United States: Strict Formalism Or Actual Notice? Supreme Court Denies Petition For Writ Of Certiorari In Important Service Of Process Case Under The Foreign Sovereign Immunities Act

First Tuesday Update is our monthly take on current issues in commercial disputes, international arbitration, and judgment enforcement. This month we cover the Supreme Court's denial of a writ of certiorari in an important service of process case under the Foreign Sovereign Immunities Act, in Saint-Gobain Performance Plastics Eur. v. Bolivarian Republic of Venezuela, 23 F.4th 1036 (D.C. Cir. 2022).

Background

As we previously wrote in DC Circuit Says Hague Service on Central Authority Not Good Enough, the US Court of Appeals for the DC Circuit reversed and remanded a lower court decision to enforce a $42 million International Centre for Settlement of Investment Disputes (ICSID) arbitral award against Venezuela because service of process under the Hague Convention and the Foreign Sovereign Immunities Act (FSIA) was not completed. In this case, Saint-Gobain Performance Plastics Europe (Saint-Gobain) served process on Venezuela via Article 5 of the Hague Convention and the proper papers were received by Venezuela's Central Authority. Article 5 of the Hague Convention requires that once the Central Authority of a signatory state receives a request for service, the Central Authority must serve the documents pursuant to the method identified by the receiving country's local law or by the method requested by the applicant.

Under Venezuelan law, these papers must be served on Venezuela's Attorney General. However, despite this requirement, neither Saint-Gobain nor Venezuela's Central Authority served these papers on Venezuela's Attorney General. Further, Article 6 requires the Central Authority to provide a certificate of service stating that the document has been served (in this case on the Attorney General), or if the document has not been served, providing the reasons which have prevented service. The Central Authority never provided this certificate and seemingly did nothing with the papers.

Article 15 of the Hague Convention provides that a court may not enter a default judgment based on a determination that the foreign entity "has not appeared" until the document is served according to Article 5 or another valid method of service under the Hague Convention. Because no one served Venezuela's Attorney General, the DC Circuit held that service was improper.

Writ for Certiorari

In its petition for certiorari, the question presented is:

Whether a District Court deciding a motion for default judgment may find service upon a foreign state pursuant to Article 15 of the Hague Service Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil and Commercial Matters and the Foreign Sovereign Immunities Act where the plaintiff actually delivered service papers to the state's Central Authority, its Foreign Ministry, and the Central Authority refused to deliver the papers to the Venezuelan Attorney General, a state organ to which the Venezuelan Central Authority should have delivered papers under Venezuela's internal law.

Saint-Gobain Performance Plastics Eur. v. Bolivarian Republic of Venezuela, petition for cert. pending, No. 21-1574 (filed on June 16, 2022). The cert petition is primarily based on (1) Saint-Gobain's assertions that this case presents an issue of fundamental importance and (2) the potential circuit split between the DC Circuit on the one hand and the Second and Fifth Circuits on the other. Fundamentally, this petition concerns the important issue of how strictly US courts should interpret the Hague Convention when a plaintiff fulfills its obligations but a country's Central Authority does not fulfill its own obligations. It is not in dispute that Saint-Gobain properly provided Venezuela's Central Authority with the necessary papers to effectuate service of process on the Attorney General. It is also not in dispute that the Central Authority failed to effectuate service as required by Article 5, and failed to provide an Article 6 certificate of service either proving service or detailing why service was not effectuated. But importantly, it is not in dispute that the plain text of the Hague Convention and Venezuelan local law requires service to be effectuated on Venezuela's Attorney General, which neither the Central Authority nor Saint-Gobain completed.

Importance of the Issue

The outcome of this case will affect foreign service of process jurisprudence both in the United States and among the signatory countries to the Hague Convention. The United States acknowledged this in its amicus curiae brief filed in the DC Circuit, asking the court to apply a strict textual construction of the Hague Convention and FSIA, which was consistent with the outcome of this case. It stated that "[i]ncorrect application of the Convention by US courts risks exposing the United States to accusations that it has breached its international legal obligations under the Convention as well as adverse reciprocal treatment in foreign litigation." Brief for the US as Amicus Curiae p. 1–2, Saint-Gobain Performance Plastics Europe v. Bolivarian Republic of Venezuela, 23 F.4th 1036 (D.C. Cir. 2022). If this decision was overturned, the United States would reasonably expect to have foreign courts apply the law in the same way against it.

