We return today to Khan Resources Inc. v. Atomredmetzoloto JSC, the case of the day from March 23, 2012. Thanks to IJA Brigade member Antonin Pribetić for bringing the case again to my attention! Here was my summary of the case from the prior post:

Khan Resources, Inc. and some affiliates entered into a joint venture with Atomredmetzoloto JSC (“AMRZ”), which is a subsidiary of the Russian State Atomic Energy Corporation—as its name suggests, a state enterprise. The purpose of the venture was to develop a uranium mine in Mongolia. In 2010, Khan sued AMRZ in Ontario for $300 million. The claims were for breach of fiduciary duty, tortious interference, and so forth. Khan sought to serve process via the Russian Ministry of Justice, which is the central authority for Hague Service Convention purposes, but the Ministry refused to execute the request for service, citing Article 13 …

Khan was successful in obtaining an order waiving the necessity of service in the lower court, but on appeal, the Superior Court of Justice reversed the decision.

In today’s case, the matter was at the Ontario Court of Appeal on appeal from the Superior Court. The court affirmed the lower court’s decision.

On the one hand, the provision in the Ontario rules of procedure that applies specifically to service in a Hague Convention state, Rule 17.05(3)(a), does not permit service by alternate means:

An originating process or other document to be served outside Ontario in a contracting state shall be served through the central authority in the contracting state.¹The rule also permits service by one of the methods permitted by Article 10 of the Convention, but the parties agreed that that was not possible here.

On the other hand, Rule 16.08(a) provides:

Where a document has been served in a manner other than one authorized by these rules or an order, the court may make an order validating the service where the court is satisfied that the document came to the notice of the person to be served …

If I understand the decision correctly, the court held that the Convention was not just exclusive, but mandatory. Just to clarify terms, by “the Convention is exclusive,” I mean that where the Convention applies and a document is to be transmitted to the foreign state, the service must be by one of the methods prescribed or permitted by the Convention. By “the Convention is mandatory,” I mean that where the defendant is in a Hague Convention state, the plaintiff must serve the documents by a means prescribed or permitted by the Convention, full stop. In other words, if the Convention is mandatory there is no option for service without transmission of the document abroad. So, for example, you could not simply serve the document on the defendant’s lawyer in Canada, as a US plaintiff can do under FRCP 4(f)(3).

This may be right as a matter of Ontario law. I defer entirely on that issue to Antonin. If Ontario chooses to require documents to be served abroad in such cases, that’s entirely permissible. But I don’t think that the Convention itself requires that result. Article 1 makes it clear that the Convention applies only when there is occasion to transmit a judicial document for service abroad, and the determination whether there is such an occasion is to be made by the law of the forum. As the Hague Conference outline of the Convention states:

For the Convention to be applicable, the following requirements must be met: (i) a document is to be transmitted from one State party to the Convention to another State party for service in the latter (the law of the forum state determines whether or not a document has to be transmitted abroad for service in the other State—the Convention in non-mandatory), (ii) an address for the person to be served is known, (iii) the document to be served is a judicial or extrajudicial document, and (iv) the document to be served relates to a civil or commercial matter. If all these requirements are met, the transmission channels provided for under the Convention must be applied (the Convention is exclusive).

And courts including the US Supreme Court have construed the Convention as exclusive but non-mandatory in just this way.

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  The rule also permits service by one of the methods permitted by Article 10 of the Convention, but the parties agreed that that was not possible here.