Ever since I attended law school, international judicial assistance progressed in scope and territorial reach, primarily within Europe: The European Union was on a path towards deeper integration on all levels, including the IJA regime: Starting with the Brussels Convention, moving on to the Brussels Regulation and then to Brussels Recast with automatic recognition of judgments.

The scope widened, with Brussels II for family law and regulations on service and evidence, on demand procedures and seizure of bank accounts. The territorial reach widened as well, with new member states joining the EU, peaking at 28 EU member states. If you add those under the Lugano regime, 31 sovereign states across Europe aligned almost all or at least significant parts of their IJA regime. I am not aware of any equivalent system, past or present.

Progress within the Hague Convention framework was slower, more incremental, but progress there was. The most visible step was the entry into force of the 2005 Convention on Choice of Court Agreements in October 2015, having been in the works as part of the HCCH’s Jurisdiction Project since 1992.

Perhaps naively, my implicit assumption was that this process towards ever closer cooperation would continue. And all of a sudden, I find myself researching the application of a 1928 “Convention between his Majesty and the President of the German Reich regarding Legal Proceedings in Civil and Commercial Matters.”

So where does that leave us—with the “us” probably being a European “us”, and the “European” mainly being a “European” European perspective, that is, including the United Kingdom. Four observations:

First, I expect to see the European Union member states assess what they have lost as a result of the “hard Brexit” (and in the process hopefully appreciate what they have achieved). The unified IJA regime across the European Union is now, regarding the respective relation with the United Kingdom, replaced by a patchwork which may or may not – I really have not made up my mind yet – include a 1928 Convention. The various member states will need to think about what gaps there are, whether they want to bridge them and if so, what the best methods are. For example, our Austrian friends might reach the conclusion that it is now appropriate to accede to the 1970 Hague Evidence Convention.

In a second step, I imagine there will be some level of (incremental) Hague activity around existing conventions. The biggest game changer would of course be if the United States ratified the 2005 Convention on Choice of Court Agreements. Ted is better placed to assess whether the incoming administration will have that on its agenda.

In a third phase, this trend might lead to further Hague Convention developments on the basis of the 2019 Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters and of the HCCH’s current mandate.

Fourth, and finally looking beyond Europe and the United States, regional economic integration bodies elsewhere in the world might move to emulate the European Union’s approach to regional judicial cooperation in civil matters. I am convinced it is a success story (as I believe is the European Union at large). The EU’s IJA regime could serve as a blueprint for other regions embarking on a path to closer economic intergration. I know very little about these matters outside Europe, but what comes to mind is the Organization for Harmonization of Business Law in Africa (Organisation pour l’Harmonisation en Afrique du Droit des Affaires, OHADA) and its Court of Justice and Arbitration in Abidjan, Ivory Coast.

In summary, I hope that over the next ten years, we see an increased and sustained interest in IJA on a multinational level. And of course, we hope we will see Ted and his blog flourish, but that is the least speculative of my predictions.

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In a judgment last week, the Federal Supreme Court (Bundesgerichtshof) has found a US party liable for damages for bringing an action against its German contractual counterparty in the US in violation of an agreement on the jurisdiction of the German courts. With this judgment, the Federal Supreme Court decided an issue that so far had been controversially debated in the German legal literature. Until this decision, it was not clear whether the violation of a choice of court agreement does not only have a procedural effect, but does also render the violating party liable for monetary damages. (Disclosure: This post is based on the Federal Supreme Court’s press release only, as the full judgment is not yet available. I will provide an update when the judgment comes out.)

The German tradition of anonymous court reporting notwithstanding, is clear that the case is Cogent Communications Inc. v. Deutsche Telekom AG. The parties had concluded, in 2003, an internet peering agreement. This agreement provided that is was subject to the law of the Federal Republic of Germany and that Bonn was the place of jurisdiction.

