Service of Process in Arbitration Enforcement Actions
G. EVAN SPENCER Associate
NOE S. HAMRA Associate
Adding to the complexity of Hague service, some countries that have ratified the Hague Convention maintain objections to specific provisions. For example, China, Germany, South Korea, and Brazil object to Article 10( a), and thus do not permit service by mail. Japan, on the other hand, objects to Article 10( b) and( c), so does not agree to service through Japanese judicial officers or officials. The resulting morass of rules and protocols, even among member countries, frequently and frustratingly leads to ineffective service of process in enforcement actions.
Maritime disputes often find their way to arbitration. Whether the arbitrations are sited in the United States or another country, collection of arbitration awards frequently requires that the prevailing party initiate a civil lawsuit to recognize and enforce the arbitration award in a U. S. federal court. In instances where the award debtor is foreign, serving process pursuant to U. S. rules often presents a significant hurdle to enforcing the award.
Rule 4 of the Federal Rules of Civil Procedure(“ FRCP”) provides that service of process can be effected on a foreign defendant by any internationally agreed means that is reasonably calculated to give notice or, if no such agreed means exists, by service reasonably calculated to give notice that is in compliance with the foreign country’ s laws or in a manner otherwise not prohibited by that country’ s laws or international agreement. Without effective service of process, U. S. courts are usually reticent to award a default judgment, and may be forced to grant a motion to dismiss under FRCP Rule 12( b).
The most common internationally agreed means of service arises under the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters(“ Hague Convention”). The Hague Convention provides for service through a ratifying country’ s Central Authority, which is the governmental body designated to facilitate service of process. Service via the Central Authority is reliable and relatively cost effective, but can take a significant amount of time— sometimes more than six months— to accomplish, leading to increased delay and expense in enforcement actions.
For those countries that have not ratified the Hague Convention and have not adopted another internationally agreed means of service( such as the Inter-American Convention on Letters Rogatory and Additional Protocol), local laws governing service of process can make the process anything from impractical to impossible. Often, local laws prohibit service by reliable and cost-effective means like personal service or service by mail, leaving creditors practically without the ability to enforce the award in the United States.
Fortunately, by its enactment of the Federal Arbitration Act(“ FAA”) the U. S. enjoys a strong policy favoring arbitration, which has resulted in an alternative option— service as provided for in the arbitration agreement.
Fortunately, by its enactment of the Federal Arbitration Act(“ FAA”) the U. S. enjoys a strong policy favoring arbitration, which has resulted in an alternative option— service as provided for in the arbitration agreement.
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1. TVL International, LLC v. Zhejiang Shenghui Lighting Co., Ltd., CIVIL ACTION NO. 3:19-CV-393-RJC-DCK, 2021 WL 830181( W. D. N. C. March 4, 2021).
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