SNL’s Kate McKinnon, as Ginsburg, J. Oh, the irony of Vitamin C!

Another hat tip to Ted Folkman for pointing out a great “Case of the Day” last summer.  Animal Science Products, Inc. v. Hebei Welcome Pharmaceutical Co. (S. Ct. 2018) was handed down in June, and at once clarifies and muddies an important part of Hague Service doctrine.  For the authoritative statement, I give you my favorite Justice,* writing for the Unanimous Nine:

A federal court should accord respectful consideration to a foreign government’s submission, but is not bound to accord conclusive effect to the foreign government’s statements.

Italics mine.  This holding is pertinent to service of process abroad, but I’m unsure just what effect it will have (read Ted’s post for a nice rundown of the facts and procedural posture).  In short, the Chinese government gave a conclusory statement that its law required price collusion among manufacturers of Vitamin C.  But China’s amicus brief failed to cite any particular code language or prior public policy statement, and was actually refuted by earlier public assertions by Beijing.

The gist of the opinion: yeah, trial courts should give a fair amount of deference to a foreign government’s statement of its own law, but that deference isn’t absolute.  A pretty reasonable rule, giving trial courts much needed latitude to reject specious statements by less-than-friendly governments or low-level officials who really don’t know what they’re talking about.

So what effect does that have on the almost bulletproof quality of Hague Certificates?  Well, maybe nothing.

And, yet, maybe quite a bit.

In Northrup King v. Compania Productora Semillas (1995), the 8th Circuit declined to “look behind” a Hague Certificate, accepting as facially conclusive a foreign Central Authority’s statement that service had been effected in accordance with that country’s own law.  This widely accepted deference gives considerable– perhaps unassailable– weight to the Certificate’s conclusions.  In short, if the foreign Authority says process has been served, for the purpose of U.S. law, it’s served.  And if a defendant wants to refute that conclusion, they must attack the Certificate in the foreign country’s court.  The Northrup King holding has long been the basis for my constant assertion that the Certificate is like a Willy Wonka Golden Ticket,** the keys to the castle, bulletproof.

I still contend that defense counsel should always question the validity of a Hague Certificate, but for different reasons— not the least of which is that not just anybody can sign a Hague request.  I’m no longer as sure about the Kevlar-like quality of even a valid Certificate.

That said, Northrup King accepted not just a conclusion of law, but of fact.  And it’s the factual conclusion that distinguishes the two cases, so the bulletproofness (yes, I made up that word) should still overcome a motion to quash.  I can’t say with certainty whether Animal Science Projects calls that into question.

Still, it’s arguable, and worth watching the interplay of these two cases.

* The Honorable Ruth Bader Ginsburg, known in the wider zeitgeist as The Notorious RBG.  I met Justice Ginsburg in April, 2017, about an hour after being admitted to the Supreme Court Bar.  I highly recommend the experience, even if you never think you’ll argue there.

** Not my original thought.  I really don’t know whose it was.

Here’s what it would have looked like in 1933.

One of the biggest challenges in serving offshore defendant companies is ensuring that they’re properly named (see Always Name Your Defendant Entity Correctly).  Closely connected to that issue is the defendant’s address– simply put, if you don’t know where they are, I can’t get them served for you.  Both of these ideas are equally applicable to cases involving U.S. defendants, so this shouldn’t be an earth-shattering thought.  I suggested some time ago that, when executing a contract with an offshore party, a few things must at least be contemplated (see Five Essential Things…).  Chief among them is my advice to DESIGNATE AN AGENT FOR SERVICE IN THE UNITED STATES.  Do that, and you never have to retain somebody like me.

It’s not difficult– you can’t throw a rock in downtown Dover, Delaware without hitting a corporate agent.  A whole bunch of outfits are happy to accept service on a company’s behalf for a low annual fee.  But if that isn’t in the cards– ie: the offshore party refuses– at the very least, make sure the foreign entity actually exists before you hand them seventeen million dollars.

Look, if you’re a mortgage officer, and a young, nice-looking couple walk into your office so they can buy that $130,000 two-bedroom starter home, in addition to pay stubs and tax returns, you’re going to insist on a copy of their driver’s licenses to make sure they are who they say they are.

