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Service Under The Hague Convention

Service Of Process Under The Hague Convention, Claims For Relief, And The Statute Of Repose

Douglas B. Abrams

I. Service Of Process Under The Hague Convention

The Hague Convention provides one basis for the exercise of personal jurisdiction over Foreign Corporations. Hague Service Convention, T.I.A.S. No. 6638, 20 U.S.T. 361 (1965). Where the Hague Convention applies, it will provide the mandatory means for service of process. See Schlunk v. Volkswagenwerk Aktiengesellscaft, 486 U.S. 694 (1988); See Also, Soiret, The Foreign Defendant: Overview of Principles Governing Jurisdiction, Venue, Extraterritorial Service of Process and Extraterritorial Discovery in U.S. Courts, Tort and Insurance Play Journal, Volume XXVIII, Number 3, at pages 549-51 (1993). Attempts to effect service in contravention of the Hague Convention runs the risk of a later determination that the service of process was void. Numerous Federal Court Opinions have held that service through the mails is an appropriate method for service of process pursuant to Alternative A of the Hague Convention. See United States District Court, Middle District of Tennessee, Nashville Division, No. 3860936, filed September 2, 1987 (A copy of which is attached); Creasey v. American Honda Motor Company, Inc., No. 861202, rendered February 26, 1987; Lemme v. Wine of Japan Import, Inc., 631 F.Supp. 456, 46364 (E.D.N.Y. 1986); Weight v. Kawasaki Heavy Industries Ltd., 597 F.Supp. 1082, 108586 (E.D. Va. 1984); Shoei kako Company v. Superior Court, 33 Cal.App.3d 808, 821, 109 Cal. Rptr. 402, 411 (1973). Specifically, these Courts have ruled that direct service upon a Japanese Defendant is entirely within the ambit of the Hague Convention. In Creasey v. American Honda Motor Company, Inc., Judge Todd of the Western District of Tennessee considered the issue of whether a Plaintiff may use the United States mail to serve a Japanese Defendant. Judge Todd asserted:

Defendants are Japanese corporations whose principal places of business are in Japan. Defendants claim that plaintiff did not serve process in accordance with the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters, popularly known as the “Hague Convention.” 20 U.S.T. 361, T.I.A.S. No. 6688, reprinted in 28 U.S.C.A. Fed. R. Civ. P. 4, app. at 87101 (West Supp. 1985).

Both the United States and Japan are signatories to the Hague Convention. The convention is a treaty which specifies the procedures to be employed in serving process on the foreign nationals. DeJames v. Magnificence Carriers, Inc., 654 F.2d 280, 288 (3rd Cir. 1981). The Hague Convention also provides for alternatives to its internal mechanisms for service:

[p]rovided the State of destination does not object, the present Convention shall not interfere with

(a) the freedom to send judicial documents, by postal channels, directly to persons abroad,

(b) the freedom of judicial officers, officials or other competent persons of the State of origin to effect service of judicial documents directly through the judicial officers, officials or other competent persons of the State of destination,

(c) the freedom of any person interested in a judicial proceeding to effect service of judicial documents directly through [sic] the judicial officers, officials or other competent persons of the State of destination.

Art. 10, 20 U.S.T. at 363. Japan ratified the Hague Convention on July 7, 1970, but voiced its objections to alternatives (b) and (c) set out above. . .

As noted, Japan did not object to alternative (a) of the Hague Convention. Nevertheless, Defendants argue that alternative (a) does not authorize the service of documents of process by mail. Defendants theory centers on the word “send” in alternative (a); they argue that “send” does not mean “serve,” and therefore service by mail is prohibited. Some Courts have agreed with Defendants’ theory. See Pochop v. Toyota Motor Company,111 F.R.D. 464, 466 (S.D. Miss. 1986); Mommsen v. Toro Co., 108 F.Supp. 444 (S.D. Iowa) 1985); Reynolds v. Koh, 490 N.Y.S.2d 295, 297 (1985); Ordnandy v. Lynn, 122 Misc. 2d 954, 472 N.Y.S.2d 274 (1984). However, this court respectfully declines to follow these decisions. It appears to this court that the better reasoned view would allow service of process by mail under alternative (a). Alternative (a) is included in a section of the treaty which is devoted entirely to mechanisms by which service of process may be made. To hold that the choice of the wordsendin the provision was calculated to exclude service of process would require that the word be taken totally out of context and given a strained construction. This court is joined by other Courts in finding that such an interpretation would be illogical and unwarranted. Accord, Lemme v. Wine of Japan Import, Inc., 631 F.Supp. 456, 46364 (E.D.N.Y. 1986); Weight v. Kawasaki Heavy Industries Ltd., 597 F.Supp. 1082, 108586 (E.D. Va. 1984); Chrysler Corp. v. General Motors Corp., 589 F.Supp. 1182, 1206 (D.D.C. 1984); Shoei Kako Company v. Superior Court, 33 Cal.App.3d 808, 821, 109 Cal. Rptr. 402, 411 (1973). Accordingly, this Court holds that plaintiff properly served process under the Hague Convention by mailing the summons and complaint directly to the defendants in Japan. (Emphasis Added).

