Gea Group Ag v. FLEX-N-GATE CORPORATION and SHAHID KHAN

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 13‐2135
GEA GROUP AG,
Plaintiff‐Appellant,
v.
FLEX‐N‐G ATE C ORPORATION and SHAHID K HAN,
Defendants‐Appellees.
____________________
Appeal from the United States District Court for the
Central District of Illinois.
No. 2:09‐cv‐02106‐HAB‐DGB — Harold A. Baker, Judge.
________________________
No. 13‐2594
IN R E : GEA G ROUP AG,
Petitioner.
______________________
Petition for Writ of Mandamus from
the United States District Court for the
Central District of Illinois.
No. 2:09‐cv‐02106‐HAB‐DGB — Harold A. Baker, Judge.
______________________
A RGUED D ECEMBER 12, 2013 — D ECIDED J ANUARY 10, 2014
______________________

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2 Nos. 13‐2135, 13‐2594
Before BAUER , C UDAHY, AND P OSNER , Circuit Judges.
P OSNER , Circuit Judge. Before us is an appeal by GEA
Group AG from an order by the district judge partially lift‐
ing a stay of discovery in a diversity suit brought by GEA
against Flex‐N‐Gate Corporation and its CEO, board chair‐
man, and controlling shareholder, the American billionaire
Shahid Khan. Also before us is a petition for mandamus by
GEA, should we decide we don’t have appellate jurisdiction.
We do have appellate jurisdiction, as we’ll explain, so the
petition for mandamus can be dismissed as superfluous. Al‐
so before us, discussed at the end of this opinion, is a motion
to seal certain documents.
The overriding issue is whether the district judge had au‐
thority to allow any discovery to proceed, when the fruits of
the discovery might be relevant to, and might even be
placed in evidence in, a pending foreign arbitration proceed‐
ing.
GEA (pronounced “gaya”), a German engineering com‐
pany, in May 2004 agreed to sell one of its subsidiaries—
Dynamit Nobel Kunststoff (DNK), a plastics manufacturer—
to Flex‐N‐Gate, a U.S. manufacturer of auto parts. The price
agreed on was €430 million. A clause in the sale contract re‐
quired arbitration in Germany of any dispute over the con‐
tract. The sale did not close, and in October 2004 GEA initi‐
ated arbitration in Germany before the Arbitral Tribunal of
the German Institution of Arbitration (see DIS‐Arbitration
Rules 98, July 1, 1998, www.dis‐arb.de/scho/16/rules/dis‐
arbitration‐rules‐98‐id10 (visited Jan. 10, 2013)), charging
Flex‐N‐Gate with having broken the contract. GEA later sold
DNK to a Swedish company, but at a considerably lower
price than the price in GEA’s contract with Flex‐N‐Gate.

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Nos. 13‐2135, 13‐2594 3
The arbitration proceeding was pending when in 2009
GEA, not content with having initiated arbitration, brought
suit in a federal district court in Illinois. The suit named as
defendants not only Flex‐N‐Gate but also Khan, who,
though as Flex‐N‐Gate’s CEO he had been involved in the
contract negotiations, was neither a signatory of the 2004
contract nor a party to the arbitration. GEA alleged that the
defendants had fraudulently induced it to enter into the con‐
tract by exaggerating Flex‐N‐Gate’s financial strength; that
Khan had used his control over Flex‐N‐Gate to strip that
firm of its assets so that it would be unable to pay whatever
award the German arbitration panel made to GEA; and that
Khan was Flex‐N‐Gate’s alter ego and therefore barred from
pleading limited shareholder liability and instead obligated
to pay any such award even if he hadn’t been complicit in a
fraudulent conveyance of the firm’s assets. Very oddly,
GEA’s complaint didn’t mention the arbitration.
GEA, having sued, then asked the district judge to stay
all proceedings in its suit, thus including discovery, which
the defendants were eager to conduct. For in their answers
to GEA’s complaint, and in counterclaims (filed only by
Flex‐N‐Gate, however), they had sought to turn the tables on
GEA by charging that Flex‐N‐Gate had been induced to sign
the sale contract by misrepresentations by GEA—Flex‐N‐
Gate was the victim, GEA the malefactor. The judge denied
GEA’s motion to stay discovery. He was surprised that GEA
would file a suit and immediately attempt to put it into deep
freeze, and he was miffed by GEA’s failing to mention the
pending arbitration in its complaint and by seeming to be
trying to bypass or at least duplicate the arbitration. For the
suit aimed to show—as GEA was trying to show in the arbi‐
tration—that Flex‐N‐Gate and Khan were responsible for the