But a great number of my clients need to serve breach of contract complaints on offshore companies that the plaintiff never verified.  Now, to be sure, many of those litigants never ran their contract by a lawyer before signing… they trusted the other party, and only sought counsel when the deal soured.

But some of those contracts were drafted by lawyers who simply didn’t undertake due diligence.  Above all, lawyers…

INSIST THAT OFFSHORE COMPANIES PROVE THEIR EXISTENCE.  ALWAYS.

Even if you KNOW them.

How?  The same way the mortgage officer insists on her borrowers’ ID’s.

When a foreign* company shows up to sign a contract, insist that they provide a Certificate of Incorporation or comparable document.  Essentially, you’re demanding to see the company’s birth certificate– and you’re going to use that birth certificate to go further in your verification.  Here in Missouri (and just about everywhere else), the Certificate indicates that the company was born on such & such a date and was, at one time anyway, a real thing.  It’s not that difficult to exercise due diligence and check the SoS website to verify that, yes, InBev International, Inc.  is still an active entity or that– uh oh– Anheuser-Busch Beverage Group, Inc. is not.  [Wait– Budweiser doesn’t exist anymore?!]

Overseas, corporate registries do pretty much the same thing.  We can easily discern that British Airways PLC is an active, registered company in England, its current incarnation incorporated in 1983.  We know that its registered address is Waterside, PO BOX 365, Harmondsworth, UB7 0GB.  Handy information to have.  And when I say to my solicitor, “hey, Nigel, could you send your process server out to tag these guys?’ he doesn’t bat an eyelash.**

But if the contract was formed in the absence of this knowledge, it could make service impossible.  In short… we’ve gotta find them first, and if we can’t, the case probably goes away.

* Foreign is a term of art.  It means “from outside the jurisdiction” in two senses: (1) in the “across the state line” sense and in the (2) “you need a passport to go there” sense.

** His name is not really Nigel.

The view from Stirling Castle. William Wallace bested the English here.

Two nights ago, my wife and I returned home from an all-too-brief visit to Scotland.  The daughter of some old friends got married in a beautiful ceremony in front of stunning seaside views, and then we traveled across the country & back again (this isn’t a big deal, as the country is barely eighty miles wide at the latitude we traveled).  Along the way, Peggy was a bit puzzled at times regarding terminology.

Okay, she said, we’re in Scotland, but also in England?  Huh?

Well, no.  We’re in Scotland, but also in Great Britain, and also in the United Kingdom (for now?) and the European Union (also for now).

I tried to explain that Scots are British, and Northern Irish are UK citizens but not British, and the Welsh will smack you for calling them English, as will the Scots and definitely the folks in the Republic of Ireland.  Scotch is term reserved only for whisky (not whiskey) and cellophane tape, and you refer to a person from Scotland as a Scot or Scottish.

Confused yet?  Well, you’re not alone.  Here’s a handy YouTube video that explains– very briefly– the difference between the geographic and political distinctions in the British Isles.  It’s the shortest of the bunch, but there are a slew of others that explain the various boundaries.

This is critical stuff when serving process.  It all falls under the Hague Service Convention, but saying “I need to serve a defendant in the UK” isn’t sufficiently specific to know what law governs.  Likewise, “I need to serve an Irish defendant” leaves out some critical details.  Once the defendant’s specific location is determined, the following guides are pertinent:

  • England & Wales (unified under the same legal regime)
  • Ireland (split into two jurisdictions)
  • Scotland (again, don’t call them English, or you’ll get hit)

Let me know if you need some guidance.  My understanding took decades to refine, and I’m still unsure at times.

 

To be sure, a good time was had by all– especially at the reception where (I’m am not making this up) I watched a couple of hundred Scotsmen sing The Proclaimers’ “500 Miles” to the bride and groom before their sendoff.  It was a stunning experience.  To the new Mr. and Mrs. Baird, I wish all possible joy and happiness.

 

The Martyrs Monument and the Royal and Ancient Golf Club, St. Andrews.

[Dateline: Pittenweem, in the Kingdom of Fife.  I’m in Scotland this week, having just attended the wedding of the daughter of some old friends.  This is, without question, my favorite country to visit, and I’ve been coming since college.  Nice people here.]