This position is the majority opinion throughout the United States. On the other hand, the position taken by Courts has not been unanimous. See Order of United States District Judge W. Earl Britt in Klauser v. Honda Motor Company, Ltd., No. 87-111-CIV-4. Perhaps the most common method of following the terms of the Hague Convention is to have the Clerk of Court sign and issue the completed Request for Service of Judicial or Extrajudicial Documents.

Steps For Service Pursuant To The Hague Convention[1]

1 Draft Complaint
2 Do not submit discovery upon Minister of Foreign Affairs
3 Discovery can be submitted directly upon foreign defendant
4 Complete Request for Service of Judicial or Extrajudicial Documents
5 Complete Summons stating service by Federal Express (two for each defendant to be served upon (1) Minister of Foreign Affairs and (2) foreign defendant)
6 Complete Federal Express forms (service from clerk to (1) Minister of Foreign Affairs and (2) foreign defendant)
7 Send all documents to Clerk for filing
8 Clerk will send out Summons, Request & Complaint to foreign defendants (per your request)
9 After @ 7 days call Federal Express for status of service and get delivery record
10 Translate filed Summons, Request & Complaint
11 Repeat steps 7, 8 & 9
12 Continue to get A&P Summons issued

Another proper method of service is to serve a subsidiary corporation. See Also, Soiret, The Foreign Defendant: Overview of Principles Governing Jurisdiction, Venue, Extraterritorial Service of Process and Extraterritorial Discovery in U.S. Courts, Tort and Insurance Play Journal, Volume XXVIII, Number 3, at pages 549-51 (1993). Service within the forum state is not governed by the Hague Convention. Courts have recognized that foreign corporations frequently conduct extensive business throughout the United States by use of subsidiary corporations. See Schlunk v. Volkswagenwerk Aktiengesellscaft, 486 U.S. 694 (1988). There are two basic grounds for permitting service of process on a foreign corporation through its subsidiary: (1) the subsidiary corporation was the actual or apparent agent of the parent corporation for purposes of conducting the business of the parent corporation, and (2) if the parent exerts “dominion” or “control” over the subsidiary corporation, the corporate distinctions are disregarded for purposes of exercising jurisdiction and for purposes of service of process. Soiret, The Foreign Defendant: at pages 550-51. The reliance on an agency relationship or a form of piercing the corporate veil carries the risk that either the trial court or a subsequent appellate court will find inadequacy of service of process. For example, in Turick v. Yamaha Motor Corporation, the Court granted a Motion to Dismiss based upon insufficiency of service. Turick v. Yamaha Motor Corporation, 121 F.R.D. 32 (S.D.N.Y. 1988). The Turick Court first analyzed the Plaintiff’s contentions that the subsidiary relationship was sufficient. In finding that the service of process was not sufficient in this case, the Turick Court observed:

[1] Although defendants concede YMUS is a subsidiary of YMC, a parent subsidiary relationship does not necessarily establish an agency for the purpose of receiving process. See Lamb v. Volkswagenwerk Aktiengesellschaft, 104 F.R.D. 95, 98 (S.D.Fla.1985) (quoting Jones v. VWOA, 82 F.R.D. 334, 335 (E.D.Tenn.1978)); see also Heise v. Olympus Optical Co., Ltd., 111 F.R.D. 1, 6 (N.D.Ind.1986). Further, once the validity of service has been contested, the plaintiffs have the burden of proving proper service, and “as such, plaintiffs must establish the agency of the person or entity receiving process.” Lamb, supra, 104 F.R.D. at 98 (quoting Richardson v. Volkswagenwerk, A.G. v. Stephenson, 552 F.Supp. 73 (W.D.Mo.1982)).

