The Hague Service Convention, Default Judgments, and Deemed Service under German Law

IJA Brigade member Peter Bert has a very interesting post today on the Hague Service Convention under German law. In a series of new cases, the Bundesgerichtshof has held that only the initial document, not later documents, must be served in accordance with the Convention. This view is in accord with the the view of Pennsylvania lawyer Christopher Voltz, the Supreme Court of Colorado’s holding in Willhite v. Rodriguez-Cera, and some dicta in Volkswagen v. Schlunk. I have argued against this view, most recently in my post on Fellowes v. Changzhou Xinrui Fellowes Office Equipment Co. But it’s becoming clearer that the weight of authority is against me. I’d welcome some backup from others who share my view on this!

In a series of judgments on July 3 and July 17, 2012, the Federal Supreme Court (Bundesgerichtshof) has ruled on the compatibility of deemed service under German law with the Hague Service Convention. The Court held that only the first court document in a dispute must be served pursuant to the Hague Service Convention. Any subsequent service of court documents can be by post, in accordance with the provisions of domestic German law. Section 184 of the German Civil Code (ZPO), according to which “two weeks after it has been mailed, the document shall be deemed served,” applies to service of such documents. In the cases before the Federal Supreme Court, default judgments were served by post, and the time period for filing a protest (Einspruch) was determined on the basis of deemed service.

The facts in all five cases were as follows: Actions were brought in Germany against defendants in Turkey. The courts issued an order that required the defendant to file its intention to defend the action (Verteidigungsanzeige) and to appoint an authorised recipient in Germany (im Inland ansässiger Zustellungsbevollmächtigter; § 183 ZPO) within two weeks from receipt of service. The court order set out the legal consequences of failing to comply with the order, in particular, the risk of a default judgment.

The Turkish defendants ignored these deadlines, and default judgments were issued. These judgments were then not served under the Hague Service Convention, but posted to the defendant’s address in Turkey. Protest against the default judgment had to be filed within two weeks from receipt. The defendants took no action. In each case, the claimants subsequently asked the court to effect service of the default judgment for a second time, apparently to comply with enforcement requirements outside Germany. Service was effected a second time, in some cases under the Hague Convention, in others using the diplomatic route and it was only then that protests were filed. If § 184 of the ZPO applied, however, the time period for the protest would be calculated from the day of posting the default judgments, and the protest was to be dismissed as too late.

And this is exactly what happened: All protests were dismissed, and the dismissal was upheld upon appeal by the Court of Appeals (Oberlandesgerichte) in Stuttgart and Cologne, respectively, and upon further appeal by the Federal Supreme Court. The court held that the Hague Convention did not require formal service of the default judgment: If formal service abroad was required, then, but only then, the Convention applies. But the question whether the default judgments required formal service was for domestic law to decide, and under domstic law, service by post was permitted (“Das HZÜ steht der Anwendbarkeit des § 184 ZPO danach schon deshalb nicht entgegen, weil dort nur die Modalitäten einer Auslandszustellung geregelt sind …, nicht aber die Frage, ob überhaupt eine förmliche Zustellung im Ausland vorzunehmen ist. Letzteres ist vielmehr durch das nationale Recht autonom zubeantworten.”).

The second event of service was held to be irrelevant for the purposes of calculating the time limit. Neither did it extent the previous period, nor did it trigger a new period. The court finally considered whether the right to a fair trial under German law and Art. 6 of the European Convention on Human Rights required a different interpretation of the law. It held that the concept of deemed service did not violate the foreign defendants’ right to a fair trial or any international agreements with Turkey. The default judgments hence had become res judicata, and fully enforceable.

The jurisprudence of the Federal Supreme Court applies to cross-border litigation with any Hague Service Convention jurisdiction. Foreign defendants ignore the order to enter a notice to defend and to appoint an authorised recipient in Germany at their peril, as any subsequent document, however important and time-critical, may be subject to deemed service. The foreign defendant would need to refute the statutory presumption of service, which is a fairly high threshold to overcome. However, as other cases have shown, it can be done.

Here is the link to one judgment, file no. VI ZR 222/11 dated July 17, 2012. The others are file no. VI ZR 226/11 and VI ZR 288/11 dated July 17, 2012 and VI ZR 227/11 and VI ZR 239/11 dated July 3, 2012.

8 thoughts on “The Hague Service Convention, Default Judgments, and Deemed Service under German Law

  1. I’m reprinting a comment I left at Peter’s blog, where his piece is also posted.

    Peter, I’m really open to the possibility that I may be wrong about this, but I appreciate you posting my editorial comments. I really don’t know of a good answer to the textual points about the Convention I’ve raised. On the other hand, sometime textual arguments prove too much. For instance, some US courts hold that Article 10(a) does not permit service of process by postal channels because it uses the word “send” instead of serve,” a view that to me at least seems clearly wrong. (Interestingly, though, if those courts were right then the Bundesgerichtshof’s view would have to be wrong, otherwise Article 10(a) would serve no purpose!) I can also see an argument in favor of the Bundesgerichtshof’s view that rests on the notion that in some civil law countries case-initiating documents have to be served by officers of the state and thus somehow implicate the state’s sovereign interests while other documents do not have to be served by an officer.

  2. I am of the view that the only thing a court can do with a document is serve it, or cause it to be served, and it is a nullity if what the court does or causes to be done with the document does not amount to “service” under the applicable law. In particular, if a service convention applies and the court needs to send a document abroad, then it must do so in accordance with that convention.

