Case of the Day: Glencore Ltd. v. Occidental Argentina Exploration & Production

The Case of the Day is Glencore Ltd. v. Occidental Argentina Exploration & Production, Inc. (S.D. Tex. 2012). Glencore had a contract with Sinopec, a Cayman Islands corporation doing business in Buenos Aires, for the delivery of crude oil to a vessel in Argentina for shipping to the United States. The claim was for demurrage. Sinopec moved to dismiss for insufficient service of process.

Glencore had not attempted to comply with the Hague Service Convention. Instead, it attempted to serve process on a Sinopec agent in Texas. This is not a bad approach, since under Article 1 of the Convention, service in the United States avoids bringing the Convention into play altogether. The judge found, however, that Sinopec had not authorized its Texas agent to be an agent for the receipt of service of process. To me the interesting point in the judge’s discussion is the apparent discounting of the possibility that the agent may have had apparent authority to accept service:

… Rule 4(1)(h)(B) allows service upon a foreign corporation to be accomplished by delivering a copy of the summons and complaint to an agent authorized to receive service of process. This Court has recognized that the Fifth Circuit construes Rule 4(h) narrowly, and requires “that the corporate entity sought to be served must have actually authorized the agent to accept service of process on its behalf.”

What is the rationale for this? Why should we not simply import the law of agency wholesale into Rule 4 and say that an agent with actual or apparent authority to receive service of process is acceptable? Apparent authority still requires a “manifestation” (in the language of the Restatement) by the principal to the third person. In other words, Sinopec would be on the hook only if it had somehow communicated to Glencore that the agent was authorized to accept service of process, even if Sinopec had not affirmatively authorized the agent to accept service of process.

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