I say all the time that we ain’t building rockets when serving process abroad.  For the most part, that’s correct… until it comes time to sue a Chinese party.  It often makes absolutely no sense to sue on this side of the Pacific, and litigators would be wise to talk to Dan Harris at Harris Bricken before going to the trouble.  Dan is the publisher of the China Law Blog, and his feel for the intricacies of China law are unparalleled.*

If you do proceed with a suit, know that serving process in China is subject to the strictures of the Hague Service Convention, regardless of which U.S. or Canadian venue is hearing the matter.  But it isn’t so simple as the procedure outlined below might lead you to believe; geography matters.  If your defendant is in Hong Kong, your Hague options are more varied (thus a more complex decision lies before you), but considerably faster, easier, and more likely to lead to an enforceable judgment.  For Hong Kong, see here, because the Hague regime there is more British than Chinese.

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

  • The roadmap to the overall process—the recipe to our Secret Sauce.
  • The structure of the Convention itself is discussed in this four-part series.
  • And an absolutely critical note: the Hague Service Convention does not confer coercive effect on subpoenas.  Repeat after me—you can’t just SERVE a subpoena abroad.  At least, not if you want it to actually work.  You have to file a Hague Evidence Request.  Dramatically different from serving a summons or notice.  But don’t get overly excited… Evidence Requests to China are usually a massive waste of time.

Now, for the chase scene.

Personally, I thought Wai Lin was way cooler than Bond. He couldn't have pulled this one off without her.
Personally, I thought Wai Lin was way cooler than Bond. He couldn’t have pulled this one off without her.

Here’s how it’s done in the People’s Republic of China:

Article 5 Service

  • Translate the documents. China’s declaration to Article 5(3) requires it and, although the defendant may speak flawless English, omitting translated documents will prompt the Central Authority to reject your request.  And for crying out loud, get the right written form of Chinese, which is simplified.  
  • No, Mandarin is not what I mean.  Yes, the thing will be in the Mandarin dialect, sort of, but you need simplified written Chinese.  If your translation provider doesn’t know what that means, find a different translation provider.
  • If the defendant is a company, hire an investigator to ascertain the appropriate address for service. It may not appear anywhere in the documents you’ve exchanged already, and if you flub the address, the Central Authority can reject your request.  Or the local officials can reject your request.  Or the guy delivering the documents can be very slipshod about the way he does it.  In any of these circumstances, no dice.
  • If it’s a U.S. action, wire $95 to the Central Authority.  The Convention arguably prohibits the assessment of fees, but we charge $95, so China returns the favor on a reciprocal basis.  (Unlike Russia, which rejects U.S. requests as a matter of course.  It’s retaliation, no question, but I happen to think they’re right.)
  • 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 12 months from submission to return of proof, if not more.

Article 10 alternative methods

  • They simply aren’t available, because China objects to them all. Article 5 is the only way it can be done.

Seriously—that’s all there is to it in China.  The method is straightforward; it’s a matter of a simple procedure with complicated implementation.  A tip worth noting is that China assesses a $95 fee for execution of service requests from the U.S.  This runs specifically counter to the “no fees to execute a service request” clause of Article 12, but they only do it to us because we do it to everybody.  It’s a better shake than the Russians give us, to be sure.

China’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.

The best practice tip:  call Dan.  No, really.  If your defendant doesn’t have assets in a country that is willing to enforce a U.S. judgment, you’re wasting time suing here.  Dan and his China lawyers can advise you on a strategy to litigate in the PRC.

UPDATE, May 14, 2018: a couple of important additional issues are discussed on a new post here.


* Dan has been an invaluable guide to me as I’ve launched my own practice and this esoteric little blog… anybody who does business in the Far East should follow his writing religiously, and any lawyer who wants to see how blogging is done should do likewise.  [Dan also knows where to find the best Chinese food in Seattle.  No—not that anglicized stuff they make for the gringos.  I’m talking a crowded hole-in-the-wall type of place where we’re the only white guys in the room.]

The Hague, Netherlands.  November 10, 2016.

I’m in the small city in Holland that is both the Dutch political capital and the center of global  jurisprudence.  Home to the International Court of Justice, it is also where some three dozen international agreements—the Hague Conventions—have been formulated to harmonize cross-border legal doctrines in private law.  As it happens, I am on a journey to visit the Permanent Bureau of the Hague Conference on Private International Law.  Several colleagues have joined me on the adventure, a day trip from a lecture series in Paris hosted by my alma mater, the University of Missouri-Kansas City School of Law.

With the Honorable Christophe Bernasconi, Secretary-General.
With Hon. Christophe Bernasconi, Secretary-General.

