state and federal court proceedings. Ultimately, however, the Second Circuit in Life Receivables Trust expressly held that §7 of the FAA does not authorize arbitrators to compel pre-hearing document discovery from entities or individuals not a party to the arbitration proceeding. Id. at 217. However, that does not mean that an arbitrator lacks all power to compel the production of documents from a non-party in an FAA-governed arbitration. Rather, as the Second Circuit explained, arbitrators may, consistent with §7 of the FAA, order any person to produce documents so long as that person is called as a witness at a hearing, regardless of whether that hearing is the ultimate hearing on the merits. See id. at 218. Thus, an arbitrator may issue a subpoena requiring a non-party's attendance at an arbitral hearing and to bring responsive documents to such hearing. See id.; see also Stolt-Nielsen SA v. Celanese AG, 430 F.3d 567, 569 (2d Cir. 2005) (rejecting the argument of the non-party seeking to quash a subpoena that §7 permits arbitrators to summon witnesses "only to a merits hearing akin to a full-blown trial.").

The Third Circuit is in accord with the Second Circuit (see Hay Group v. E.B.S. Acquisition, 360 F.3d 404 (3d Cir. 2004)), while the Eighth Circuit has held to the contrary, reasoning that "implicit in an arbitration panels' power to subpoena relevant documents for production at a hearing is the power to order the production of relevant documents for review by a party prior to the hearing." In re Sec. Life Ins. Of Am., 228 F.3d 865, 870-71 (8th Cir. 2000). The Fourth Circuit has struck a middle ground, holding that while §7 generally precludes discovery subpoenas, discovery subpoenas may be allowed in exceptional circumstances upon a showing of special need or hardship. See COMSAT v. Nat'l Sci. Found., 190 F.3d 269, 276 (4th Cir. 1999).