The case of the day is Isaac Industries, Inc. v. Petroquímica de Venezuela, SA (11th Cir. 2025). Isaac, a Florida wholesale chemical distributor, had a contract with Bariven, a Venezuelan oil and chemical company “associated with or owned by” the state, to sell 2-ethylhexanol for nearly $3,000 per metric ton. Bariven ordered almost 6,000 metric tons of the chemical, and Isaac shipped it, issuing invoices after each shipment. Bavarian did not object to the invoices but also did not pay for the goods. That’s a big unpaid bill.

According to Isaac, after two years, representatives of Petroquímica de Venezuela, another potentially state-owned company, asked for a meeting. At the meeting, Pequiven undertook to pay Bariven’s debt with interest in return for a release of the debt (to become effective after Pequiven made all the required payments). The deal was memorialized in a written contract. Pequiven made the first payment due under the contract but then stopped paying.

Two years later, in 2017, following a disputed election, the United States recognized the 2015 National Assembly as the legitimate government of Venezuela, but the country’s de facto President, Nicolás Maduro, remained in power and effectively in control of the oil companies.

Isaac sued Pequiven, Bariven, and the main Venezuelan state oil company, PDVSA, for breach of contract. It sought to serve process via the central authority per the Hague Service Convention, but the central authority “never confirmed that it executed service.” A year into the lawsuit, Isaac moved for leave to serve process by alternate means. The court granted the motion. At that point, the defendants appeared and moved to dismiss, arguing that they were instrumentalities of the Venezuelan state and that service had to be made under the FSIA. They also argued that the complaint did not allege the case fell within any of the exceptions to foreign sovereign immunity. The court granted the motion to dismiss for insufficient service of process; the order said that the companies could “reassert the remaining bases for dismissal” later.

Rather than try service again, Isaac sought entry of a default judgment due to the lack of any response from the central authority, citing Article 15 of the Convention. Here is how the court described Article 15:

Article 15 permits a judge to enter a default judgment “even if no certificate of service or delivery has been received” so long as a plaintiff “transmitted” the service documents “by one of the methods” described in the Convention, “six months … has elapsed,” and “no certificate of any kind has been received, even though every reasonable effort has been made to obtain it.”

The magistrate judge found that all three conditions had been satisfied. Nevertheless, the magistrate judge (wisely, in my view) recommended denial of the motion for entry of default. No parties objected to the magistrate judge’s report and recommendation. The court adopted the R&R, denying the motion for entry of default, but it also dismissed the complaint on FSIA grounds and ordered Isaac to file an amended complaint that alleged an exception to foreign sovereign immunity. It also “prohibited the oil companies from ‘re-asserting a challenge to service of process.’”

Isaac filed an amended complaint that alleged that the case fell within the commercial activity exception for foreign sovereign immunity. PDVSA moved to dismiss based on immunity grounds, and the court granted. But neither Pequiven nor Bariven squarely denied the allegation that the case arose out of commerical activity in their answers: instead, they “stated that the allegations about the commercial activity exception required no response because they called for a ‘legal conclusion.’” Nor did they raise insufficient service of process as an affirmative defense.

Isaac moved for summary judgment, the court granted the motion, and Pequiven and Bariven appealed. One ground for the appeal was a lack of personal jurisdiction; the oil companies argued that the court had lacked jurisdiction because they had not been properly served. It’s true that the two had challenged service of process in the lower court, but when the magistrate judge found that the requirements of Article 15 had been met, they did not object, and under ordinary procedural principles, a failure to object to a magistrate judge’s decision waives the right to challenge the decision on appeal. So the court affirmed the judgment.

I get it, but I am not 100% sure the decision is right. After all, at the time of the magistrate judge’s recommendation, the court had already held that service of process was insufficient, and that decision came more than a year into the lawsuit (and likely many months if not a year after Isaac had transmitted the papers to the central authority for service). And Isaac didn’t try to effect service of process after that dismissal, but instead looked to Article 15 as a kind of fallback. The magistrate judge didn’t find that service had been proper; he found that judgment could be given despite the lack of evidence that service had been effected. To my mind, there was enough doubt about what were the implications of the magistrate judge’s recommendation that it would have been reasonable for court to review the service question in the interests of justice.