This straight-forward wording notwithstanding, when a dispute arose between the parties about Cogent’s right to request internet connection point upgrades, Cogent in 2015 sued Deutsche Telekom in the US District Court for the Eastern District of Virginia. In 2016, the US Court dismissed the action pursuant to the doctrine of forum non conveniens, citing the choice of court agreement. Judge Brinkema said:

So I think it’s a very simple way to resolve the motions [to dismiss] that are here, that I’m going to grant the motion to dismiss because this case does not belong here; it belongs in Germany. It’s not a dismissal on the merits, so you can certainly refile over there.

Cogent duly refiled its action to Bonn. Deutsche Telekom issued a counterclaim for $196,118.03 in damages for the violation of the choice of court agreement, representing the attorney’s fees it incurred in the US proceedings. The District Court (Landgericht) of Bonn dismissed Cogent’s action and granted Deutsche Telekom’s counterclaim.

On appeal, only Deutsche Telekom’s counterclaim remained at issue. The Court of Appeals (Oberlandesgericht) of Cologne reversed and dismissed the counterclaim. In its judgment, the Cologne court provided a thorough discussion of the German legal literature on the issue on which it had to rely, in the absence of German cases on the topic. The Cologne court opted for a narrow interpretation of a choice of court agreement. It held that the choice of court agreement only had a procedural effect, but not, in parallel to that, a substantive effect. Hence the choice of court agreement was not to be understood as a separate contractual obligation in its own right and a basis for monetary sanctions.

The Federal Supreme Court was not convinced and found to the contrary. The Court stated that the agreement on the jurisdiction of the Bonn court and the application of German law has to be construed as creating an obligation to bring actions in relation to the contract only in the Bonn courts. If a party violated this obligation, and if the foreign court denied its jurisdiction, that created a liability for legal costs incurred in defending the foreign action. In its press release, the Federal Supreme Court summarized its position as follows:

With such a [choice of court] agreement, the parties have manifested their interest in allowing legal disputes to be planned from both a substantive and a procedural point of view. Contracting parties involved in international transactions in particular intend to use such an agreement to create legal certainty and render litigation risks, including the financial risks, quantifiable. By defining a specific court, they seek to select a specific place of jurisdiction and, in particular, to prevent subsequent forum shopping by a contracting party. In case the objective of avoiding disputes about jurisdiction and thus also unnecessary costs caused by invoking a court which does not have jurisdiction, is jeopardized by invoking a court in breach of the agreement, the objective can only be achieved if the party affected by the breach is granted a claim for reimbursement of costs.

With the agreement as a whole governed by German law, the parties have recognised both the general principle—resulting from Sec. 280 (1) German Civil Code (BGB)—that a breach of contractual obligations, including a breach of the choice of court agreement, may give rise to a claim for monetary damages, and the principle that one party to a civil dispute is obliged to reimburse the other party for the costs necessary for its legal defence.

The Federal Supreme Court then goes on to discuss its established case law that bringing an action in a court of law to enforce alleged rights as a matter of principle cannot be regarded as a breach of contract triggering damages. The Federal Supreme Court makes it clear that it does not see an contradiction here: This general principle protects the constitutional right of free access to state courts. This access is not restricted in a manner that would cause constitutional concerns by a cost risk being imposed on the violating party, as “the obligation to reimburse costs [is] inherent in every filing of an action.”

To me, the Federal Supreme Court’s position is convincing, both from the point of view of construction of the contract, and from a policy perspective. From a construction point, I do not find it convincing to distinguish between procedural and substantive effects of a contractual provision. From a policy perspective, the Federal Supreme Court’s contractual interpretation provides for a sanction that hopefully deters frivolous lawsuits brought in particular in the US with a view to creating a nuisance value and a cost risk for the other side.

The post Peter Bert on Damages for Violations of Choice of Court Agreements in Germany 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.

In US-German disputes, the question often arises whether a party in US litigation can compel a third-party witness who is a German resident and does not volunteer to testify to render testimony as part of the pre-trial deposition discovery in the US proceedings. In short, the answer is yes.

