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When contracting with a foreign government to provide goods or services, it is permissible for US corporations to contract away the need for formal service of process (should the need someday arise). Specifically, under the Foreign Sovereign Immunities Act, service of process can be effectuated by the “delivery of a copy of the summons and complaint in accordance with any special arrangement for service between the plaintiff and the foreign state or political subdivision.”[1]

So, if a foreign government agrees to allow itself to be served by mail in the event of a contract related dispute, service can be effectuated by shipping (via Federal Express) the documents to be served to the foreign government. The Federal Express air bill, which demonstrates that the foreign government received the documents, serves as the proof of service.

But, can private parties contract away formal service of process?

Rockefeller Technology Investments (Asia) VII v. Changzhou Sinotype Technology CO., LTD.,[2] a case certified for publication by the Court of Appeals of California six days ago, examines this question.

An Overview of the Case

This case concerns an international business deal between Changzhou SinoType Technology Company, Ltd. (SinoType), a Chinese company, and Rockefeller Technology Investments (Asia) VII (Rockefeller Asia), an American investment partnership.

In a 2008 Memorandum of Understanding between the parties, the parties agreed to the following provisions:

  1. The Parties shall provide notice in the English language to each other at the addresses set forth in the Agreement via Federal Express or similar courier, with copies via facsimile or email, and shall be deemed received 3 business days after deposit with the courier.
  2. The Parties hereby submit to the jurisdiction of the Federal and State courts in California and consent to service of process in accord with the notice provisions above.

When the relationship between these two entities soured, Rockefeller Asia initiated legal action against SinoType by shipping the relevant documents to SinoType via Federal Express. After a default judgement was entered against SinoType, SinoType moved for the judgment to be set aside because service did not comply with the requirements of the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters;[3] i.e., the Hague Service Convention (HSC). The trial court acknowledged that the service of the summons and petition had not complied with the Hague Service Convention, but concluded that because the parties had privately agreed to accept service by mail, the service in this case was proper.

How the Appellate Court Ruled

Breaking Down the HSC

The appellate court began its discussion by observing that the HSC is a multinational treaty formed in 1965 to establish an “appropriate means to ensure that judicial and extrajudicial documents to be served abroad shall be brought to the notice of the addressee in sufficient time.”[4]

The HSC provides specific procedures to accomplish service of process. Authorized modes of service are service through a central authority in each country; service through diplomatic channels; and service by any method permitted by the internal law of the country where the service is made.[5]

Each signatory nation may ratify, or object to,[6] each of the articles of the HSC.[7] Because both the United States and China are signatories to the HSC, “the Convention preempts inconsistent methods of service prescribed by state law in all cases to which the Convention applies.”[8] Accordingly, the HSC prescribes the proper methods of service from a US plaintiff to a defendant in country that is a signatory to the Convention.

Service by Mail

The appellate court next focused on Article 10 of the Convention, which concerns service by mail. Article 10 provides alternatives to Central Authority service “if permitted by the ‘State of destination.’” More specifically, the HSC states:

Provided the State of destination does not object, the present Convention shall not interfere with . . . the freedom to send judicial documents, by postal channels, directly to persons abroad.

China has filed a “reservation” to Article 10, which states that it

oppose[s] the service of documents in the territory of the People’s Republic of China by the methods provided by Article 10 of the Convention.[9]

Accordingly, foreign plaintiffs cannot rely on Article 10’s allowance for service via `postal channels’ because [China] is among the countries who have formally objected to such means of service, rendering Article 10 inapplicable.[10]

China’s reservation to Article 10 service has also been codified into Chinese law.[11] Accordingly, the appellate court concluded that “Rockefeller Asia’s mail service of the summons and petition on SinoType was not effective under the Hague Service Convention.”

Contracting Around the HSC

The appellate then addressed Rockefeller Asia’s argument that parties can “contract around” the Convention’s service requirements.[12] By its own terms, the Convention applies to “all cases, in civil or commercial matters, where there is occasion to transmit a judicial or extrajudicial document for service abroad”[13] and this language “is mandatory.”[14] Moreover, the HSC grants the right to make declarations and reservation to the Convention to the contracting states and “not the citizens of those states.”[15] To permit

private parties to avoid a nation’s service requirements by contract is inconsistent with [China’s Code of Civil Procedure] Article 261, as well as with the Convention’s stated intention to avoid infringing on the ‘sovereignty or security’ of member states.