Most of us in the U.S. have a fairly cinematic image of Scotland in our heads– usually something to do with Gene Kelly waking up in a mystical village & falling in love with Cyd Charisse (and who wouldn’t?), or Mel Gibson with half a blue face, before he really went nuts.  The beach in the picture above?  Yeah… three words: Chariots of Fire.

But there’s quite a bit more to this northern half of Great Britain.  Serving process in Scotland is subject to the strictures of the Hague Service Convention, regardless of which U.S. venue is hearing the matter, but it’s a different system than in its fellow U.K. (for now, anyway) members.

Some background is in order, if you’re so inclined, before we cut to the chase.

Now, here’s how service is done in Scotland:

Article 5 Service

  • Translate the documents. The UK’s declaration to Article 5(3) requires that documents be in English.  Game over, right?  Pack up and go home?  Not so fast, counsel… make sure your defendant speaks English, because his U.S. Due Process rights follow him, in a sense.  Anybody sued in a U.S. court must be served in a language they understand, so if they don’t speak English, translation is still necessary.
  • Fill out a USM-94. Be very careful about ensuring that it is complete and concise, and make sure that it is signed by a court official or an attorney.  If it is not, make sure that the person signing is commissioned by the court.
  • Send to the Central Authority.
  • Sit tight. It may take a while—likely three or four months from submission to return of proof.
  • If your defendant is an individual, there is a significant chance that your Article 5 request will fail. The English Central Authority uses Royal Mail to carry service of process, and if the defendant doesn’t sign for the delivery… no dice.  You get a very pleasant notice from London inviting you to try again.

Article 10 alternative methods

The U.K.’s declarations and Central Authority information—as well as those of all the other countries in the treaty—can be found here.

Bonus practice tip… if you’re defense counsel, always question the validity of service effected on your overseas client.  The plaintiff may not have done it correctly.

Avast, ye scurvy dogs– September 19th be International Talk Like A Pirate Day, so my crew and I will be celebratin’ by talkin’ like pirates (just like every day aboard the Pirate Vessel HLB) and raising a flagon o’ grog to the memory of Jack Sparrow, Hector Barbossa… and the greatest buccaneer to ever wield a rapier on the high seas, Peter Blood.

FOLLOW ME, M’ HARDIES!   [Talking like a pirate very well could entail a patrician accent like that of Errol Flynn, so don’t feel the need to follow the silliness by being guttural and making your throat all raspy.]

Just so’s ye have some context for our bit o’ celebratin’, a few links:

Enjoy the holiday, ye rotten bilge swillers.

 

 

 

 

The Rock of Gibraltar… guaranteeing access to the Mediterranean since 1704.  USAF photo.

In 2016, I posted “Five Essential Things All Business Owners (and Their Lawyers!) Should Know Before Signing Global Contracts” with real people– and preventing lawyerly goof-ups– in mind.  But lately, I’ve realized that some elaboration is necessary.

Why those five things matter ought to be apparent.  But some nuance is necessary, so I offer a five-part series that elaborates on each point, more for than benefit of lawyers than for the business owners who want to venture abroad.

Those five things, in turn…

  1. Designate an agent for service in the United States.
  2. Include a choice of venue.
  3. Choose a governing law.
  4. Determine the operative language.
  5. Secure a guarantee of judgment debt.

To elaborate on Point Five…

Secure a guarantee of judgment debt.

Face it.  As I wrote in July, a lawsuit ain’t over ’til the client gets a check.  An eye toward enforcement of a judgment is absolutely critical when litigation is in the planning phase.  The key is to think about it even earlier– when the contract is in the drafting phase– in order to prevent a breach from occurring at all.  Our clients honestly don’t expect the other party to welch on the deal, but it’s our job to give them a reality check.  Even though we hope it never happens, we have to anticipate it, and if we can do that, well… an ounce of prevention truly is worth a pound of cure.