*34 Lamb involved a suit against Volkswagenwerk Aktiengesellschaft (“VWAG”), a German company, and its subsidiary Volkswagen of America, Inc. (“VWOA”). In response to defendant’s motion to dismiss for lack of sufficient service of process, the plaintiffs produced “voluminous documents and overwhelming evidence bearing on the degree of control that VWAG exercise[d] over VWOA…. [T]hey established that VWAG exercised the degree of control necessary to uphold service upon VWOA as an agent of VWAG.” Lamb, supra, 104 F.R.D. at 99. Conversely, in three prior actions involving the same defendants, VWOA and VWAG, “plaintiffs [had] failed to present evidence to counter the affidavit submitted by the defendant in support of the contention that VWOA and VWAG were separate corporations….” Id. (citing Ex Parte Volkswagenwerk Aktiengesellschaft, 443 So.2d 880, 88485 (Ala.1983)). Therefore, in the prior actions, VWOA was not found to be an agent of VWAG.

In the present case, the plaintiffs’ attempt to meet their burden of establishing an agency relationship between YMC and YMUS consists of a conclusory statement, which is unsupported. Plaintiffs have failed to meet their burden establishing an agency relationship for purposes of receiving process. Hence, service on YMC, a foreign corporation, is governed by the Hague Convention.

Turick, 121 F.R.D. at 33-34. The lesson of the Turick case is that in order to serve a subsidiary properly, the facts and the record must establish (1) sufficient domination or control by the parent corporation to permit service or (2) sufficient evidence of agency to permit service.

As a practical matter, in a situation in which a potential statute of limitations is approaching, the attorney should consider perfecting service by (1) service through the Minister of Foreign Affairs or other designated body; (2) Federal Express service upon the actual Defendant; and (3) service upon a subsidiary. Similarly, use of translated documents avoids at least the technical argument of the failure to properly comply with the Hague Convention. Several computer programs are available which will translate the Complaint from English into other languages. Because the purpose of the Hague Convention is to provide notice to a potential foreign defendant, defendants can scarcely argue that the translation itself was inadequate. In countries, such as Japan, the Minister of Foreign Affairs all too frequently delays submitting the documents to the defendant. On occasion, a letter to a Congressperson with a copy to the Minister of Foreign Affairs can expedite the situation. It is remarkable how the Japanese Minister of Foreign Affairs can suddenly locate corporations such as Toyota or Honda after receiving a copy of such a letter.

II. Statutes Of Repose

A. Historical Perspectives Of The Statute Of Repose

In the mid-1970’s efforts were generated by some special interest groups to enact so-called Products Liability Acts in order to restrict consumer’s rights. Despite the evidence that Statutes of Repose were unrelated to increasing cost of liability insurance and were uniformly unjust, some state legislatures enacted Statutes of Repose. See North Carolina General Statute ‘ 1-50(6). As a result of massive political pressure in some states, several states enacted statutes of repose. When examined under constitutional analysis, statutes of repose should never be condoned. Fortunately, a number of Courts rejected the political pressure associated with statutes of repose and ruled the statutes of repose unconstitutional. A sample of those cases include:

Statute Of Repose – Found To Be Unconstitutional

Idaho Olson v. J.A. Freeman,
791 P.2d 1285 (1990)
Statute is 10 years or reasonable expectable life, whichever is sooner
Rhode Island Kennedy v. Cumberland Eng.,
471 A.2d 195 (1984)
10 years
South Dakota Daugaard v. Baltic Coop.,
349 N.W.2d 419 (1984)
10 years
Utah Berry v. Beech Aircraft,
717 P.2d 670 (1985)
6 years
Kansas Miller v. G.W. Electric,
734 F.Supp. 450 (1990)
10 years of reasonable safe life whichever is shorter

See Dennis, Product Liability Statutes of Repose as Conflicting with State Constitutions: The Plaintiffs are Winning, 26 Ariz. Law Review 363 (1984). Statutes of Repose were typically stricken based upon their violation of a citizen’s right to access to the Courts. As Dennis observed in Products Liability Statutes of Repose, the basis for the right to access to the Courts derives from chapter 4 of the Magna Carta, and State Constitutions adopted this provision. Dennis, Products Liability Statutes of Repose, 26 Ariz. Law Review at page 367. Perhaps only in the law could an otherwise educated person suggest that logic permits a manufacturer of a defective product to gain immunity from the consequences of manufacturing and selling the product merely because a by-stander to an exploding vehicle had the misfortune of driving to work that day. The proponents of Statutes of Repose rest their argument upon an implicit assertion that society and the individual’s rights are less significant than the need of Corporate America to rest peacefully in the knowledge that the worst product made can be excused after a specific period of time.