Having concluded that service of process in this case was not effected pursuant to the HSC and that private parties cannot contract away the HSC requirements for service of process, the appellate court held that it had no personal jurisdiction over SinoType.[16]

The California Court of Appeals’ opinion makes it pretty clear that private parties cannot contract around the HSC.

On another note, this case resonates with a recent LLS blog on mail service which can be found here. International mail service, which is cheap, fast, and avoids translation cost, always sounds like a good idea up front. “But when it comes time for the plaintiff to prove that [international service of process] by mail was proper, the plaintiff is likely to find that they have entered into a Faustian bargain.”

Update: Since publishing this post, the California Supreme Court has agree to review the Appellate Court’s opinion. Read more here.

How LLS Can Help

Do you require assistance serving process abroad? With more than 35 years experience, LLS has earned a reputation as the premier US source for international litigation support. Contact our professional team of lawyers and language specialists today.

Call us at 1-800-755-5775 or simply fill out our free quote form.

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[1] 28 USC 1608(a)(1). See also Id. at (b)(1).
[2] No. B272170 June 1, 2018. This is fairly complex case, so here only issues related to service of process are examined.
[3] Nov. 15, 1965, 20 U.S.T. 361, T.I.A.S. No. 6638.
[4] Id. at Preamble.
[5] See Id. at Arts. 2-6, 8, 19; see also Bankston v. Toyota Motor Corp., 889 F.2d 172, 173(8th Cir. 1989).
[6] Objections are also known as reservations.
[7] Supra note 3 at Art. 21; Honda Motor Co. v. Superior Court, 10 Cal.App.4th 1043, 1045 (1992).
[8] Volkswagenwerk Aktiengesellschaft v. Schlunk 486 U.S. 694, 699 (1988); Honda Motor Co., 10 Cal.App.4th at p. 1049.
[9] Hague Conference on Private International Law, Declaration/Reservation/Notification [as of May 31, 2018].
[10] Prince v. Government of People’s Republic of China, No. 13-CV-2106 (S.D.N.Y. Oct 25, 2017, (TPG)); Zhang v. Baidu.com, 932 F.Supp.2d 561, 567 (S.D.N.Y. 2013)(mail service of summons and complaint on Chinese defendant did not constitute proper service: “[T]he Hague Convention allows for service through `postal channels,’ but only if `the State of destination does not object.’ . . . China has objected.”); Pats Aircraft, LLC v. Vedder Munich GmbH 197 F.Supp.3d 663, 673 (D. Del. 2016) (“Germany . . . has specifically objected to service by mail under the Hague Convention. [Citation.] As such, service of process upon a non-resident defendant in Germany must comply with the other relevant service provisions of the Hague Convention.”); RSM Production Corp. v. Fridman, 2007 WL 1515068, p. *2 (“The Hague Service Convention . . . prohibits service through certified international mail or Federal Express International Priority mail on individuals residing in the Russian Federation due to that country’s objection to Article 10”); Shenouda v. Mehanna, 203 F.R.D. 166, 171 (D.N.J. 2001) (“Article 10 permits parties to send judicial documents via postal channels or through judicial officers in the receiving nation. [Citation.] This provision, however, is inapplicable here because Egypt has objected to Article 10 in its entirety.”); Honda Motor Co., 10 Cal.App.4th at p. 1049 (“Since the attempted mail service on Honda was improper under the Hague Convention, the trial court should have granted the motion to quash service on defendant Honda.”).
[11] Civil Procedure Law of the People’s Republic of China Article 261. No “foreign agency or individual may serve documents . . . within the territory of the People’s Republic of China without the consent of the in-charge authorities of the People’s Republic of China.” Id.
[12] In support of its position Rockefeller Asia cited the following cases: Alfred E. Mann Living Trust v. ETIRC Aviation S.A.R.L., 78 A.D.3d 137 (N.Y. App. 2010) and Masimo Corp. v. Mindray DS USA Inc. 2013 WL 12131723(C.D. Cal., Mar. 18, 2013). However, the California Court of Appeals summarily dismissed these cases as being too vague on the issue of whether private parties could contract away the HSC’s requirements for service of process.
[13] See supra, note 3.
[14] Volkswagenwerk, 486 U.S. at p. 699; see also Société Nat. Ind. Aéro. v. U.S. Dist. Court, 482 U.S. 522, 534, fn. 15. (1987).
[15] Supra note 3 at Article 2, 5, and 11.
[16] County of San Diego v. Gorham, 186 Cal.App.4th 1215, 1227 (2010)(failure to properly effect service is a violation of a defendant’s due process rights).

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