Germany and the US are signatory states to the Hague Convention of March 18, 1970 on the Taking of Evidence Abroad in Civil and Commercial Matters, which allows for the transmission of letters of request for the judicial assistance in the taking of evidence among its signatory states without recourse to consular and diplomatic channels. Letters of request are commonly known as letters rogatory.

Germany has, as most European jurisdictions have, filed a reservation under Article 23 of the Hague Evidence Convention against the execution of letters of request issued for the purpose of obtaining pre-trial discovery of documents and hence does not execute letters of request pertaining to U.S. pre-trial discovery of documents. However, German authorities do execute letters of request under the Hague Evidence Convention for the examination of witnesses for U.S. legal proceedings. This does include testimony for the pre-trial discovery deposition of third party witnesses on German territory.

If you seek judicial assistance from German courts for the deposition testimony of a German resident who does not volunteer to testify in a U.S.litigation, this is what needs to be done:

First, a letter of request must be submitted to the competent German “Central Authority” designated by Germany pursuant Article 2 of the Hague Evidence Convention—please note that, counterintuitively, but due to the federal nature of our court system, there is not one Central Authority, but one in each federal state. The German Central Authority will satisfy itself that the letter of request meets the requirements of the Hague Evidence Convention and will then forward the letter of request to the competent German court for execution. The competent German court for the execution of the letter of request is usually the Local Court (Amtsgericht) at the place of residence of the third party witness.

The German court will summon the third party witness to appear before the court in order to render his or her testimony. The testimony will be taken before a German judge. Legal representatives of the parties to the US litigation are allowed to participate at the witness deposition. In accordance with Article 14 of the Hague Evidence Convention, no court fees are payable.

If the third party witness fails to appear at the hearing, the German court will usually hold the witness liable to bear any costs resulting from his or her default. Furthermore, the German court will regularly sanction any default by the witness to comply with his or her duties to testify by a fine and, if such file is not collectable, impose a detention upon the witness. Should a witness repeatedly fail to appear before the court, the court can request the police to physically enforce the personal appearance of the witness before the court.

In summary, the Hague Evidence Convention enables US litigants to obtain the testimony of a German resident who does not volunteer to testify in a pre-trial deposition discovery in US proceedings through the assistance by a German court. To execute a letter of request under the Hague Evidence Convention, the German court can and if necessary will take recourse to coercive measures against the third party witness which are available under normal German civil procedure rules including fines or detention.

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In a ruling in January 2013, the Federal Constitutional Court (Bundesverfassungsgericht) confirmed its approach to service of US actions in Germany under the Hague Service Convention. The court refused to hear a constitutional complaint (Verfassungsbeschwerde) filed by a German company sued in the United States. The German defendant had sought to stop service in Germany of process in a US action, and it had applied for a preliminary injunction to that effect.

The defendant had been involved in a legal dispute with “B” Inc., a US corporation, since 2006. These disputes were about trademarks and internet domains owned by the defendant, all of them included variations of the word “B”. “B” Inc. tried to enforce rights over the trademarks and domains in dispute. To that effect, “B” Inc. filed an action in the United State District Court for the Northern District of California in May 2012, based on federal trademark infringement, unfair competition, and false designation of origin.

The German party first applied to the Central Authority for the State of Berlin, (Senatsverwaltung für Justiz) to abstain from executing the US service request. When the Central Authority denied that application, the German party applied for legal review to the Berlin Court of Appeals (Kammergericht), but it was unsuccessful. The Berlin Court of Appeals held that Article 13 of the Hague Service Convention, which covers infringement of sovereignty or security, did not apply.

The German party then took the matter to the Federal Constitutional Court (Bundesverfassungsgericht). It argued that service of the US action violated its constitutional rights, as it had not sufficient funds to defend the US action and its existence was at risk if the service of the action was allowed. On that basis, the German party alleged that by permitting service under the Hague Service Convention, the German authorities would violate its fundamental rights. The constitutional complaint relied in particular on Article 2, Personal Freedoms, and Article 14, Occupational Freedom, of the Basic Law (Grundgesetz), the German constitution.

