The issue of whether a U.S. court can order email service under the Hague Convention has been covered many times on this blog and is the subject of a split of authority at the district court level.  The U.S. Supreme Court recently denied a certiorari petition in Grupo Cementos de Chihuahua S.A.B. de C.V., v. Compañía de Inversiones Mercantiles, S.A., (Case No. 20-1033) which had teed up this question for resolution.

By way of background, cross-border service of process in civil cases is governed by the Hague Convention.  Each contracting state is required to designate a central authority to accept incoming requests for service.  The Hague Convention also provides other optional avenues of service, including service by regular mail.  However, signatories may opt out of a form of service other than the central authority process.  A few major economic partners of the United States, including Germany, Mexico, Japan, South Korea, China and India, have elected to opt out.  As a result, for a plaintiff suing a defendant located in any of those countries, the central authority route is mandatory.  The process can be unreliable, frustratingly bureaucratic, and often entails extensive delays.  

Federal Rule of Civil Procedure 4(f)(3) allows a district court to authorize “other means [of service] not prohibited by international agreement” on a foreign defendant.  Under the case-law of most judicial districts, a plaintiff must make a good-faith attempt to use the Hague Convention before moving for alternative service. 

The fact pattern in Grupo Cementos is a familiar one to practitioners who handle cross-border litigations.  Compafiía de Inversiones Mercantiles S.A. (“CIMSA”), a Bolivian company, commenced a case in the District of Colorado to enforce an arbitration award against Grupo Cementos de Chihuahua, S.A.B. de C.V., and GCC Latinoamerica, S.A. de C.V. (collectively “GCC”), two affiliated companies located in Mexico.  Over the course of two years, CIMSA made two failed attempts to perfect service through the Mexican central authority.  According to the Mexican government, it could not locate the recipients of the summons, even though DHL was able to make a delivery at the address supplied by CIMSA to the Mexican authorities.  The district court therefore granted CIMSA’s Rule 4(f)(3) motion to serve GCC through their U.S. counsel.  The Tenth Circuit affirmed in what appears to be the first-ever federal appellate decision addressing the issue of email service on foreign defendants.

GCC acknowledged (as it must) in its briefing that according to the majority rule at the district court level email service is permissible.  It nevertheless contended that the minority view to the contrary was the correct one.  It relied principally on the Court’s holding in Volkswagenwerk Aktiengesellschaft v. Schlunk, 486 U.S. 694, 699, 706 (1988) that the Hague Convention is the “exclusive” method of service which “preempts inconsistent methods of service prescribed by state law.”  Recall that Rule 4(f)(3) on its face permits a court to fashion a service method “not prohibited by international agreement.”  In effect, GCC took the position that an alternative service method would be prohibited unless it was expressly authorized in the Hague Convention (the host of this blog agrees with this position).  In my view, this position is not tenable because it would render Rule 4(f)(3) a nullity.  I read Rule 4(f)(3) as a safety valve provision that ordinarily comes into play only in cases where the Hague Convention has failed to work. The Hague Convention and Rule 4(f)(3) should work seamlessly together.  An alternative method of service that is not expressly prohibited by the Hague Convention can be authorized by Rule 4(f)(3).  If the alternative method of services were limited only to the methods expressly specified in the Convention, then Rule 4(f)(3) could never be used to effectuate service of process in circumstances where it was most needed.

There was a better basis to reject the use of email service in the Grupo Cementos case.  Article 10(a) of the Hague Convention gives the contracting states the ability to affirmatively object to service by regular mail.  Mexico has done so here.  Email, which did not exist when the Hague Convention was adopted in 1965, has largely displaced regular mail as a routine means of written communications.  It is simply not conceivable to me that a state which made a deliberate choice as a sovereign reject service by mail would have agreed to permit foreign parties to serve its nationals using electronic mail.  On the flip side, this means that email service should be permissible for countries that have not objected to Article 10(a).  

A wrinkle in the Grupo Cementos case is the email service was done not on foreign-based defendants themselves, but on defendant’s counsel based in the United States.  In my view, this was not a Hague Convention or Rule 4(f)(3) issue because service took place on U.S. soil and did not involve the transmission of documents to a foreign country.  Whether such service is authorized by other provisions of Rule 4 is the subject of yet another district court split.  It is worthy of a separate blog post!       

It was not surprising that the Supreme Court did not agree to review the case.  The Court is generally not in the business of resolving district court disagreements.  Unless and until there is a circuit court split, the issue will likely remain outstanding.                 