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4 Nos. 13‐2135, 13‐2594
contractual breakdown. The judge thought that Khan, hav‐
ing been sued—gratuitously as it seemed—by GEA, and not
being a party to the arbitration, should be allowed to defend
himself by seeking discovery in the proceeding in which he
was a party.
GEA filed a notice of appeal from the denial of its stay of
discovery on March 22, 2010—three days after the German
arbitration panel, having completed the arbitration at last,
had issued its decision, which was to award GEA damages
and costs totaling some €213.4 million (about $293.3 million).
We dismissed GEA’s appeal as moot, believing that a final
arbitration award would end their dispute. But Flex‐N‐Gate
was able to persuade the Higher Regional Court in Frankfurt
to vacate the arbitration award—which thus turned out not
to be “final” after all—and order a brand‐new arbitration.
GEA had renewed its motion in the district court for a
stay of discovery (indeed a stay of all proceedings in the
case) pending the outcome of the German proceedings. The
district judge again denied the stay, on the ground that he
was unsure how those proceedings would affect the case be‐
fore him and didn’t want to wait years to find out. GEA
again appealed to us and this time we held, in an un‐
published order issued in June 2011, that the claims in the
district court proceeding were “clearly governed by the arbi‐
tration provision. As a result, the case should be stayed
pending arbitration.” So we reversed the district court and
remanded with directions that it “stay proceedings pending
resolution of all arbitration proceedings.”
GEA had sought review of the Frankfurt court’s decision
by the German Federal Court of Justice (Germany’s highest
court for the decision of nonconstitutional cases), but that

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Nos. 13‐2135, 13‐2594 5
court declined to hear the appeal. That was in October 2012
and in December the new arbitration ordered by the Frank‐
furt court began, again before the Arbitral Tribunal of the
German Institution of Arbitration. The primary reason the
Arbitral Tribunal gave for restarting the arbitration forth‐
with—notwithstanding a separate pending appeal, this one
by Flex‐N‐Gate, asking the Frankfurt court to terminate the
arbitration altogether (which would spell utter defeat for
GEA)—was to minimize further delay in resolving a breach
of contract claim now nine years old.
After the rejection of GEA’s appeal by the Federal Court
of Justice, Flex‐N‐Gate had moved to reopen discovery in the
present case. The district judge conducted a hearing in May
2013 that clarified the parties’ positions. GEA made clear
that its district court suit was ancillary to the arbitration: if it
won a “final final” award (that is, a final arbitration award
that survived judicial challenge in Germany, as the previous
final award had not) and Flex‐N‐Gate paid the award in full,
GEA’s claims in the district court suit would be moot, and
likewise if it lost the arbitration. But if Flex‐N‐Gate didn’t
pay in full, GEA would seek to obtain a judgment in the dis‐
trict court proceeding ordering Khan to pay GEA the differ‐
ence between the arbitration award and what Flex‐N‐Gate
paid toward satisfaction of the award. So if, for example, the
award was again €213.4 million, and Flex‐N‐Gate paid €20
million, GEA would ask the district court to enter judgment
against Khan for €193.4 million, on the ground either of
fraudulent conveyance of Flex‐N‐Gate assets or of his being
his company’s alter ego.
GEA argued that discovery in the district court case
would therefore be premature, since if it either lost the arbi‐