A Chamber of the Second Senate of the Federal Constitutional Court, comprising three of its eight judges, including the court’s president, Andreas Voßkuhle, reviewed the matter. It refused to entertain the constitutional complaint. Each of the arguments made by the German party is discussed and dismissed:

The US plaintiff had sought punitive damages, and the defendant argued that this concept was contrary to German public policy. The court did not concur; punitive damages do not per se violate fundamental principles of the Rule of Law (unverzichtbare Grundsätze des freiheitlichen Rechtsstaats). In addition, the German authorities are not in a position to assess, at the time of service, whether the amount of damages claimed was disproportionate; The same was true for the US rule on costs, which does not provide for the loosing party to reimburse the opponent. In this context, the court noted that the financial risks stemming from US litigation were business risks resulting from doing cross-border business (Folge der unternehmerischen Entscheidung für eine grenzüberschreitende Teilnahme am Wirtschaftsleben).

That proceedings in the United States can be brought both in State and in Federal Court was a deviation from the German concept but still did not amount to violation of fundamental principles of the Rule of Law, since the US legal system on the other hand provides for safe guards that prevent from contradicting judgments in the same matter being issued. Finally, the fact that a media campaign was allegedly triggered by the US action did also not persuade the court to find otherwise.

The ruling in this matter is in line with the recent case law, which we reviewed in an earlier post. It appears that the preliminary injunction that the Federal Constitutional Court issued in the Bertelsmann/Napster matter in 2003 is very likely to remain a one-off decision. In that case, Bertelsmann withdrew its application in 2005, and the Federal Constitutional Court never got to rule in the main action, or on the merits. For all practical purposes, in the absence of extreme factual circumstances, the German courts will not stop service of US actions under the Hague Service Convention. Any “excesses” of the US legal system would be dealt with post judgment on the recognition and enforcement level.

The post German Federal Constitutional Court: Risk of Punitive Damages No Reason to Prevent Service of U.S. Action 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.

Issues of international service are often rather mundane, not to say boring, technicalities. Nevertheless, in international litigation, service aboard is the eye of the needle, through which every dispute must go. A recent judgment by the Federal Supreme Court (Bundesgerichtshof) is therefore highly welcome, as it addresses technicalities such as the interpretation of a certificate of service from the Chinese Central Authority under the Hague Service Convention, and the extent to which documents that support a statement of claim (Klageschrift) must be translated into the Chinese language, in order for service in China to be effective.

The underlying facts were as follows: A German party was suing two Chinese entities under a cooperation agreement in the Stuttgart courts. The statement of claim was translated into Chinese. However, the German party expressly requested that the attachments to the statements of claim were not to be translated. Together with the statement of claim, an order of the German court duly translated into Chinese was served. The order set a four-week deadline for the Chinese defendants to appoint either a German lawyer (Prozessbevollmächtigter) or a service agent domiciled in Germany (inländischer Zustellungsbevollmächtigter). The order made it clear that if they failed to do this, any subsequent service could be effected under German procedural law by post.

Both the statement of claim and the court order were served through the Chinese Central Authority. It is interesting to note how long it took: the papers were sent out by the German court, apparently sometime in March 2009. The Chinese Central Authority effected service upon the Chinese defendants on June 17, 2009, and issued the corresponding certificate of service on September 1, 2009. Not that bad compared to other jurisdictions, I would say.