So think ahead to the end of a potential lawsuit.  You’ve done everything right– served properly, undertaken the perfect scope of discovery, won the right motions, and convinced a jury that your client was damaged as a result of the other party’s intransigence.  You’re awarded seven figures in damages and your client is ecstatic.*

But… harumpf.  Your losing opponent (let’s say they’re from China) has no assets in the United States except a $170,000 corporate apartment in Galveston.  At the outset, you tried to convince the client that choosing Chinese law, venue, and language would be a great hedge against a breach, but they insisted on… ‘Murica, damnit, we’re the greatest country in the world.  They insisted on fighting it out here because they feared litigating over there.

Your defendant, counselor, is a turnip.  As in “can’t get blood out of a…”

Forget about enforcing the judgment in China. Just don’t waste your time, because Chinese courts have enforced exactly ONE U.S. JUDGMENT in as long as anybody can remember.  One.  And that was between two Chinese citizens in a case that Chinese courts wouldn’t touch with a ten-foot pole.

What to do?

AHA!  While your client dissed your Chinese law/venue/language recommendation, they did have the good sense to act on your recommendation that they get a guarantee of judgment debt.  Exercise the guarantee, whatever form it takes, and you’re able to collect that vaunted check.

Whatever the type of transaction, there are always options.  Sure, they’re likely to increase the cost of the transaction, but car insurance increases my cost per mile on the road, and I wouldn’t be without my coverage (or my agent, Irvin).  I hope I never have to use it, but peace of mind is awfully nice.  And if something horrible happens, I know I won’t have to live in a van down by the river.

Options

  1. Collateral.  Okay, so they only have that condo in Galveston.  But they put it up as collateral on the contract, you file the proper lien, and you don’t have to litigate to enforce the judgment.  Just act on the lien.
  2. Letters of Credit.  Like a deep pocketed co-signer, banks provide letters of credit all the time.  They may not be willing to back a Chinese party directly, but maybe a Chinese bank would provide a guarantee to the U.S. bank.  Again, this kicks up the cost quite a bit, but when you win that seven-figure judgment, the U.S. bank pays it and then collects from the Chinese bank, who in turn goes after the breaching party in… China.
  3. Other U.S. parties who are beholden to the foreign party.  Company XYZ in Oregon owes the foreign party an amount equal to half of the judgment.  Yes, collect it, but if it’s written into the contract that you can seize those receipts, much easier to collect.
  4. Some other U.S. guarantor.  Perhaps not specifically a Letter of Credit, but functionally similar.  An affiliate of the foreign party, perhaps, who does have sufficient assets in the United States, offers collateral or other guarantee on the contract.
  5. Export Insurance.  Just as Irvin and State Farm have me covered in case of a car accident or fire or other horrible event, export insurors have your client covered if their overseas buyer refuses to pay the balance due on a high-value shipment.  If you don’t know who to contact, just Google “export insurance”. **  In truth, this isn’t really a judgment guarantee– it’s a deal guarantee.  You wouldn’t even have to litigate in such a situation.

The list goes on.  But the bottom line is this:  a courtroom victory is Pyrrhic if there’s no way to collect on it.  So make life easier on your client by providing some kind of assurance that they’ll be paid if the other guy breaches.  Yes, it’s a pain in the neck.  Yes, it can drive up the cost of contracting and thus drive up the cost of the entire relationship.  But a judgment following a lawsuit is utterly worthless if it can’t be enforced.  If the foreign party’s assets are all in a country that won’t recognize and enforce a U.S. judgment, litigating the matter is a massive waste of time.

* Set aside the fact that the transactional folks who write this agreement aren’t likely to litigate it, too.

** For a more personal touch, call my friend Dave Clark at ARI Global.  He’s originally from Nebraska, but we don’t hold that against him, especially since he’s the fellow who introduced me to the concept of export insurance in the first place.

Tom Hall, via Wiki.

The vast majority of cases I work on are a lot like the material we read in law school.  My Torts professor told us on more than one occasion that “there are real people behind every one of these cases.”  My cases are no different.

She also told us that they were in these casebooks “because some lawyer goofed.”  Or words to that effect, anyway.  I took both thoughts to heart, and they have guided my immersion in the profession ever since.*

In 2016, when I posted “Five Essential Things All Business Owners (and Their Lawyers!) Should Know Before Signing Global Contracts,“ I had those real people– and preventing lawyerly goof-ups– in mind.  But lately, I’ve realized that some elaboration is necessary.  Why those five things matter ought to be apparent.  But some nuance is necessary, so I offer a five-part series that elaborates on each point, more for than benefit of lawyers than for the business owners who want to venture abroad.