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6 Nos. 13‐2135, 13‐2594
tration, or won and was paid in full by Flex‐N‐Gate, it would
voluntarily dismiss its case. It argued that a stay of discovery
not only would be prudent in light of that circumstance but
was required by the United States Arbitration Act, 9 U.S.C.
§§ 1 et seq. Section 3 of the Act, captioned “stay of proceed‐
ings where issue therein referable to arbitration,” provides
that “if any suit or proceeding be brought in any of the
courts of the United States upon any issue referable to arbi‐
tration under an agreement in writing for such arbitration,
the court in which such suit is pending, upon being satisfied
that the issue involved in such suit or proceeding is referable
to arbitration under such an agreement, shall on application
of one of the parties stay the trial of the action until such ar‐
bitration has been had in accordance with the terms of the
agreement, providing the applicant for the stay is not in de‐
fault in proceeding with such arbitration.” GEA argued that
since some of the issues raised in the district court suit were
also issues in the arbitration proceeding, a stay of “the trial
of the action” in the district court was mandatory—and
would extend to discovery. For the archaic term “trial of the
action” in section 3 has been understood to include pretrial
proceedings, such as discovery, rather than being limited to
the trial phase of litigation. IDS Life Ins. Co. v. SunAmerica,
Inc., 103 F.3d 524, 528–29 (7th Cir. 1996); cf. Corpman v. Pru‐
dential‐Bache Securities, Inc., 907 F.2d 29, 31 (3d Cir. 1990) (per
curiam); Suarez‐Valdez v. Shearson Lehman/American Express,
Inc., 858 F.2d 648, 649 (11th Cir. 1988) (per curiam); Lummus
Co. v. Commonwealth Oil Refining Co., 273 F.2d 613, 613–14
(1st Cir. 1959) (per curiam).
Khan responded that the issue of his liability for an arbi‐
tral award in GEA’s favor was not an issue in the arbitration,
because he was not a party either to the arbitration or to the

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Nos. 13‐2135, 13‐2594 7
contract that was its subject matter. Hence section 3 was in‐
applicable and so no stay was required. The district judge
agreed in part, ordering that the stay of discovery that he’d
imposed pursuant to our order in the first appeal be lifted
for the limited purpose of allowing Khan to conduct discov‐
ery aimed at preserving evidence that might be germane to
GEA’s claims against him in the district court suit. That’s the
order GEA appeals from. The district judge has stayed his
partial lifting of the stay pending our disposition of this ap‐
peal. The order lifting the stay is inconsistent with our un‐
published order directing the judge to stay all proceedings
before him pending the German arbitration. But he was jus‐
tified in issuing a new order on the basis of new develop‐
ments since our order, which had been issued two years
(short one month) earlier, in June 2011.
We have jurisdiction of the appeal. Section 16(a)(1)(A) of
the Arbitration Act provides that “an appeal may be taken
from an order refusing a stay of any action under section 3 of
this title [Title 9].” GEA asked for a stay under section 3 of
all proceedings in the district court. The district judge in the
order that GEA is appealing has granted in effect a more
limited stay. His refusal to grant the complete stay that GEA
seeks is appealable even though the stay order is interlocuto‐
ry and the appellant might not be entitled to the stay that he
is seeking. Arthur Andersen, LLP v. Carlisle, 129 S. Ct. 1896,
1900 (2009).
We are mindful that the Arbitration Act has a separate
chapter (Chapter 2), entitled Convention on the Recognition
and Enforcement of Foreign Arbitral Awards, and that sec‐
tions 3 and 9 of the Act are in Chapter 1. But Chapter 2 con‐
cerns the enforcement of foreign arbitration awards, which is