As the Chinese defendants did not act upon receipt of the court order, on November 9, 2009, a default judgment (Versäumnisurteil) was issued, and sent by post, to the Chinese parties on November 10, 2009. Only when the claimant commenced enforcement of the default judgment against assets in Germany did the Chinese parties instruct lawyers in Germany, who filed a complaint (Einspruch) against the default judgment. This complaint was outside the two week time period for this remedy, and the issue before the Federal Supreme Court was whether the First Stuttgart District Court (Landgericht) and the Stuttgart Court of Appeals (Oberlandesgericht) were right in not granting the application to reinstate the Chinese defendants (Wiedereinsetzung in den vorherigen Stand). In short, the Federal Supreme Court confirmed the earlier judgments and held that the application for reinstatement had been rightly dismissed, as both the statement of claim and the default judgment had been validly served in China, and triggered the respective deadlines. In that context, the Court looked at the content of the certificate of service, and at the issue of translation of the attachments.

With respect to the certificate of service issued by the Chinese Central Authority, the defendants had argued that the certificate did not identify the individual or individuals to whom the documents were handed over. The form simply stated that service was effected by way of transmission to the “personal service” of the defendants. In that respect, the Federal Supreme Court ruled that there was no requirement either under German procedural law, or under the Hague Service Convention, to specify the names of individuals in the Certificate of Service. Both the requirements of Section 418 of the German Code of Civil Procedure (ZPO) and of Article 6 of the Hague Service Convention had been met, notwithstanding the fact that the model of the form annexed to the Hague Service Convention (see Art. 7) does provide for the section “Identity and description of person” to whom the request has been delivered.

The Court then turned to the issue of translations of exhibits. In German litigation, the statement of claim must fully set out the legal and factual basis of the claim, and in particular, the claimant must attach copies of documents on which the claimant intents to rely. In a fairly detailed and highly technical discussion of German provisions of civil procedure on the one hand, and the constitutional standard of the right to be heard (rechtliches Gehör) on the other hand, the Court concludes that there is no legal requirement to attach translations of the exhibits, provided that the statement of claim in itself, and hence its translation, put the defendant in a position to understand what the dispute is about and to respond adequately to it.¹

For German claimants who need to effect service under the Hague Service Convention, the judgment is good news. First, the Federal Supreme Court takes a robust pro-validity approach to the interpretation of service certificates from foreign central authorities. Secondly, the time-consuming and often expensive process of having exhibits translated can now be avoided, provided that the statement of claim itself puts the foreign party in a position to adequately defend itself. In that context, the court appears to attach some weight to the fact that the annexes were known to the Chinese defendants, and already in their possession, either because they formed part of the original contract documentation, or because they were exchanged in pre-litigation correspondence—as often will be he case in commercial litigation. To foreign defendants, the Court issues a safety warning: Once a German court document is received by the foreign party, then the foreign party is subject to the same duties of care as a German party. It must without undue delay take appropriate steps to understand the content of the court documents and to obtain advice on the formal requirements for any legal steps that need to be taken.

The post From Germany to China: The Nitty-Gritty of International Service, How To Fill In Forms and What To Translate 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.

For Germans, this case pitches two iconic names against each other: Loriot was one of Germany’s most loved comedians, actors, film makers and cartoonists. He passed away in August 2011. Shortly thereafter, his daughter sued Wikimedia Foundation in the Berlin courts for allegedly violating Loriot’s copyright. Wikipedia’s German entry for Loriot depicted, inter alia, postal stamps with Loriot cartoons. For the purposes of this blog, the judgment of the Berlin District Court (Landgericht)¹ is interesting not so much for the copyright issues—on these, Loriot’s daughter prevailed on one, and lost on the other—but rather for its holding relating to service of a German injunction in the United States.

First, a brief history of proceedings: Loriot’s daughter applied for injunctive relief on September 27, 2011, and a preliminary injunction (einstweilige Verfügung) prohibiting the use of the pictures was granted ex parte on October 6, 2011. It was served on the applicant the day after. The applicant then applied to the court to serve the preliminary injunction by registered mail, return receipt requested (Einschreiben mit Rückschein) upon the defendant in accordance with Sec. 183 para 1. of the German Code of Civil Procedure (ZPO). The papers were posted by the court to the United States on October 19, 2011. On November 23, 2011 at the latest, the return receipt (Rückschein) was received by the Berlin court.

