Case of the Day: Zaft v. Golan

The case of the day is Zaft v. Golan (N.D. Fla. 2013). It’s an older case that just came across my screen and is worth a mention. Gidon Zaft, an American, and Yair Golan, an Israeli, were parties to a partnership agreement under which Zaft owned 70% of Royal Moroccan Inc., a Floridan corporation, and Golan owned 30%. The agreement had Florida choice of law and choice of forum agreements, and it provided:

All notices required or permitted under the terms of this Agreement shall be in writing and shall be
deemed to have been properly given and served when sent by overnight, Registered and/or Certified Mail, postage prepaid, returned receipt requested, properly addressed.

Zaft sued Golan on several business tort claims. According to the return of service, a process server personally served the documents on Golan in Israel, at the address specified for notices in the agreement. The court entered Golan’s default when Golan didn’t answer. Golan sought relief from the default on the grounds that he had not been properly served with process.

The judge granted relief from the default. The decision is confused. The court construed the quoted provision of the agreement to be an agreement for an exclusive method of service, but that seems incorrect—saying that a notice is deemed proper if sent by a method is not the same as saying that a notice is improper if sent by another method. But there is a deeper problem. We have seen in another context that there is a difference between an agreement that “all notices” are to be sent by a particular method and an agreement that “all notices required or permitted under this agreement” are to be sent by a particular method. The former is an agreement for a method of service of process; the latter is not. So the agreement was really irrelevant to the validity of the service. The real question was whether service by process server was permissible under the Hague Service Convention.

Israel’s declarations are somewhat unusual. Instead of lodging an objection to service under Articles 10(b) or (c), Israel made the following declaration:

The State of Israel, in its quality as State of destination, will, in what concerns Article 10, paragraphs b) and c), of the Convention, effect the service of judicial documents only through the Directorate of Courts, and only where an application for such service emanates from a judicial authority or from the diplomatic or consular representation of a Contracting State.

What does this mean? It’s challenging to construe the declaration. It is not expressly an objection, but if it’s not intended as an objection its intent is unclear. In any event, it has been construed by American courts as an objection under Articles 10(b) and (c). See, e.g., Doe I v. State of Israel, 400 F. Supp. 2d 86 (D.D.C. 2005). Thus I think the outcome of this case is right, though not for the reasons the judge gave.

It’s somewhat ironic that Zaft would have been better off serving process by mail, because Israel has not objected to service under Article 10(a)!

2 responses to “Case of the Day: Zaft v. Golan”

  1. The practical effect of the Israeli 10(b)/(c) declaration effectively makes private agent service a 5(b) procedure [that is, service requested by a specific means]. In truth, they don’t have a 10(b) channel– due, as you said, to the ambiguity of the declaration.

    But the “quasi-5(b)” route is exceedingly fast if you have the right agent on the ground.

    1. Yes, that’s right. Serving by mail, if permitted by the law of the forum, is probably fastest, but it’s wise to bear in mind the option of using sub-paragraph (b) of the first paragraph of Article 5.

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