Case of the Day: DRM Contract Administration v. Proton Technologies

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The case of the day is DRM Contract Administration Ltd. v. Proton Technologies AG [2021] IEHC 554. DRM sued Proton Technologies, the Swiss company that runs the well-known Protonmail email service, for defamation after two emails were sent using Protonmail by a pseudonymous user, “ConcernedTaxPayer11,” asserting that DRM’s managing director “had engaged in fraudulent activities in respect of the N56 Kilkenny to Letterilly road project.” One might pause to ask why DRM had sued Protonmail, which merely transmitted the allegedly defamatory communication made by its user, and in fact Protonmail ultimately took the position that it was immune from liability under the Directive on Electronic Commerce, Directive 2000/31/EC. But I’m not going cover the substance of defamation law here. The issue of interest is service of process. The Irish High Court authorized service of the summons outside the jurisdiction, and DRM transmitted the summons to Proton by email and “tracked post.” Oops! There should be no question that under the Service Convention, service had to be made via the Swiss central authority, as Switzerland has objected to the use of alternate channels of transmission under Article 10 (I leave aside the possibility of service under Articles 8, 9, and 19, which are irrelevant here).

Protonmail’s in-house counsel attempted to enter an appearance in the High Court, though DRM informed him that he could not appear for the company and that the company would need to hire a solicitor. Protonmail then decided, for cost reasons, not to appear in the case. Ultimately DRM sought and received a default judgment. At that point, Protonmail hired a solicitor and sought to have the judgment set aside.

The initial question was whether the judgment was a “regular judgment” or an “irregular judgment.” The distinction, in Irish law, seems broadly similar to our distinction between judgments that are valid but that can be set aside for one reason or another, and judgments that are void (for example, because they were entered without jurisdiction). If the judgment is “irregular,” then the defendant is entitled to have it set aside without regard to the merits and without any terms. If the judgment is “regular,” then the court must show a bona fide defense and often has to provide some security.

The judge correctly held that the judgment was “irregular” because the service did not comply with the Convention. DRM argued that the service did comply with Article 5, because the defendant accepted it voluntarily. And Article 5 does say that “Subject to sub-paragraph (b) of the first paragraph of this Article, the document may always be served by delivery to an addressee who accepts it voluntarily.” But it’s an obvious mistake to say that Article 5 allows service by any means as long as the defendant accepts it voluntarily. Article 5 as a whole is about service via the central authority, and the language DRM cited refers to defendants who are served via the central authority and who accept service voluntarily. It is customary in some countries for the bailiff, huissier, or other appropriate officer to contact the defendant and ask whether he will accept service voluntarily rather than requiring formal service. This is the situation the “voluntary acceptance” provision of Article 5 means to permit.

We're taking an awful risk, Vader, this had better work

A concluding note on strategy. It is sometimes advisable for companies in Protonmail’s position to “run silent, run deep,” or in other words, simply to ignore the proceedings altogether. Of course, you take the risk that you’re wrong about the validity of the service, but if, as in this case, it is really very clear that the service was improper, why take on a cost you can’t afford? That said, I would make two observations. First, if you are going to “run silent, run deep,” don’t try to enter an appearance in the foreign case! Protonmail’s in-house counsel’s effort to make an appearance was strategically unwise, since the ran the risk that the court would find the company had submitted to jurisdiction, thus undermining the company’s very sound position on service. (I should add that I don’t know for certain that this risk was significant under Irish law, but I have to assume it was). Second, you have to decide whether you are worried about the possibility of a default judgment against you in the foreign country, or whether you are really only worried about whether your own country’s courts would recognize a foreign judgment based on the bad service. If Protonmail was only worried about the Swiss courts, and if it was confident that the Swiss courts would not recognize the Irish judgment, then it could safely ignore the proceedings. But evidently Protonmail was worried about the Irish judgment, since otherwise it would not have applied to have the judgment set aside. In that situation, you have to research not just your own law, but the law of the forum.

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