Under German law, the applicant who is granted injunctive relief must observe a one month enforcement period (Vollziehungsfrist; Sec. 929 ZPO) during which he must make use of that court order and arrange for it to be served on the other party. In a domestic context, the applicant needs to instruct a bailiff (Gerichtsvollzieher) to do that. If service needs to be effected abroad, however, all he has to do is to apply to the court within the one month period and request service on the defendant. Everything else is then handled by the court administration.

If service by registered mail had not been permitted, then the one month period would have lapsed and the injunction would have been void. Therefore, when Wikipedia moved to set the injunction aside, it challenged two aspects of service: On the one hand, Wikipedia argued that service should have been in accordance with Art. 5 (a) Hague Service Convention, that is, through the formal Hague Convention process. On the other hand, it challenged the fact that only the German original of the preliminary injunction was served, but no English translation thereof.

In its judgment upholding the preliminary injunction in part, the Berlin Court rejected both of Wikipedia’s arguments.

With respect to service by registered mail, the court held that even if Germany itself does not allow service by post and has lodged the respective objection in accordance with Art. 10 Hague Service Convention, the United States did allow that method of service. This was sufficient for service to be permitted by registered mail. The Berlin Court distinguished an older judgment by the Düsseldorf Court of Appeals (Oberlandesgericht) on which Wikipedia had relied. The Düsseldorf court had held that service by registered mail would only be permitted if both Hague Service Convention member states concerned permitted that method. The Berlin court stated that in the meantime, Sec. 183 ZPO had been amended, and it is now clear that service by post is expressly provided for in the Code, even as a preferred method of service.

On the issue of language, the judgment by the Berlin Court is very brief: It simply states that a translation would only be required, if formal service under the Hague Convention had been chosen. Since the method of service was by registered mail pursuant to Sec. 183 ZPO, as permitted under Art. 10 Hague Service Convention, the translation requirement of Article 5 Hague Service Convention did not apply.

The Convention reads, in Art 5 para. 3: “If the document is to be served under the first paragraph above, the Central Authority may require the document to be written in, or translated into, the official language or one of the official languages of the State addressed.” The Berlin court reads this, in accordance with previous case law, as exclusively applying to service under Art. 5 Hague Service Convention, and not to other methods of service permitted under Art.10 Hague Service Convention, such as service by registered mail.

This judgment illustrates that injunctive relief obtained ex parte against a foreign party in Germany can be served very quickly and effectively upon the foreign party, as long as it resides in a jurisdiction that permits service by registered mail. Since there is no translation requirement for that type of service, foreign parties ignore German language documents sent to them by a German court via registered mail at their own peril.

The post Loriot v. Wikipedia: Transatlantic Service and Injunctive Relief 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.

The German procedure is somewhat counterintuitive, and its effect on US proceedings is unclear. From Peter’s post, it seems that there are two scenarios worth noting. In the first, the central authority (typically a German court acting in an administrative rather than a judicial capacity) decides on its own not to serve documents on the grounds that the request for service does not comply with the Convention (or, I suppose, on the grounds set out in Article 13 of the Convention). This is the same way that most central authorities operate. In the second scenario, the central authority serves the papers and the defendant, post facto, asks the court to decide whether the service was proper. I don’t see that this could matter to a US court, since the purpose of the service—providing notice—has already been fulfilled. You can’t unring the bell. German courts should intervene only at the enforcement stage. Peter’s post shows that the German courts have reached this position in many key contexts but not in every case (e.g., the False Claims Act case Peter mentions), though it seems to me valid across the board.

German defendants in US litigation can ask the German courts to review a request for service of process under the Hague Service Convention originating from a US court for compliance with the Convention. There are references to this procedure in several US cases, e.g., In re South African Apartheid Litig., 643 F. Supp. 2d 423, 437 (S.D.N.Y. 2007); Bauman v. DaimlerChrysler AG, 2005 WL 3157472, at *1 (N.D. Cal. Nov. 22, 2005). This post describes the procedure and some recent cases that illustrate the approach of the German courts to US service requests.