It’s here that the Hague Law Blog (HagueLawBlog.com) must be launched.  This new platform marks the beginning of yet another adventure—one that I hope brings efficiency and accuracy to the practicing bar, along with a bit of humor.  Many of my prior columns are migrating over from my firm website, and the new ones will cover every manner of Hague issue—including newly effective Conventions on Securities and Maintenance & Child Support—as well as some issues that lie outside the Hague Conference community.  I always welcome commentary from colleagues, and I invite questions any time.  Truly, I don’t have all the answers to questions I field from clients, and I hope to learn from this experience as much as I hope to contribute.

My mission is to enlighten my fellow lawyers and make us all better at the practice of law.  Two distinguished colleagues provide the inspiration for this launch (and I heartily recommend their work): Ted Folkman, author of Letters Blogatory , and  Dan Harris, author of China Law Blog.  I have read these two fellows’ work religiously for years; if I can be half as entertaining and a quarter as informative as they are, I’ll consider this mission successful.

Thanks for being here.  I look forward to our conversation.

Aaron

(… or, if you will, “How to not have to hire Viking Advocates when the contract sours.”)

Let’s get the disclaimers out of the way.  One, this advice is legal in nature, but it is not offered to a specific person.  It is general information meant to provide perspective, to highlight the vulnerabilities in a contract.

Two, it is not an exhaustive list, so if this is all you contemplate in a contract, you are headed for disaster.

Three, if you are a business owner who seeks to enter into a contract with a foreign party, you must (and I cannot stress this enough) HIRE A LAWYER.  This is not just a plea to protect my guild monopoly.  Yes, you’re as smart as any of us.  Yes, you have a wonderful product/service/company/etc. and you do wonderful things.  But you cannot foresee what your lawyer can.  Global commerce is no place for the faint of heart, and it is no place for self-representation.

These are vital issues your lawyer must contemplate before you sign a contract.  If s/he hasn’t thought of them, mention them.  If they tell you these issues aren’t important, run away as fast as you can, because your lawyer is dangerously ignorant of transnational litigation procedures (to be sure, just because your lawyer hasn’t mentioned them does not mean s/he hasn’t factored them into the equation).  These are not absolutes, but are factors that should unquestionably be mentioned.  [UPDATE:  Each of these headings is linked to a post that elaborates on the idea…]

  1. Designate an agent for service in the United States. All U.S. entities must designate an agent for service when they incorporate, organize, or register with their respective Secretary of State.  Foreign (that is, non-U.S.) entities usually bear no such responsibility.  If a lawsuit becomes necessary, you probably won’t be able to just hire a process server in the foreign country. Your lawyer will need someone like me to handle it for you or, worse, will spend hours just researching how it’s done (and then bill you for that time).  With a U.S. agent, regular U.S. practice is perfectly fine.  (And to go one better, have the contract stipulate that the agent can be served by email!)
  1. Include a choice of venue. Even if that venue is overseas (and in many cases, it’s actually smarter to choose a foreign venue than a U.S. venue), agreeing on the appropriate place for a suit prevents a number of headaches—and can even prevent a dispute from arising in the first place.  Globally, this is referred to as a “choice of court clause” but has similar binding effect in most industrialized countries.
  1. Choose a governing law. Amazingly, the choice of what rules govern a dispute is left out of many contracts completely, with each party simply assuming that their own laws will apply.  That assumption is incredibly dangerous.  To be sure, the negotiated choice of law may not ultimately be the one you hope for, but as the old adage goes… forewarned is forearmed.
  1. Determine the operative language. Especially if the other party puts two versions of a proposed contract in front of you, make sure you select the operative language early on—and then revise that draft accordingly.  An entire civilization once gave over its territory because an ostensibly bilingual contract wasn’t really bilingual.
  1. Guard against having to enforce abroad by making the other party secure a guarantee of judgment debt from an American bank or other guarantor. 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.
  1. Bonus Tip: add an arbitration clause. It serves the same purpose as a choice of court clause, and often designates specific rules and the governing law.  Thanks to the New York Arbitration Convention, arbitral awards are far easier to enforce abroad than litigated judgments and, despite their political unpopularity, provide significant cost savings in dispute resolution.

Again, your lawyer may have already pondered these tips, but they are still worth discussing.  Viking Advocates assists attorneys in the diligent drafting of global contracts, but the bulk of what we do results from contracts that are silent on these issues.  Hiring us now for a consultation now means not having to hire us later to help wage a long and protracted litigation war.

 

Acknowledgment:  Particular thanks to Dan Harris of Harris Moure in Seattle, who pens an outstanding blog on the legal ramifications of doing business in China.  Dan’s thoughts on litigating against Chinese opponents are extrapolated more generally here.