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8 Nos. 13‐2135, 13‐2594
not an issue in this appeal. And in 9 U.S.C. § 208, Chapter 2
expressly preserves the applicability of Chapter 1 to foreign
arbitration unless there is a conflict either with Chapter 2 or
with the Convention (Chapter 2 implements the Conven‐
tion—it is not the Convention itself). There is no conflict in
this case.
The defendants argue that the only difference between
the stay that GEA sought and the stay that the district judge
granted was that the broader stay sought by GEA would
have prevented Khan from conducting any discovery; and
since he isn’t a party to the arbitration no issue involving
him is “referable” to arbitration and so section 16 is inappli‐
cable. But even if this is right, all that matters for appealabil‐
ity, as the Carlisle decision makes clear, is that the appellant
have sought the stay on the authority of section 3, whether
or not the stay was authorized by that section. All that’s re‐
quired to confer jurisdiction is thus a colorable section 3
claim, not necessarily a meritorious one.
Anyway the only reason GEA wanted the broader stay
was fear that Khan, who after all controls Flex‐N‐Gate, will
reveal to his company anything he learns in discovery that
might be germane to the arbitration; the discovery may thus
indeed concern “issue[s] referable to arbitration.” Remember
that the defendants’ answer and counterclaims seek to affix
blame for the breakdown of the contract for the sale by Flex‐
N‐Gate of DNK on GEA—an issue not only germane, but
potentially central, to the arbitration. This is another reason
to conclude that GEA’s motion, and subsequent appeal, are
proper.
Coming at last to the merits, we think that what the dis‐
trict judge did on remand in allowing Khan to conduct dis‐

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Nos. 13‐2135, 13‐2594 9
covery was not only reasonable but eminently sensible. GEA
should not have brought this suit. To the extent that it dupli‐
cates the arbitration by charging Khan, Flex‐N‐Gate’s CEO,
with responsibility for the breakdown of the contract, thus
offering GEA a second bite at the same apple, it appears to
violate the arbitration clause of GEA’s contract with Flex‐N‐
Gate. And to the extent that GEA seeks by this suit to protect
itself against ending up with a worthless award if Khan has
spirited away Flex‐N‐Gate’s assets, the suit may well be
premature. If GEA loses the arbitration, Flex‐N‐Gate’s ability
to satisfy an arbitration award is irrelevant and the case
moot. And likewise if GEA obtains an award and Flex‐N‐
Gate pays it in full. If GEA obtains an award and Flex‐N‐
Gate doesn’t pay it, GEA can sue Khan for fraudulent con‐
veyance or as Flex‐N‐Gate’s alter ego. There cannot be any
serious doubt of Khan’s ability to pay such an award.
But there’s a rub: GEA argues that if it waits to sue Khan
for fraudulent conveyance (now often called fraudulent
transfer) until a “final final” arbitration award is issued
(which, in Germany at least, can take a long time, as we now
know), the statute of limitations governing such a suit may
have expired. The statute of limitations in both the Uniform
Fraudulent Transfer Act and Illinois’s version of the Act is
only four years, see 740 ILCS 160/10, and begins to run on
the date of the transfer (or within a year after the plaintiff
discovered the transfer if he had not and could not through
reasonable diligence have discovered it at least a year before
the four‐year period expired) if the transfer was made with
fraudulent intent. Id.; Fidelity National Title Ins. Co. v. Howard
Savings Bank, 436 F.3d 836 (7th Cir. 2006). So the statute of
limitations might (or might not—see below) have run had
GEA waited any longer to sue. GEA contends that Khan be‐

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10 Nos. 13‐2135, 13‐2594
gan transferring Flex‐N‐Gate assets shortly after the aborted
contract of sale was signed, which was in 2004. It would
have been perilous for GEA to have waited beyond 2009 to
sue Khan for engineering a fraudulent conveyance.
Or so GEA argues. The argument, which appears only in
a short footnote in GEA’s opening brief, is insufficiently de‐
veloped to be a ground for reversal. Oddly, GEA’s counsel
led with the statute of limitations at the oral argument, but
without particulars.
The idea that a claim for fraudulent conveyance aimed at
evading having to pay a hypothetical future judgment ac‐
crues before the judgment is entered seems far‐fetched—and
would be if understood to entitle any plaintiff seeking mone‐
tary relief in a lawsuit to include a claim for fraudulent con‐
veyance in his complaint just because the defendant might
conceivably seek to elude a judgment against him, if he got a
judgment, by squirreling away the assets needed to satisfy it.
After the oral argument, however, GEA sent the court a let‐
ter briefly amplifying its statute of limitations argument by
citing several Illinois cases. One of them, decided by the Illi‐
nois Appellate Court, supports GEA’s position—Levy v.
Markal Sales Corp., 724 N.E.2d 1008, 1012–14 (Ill. App.
2000)—as does a subsequent case from that court, not cited
by GEA: Salisbury v. Majesky, 817 N.E.2d 1219, 1222 (Ill. App.
2004). The Supreme Court of Illinois has not addressed the
issue, however, and it’s by no means certain that when it
does it will agree with the appellate court. As forcefully ar‐
gued in Cortez v. Vogt, 52 Cal. App. 4th 917, 935–37 (1997),
the purpose of the drafters of the Uniform Fraudulent Trans‐
fer Act in eliminating the requirement that a “creditor,” to be
allowed to bring a suit for a fraudulent transfer, must have a