A decision on service by the Central Authority under the Hague Service Convention constitutes a judicial administrative act (Justizverwaltungsakt). The Central Authority typically is the President of the Court of Appeals (Oberlandesgericht) in the German federal state concerned, but acting in an administrative capacity, rather than in a judicial one. Judicial administrative acts constitute a separate class of actions taken within the court system. One can, by and large, characterize these acts as everything that is not a substantive decision of a judge in a pending litigation itself, be it procedural or otherwise. Sections 23 et seq. of the Introductory Act to the Courts Constitution Act (EGGVG) govern the judicial review of such judicial administrative acts. A defendant who is served can approach the Court of Appeals—acting in its judicial, not in its administrative capacity—and seek review of a decision to order service as per the request from the US court.

For some time, German defendants tried to use this review process to prevent the service of proceedings in class actions, and, in particular, in proceedings where punitive damages could be awarded against them. The most high profile of these cases was the Bertelsmann case, where Bertelsmann was sued in the US for $17 billion in damages for its involvement with Napster. In July 2003 Bertelsmann successfully applied for a preliminary injunction from the Federal Constitutional Court (Bundesverfassungsgericht), which suspended the service of process. One of the key arguments was that $17 billion was an amount that was totally disproportionate to the alleged actions and the action was brought only to exercise undue pressure on Bertelsmann.

Ultimately, however, the attempt to prevent service failed. The preliminary injunction was not confirmed in main proceedings. Today, the courts will consider the outcome of the US proceedings only once a judgment has been entered, that is, at the enforcement stage. If punitive damages were granted that violate German public policy, then a judgment would not be declared enforceable. However, that analysis will be strictly separated from the analysis at the service stage, and service in such a matter does not per se violate public policy. Service cannot be stopped on the basis that the US matter is a class action, that it will lead pre-trial discovery or that it allows for punitive damages. A recent case discussing and dismissing all three arguments is a 2009 judgment of the Düsseldorf Court of Appeals that allowed service in a South African Apartheid litigation matter in New York.

Therefore, the more recent cases primarily deal with the question whether the foreign action falls within the scope of the Hague Service Convention.

For example, the Frankfurt Court of Appeals has held in a judgment in December 2009 that an order made by the President of the Court in his capacity as the Central Authority, which allowed service of a summons originating from the United States District Court, Eastern District of Virginia, in relation to civil penalties under the False Claims Act should not have been made. The court held that civil penalties do not fall within the definition of “civil or commercial matter” of the Hague Service Convention. This ruling of the Court of Appeals then means that from a German perspective, the service was invalid, even if compliant with the Hague Service Convention procedure.

This judgment, by the way, also illustrates that the various central authorities across the country may reach different conclusions. The President of the Munich Court of Appeals in the same matter had not allowed service on parties domiciled in Bavaria in the first place, saving the Bavarian defendants the effort of challenging the execution of the US service request.

The question what constitutes a civil or commercial matter arose in two other cases that both had anti-trust elements.

One matter in the High Court in Auckland, New Zealand, had been brought by New Zealand’s Commerce Commission. In substance, it was a competition and anti-trust matter which could have led to penalties against the German party. The Frankfurt Court of Appeals in 2010 held that not withstanding the fact that New Zealand treated the matter as commercial and the High Court entered hat it into the Commercial List, it did not qualify as a civil or commercial matter for the purposes of the Hague Service Convention. The service accordingly was held to be invalid.

It is interesting to compare this case with a 2008 Düsseldorf case. The service request originated from a US private enforcement action in an anti-trust matter. The German Federal Cartel Office (Bundeskartellamt) has fined the German defendants for anti-competitive behaviour, and the US parties alleged that they were victims of the cartel, seeking treble damages in the US. As the US claimants were private parties, unlike the New Zealand claimant, the matter did qualify as a civil action, and service was held to be valid.

