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Importance of Proper Service of Process in International Cases

Thomas W. Hartmann
The Hartmann Law Firm LLC
TheHartmannLawFirm.com; [email protected]; 908 769 6888

With the expanding world economy and ballooning international transactions, we see an increase in litigation involving parties outside the United States. For any lawsuit, the plaintiff or proponent must insure proper service or delivery of the complaint to the opposing side. This can be quite complex, expensive and time consuming in the international context.
The Hague Service Convention. Federal Rule 4(f) governs service in a foreign country. Principally, Rule 4(f) directs that service be completed through the Hague Service Convention or other formal treaty between the U.S. and the foreign country. Generally, service is through the foreign country's Central Authority, but if the foreign country does not prohibit it, service can be by mail, at least for New Jersey federal cases. Eli Lilley & Co., v. Roussel Corp. 23 F. Supp. 2d 460, 470-472 (D.N.J. 1998); Trump Taj Mahal Assocs. v. Hotel Servs. Inc. 183 F.R.D. 173, 179 (D.N.J. 1998); EOI Corp. v. Med. Mktg Ltd., 172 F.R.D. 133, 140-142 (D.N.J. 1997).
Service under the Hague Convention is mandatory, unless there is an exception. This type of service requires various forms, including a request, a certificate and a summary, which are available through the U.S. Marshals Service on Form USM-94. In addition to listing the name and address of the party to be served in the foreign country, one must list the address of the Central Authority in that country and the title of each document served. If the plaintiff chooses to serve under the laws of the foreign state, the foreign state often requires translation into the native language. The Central Authority may also require original forms of the complaint and summons.
Exception to Hague Service Convention by Serving U.S. Subsidiary. An important exception to the complex service under the Hague Service Convention can arise if the foreign entity operates through a subsidiary in the U.S. It is well-settled that if service can be made upon the domestic subsidiary of a foreign corporation consistent with the law of the state where the lawsuit is brought, service need not comply with the Hague Service Convention. Volkswagen Aktiengesellschaft v. Schlunk, 486 U.S. 694, 701 (1988) (noting that the Hague Service Convention does not apply when process is served on a foreign corporation by serving its domestic subsidiary which, under state law, is the foreign corporation's involuntary agent for service of process; "whether there is service abroad must be determined by reference to the law of the forum state.")
There are two grounds for permitting service of process on a foreign corporation through its subsidiary: (1) the subsidiary corporation was the actual or apparent agent of the parent corporation for purposes of conducting the business of the parent corporation; or (2) if the parent exerts "dominion" or "control" over the subsidiary corporation, the corporate distinctions are disregarded for purposes of exercising jurisdiction and for purposes of service of process. Volkswagenwerk Aktiengesellscaft v. Schlunk, 486 U.S. 694 (1988); Sablic v. Croatia Line, 719 A.2d 172, 315 N.J. Super. 499 (N.J. Super. 1998); Cintron v. W&D Machinery Company, 182, N.J. Super. 126 (1981); Coons v. Honda Motor Co. Ltd of Japan, 176 N.J. Super. 575 (App. Div. 1980); Van Eewen v. Heidelberg Eastern, 124 N.J. Super. 251 (App. Div. 1973); Dewey v. Volkswagen AG, 558 F. Supp. 2d 505, 513 (D.N.J. 2008).
Note that service on a subsidiary to avoid the Hague Service Convention is not a simple matter. It involves a great deal of fact analysis to determine if control or dominion truly exists. Merely being a wholly owned subsidiary is not likely to satisfy a court that control or domination exists.
If Hague or Other International Convention Does Not Apply. If no international service treaty applies, Federal Rule 4(f)2 allows service in a variety of ways, including methods allowed by the foreign county, hand-delivery to the defendant (unless prohibited in the foreign country) or return receipt mail, but addressed and delivered by the clerk of court.
International Service by Other Means. Finally, Federal Rule 4(f)(3) allows service by other means that are not prohibited by international agreement. This has become an extremely important and flexible form of service, as the number of international cases has risen.
The Federal Rules of Civil Procedure do not limit service on a defendant located outside the United States to the Hague Service Convention. Federal Rule 4(f)(3) allows for service on individuals located outside of the United States by "other means not prohibited by international agreement as may be directed by the court." Fed. R. Civ. P. 4(h)(2) applies Rule 4(f)(3) to service on foreign business entities.
Rule 4(f)(3) includes "no qualifiers or limitations which indicate its availability only after attempting service of process by other means." Brookshire Bros., Ltd. v. Chiquita Brands Int'l, Inc., 2007 WL 1577771, at *2 (S.D. Fla. May 31, 2007) (citing Rio Props., Inc. v. Rio Int'l Interlink, 284 F.3d 1007, 1015 (9th Cir. 2002)); Nuance Commc'ns, Inc. v. Abbyy Software House, 626 F.3d 1222, 1239 (Fed. Cir. 2010) ("Rule 4(f)(3) is not subsumed within or in any way dominated by Rule 4(f)'s other subsections; it stands independently, on equal footing." ) (quoting Rio Props., 284 F.3d at 1015).
In fact, "[c]ourt-directed service under Rule 4(f)(3) is as favored as service available under Rule 4(f)(1) or Rule 4(f)(2)." Rio Props., 284 F.3d at 1014-15; Ryan v. Brunswick Corp., 2002 WL 1628933, at *2 (W.D.N.Y. May 31, 2002) ("subsection (f)(3) is an independent basis for service of process and is neither 'extraordinary relief' nor a 'last resort' to be used only when parties are unable to effectuate service under subsections (f)(1) or (f)(2)"); Swarna v. Al-Awadi, 2007 WL 2815605, at *1-2 (S.D.N.Y. Sept. 20, 2007) ("[T]here is nothing in the text of the rule which contains a hierarchy of service methods as between Rule 4(f)(2) and Rule 4(f)(3).")
Service by Publication, Email or Fax. Under Rule 4(f)(3), "courts have authorized a wide variety of methods of service including publication, ordinary mail, mail to the defendant's last known address, delivery to the defendant's attorney, telex, and most recently, email." Rio Props., 284 F.3d at 1016. In Rio Properties, the Ninth Circuit held that the district court properly concluded that alternative service via international courier and via email was constitutionally acceptable. Id. at 1016-17. In so ruling the Court observed that the "Constitution does not require any particular means of service of process, only that the method selected be reasonably calculated to provide notice and an opportunity to respond." Id. at 1017; see also Chanel, Inc. v. Lin, 2009 WL 1034627, at *2 (S.D. Fla. April 16, 2009) (noting that a method of service under Rule 4(f)(3) should be calculated "to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections"); Maclean-Fogg Company and Maclean Power, LLC v. Ningbo Fastlink Equipment Co., Ltd, David Zhang and Charlie Jin, Civil Action No. 08 CV 2593 (N.D. Il., December 1, 2008).