Those five things, in turn…

  1. Designate an agent for service in the United States.
  2. Include a choice of venue.
  3. Choose a governing law.
  4. Determine the operative language.
  5. Secure a guarantee of judgment debt.

To elaborate on Point Four…

Include a choice of language clause.

This is a classic problem, and it was at the heart of one of my favorite cases in law school, as well as a little known treaty that created a nation:

Frigaliment Importing Co. v. B.N.S. International Sales Corp., 190 F.Supp. 116 (S.D.N.Y, 1960).

Yes, you remember the case.  And if you don’t, here’s a hint:

Nobody does it better than Costco. Nobody.

When I first read Frigaliment, I thought I might just need new glasses.  A month into my 1L year, and the judge writes, quite literally…

The issue is, what is chicken?

Remember it now?  It seems the parties to the contract failed to define what they meant by a seemingly innocuous word.  Chicken is chicken, right?

No, said the buyer.  Chicken is “young fryers”, rather than those old, stringy stewing hens you sent us.  Give us our money back.

The case was included in our Contracts casebook to illustrate the concept of usages— course of performance, course of dealings, usage in trade– and it does so beautifully.**  But a significant part of the course of dealings analysis turned on communication between the parties in German.  The German word they used was just as ambiguous, so the court then had to move on to more attenuated analyses, but the analysis necessitated a whole bunch of bilingual gymnastics that courts hate having to deal with– so just avoid the issue altogether.  In the end, it could have been handy to have a translation of the contract, because a German translator may have asked for clarification.  The best ones always do.

The Treaty of Waitangi, 1840

Depending on how you look at it, a tragic loss befell an entire people in the early years of Queen Victoria’s reign.  It seems the Royal Navy sailed into what is now Auckland Harbor and offered a treaty to the native Maori tribes who had inhabited New Zealand for centuries.  The gist of the treaty, in the Maori language:  you guys let us Brits administer these two big islands– islands that strangely resemble Middle Earth, but whatever– and we’ll give you a big chunk of the profits.  Call it rent.

In the English version of the contract, the gist was different:  you guys let us Brits take ownership of these two big islands– islands that strangely resemble Middle Earth, but whatever– and we’ll give you… well, we won’t destroy your civilization completely.  Call it protection.

No choice of language clause would have mattered– the British would have certainly taken the place by force anyway– but the Maoris signed onto the treaty based on the understanding of the terms offered in their own language.  They assumed that their own language governed, and that was a tragic mistake.

The Bottom Line

Don’t let your clients make the same mistake.  Take the issue off the table altogether.  Make a decision about what language is operative because, if you have two versions of a contract without a choice, which do you think the forum court is going to prefer?  THE ONE IN ITS OWN LANGUAGE.

But think about a few things as you do…

  1. Don’t be too certain that your language is the best way to go.  A rural Kansas state court may not have sufficient expertise to adjudicate an international trade case, and it definitely doesn’t have the expertise to parse a contract written in both English and traditional Chinese.
  2. Don’t be too certain that the other fellow’s language is not the best way to go.  In some cases, particularly in China (as highlighted frequently by Dan Harris’ excellent China Law Blog), choosing the foreigner’s language (and law and venue) may prevent a breach altogether.
  3. Be certain the selected language has sufficient connection to the facts & parties involved.  Sure, French might be a great diplomatic language, but if the parties are American and Mexican and the court isn’t francophone, it makes zero sense.  A court might kick the case just out of spite because you’re making the judge and staff work harder than reasonably necessary.
  4. Recognize that the choice of language clause can be an outstanding negotiating concession.  If you’ve concluded that communicating in the other fellow’s language wouldn’t be a tragedy, give that fellow*** what he wants in exchange for something you truly need.  My favorite Nelson Mandela quote: “If you talk to a man in a language he understands, that goes to his head. If you talk to him in his language, that goes to his heart.”  There’s a whole lot of preventive medicine in that idea.  A good chunk of Ubuntu as well.
  5. Above all, for crying out loud, make the venue and governing law correspond to the language!  It’s awfully impractical to expect a Minnesota court to adjudicate a Spanish contract under German law.  Ponder that for just a moment– it insults Minnesota because you don’t believe in English or Minnesota law, in insults Spain (or Mexico or Argentina, etc.) because you don’t believe in Spanish courts or law, and it insults Germany because you can’t be bothered to adjudicate there in its language.