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Nos. 13‐2135, 13‐2594 11
matured claim, such as a judgment or a lien, was to expand
the rights of potential victims of fraudulent transfers. It was
not to put them in a statute of limitations pincers, forcing
them to sue prematurely in anticipation of a possible diffi‐
culty in collecting a judgment against their debtor, should
they obtain such a judgment.
Being allowed to sue as a potential judgment creditor in
order to prevent or rescind a fraudulent transfer is different
from being forced to sue that early on pain of being held to be
time‐barred if one waits to sue until one has a judgment.
Although an injury alleged when one is still only a potential
judgment creditor can only be a probability of injury, be‐
cause there may be no judgment (no award, if it is an arbitral
rather than adjudicative proceeding), “a probabilistic harm,
if nontrivial, can support standing.” Walters v. Edgar, 163
F.3d 430, 434 (7th Cir. 1998), quoted in Jackson v. Pollion, 733
F.3d 786, 790 (7th Cir. 2013). If a postjudgment suit to recover
assets that had earlier been fraudulently conveyed might
prove futile—if the assets might by then have been con‐
cealed, or been dissipated, or have otherwise been placed
beyond the reach of the judgment creditor—the potential
judgment creditor faces a probabilistic harm that may entitle
him to injunctive relief; “the conveyance of his property by a
tort‐defendant, made with intent to defraud the tort‐
plaintiff, is subject to invalidation as a fraudulent convey‐
ance, even though the liability to the prospective tort‐creditor has
not matured into a judgment at the time of the transfer.” United
States v. Chapman, 756 F.2d 1237, 1241 (5th Cir. 1985) (em‐
phasis added).
It doesn’t follow, however, that the statute of limitations
begins to run as soon as the plaintiff discovers or should

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12 Nos. 13‐2135, 13‐2594
through the exercise of reasonable diligence have discovered
the conveyance. There is not yet a national consensus on
whether it starts to run that soon, or a definitive ruling in
Illinois law. (Anyway forfeiture of a ground of appeal is not
redeemed by a post‐argument letter to the court.) But Mor‐
ganroth & Morganroth v. Norris, McLaughlin & Marcus, P.C.,
331 F.3d 406, 416–17 (3d Cir. 2003), like the Cortez decision
that we cited earlier, sensibly holds that the statute of limita‐
tions does not begin to run as long as the creditor’s claim has
not yet matured, is still merely potential. And if this is
wrong and it does start to run then, we can’t understand
why having filed such a claim GEA has not sought injunc‐
tive relief—why instead it has sought to stay all proceedings
in its suit, which would include a request by it for prelimi‐
nary relief pending the outcome of the arbitration. If Khan is
seeking to place Flex‐N‐Gate’s assets beyond GEA’s reach,
GEA by failing to seek injunctive relief and instead seeking
to freeze its suit—its own suit—is assisting Khan to do so.
Put differently, the only reason GEA could have for filing its
suit when it did was to enjoin Khan from taking steps that
might make it impossible for GEA to collect an arbitration
award from Flex‐N‐Gate.
Not only has GEA sought no injunctive relief; it waited
two years after discovering the alleged fraudulent convey‐
ance to file suit at all. Were it to wake up at this late date
(four years after suing) and seek injunctive relief, the doc‐
trine of laches would be an insurmountable barrier. See
Teamsters & Employers Welfare Trust of Illinois v. Gorman
Brothers Ready Mix, 283 F.3d 877, 881 (7th Cir. 2002) cf. Orien‐
tal Financial Group, Inc. v. Cooperativa de Ahorro y Credito Ori‐
ental, 698 F.3d 9, 20 and n. 8 (1st Cir. 2012).