In short, the case law that developed in Germany over the last couple of years provides robust guidelines on how to deal with US service requests. German courts will allow service in all civil and commercial matters, the peculiar and often frightening aspects of US law and civil procedure that were invoked as a defence notwithstanding.

The post Judicial Review under the Hague Service Convention in Germany 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.

In a series of judgments on July 3 and July 17, 2012, the Federal Supreme Court (Bundesgerichtshof) has ruled on the compatibility of deemed service under German law with the Hague Service Convention. The Court held that only the first court document in a dispute must be served pursuant to the Hague Service Convention. Any subsequent service of court documents can be by post, in accordance with the provisions of domestic German law. Section 184 of the German Civil Code (ZPO), according to which “two weeks after it has been mailed, the document shall be deemed served,” applies to service of such documents. In the cases before the Federal Supreme Court, default judgments were served by post, and the time period for filing a protest (Einspruch) was determined on the basis of deemed service.

The facts in all five cases were as follows: Actions were brought in Germany against defendants in Turkey. The courts issued an order that required the defendant to file its intention to defend the action (Verteidigungsanzeige) and to appoint an authorised recipient in Germany (im Inland ansässiger Zustellungsbevollmächtigter; [section] 183 ZPO) within two weeks from receipt of service. The court order set out the legal consequences of failing to comply with the order, in particular, the risk of a default judgment.

The Turkish defendants ignored these deadlines, and default judgments were issued. These judgments were then not served under the Hague Service Convention, but posted to the defendant’s address in Turkey. Protest against the default judgment had to be filed within two weeks from receipt. The defendants took no action. In each case, the claimants subsequently asked the court to effect service of the default judgment for a second time, apparently to comply with enforcement requirements outside Germany. Service was effected a second time, in some cases under the Hague Convention, in others using the diplomatic route and it was only then that protests were filed. If [section] 184 of the ZPO applied, however, the time period for the protest would be calculated from the day of posting the default judgments, and the protest was to be dismissed as too late.

And this is exactly what happened: All protests were dismissed, and the dismissal was upheld upon appeal by the Court of Appeals (Oberlandesgerichte) in Stuttgart and Cologne, respectively, and upon further appeal by the Federal Supreme Court. The court held that the Hague Convention did not require formal service of the default judgment: If formal service abroad was required, then, but only then, the Convention applies. But the question whether the default judgments required formal service was for domestic law to decide, and under domstic law, service by post was permitted (“Das HZÜ steht der Anwendbarkeit des [section] 184 ZPO danach schon deshalb nicht entgegen, weil dort nur die Modalitäten einer Auslandszustellung geregelt sind [ellipsis], nicht aber die Frage, ob überhaupt eine förmliche Zustellung im Ausland vorzunehmen ist. Letzteres ist vielmehr durch das nationale Recht autonom zubeantworten.”).

The second event of service was held to be irrelevant for the purposes of calculating the time limit. Neither did it extent the previous period, nor did it trigger a new period. The court finally considered whether the right to a fair trial under German law and Art. 6 of the European Convention on Human Rights required a different interpretation of the law. It held that the concept of deemed service did not violate the foreign defendants’ right to a fair trial or any international agreements with Turkey. The default judgments hence had become res judicata, and fully enforceable.

The jurisprudence of the Federal Supreme Court applies to cross-border litigation with any Hague Service Convention jurisdiction. Foreign defendants ignore the order to enter a notice to defend and to appoint an authorised recipient in Germany at their peril, as any subsequent document, however important and time-critical, may be subject to deemed service. The foreign defendant would need to refute the statutory presumption of service, which is a fairly high threshold to overcome. However, as other cases have shown, it can be done.

Here is the link to one judgment, file no. VI ZR 222/11 dated July 17, 2012. The others are file no. VI ZR 226/11 and VI ZR 288/11 dated July 17, 2012 and VI ZR 227/11 and VI ZR 239/11 dated July 3, 2012.

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