Seriously.  This stuff is crucial, and there is no “required” language.  Do what seems right in light of the circumstances surrounding the language issue.

* I learned Torts from Nancy Levit.  It was my best grade that very first semester, which isn’t saying much (a horrible 14 weeks, for sure), but I definitely learned a bunch from Nancy.  The learning continued after I graduated, with two books she co-wrote with Doug Linder (my ConLaw professor, two semesters worth).  I highly recommend The Happy Lawyer and The Good Lawyer.

** Usages are also a great way to illustrate customary international law.  Just because there’s no writing… doesn’t mean the parties aren’t bound by past practice.

*** An explanation on the gendered language: I’m not trying to exclude here.  Just trying to keep some lingustic cohesion in the paragraph.

The Peace Palace, den Haag.

Calling readers’ attention to a celebration… and a quick article published on conflictoflaws.net this morning, by my friend and colleague Mayela Celis, Senior Legal Officer at the Hague Conference on Private International Law.  Given this organization’s impact at the end of a brutal century, it’s little wonder that Tobias Asser was awarded the Nobel Peace Prize.  [If only his guidance had been followed, the 20th century wouldn’t have been even more brutal than the 19th!]

Asser’s Enduring Vision: The HCCH Celebrates its 125th Anniversary

I had the pleasure of visiting the Permanent Bureau two years ago.  Wonderful people, highly capable colleagues… I cannot speak highly enough of these professionals, who are keeping the Asser vision alive and well.

 

Hugo Grotius, Father of International Law.  Portrait by Michiel Jansz. van Mierevelt, 1631 (via Wiki).

Litigators tend to get a bit skittish when treaty law creeps into lawsuits.  And with good reason– most American lawyers come up against treaties only very rarely, and their effects can really harm the unaware.  I promise you, in whatever practice area, sooner or later, some treaty or other doctrine of international law will have an effect on what they (you) do, and it’s critical to know where the landmines are buried.

All that said, let me bring the vaunted idea of a treaty down to the 1L level, because all you need to really know about treaties, you picked up in first year Contracts.  That’s all a treaty is: a contract.  Meeting of minds, offer, acceptance, consideration, breach, remedies, adhesion…  All that stuff plays into treaty analysis, because a treaty is just a contract.*  A special kind of contract.  See Foster v. Neilson, 27 U.S. 253, 314 (1829):

A treaty is in its nature a contract between two nations, not a legislative act. It does not generally effect, of itself, the object to be accomplished, especially so far as its operation is infra-territorial; but is carried into execution by the sovereign power of the respective parties to the instrument.

And remember the characterization of a contract as a sort of particularized law, enacted by the parties to govern a particular relationship.

Just about every treaty refers to its signatories as “Contracting States” or “High Contracting Parties”, so you don’t necessarily need Justice Story to illustrate the point.

That said, note the careful wording of the opinion (here’s where it gets a bit complicated).  A treaty in its nature is… not a legislative act.   But by virtue of the Supremacy Clause, it takes on the authority of a legislative act because it is ratified with the consent of the legislature (or at least half of it) and becomes supreme law.**  It thus overrides any lower authority in conflict with it.

Obviously, the best example in my world: the Hague Service Convention, which technically forces U.S. rules to give way to foreign law.

You read that correctly.  Foreign law overrides U.S. law.

Let’s say you’re suing a German defendant in federal court.  Due process requires that you serve by a means reasonably calculated to (1) put the defendant on notice and (2) provide the opportunity to defend.  FRCP 4(f) says serving by mail is okay if a treaty allows it, right?  And Article 10(a) of the Convention says mail is acceptable, right?

Well, not exactly.  They both defer to the other country’s viewpoint on the issue.  Rule 4(f)(2)(C)(ii) says mail service is okay*** if a treaty allows but doesn’t specify other means– and provided it isn’t prohibited by the foreign country’s law.  (See?  Even the FRCP defers to foreign law.)

