Case of the Day: Delex, Inc. v. Sukhoi Civil Aircraft Co.

The case of the day is Delex Inc. v. Sukhoi Civil Aircraft Co. (Wash. Ct. App. 2016). Delex’s claim was that it had entered into a three-year lease of office and warehouse space in Seattle from a third party on behalf of Sukhoi, a Russian firm. According to Delex, Sukhoi never paid rent, and Delex surrendered the premises to the landlord within a year, and it sued Sukhoi for breach of contract. It served process by registered mail in Russia and by personal delivery to the head of Sukhoi’s foreign activity legal support department. Sukhoi defaulted, and Delex obtained a default judgment for approximately $327,000. The court issued a writ of execution. The sheriff seized Sukhoi’s property, worth $420,000, which, according to Sukhoi, included “highly sensitive US aircraft technology and components.” Sukhoi then sought relief from the judgment and a stay of the sheriff’s sale. The trial court denied the motions, and Sukhoi appealed.

On appeal, the court affirmed. The gist of the decision is that in light of Russia’s unilateral refusal to comply with the Hague Service Convention with respect to requests originating in the United States, plaintiffs in US litigation may make use of methods of service that are not authorized or permitted by the Convention. Russia has objected to service under the means permitted by Article 10 of the Convention, namely service by postal channels and service by persons competent under Russian law. Does Russia’s intransigence permit plaintiffs to make service by Article 10 means? The cases are mixed. Compare Fisher v. Petr Konchalovsky Foundation (S.D.N.Y. 2016)(service by mail under FRCP 4(f)(3) improper in Russia despite Russia’s position on the Convention) with Baldiga v. Joint Stock Co. (In re Cyphermint, Inc.) (Bankr. D. Mass. 2011) (service by mail permitted in light of Russia’s position). My own view is that Russia’s unilateral refusal to comply with the treaty does not allow US litigants to serve process by methods the Convention does not permit. I preface this discussion by saying that it involves a question of public international law that I really lack the expertise to address in a serious way. But it seems to me that Article 60(2)(b) of the Vienna Convention sets out the relevant rule:

A material breach of a multilateral treaty by one of the parties entitles … [a] party specially affected by the breach to invoke it as a ground for suspending the operation of the treaty in whole or in part in the relations between itself and the defaulting State.

Under Article 65(1), when a party seeks to suspend the operation of a treaty, it “must notify the other parties of its claim,” and the notification must “indicate the measure proposed to be taken with respect to the treaty and the reasons therefor.” As far as I know, the United States has not taken these steps, and so it seems to me that the Convention has not been suspended as between the United States and Russia. It is not up to private litigants or to the judiciary to decide that the treaty has been suspended.

The court made a good effort to deal with the situation by discussing Charlton v. Kelly, 229 U.S. 447 (1913), an older case holding that a foreign state’s breach of a bilateral treaty made the treaty voidable, not void. But the distinction the court drew—that the Hague Service Convention is multilateral, not bilateral—seems to lack any real force. Plus, Charlton predates the Vienna Convention by many years. So I think the case is probably wrongly decided.

All of this raises the question: why doesn’t the United States take steps to suspend operation of the Convention with respect to Russia? Such a step would benefit American litigants, because under FRCP 4(f)(3), federal courts can grant leave to serve process by alternate methods unless such leave would violate an international agreement, and suspending the Convention would make it clear that service by mail, for example, is permissible in Russia even though the Convention prohibits such service. And the step would not disadvantage Russian litigants, since service on parties in the United States is simple even without the Convention. I don’t know, but most likely there are some diplomatic costs in suspension that make it undesirable. As long as the US does not take the step of suspending the treaty, my view is that cases such as this allowing service by mail are probably wrong, even though the Russian position on the Convention is unjustified.

About Ted Folkman

Ted Folkman is a shareholder with Murphy & King, a Boston law firm, where he has a complex business litigation practice. He is the author of International Judicial Assistance (MCLE 2012), a nuts-and-bolts guide to international judicial assistance issues, and of the chapter on service of process in the ABA's forthcoming treatise on International Aspects of US Litigation, and he is the publisher of Letters Blogatory, the Web's first blog devoted to international judicial assistance, which the ABA recognized as one of the best 100 legal blogs in 2012, 2014, and 2015.

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