Service on Defendant's Counsel. Among the acceptable methods of service pursuant to Rule 4(f)(3) is service on a defendant's United States-based attorney, when there is evidence of an attorney-client relationship. Marlabs, Inc. v. Jakher, No. 07-04074, 2010 U.S. Dist. LEXIS 39557 (D.N.J. Apr 22, 2010) (attorney appearing in support of motion to vacate default judgment; method allowed after other methods had been attempted unsuccessfully) and cases cited therein; In re Potash Antitrust Litig., 667 F. Supp. 2d 907, 931 (N.D. Ill. 2009) (directing substituted service on U.S. attorneys retained by Russian defendants); Brookshire Bros., Ltd. v. Chiquita Brands, Int'l, 2007 WL 1577771, at *2 (S.D. Fla. May 31, 2007) (authorizing service on foreign defendants through local counsel); U.S. Commodity Futures Trading Com'n v. Aliaga, 272 F.R.D. 617, 621 (S.D. Fla. 2011) (authorizing service on an attorney in the United States); RSM Prod. Corp. v. Fridman, 2007 WL 2295907, at *6 (S.D.N.Y. Aug. 10, 2007) (authorizing service on foreign defendant's U.S. counsel); LG Elecs, Inc. v. Asko Appliances, Inc., 2009 WL 1811098, at *4 (D. Del. June 23, 2009) (service on attorney permissible in light of the regularity of contact between the defendant and attorney); In Re TFT-LCD, 270 F.R.D. 535 (N.D. Cal., 2010); In Re LDK Solar Securities Litigation, Civil Action No. C 07-05182 (N.D.Cal., June 12, 2008); U.S. v. Machat, Civil Action No. 7936 (S.D.N.Y., September 21, 2009); but see Cephalon v. Sun Pharmaceuticals, Civil Action No. 11-5474 (D.N.J., Dec 7, 2011) (service on counsel can only occur if the party obtains court permission and "there is no internationally agreed means").
This Will Not Be Easy. Though a variety of foreign service methods are available, do not assume any part of this is easy, simple or fast. If the Hague Service Convention applies, courts often require that the plaintiff try this first before turning to other methods. The "other" means under Rule 4(f)(3), while not technically subordinate to other forms of service, are regularly viewed that way by courts in a practical sense.
Approach service in the international context in a strategic sense. For example, you may want to try several methods of service at the same time. You may want to start simultaneously with the Hague methods, subsidiary discovery and service, and even some of the "other" means under Rule 4(f)(3) (which are far less expensive and move much faster.)
The Hague methods are costly and time consuming. Translation of court papers can consume thousands of dollars and add time. The process of working through the Central Authority and actually finding the defendants (who may not want to be found) adds time and complexity. This can all take up to a year or more. But, in beginning this process, you will also be showing the court that you have gone to great lengths to serve and that, if Hague service is not working, other methods should be permitted. On the other hand, if you try to avoid the Hague methods all together, a court may force you back to them when the other party files a motion to quash service. That forces the plaintiff to almost start over long after the case was initially filed.
Failing to approach this process strategically, not following the rules or failing to appreciate technicalities only delay the process and add unnecessary cost to the very first step of a long litigation process.
The Hartmann Law Firm LLC can assist in these matters to insure your business and your assets are protected. Beyond this, we can help guide businesses through issues ahead of litigation or aggressively advocate in litigation and business disputes should the need arise.

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