The case of the day is Voltage Pictures LLC v. Gussi S.A. de C.V. (9th Cir. 2024). Voltage was an LA film production company. Gussi was a Mexican film distributor. The two companies had an agreement for the distribution of Ava in Latin America. Who is Ava, you ask? She is played by Jessica Chastain. According to IMDB, “Lethally beautiful and incredibly efficient in her dangerous line of work, Ava, a taciturn lone wolf and cold-blooded assassin, is starting to develop a conscience.” The contract had an agreement to arbitrate under the IFTA Rules. The arbitration clause also provided: “The Parties agree to accept service of process in accordance with the IFTA Rules.” Those rules provide:

Service of any petition, summons or other process necessary to obtain confirmation of the Arbitrator’s award may be accomplished by any procedure authorized by applicable law, Treaty or Convention, except that the parties waive application of the Hague Convention for Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters with respect to service of process.

They also provide:

The Arbitrator shall apply the laws of the State of California to all arbitrations conducted under these Rules unless the parties by mutual agreement or by the contract to be enforced provide that the Arbitrator shall apply the law of one other jurisdiction, or the Arbitrator for good cause designates another location to be the situs of the arbitration in which case the Arbitrator shall have the discretion to apply for good cause the law of the situs of the arbitration.

When a dispute arose, the parties held an arbitration, with its seat in Los Angeles, by Zoom. The arbitrator issued an award favor of Voltage.

Voltage sought confirmation in the federal court in LA. It mailed its motion to confirm the award to the lawyers who had represented Gussi in the arbitration and filed the motion with the court. Why was this a motion rather than a complaint? Section 6 of the FAA says that “any application to the court hereunder shall be made and heard in the manner provided by law for the making and hearing of motions, except as otherwise herein expressly provided.” On the other hand, Section 9 of the FAA says:

Notice of the application [to confirm an arbitral award] shall be served upon the adverse party, and thereupon the court shall have jurisdiction of such party as though he had appeared generally in the proceeding. If the adverse party is a resident of the district within which the award was made, such service shall be made upon the adverse party or his attorney as prescribed by law for service of notice of motion in an action in the same court. If the adverse party shall be a nonresident, then the notice of the application shall be served by the marshal of any district within which the adverse party may be found in like manner as other process of the court.

We’ll come back to this.

Gussi moved to quash service and to dismiss the motion to confirm the award. The court granted the motion to quash on the grounds that Voltage had not served process on Gussi in accordance with California law. Voltage then mailed the motion papers to Gussi’s address in Mexico, with a return receipt requested. Gussi moved to quash the service again, on the grounds that federal law, not California law, governed service of process and that the service had not complied with federal law. This time, the court denied the motion. The court confirmed the award, and Gussi appealed.

The Ninth Circuit began by noting, correctly, that federal law, not state law, governs service of process in all actions in federal court, because service of process is procedural. A choice of law agreement does not affect the law governing service of process. The court pointed out, again correctly, that parties can by contract waive service of process, but in addition to citing National Equipment Rental v. Szukhent, 375 U.S. 311 (1964), it also cited the Changzhou Sinotype case, to my dismay. What, then, to make of the provision in the IFTA rules that says that service can be effected by “any procedure authorized by applicable law.” What is the “applicable law” here? The court, rightly, rejected Voltage’s view that the “applicable law” was California law.

Having cleared the decks, the court turned to the real question: did the service meet the standard of federal law? The court began by observing that the FAA’s language about the role of the marshal in service of nonresident defendants does not apply when the nonresident defendant has to be served abroad.¹ But if the FAA itself doesn’t say how the papers are to be served, how should they be served?

The court held that FRCP 5, the rule on serving motions, and not FRCP 4, the rule on service of process, governs. This is contrary to the rule in the Second Circuit, which I had thought was simply the rule that all or nearly all courts adopted. FRCP 5 allows for service of a motion by serving the other party’s lawyers by mail. The court held that the service on the lawyers was sufficient. In a footnote, the court held that there was no Hague Service Convention issue because Gussi conceded that it had “waived application of the … Convention.”