On the other hand, the Hague Convention's specified purpose was to simplify and expedite the procedure for serving process abroad. The Supreme Court's denial to hear this case may send a contrary message to other signatory countries that their designated Central Authorities can forgo their duties under the treaty to avoid submitting to personal jurisdiction in US courts.

Of course, even if a signatory country avoids their duties under the Convention, parties are left with other avenues to effectuate service. For example, under the FSIA, 28 U.S.C. § 1608, Saint-Gobain can still effectuate service by sending the relevant documents to be "dispatched by the clerk of the court to the Secretary of State," who in turn will "transmit a copy of these papers through diplomatic channels to the foreign state." This avenue would take far longer to effectuate service, is often times more expensive, and is less preferable than delivering the documents pursuant to the Hague Convention according to the FSIA's own terms.

The Supreme Court has found it necessary to grant cert regarding the Hague Convention's scope before, such as in Volkswagenwerk Aktiengesellschaft v. Schlunk, 486 U.S. 694 (1988) and Water Splash, Inc. v. Menon, 137 S. Ct. 1504 (2017). Granting cert here would have provided further necessary guidance of interpreting the scope of the Hague Convention to service on foreign sovereigns.

Conflicts With Other Circuits

The parties also dispute whether the DC Circuit's holding conflicts with decisions of the Second and Fifth Circuits. In Burda Media, Inc. v. Viertel, 417 F.3d 292 (2d Cir. 2005), the Second Circuit determined that a default judgment was properly entered against an individual defendant notwithstanding the failure of the French Ministry of Justice (France's Central Authority) to return a formal certificate of service. In this case, although the Ministry of Justice failed to return a formal certificate, the Ministry of Justice had effected service on the defendant by dispatching the French police, which issued a report that provided all of the required information and thus served the same purpose as a formal certificate.

Factually, this case is easily distinguishable from that of the DC Circuit as the basic requirements of the Hague Convention were all met. But what was notable about this case was its departure from the rigid requirements of the Convention in allowing a similar document—which came from the French police instead of the Central Authority—to be used in place of the formal certificate. In finding proper service, the Second Circuit considered that "the plaintiff attempted in good faith to comply with the Hague Convention" and "the defendant had sufficient notice of the action such that no injustice would result."

The Fifth Circuit relied in part on this proposition in deciding Box v. Dallas Mexican Consulate General, 487 F. App'x 880 (5th Cir. 2012). In this case, the Fifth Circuit found that a plaintiff properly served Mexico under the Hague Convention upon delivering papers to Mexico's Central Authority (the Consulate) despite never receiving the Article 6 confirmation certificate. It reasoned that "it was certainly not Box's fault that the Mexican authorities did not return a formal Certificate" and that “both Mexico and the Consulate had notice of the lawsuit and an ability to defend." Id.  at 886 (cleaned up). Moreover, Box  added its view that service on a corporation is more important than service on the state itself because providing papers to the state's designated Central Authority has a greater chance to provide the state with actual notice compared to a corporation located within the state.

The DC Circuit distinguished the Fifth Circuit's opinion in a single sentence because it concerned service under Article 15(2) and did not interpret the text of Article 5. In its opposition to Saint-Gobain's petition, Venezuela expounded on this notion that in Box, the Mexican consulate failed to answer or appear before the district court entered a default judgment. But in the case before the DC Circuit, Venezuela [eventually] appeared to challenge the personal jurisdiction of the courts before a default judgment was entered. With the Supreme Court's denial to grant certiorari, uncertainty remains as to the unresolved circuit split. For now, it appears strict formalism has prevailed over actual notice when serving process abroad.

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