But we don’t even need to analyze German law, because as it applies to Germany, the Hague Service Convention doesn’t allow it!

Article 10:  Provided the State of destination does not object…

Germany objects– as do China, Mexico, Switzerland, Korea, etc.– so Article 10, including the “postal channels” option in 10(a), is off the table.  A treaty thus allows a foreign country to override U.S. rules.  [That’s really gotta rub Roy Moore the wrong way!]

The power of this contract really is massive.

* Remember that you can have a contract without paper.  Even absent a written treaty, customary international law can still bind nations to a certain code of conduct.  Imagine customary law like you view usages… how have we done it in the past?  Course of performance, course of dealing, usage in trade… same concept, but applied differently.

** Not to get into tall weeds, but there are actually two types of treaty: those that come into effect by their own language upon ratification, and those that require implementing legislation.  The latter sort really does become a legislative act, requiring both chambers’ assent.

*** It’s usually a horrible idea– even if it’s legal.  And even in those rare cases where mail is the only viable option, it still must be done properly.

 

Wikimedia Commons

An interesting story hit the blogosphere a couple of weeks ago (see “MtGox’s US customers try to find Mark Karpeles” over at the FinanceFeeds blog).  I won’t pretend to understand the mechanics of the case discussed– the Bitcoin phenomenon and the MtGox security breach lie far outside my expertise, and frankly, the whole concept is pretty complex and I don’t have the time to give it reasonable study.  Suffice to say that this case is a classic illustration of just how complex cross-border finance and cross-border litigation have become.

A particular paragraph in the post caught my eye:

Karpeles is a French citizen believed to be living in Japan, so service upon him is governed by the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents. In order to effect service under the Hague Convention, a physical address is required.

Well, sort of.

Er, not exactly.

Wait… no.  That’s not right at all.

It is correct that in order to effect service under the Convention, you have to have an address.  But service on Karpelès is not “governed” by the Hague Service Convention unless and until the plaintiffs know his whereabouts.  He is merely believed to be living in Japan.  By its own terms (Article 1), the Convention doesn’t apply “where the address of the person to be served with the document is not known.”

In short, if the fellow can’t be found after a diligent search, adherence to the strictures of the Convention is unnecessary.  Frankly, adherence is impossible, because the primary bit of information necessary for a service request to a Hague Central Authority– Japanese, French, or otherwise– is where to find the guy.

So what is a litigant to do?  Well, do what the DNC did earlier this month: use Rule 4(f)(3) to serve him electronically (see my recent post “Twitter Service Hits the Bigtime“).  Or ask the court to appoint his U.S. counsel– if indeed he has counsel here**– as his agent for service, then serve him under 4(e)(2)(C).

The FinanceFeeds post went on to say that…

The Court agreed that the time for Mr Lack to file Proof of Service on Defendant Mark Karpeles should be extended to and through October 31, 2018.

That tells me that none of the lawyers in the room (including the judge) are reading the whole of Rule 4(m), the basis for the standard 90-day deadline to serve a defendant.  The last sentence of 4(m) is a beautiful little safe harbor for plaintiffs seeking to serve abroad:  “This subdivision (m) does not apply to service in a foreign country…”  [Emphasis mine.] *

Now, that doesn’t mean a plaintiff has unlimited time to get the job done– a reasonable diligence standard applies– but it does negate the need to extend anything.  The plaintiff merely has to not be dilatory (I had to look that up once) in his efforts to serve.  Yes, keep the court updated on your progress.  Yes, make sure the judge knows what you’re up against.  Don’t give up on the effort.  Just know that an ordinary extension of time isn’t necessary.

The takeaway from all this?  Not all is lost if a defendant can’t be located, and the Federal Rules of Civil Procedure account for that.

* At that, even assuming the plaintiffs do find an address, they shouldn’t expect a proof of service by the end of October.  Serving in Japan has been taking longer than normal lately– and “normal” is four months, at best.

** UPDATE (a day after posting):  Within hours of my post, up pops another FinanceFeeds article about this defendant, but in a different suit in N.D. Ill.  Apparently, yes, he does have U.S. counsel.  And the ability (not to mention, obligation) to waive.