The remarkable fact is that any Court would approve a Statute of Repose rather than the fact that the majority of Courts which have considered this issue have rejected Statutes of Repose. Under legislation now passed by the United States House of Representatives, a national statute of repose has been included. See H.R. 1075 (draft)(Due to the number of amendments, this version of H.R. 1075 is only a draft version. This draft version is included for informational purposes only). Section 108 Statute of Repose provides for a fifteen year statute of repose. This section applies only if “the Court determines that the claimant has received or would be eligible to receive full compensation from any source for medical expense losses. Moreover, this section does not apply where express warranties are given until the expiration of the express warranty or where there is a physical injury which does not ordinarily appear less than 15 years after the first exposure to the product.”

B. Practical Considerations With Respect To Statutes Of Repose

States which have found statutes of repose to be unconstitutional may also refuse to apply another State’s statute of repose. These Courts correctly apply conflicts of laws considerations in refusing to be compelled by the jurisprudence of another state to apply an unconstitutional provision. For example, in Rhode Island, a typical statute of repose was held unconstitutional. Later, in a case arising out of the State of North Carolina, the Rhode Island Court refused to apply North Carolina’s Statute of Repose. Instead, the Rhode Island Court ruled that it would not enforce North Carolina’s Statute of Repose to bar a Plaintiff’s claim. Kennedy v. Cumberland Engineering Company, Inc., 471 A.2d 195 (1984). If in personam jurisdiction can be obtained in Rhode Island, or some other state which correctly refuses to apply unconstitutional statutes of repose, a Plaintiff would have a viable claim. The sad irony of the situation cannot be overlooked — some states like Rhode Island care more about the safety rights of North Carolina and Tennessee citizens than either North Carolina or Tennessee. Also, some Courts will view a statute of repose as a procedural and not substantive rule of law and therefore will apply the statute of limitations of the forum state. Thus, In Etheredge v. Genie Industries, the Alabama Supreme Court held that North Carolina’s Statute of Repose would not apply in a case brought in Alabama, but which occurred in North Carolina. The Alabama Court invoked the rule of lex locii and refused to apply North Carolina’s product liability statute of repose. Etheredge v. Genie Industries, 632 So.2d 1324 (1994). The Etheredge Court reasoned:

[6] Because we hold N.C.G.S. s 150(6) to be procedural, it does not apply to this action. We therefore must decide what statute of limitations is applicable to this action. The forum applies its own procedural laws. Leflar, supra, at 331. We hold that Ala.Code 1975, s 6238(l ), the catch all provision, imposing a two year limitations period on actions seeking damages for personal injury, is applicable in this case. Section 6238(l ) states: “All actions for any injury to the person or rights of another not arising from contract and not specifically enumerated in this section must be brought within two years.” Etheredge filed his complaint within two years after he was injured; therefore, his action is not barred.

Etheredge v. Genie Industries, 632 So.2d 1324 (1994). Similarly, some statutes of repose are not absolute bars. For example, under Georgia Law, a plaintiff must bring a lawsuit within 10 years of the initial purchase of the product, unless (1) there was a continuing duty to warn based on subsequent information or (2) the conduct of the Defendant amounted to wanton and wilful misconduct. See Morgan v. Sears, Roebuck and Company, 700 F.Supp. 1574 (1988)/ In Arizona, a 12 year statute of repose applies to strict liability and breach of warranty claims, but not to claims based upon negligence or express warranty. Arizona Revised Statute Annotated section 12-551 (1978).

Statutes of repose may also have a saving provision for the protection of minors or persons who were rendered incompetent. For example, under North Carolina law, the sessions laws which incorporated North Carolina’s Model Products Liability Act, excluded claims for minors. This exclusion should be interpreted to completely obviate the effects of the Statute of Repose. North Carolina General Statute section 1-50(6). Under a recent North Carolina Court of Appeals decision, the Court in dictum gave a narrower interpretation of the effect of minority on the Statute of Repose. Bryant v. Adams, 116 N.C. App., 448 S.E.2d 832 (1994). In Bryant, the North Carolina Court of Appeals ruled that minority would toll the application of the Statute of Repose if the injury occurred before the product was six years old. This limited interpretation was dictum in the case and runs contrary to the express language of the North Carolina Sessions Laws.