    A potentially relevant case before the ECJ, which I believe supports the above proposition, is Case C‑325/11 Adler v Orlowska, in which Advocate-General Bot has expressed the view that “the service of a judicial document must necessarily be effected in conformity with the requirements of [the Service Regulation (No 1393/2007)] where the addressee of the document resides in another Member State.” Case C‑325/11 Adler v Orlowska (ECJ, 20 September 2012), Opinion of AG Bot, [49]. (http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:62011CC0325:EN:HTML).

    The facts are set out in the Advocate-General’s opinion, but in brief claimants resident in Germany brought proceedings in Poland against defendants resident in Poland, but the claims were dismissed following a hearing of which the claimants had no notice. This was because they had not appointed a representative in Poland who could accept service, and in those circumstances the Polish civil procedure code provides that a document is deemed served merely by being placed in the court’s case file. Subsequent attempts to have this dismissal set aside (the AG’s Opinion is silent on how the claimants discovered the dismissal of their claims, if this was “served” in the same manner as the initial notice of the hearing) resulted in the following question being referred to the ECJ:

    “Are Article 1(1) of Regulation (EC) No 1393/2007 … and Article 18 TFEU to be interpreted as meaning that it is permissible to place in the case file, deeming them to have been effectively served, court documents which are addressed to a party whose place of residence or habitual abode is in another Member State, if that party has failed to appoint a representative who is authorised to accept service and is resident in the Member State in which the court proceedings are being conducted?”

    The Advocate-General’s proposed answer is:

    “Article 1 of Regulation (EC) No 1393/2007 … must be interpreted as precluding legislation of a Member State, such as that in question in the main proceedings, which provides that judicial documents which are addressed to a party whose place of residence, habitual abode or registered office is in another Member State are to be placed in the case file and deemed to have been served if that party has failed to designate a representative who is authorised to accept service and is resident in the Member State in which the court proceedings are being conducted.”

    In the course of his opinion, AG Bot (at [31]) makes the following observation on the Hague Convention, on which the Service Regulation is modeled:

    “The 1965 Hague Convention is regarded as non-binding since it is applicable only if the national law of the State of the court before which the matter is brought decides that a document must be transmitted abroad for the purpose of service. Accordingly, the practical handbook on the operation of the Convention, edited by the Permanent Bureau of the Hague Conference on Private International Law, states that a ‘brief look’ at the practice of the signatory States ‘appears to confirm, apart from a few exceptions, the non-binding nature of the [said] Convention’, while adding, as if with regret, that, in order to achieve fully the aim of ensuring that the document served is actually brought to the notice of the addressee, the 1965 Hague Convention ought to have intervened in national law and itself laid down the conditions for valid service, which would have been the only means of eliminating forms of fictitious service such as service at the public prosecutor’s office.”

    He then goes on to explain why “the development of the objectives of Union policy concerning judicial cooperation in civil matters and the aim of creating a European judicial area in order, first, to ensure the free movement of judicial and extrajudicial documents and, secondly, to safeguard fundamental rights” requires a different conclusion in regard to the Service Regulation:

    “… I think that to allow each Member State to continue to apply national provisions for notional service where the addressee resides in another Member State would compromise the objectives of the free movement of documents and the promotion of fundamental rights. In particular, it must be stressed that the inclusion of the rules for the service of judicial documents in the components of a fair hearing in order to guarantee, for the claimant, the right of access to the court and, for the defendant, the right to be informed in good time of the subject‑matter and the ground of the claim so as to be able to defend himself, entails the prohibition of any method of notional service which has the consequence of depriving the parties of the rights of protection in Regulation No 1393/2007. A fiction of service such as that at issue in the main proceedings could, for example, have the effect of depriving a defendant residing in another Member State of the right to refuse to accept a document instituting proceedings which has not been translated into a language which he understands or the official language of the Member State addressed.

    “The fact that the national law applicable to the main proceedings provides, with respect to the service of judicial documents, for a presumption which makes it unnecessary to serve the document at the true address of the party living abroad seems to me contrary to the letter, the purpose and the general scheme of Regulation No 1393/2007 and is likely to deprive it of practical effect by circumventing the system for the service of judicial documents which the Regulation establishes.” (Ibid [52], [54].)

    It remains to be seen whether the ECJ will follow AG Bot’s opinion, but if it does then arguably deemed service provisions (particularly those which don’t involve actually sending a document to a party or his representative) will in future fall foul of ECHR Articles 6 and 14 (“The enjoyment of the rights and freedoms set forth in this Convention shall be secured without discrimination on any ground such as … national or social origin … or other status”), in as much as they would be applicable only to persons not resident in Member States.

    The effect of Adler on the cases before the BGH if the Service Regulation had applied would be that (a) the default judgments, being required to be sent to the defendants, ought to have been served on them in accordance with the Service Regulation, but (b) service by registered post is permitted under Article 14 of the Service Regulation, with the date of service being the date the documents were received.

    1. Thanks, P Smith, for the comment and the interesting insights on the European situation.

      The Convention does have some protections against default judgments in cases of notional service. In particular, unless a state makes an appropriate declaration, a default judgment cannot enter against a person served within its territory unless the summons “was served by a method prescribed by the internal law of the State addressed for the service of documents in domestic actions upon persons who are within its territory” or “the document was actually delivered to the defendant or to his residence by another method provided for by this Convention.” So although it’s certainly reasonable and permissible to take the position that the Convention should have been construed as exclusive in cases where it applies, it doesn’t seem to me that there is a major problem under the Convention that needs solving.

Leave a Reply

Your email address will not be published. Required fields are marked *