The Hague Service Convention, Default Judgments, and Deemed Service under German Law
Posted on September 21, 2012
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.