This seems like an obvious mistake to me for a few reasons. First, Rule 5 applies to service on lawyers who have appeared in the proceeding. Before a party is represented by a lawyer in an action, service under FRCP 5 is made on the party itself. Here is Moore’s Federal Practice § 5.03: “Appearing with or through an attorney designates that attorney as the agent to whom all such service and notice must be given. Prior to any appearance by counsel, however, service is to be made directly on the party.” So even if FRCP 5 applies, it can’t be that the first document in the case, before any lawyer has appeared, can be served on the lawyer. Anyway, it’s not clear whether Gussi was represented by American lawyers or Mexican lawyers in the arbitration. If the lawyers were not admitted to practice in the federal court in Los Angeles, that is yet one more reason why the court’s conclusion makes little sense. Second, the FAA makes it clear that the papers are to be served on the opposing party “in like manner as other process of the court.” A summons is “process.” A motion is not “process.” So the statute itself makes it clear that FRCP 4, the rule on service of process, must apply.

Even if the method of service were governed by Rule 5 instead of by Rule 4, it is wrong to say that the Convention could have no application because Gussi had waived it.² If the Convention does apply, and if the documents were served by mail in Mexico, then the service was in my view no good, because of Mexico’s objection to service by postal channels.

Longtime readers will know what I think about this. The Convention is an agreement between states, and its provisions are not for the parties to waive, or at least. The law is that when the Convention applies, and when you have to transmit a document abroad for service, you must use one of the methods of service that the Convention authorizes or at least permits. That’s because states that are party to the Convention object to certain forms of service being attempted in their territory without their permission. So it should not be in the power of the parties to a litigation to waive the limitations of the Convention, which are there to protect the interests of the state, not the interests of the litigant.

With that said, the case does raise an interesting possibility, though neither the court nor, apparently, the parties picked up on it. Suppose the documents had been mailed to the lawyers in Mexico, or suppose that Voltage had relied on the service by mail to Voltage in Mexico rather than on the service on the lawyers. Leaving waiver aside, would there still be an argument that the Convention shouldn’t apply?

Maybe, but I think not. The law of the forum determines whether there is occasion to transmit a document abroad for service. The problem here is like the problem in the SinoType case, although not quite so bad. There, the document served abroad by mail was an ordinary summons in a civil action, even though the case was for confirmation of an arbitral award. The problem, or one problem in a case with a few, was that the California courts decided to call the delivery of the summons to the defendant by mail something other than “service of process” so as to avoid the Convention, which in the US is often construed to be limited to service of process. Here, it doesn’t seem that Voltage used a summons at all. Still, the delivery of the documents was necessary to bring Gussi before the court and to give it notice and and opportunity to defend. The result of a proceeding to confirm an arbitral award is an ordinary judgment for damages. If the papers were not served, any judgment that resulted would be void. And there is textual reason in the FAA itself to think that the documents that must be served are process documents, and not just motion papers. So I do not see that it makes much sense to call the papers used to start the case something other than “process.” If I am right, then Gussi should have won, for two reasons: (1) a party cannot waive the Convention’s rules on what service is permissible; and (2) the Convention did not permit service by mail in Mexico.

Unfortunately for Gussi, it didn’t just waive the Convention in the contract but also in its submissions to the court. That kind of procedural waiver is effective, and so I don’t see that Gussi has much chance at further review on the issue of waiving the Convention. But the circuit split created by the holding that FRCP 5, rather than FRCP 4, governs the method of service might interest the Supreme Court if Gussi files a cert. petition.

Image Credit: Greg Skidmore (CC BY-SA)

1. The court did hold, surprisingly to me, that the requirement of using a marshal continues to apply when a nonresident defendant is served within the United States, but I don’t address that point here.
2. Of course, if the lawyers who were served were in the United States, then the Convention would not have applied, because there would have been no occasion to transmit the documents abroad for service.