Moreover, not every case involving a product amounts to a products liability claim. Some cases may arise not from the defective condition of a product, but from another entity’s misapplication of the product. For example, a seller may sell a product which is inappropriate for a specific use. The claim against the seller is not necessarily a “products liability claim.”

Additionally, the substantive law which applies in a given case may depend upon the forum state’s view of conflicts of laws rules. Some states apply a lex loci rule, in which the substantive law of the state where the injury occurred will govern. Even in lex loci states, the Uniform Commercial Code generally has been adopted. Under the Uniform Commercial Code, a “significant contacts” rule or “significant interest” rule has been adopted. In those states, negligence claims would be determined by lex loci, while strict liability claims and breach of warranty claims would be governed by the “significant interests” test. A practical example comes for an actual case. A driver who was a Texas resident, came to North Carolina in order to look for work during a time of economic downturn in Texas. The North Carolina driver is given a tractor-trailer rig which was manufactured in Illinois and sold by a Virginia Corporation to a North Carolina dealer. The trailer was used for several years and was sold on more than three occasions. Ultimately, a North Carolina dealer sold the trailer to a North Carolina trucking firm. The Plaintiff was given the trailer to drive a load interstate to New York. In New York, the sliding tandem bogey came detached from the trailer as a result of a structural modification and the trailer overturned. In the process, the Plaintiff received devastating personal injuries. A lawsuit was initiated in Texas and in North Carolina based upon the defective condition of the trailer due to the structural modifications. The trailer was more than six years old and therefore was beyond the North Carolina statute of repose period. The North Carolina Court of Appeals agreed that negligence claims were governed by New York law, including the fact that New York did not impose a statute of repose. Therefore, the negligence claim was not barred. Terry v. Pullman, 92 N.C.App. 687, 376 S.E.2d 47 (1989). The North Carolina Court of Appeals also held that strict liability claims were governed by lex loci. The North Carolina Court of Appeals further held that the “significant interests” rule applied to breach of warranty claims and held that North Carolina had the most significant interest in the case. Terry v. Pullman. The analyses used in Terry v. Pullman is instructive as to the factors Courts will consider in determining which state’s law to apply. The following factors should be considered, among others:

(a) the needs of the interstate and international systems;

(b) the relevant policies of the forum;

(c) the relevant policies of other interested states and relative interests of those states in the determination of the particular issue;

(d) the protection of justified expectations;

(e) the basic policies underlying the particular field of law;

(f) curtaining, predictability and uniformity of result; and

(g) ease in determination and application of the law applied.

Id. at 690-691, 376 S.E.2d at 49-50. As the Terry Court noted, with respect to policies of the forum and other states, “the state where the accident occurred has a greater interest in having its law apply in a tort case than in a breach of warranty action where the sale and distribution occurred elsewhere.” Id. at 693, 376 S.E.2d at 50 (emphasis added). The Terry Court further reasoned that “Businesses have a justifiable expectation that the law of the state where the goods were sold and distributed will govern the warranties they impliedly or expressly extend.” Id. at 693, 376 S.E.2d at 51.

Additionally, where a manufacturer submits later owner’s manuals, negligence in failing to provide proper instructions in the subsequent manual will be a basis for relief. Other exceptions to a statute of repose would include re-engineering or remanufacturing of a product. Similarly, where a repair company on a textile machine

comes to work on the machine and as part of the work redesigns the machine and fails to bring the textile machine into OSHA compliance, a valid claim would exist, even where the machine was beyond the statute of repose period.

Another factor to look for in determining which law may apply in a given case is the warranty documentation. Some warranty documents include a choice of laws provision. A defendant who drafts a document including a choice of law provision can scarcely object to the Court’s enforcing that provision.


A. Steps for Service Pursuant to Hague Convention

List of Foreign Defendants 1

List of Ministers of Foreign Affairs……. 2

Request for Service Abroad of Judicial or Extrajudicial Documents 3

Letter and Certificate Showing Proper Service on Foreign Defendant. 4

Summons for Foreign Defendant. 5

International Federal Express Air Waybill…… 6

Rule 4(j3) 7

Letter to Clerk……… 8

APS Legal Support Handbook 9

Federal Express Delivery Record…. 10

Affidavit of Service by Federal Express. 11

B. Miscellaneous

Letter to Congressman 1

H.R. 1075 (draft) 2

See Appendix A for more detailed outline of service under the Hague Convention.