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Nos. 13‐2135, 13‐2594 13
The statute of limitations could in any event have had no
effect on the alter ego claim that appears in GEA’s com‐
plaint, or its claim that Khan fraudulently induced Flex‐N‐
Gate to breach its contract with GEA. For neither claim arises
out of the alleged shuffling of Flex‐N‐Gate’s assets to other
provinces of Khan’s commercial kingdom. If it’s true that
Flex‐N‐Gate is, in contemplation of law, Khan, then if GEA
wins and Flex‐N‐Gate doesn’t pay the award he will be lia‐
ble. The statute of limitations has a possible effect only on
GEA’s alternative charge against him of fraudulent convey‐
ancing of Flex‐N‐Gate’s assets.
All this turns out to be rather a side issue, however; for
the ground for reversal that GEA urges on us, in its briefs at
least, is unrelated to fears, quixotic or otherwise, of the stat‐
ute of limitations. The ground is that Khan will convey the
fruits of his discovery to Flex‐N‐Gate for use against GEA in
the do‐over arbitration proceeding. But that is not a proper
concern of the district court, or of this court. It is the concern
of the foreign arbitrators and the foreign courts. Should Flex‐
N‐Gate try to inject evidence into the arbitration from dis‐
covery conducted by Khan in the district court suit, GEA can
object and the arbitrators will decide. What business is it of
an American court? It was GEA that invoked German arbi‐
tration. By doing so, it subjected its claim of breach of con‐
tract to the German arbitrators and judiciary. If the arbitra‐
tors allow the fruits of Khan’s discovery into the arbitration,
and in doing that they are violating German law, there is al‐
ways the Higher Regional Court in Frankfurt, and, if neces‐
sary, the Federal Court of Justice, for GEA to appeal to.
GEA insists that the stay of all proceedings in the present
suit (that is, a stay with no exception to allow discovery by

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14 Nos. 13‐2135, 13‐2594
Khan) is required by our decision in Volkswagen of America,
Inc. v. SUD’s of Peoria, Inc., 474 F.3d 966, 972–74 (7th Cir.
2007). That decision holds that a district court should stay an
entire suit pending arbitration if there is a serious danger
(should it fail to do so) of inconsistent rulings or needless
duplication of effort. To the same effect see, e.g., IDS Life Ins.
Co. v. SunAmerica, Inc., supra, 103 F.3d at 529–30; AgGrow
Oils, L.L.C. v. National Union Fire Ins. Co. of Pittsburgh, 242
F.3d 777, 782 n. 5 (8th Cir. 2001). But the danger is slight in
this case—certainly as long as the only activity in the district
court is discovery conducted by Khan. That discovery may,
it is true, result in evidence that Flex‐N‐Gate may want to
use in the German arbitration proceeding. But if so, whether
it will be permitted to do that will depend entirely on Ger‐
man law and practice. We have no authority over German
arbitration or the German judiciary. If German arbitrators or
judges decide they will, or will not, consider evidence gen‐
erated in an American litigation, specifically from discovery
conducted by Khan, then that will be final. Similarly, in the
unlikely event that the district court proceeding continues
after discovery is complete and results in the issuance of a
final judgment before the German arbitration, and any Ger‐
man litigation arising from it, conclude, it will be the busi‐
ness of the German court and arbitrators whether to give col‐
lateral estoppel effect to that judgment. GEA consented to
(no doubt took the lead in suggesting, as it is a Germany
company) German arbitration. It can’t rescind that consent
by suing in an American court, or by asking the American
court to enjoin the introduction in German proceedings of
evidence obtained in the American case.
There is still another wrinkle to this appeal. As noted in
passing earlier in this opinion, GEA’s suit against Khan is

