The case of the day is Firstbank Puerto Rico v. Atlantic Finance Business Corp. (D.P.R. 2014). Firstbank sued Atlantic Finance and Leovigildo Perez–Minaya for breach of contract. The defendants were served with process in the Dominican Republic, which is not a party to the Hague Service Convention or the Inter-American Convention.
Continue reading Case of the Day: Firstbank Puerto Rico v. Atlantic Finance Business Corp.
Welcome back, and happy new year! The case of the day is Concesionaria Dominicana de Autopistas y Carreteras v. Dominican State (D.D.C. 2012). In 2001, the Concesionaria Dominicana de Autopistas y Carreteras (CODACSA) entered into a contract with the government of the Dominican Republic to develop several highways. Under the contract, CODACSA was entitled to collect tolls in exchange for financing and construction work. But according to CODACSA, the government breached the contract by failing to provide required bank guaranties. CODACSA initiated an arbitration before the Arbitration Court of the ICC in Washington, and the tribunal found that the Dominican Republic had breached the contract and awarded more than $33 million in damages.
CODACSA moved to confirm the award in the District of Columbia. It served the papers on the Dominican Republic by private courier (DHL), and while the Republic accepted service, it did not respond to the petition. CODACSA then sought a default judgment.
The judge found that he had jurisdiction. He had subject-matter jurisdiction because under 28 USC § 1605(a)(6)(B), there is no sovereign immunity from jurisdiction “in any case … in which the action is brought … to confirm an award made pursuant to … an agreement to arbitrate, if … the agreement or award is or may be governed by a treaty or other international agreement in force for the United States calling for the recognition and enforcement of arbitral awards.” He had personal jurisdiction because the courts have personal jurisdiction over all actions against foreign states in which subject-matter jurisdiction exists and service of process has been effected.
The judge found that CODACSA was entitled to confirmation. Since the Dominican Republic had defaulted, it had not even sought to argue that any exceptions to the the requirement of confirmation applied. But under 28 USC § 1608(e), a court can enter a default judgment against a foreign state only where the claimant established its claim “by evidence satisfactory to the court.” The judge undertook his own review of the record and found that CODACSA had proved its case. Easy case.
The case of the day, U.S. Commodity Futures Trading Commission v. Aliaga (S.D. Fla. 2011), involves alternative means of service where the defendant is in a country not party to a convention on service of process. The government alleged that Claudio Aliaga swindled retail investors in a Ponzi scheme supposedly involving investments in the foreign exchange markets. The government obtained a temporary restraining order, but the Marshal was unable to serve the TRO on Mr. Aliaga or his wife, Betty (who was sued on an unjust enrichment theory but who was not alleged to have committed fraud) at their last known addresses in Florida. The government sought to communicate with Mr. Aliaga by email, sought to serve process on his lawyer, who was not authorized to accept service, and sought to locate the Aliagas by making inquiries with the Postal Service and the Customs and Border Protection bureau. The government’s investigation suggested that the Aliagas were now living in the Dominican Republic, which is not a party to the Hague Service Convention or to the Inter-American Convention. It sought leave to serve Claudio Aliaga and his company and Betty Aliaga by service on Mr. Aliaga’s local counsel and by email.
Under Rule 4(f)(3) of the Rules of Civil Procedure, service on a person in a foreign country is permissible “by other means not prohibited by international agreement, as the court orders.” Such service must, of course, also comply with the Due Process Clause.
The court held that since the Dominican Republic was not party to any convention on service of process, service by email or by service on local counsel did not violate any international agreement. Given that the government’s investigation gave reasonable grounds for believing that certain email addresses belonged to the Aliagas, and given that Claudio Aliaga’s attorney had filed a motion to dismiss and thus was evidently still in communication with his client, the court held that service by email and by service on the attorney was proper as to Claudio Aliaga. But because there was no evidence that the Aliagas were living together or in communication with one another, and because the attorney did not represent Betty, the court held that the proposed means of service did not comport with due process as to her.