The post Minyao Wang on Service By Email appeared first on Letters Blogatory. Letters Blogatory by Ted Folkman and contributors is © 2011-2024 and is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License. Images may be separately licensed.

Earlier this week the Supreme Court unanimously ruled for the plaintiffs in Opati v. Republic of Sudan, holding that a law passed by Congress in 2008 that authorizes punitive damages against foreign governments for supporting terrorism applies to misconduct predating the law.¹ This case gave the Court an unusual opportunity to address the interplay of two different American legal rules: sovereign immunity and the presumption against retroactive application of a new law.

The events giving rise to the litigation were the bombings of United States embassies in Kenya and Tanzania in August 1998. The explosions killed more than 200 people and injured more than a thousand. The United States Government attributed the attacks, which are now seen as a prelude to the 911 terrorist attacks on New York and Washington DC, to Usama bin Laden’s al Qaeda network. Victims of the attacks commenced litigation against Sudan in the District of Columbia district court, alleging that the government of Sudan provided material support and shelter to the terrorist network. The district court awarded billions of dollars in favor of plaintiffs, but an appellate court cut that award in half. It ruled that its legal authority to award punitive damages against a foreign government for supporting terrorism does not operate retroactively.

Under the Foreign Sovereign Immunities Act (“FSIA”), a foreign government cannot be sued in a United States courtroom unless a specific exception set forth in FSIA applies. FSIA also provides that even if an exception applies, a plaintiff generally cannot recover punitive damages from a foreign government. In 1996 (two years before the embassy bombings), Congress added an exception to FSIA permitting lawsuits against certain state sponsors of terrorism, but it did not authorize the award of punitive damages. In 2008, while the lawsuits against Sudan were pending, Congress made further refinement to this “terrorism exception.” First, it moved the exception to a new section of the statute to which the usual prohibition on punitive damages does not apply. Second, it created an express federal cause of action for acts of terror, open to U.S. citizens and U.S. government employees. The new cause of action makes foreign governments liable for punitive damages. Third, Congress authorized plaintiffs to bring new federal claims for past conduct, but this retroactivity provision does not expressly allow these plaintiffs to collect punitive damages for their claims.

Retroactive application of a new law can obviously raise fundamental fairness and due process concerns. Courts in the United States therefore presume that a new law is meant to apply prospectively only, unless there is a clear statement of Congressional intent to apply it retroactively. The issue before the appellate court and the Supreme Court was whether Congress spoke with the requisite clarity to apply the punitive damages provisions retroactively when it enacted the 2008 amendments. A unanimous Supreme Court concluded that Congress could not have been clearer in authorizing plaintiffs to seek punitive damages for conduct that took place before 2008. The Court explained that Congress “expressly authorized punitive damages under a new cause of action” and then it “explicitly made that new cause of action available to remedy certain past acts of terrorism.” “Neither step,” according to the Court, “presents any ambiguity, nor is the” 2008 law “fairly susceptible to any competing interpretation.” The Court rejected Sudan’s argument that the clear statement rule required Congress to use the words “punitive damages” in the retroactivity provision of the 2008 amendments itself.

Because the Court determined that the 2008 amendments met the clear statement requirement, it declined to address plaintiffs’ argument that because sovereign immunity is a “gesture of grace and comity” that can be withdrawn at will, the usual presumption against retroactivity should not apply. The Supreme Court hinted at this exception 16 years ago in Republic of Austria v. Altmann, 541 U. S. 677, 689 (2004). Resolution of the scope of this exception, to the extent it exists, will need to await another case and another day.

One lesson to be learned from this case is that the existence of a clear statement is often in the eyes of the beholder. While the retroactive application of punitive damages is crystal-clear for eight members of the Court, it bears noting for a distinguished and ideologically diverse District of Columbia appellate panel (consisting of Judges Ginsburg, Henderson and Rogers), retroactivity took “one too many a logical leap.” Owens v. Republic of Sudan, 864 F. 3d 751, 818 (D.C. Cir. 2017).

Congress is currently reviewing possible amendments to FSIA to permit legal actions against the government of the People’s Republic of China for alleged acts of commission and omission that led to or exacerbated the COVID 2019 pandemic. Legislators should bear the presumption against retroactivity in mind as they craft an appropriate response to an event that has upended lives worldwide in the past two months.

The post Case of the Day: Opati v. Sudan appeared first on Letters Blogatory. Letters Blogatory by Ted Folkman and contributors is © 2011-2024 and is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License. Images may be separately licensed.