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Nos. 13‐2135, 13‐2594 15
not only about problems GEA may encounter in collecting
an arbitration award against Flex‐N‐Gate, should it obtain
such an award. GEA also charges Khan with having induced
the contract by fraud. Since fraud is a tort, GEA is entitled to
make it the subject of a lawsuit. But it is a serious charge and
Khan is entitled to defend himself against it, which he can’t
do, it appears, without being able to conduct discovery. Dis‐
covery may yield evidence germane to the arbitration as
well, but if so—and, more to the point, if it yields evidence
favorable to Flex‐N‐Gate—that is a consequence that GEA
will have brought upon itself by its decision to sue Khan.
You cannot sue someone and prevent him from defending
himself.
And GEA must have known that Flex‐N‐Gate could have
asked the district judge to provide evidence to “a foreign or
international tribunal,” as district judges are authorized to
do by 28 U.S.C. § 1782; see, e.g., Heraeus Kulzer, GmbH v. Bi‐
omet, Inc., 633 F.3d 591, 593 (7th Cir. 2011). The German pan‐
el conducting the arbitration between GEA and Flex‐N‐Gate
might be considered such a tribunal. See Consorcio Ecuatori‐
ano de Telecomunicaciones S.A. v. JAS Forwarding (USA), Inc.,
685 F.3d 987, 997–98 (11th Cir. 2012). (Or might not—the ap‐
plicability of section 1782 to evidence sought for use in a for‐
eign arbitration proceeding is uncertain. See S.I. Strong,
“Discovery Under 28 U.S.C. §1782: Distinguishing Interna‐
tional Commercial Arbitration and International Investment
Arbitration,” 1 Stan. J. Complex Litig. 295 (2013).)
That completes our discussion of the appeal but we have
yet to consider the motion to seal certain documents—that is,
to prevent public access to them. The parties have agreed in
asking us to seal certain documents that have been intro‐

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16 Nos. 13‐2135, 13‐2594
duced in the arbitration proceeding. Their agreement is not
binding on us. Secrecy in judicial proceedings is disfavored,
as it makes it difficult for the public (including the bar) to
understand why a case was brought (and fought) and what
exactly was at stake in it and was the outcome proper. The
interest in allowing public access to the judicial record is
thus a social interest rather than a concern solely of the liti‐
gants. That is why their agreement to seal does not bind us,
and, more broadly, why “documents that affect the disposi‐
tion of federal litigation are presumptively open to public
view.” In re Specht, 622 F.3d 697, 701 (7th Cir. 2010);
see Baxter Int’l, Inc. v. Abbott Laboratories, 297 F.3d 544, 545
(7th Cir. 2002); LEAP Systems, Inc. v. MoneyTrax, Inc., 638
F.3d 216, 220 (3d Cir. 2011); Goesel v. Boley Int’l (H.K.) Ltd.,
Nos. 13‐2434, ‐2818, 2013 WL 6800977, at *1–2 (7th Cir. Dec.
26, 2013) (chambers opinion).
But the presumption can be overridden by competing in‐
terests, as in cases involving trade secrets—arguably in some
cases involving settlement agreements—uncontroversially in
most cases in which the plaintiff is a child victim of sexual
abuse. It’s overridden in this case as well, for the simple rea‐
son (related to our earlier discussion of the difference it may
make that this case involves foreign arbitration) that parties
to a German arbitration may not disclose evidence presented
in the arbitration. DIS‐Arbitration Rules, supra, § 43.1. That
may be a good rule or a bad rule, but it is a rule that United
States courts should respect as a matter of comity, see, e.g.,
United States v. Kashamu, 656 F.3d 679, 683 (7th Cir. 2011)—
the respect that independent sovereigns owe one another—
and also because “we [Americans] are not so provincial as to
say that every solution of a problem is wrong because we
deal with it otherwise at home.” Loucks v. Standard Oil Co.,

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Nos. 13‐2135, 13‐2594 17
120 N.E. 198, 201 (N.Y. 1918) (Cardozo, J.). It was lawful for
the parties to agree to arbitrate their dispute in Germany,
and we have no authority to rewrite the rules of German ar‐
bitration.
And so the motion to seal is granted, while for the rea‐
sons stated earlier the order of the district court partially lift‐
ing the stay of discovery is affirmed.

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