The highest court in the state of California is set to review whether or not a lower court’s decision to reverse a $414 million award granted in arbitration due to improper service was correct. The multi-million dollar award was given to an American partnership but later reversed when the Chinese business entity involved claimed it was not served properly.

 

The case is Rockefeller Technology Investments (Asia) VII v. Changzhou Sinotype Technology Co., Ltd. The companies entered into an agreement that included a clause by which parties would provide notice in English via Federal Express or some other type of mail courier service in the event of a business dispute between them.

 

International Service

 

The Hague Service Convention is a multilateral treaty adopted in 1965 by member states to the Hague Convention on Private International Law. The purpose of the Hague Service Convention was to provide international litigants with a reliable and efficient manner in which to serve documents on parties that are living, operating, or based in another country. The provisions apply to service of process in civil and commercial matters but not criminal ones.

Under the Hague Service Convention, each state must designate a central authority to accept incoming service requests. Then, a judicial officer competent to serve process in the origin country is allowed to send the request directly to the central authority of the country where service is to be made. Once received, the central authority in the receiving state arranges for service of process in the manner permitted in that country. Once service is effected, the central authority sends a certificate of service to the judicial officer who made the service request.

 

For those states who are not party to the Hague Service Convention, the service of legal documents occur through diplomatic channels and effected by a letter rogatory – a formal request to issue a judicial officer from a court in the state where the proceedings have started to be served by the originating court to the foreign ministry in the country of origin. This process is even longer than the one required by the Hague Service Convention typically going from the foreign ministry of the originating country to the one in the designated country, then to the local court, then an order is issued to allow service, then a certificate of service is issued. The certificate of service would pass through the same channels, but just in reverse order.

 

It is not uncommon in international business practices for companies to include a similar workaround in their agreements to avoid the requirements of service via the Hague Service Convention or Letters Rogatory. The purpose of this workaround is to limit the expenses associated with litigation and avoid delays typically associated with international service, which can take up to six months.

 

The Case at Hand

 

In Rockefeller Technology, the monetary award was granted after the defendant Changzhou never showed up to arbitration. A California trial court confirmed the award when the defendant once again failed to appear. When Changzhou sought to dismiss the award, the judge refused to do so because the parties had privately agreed to the service by mail. Because the Hague Service Convention does not allow individuals to be served by mail – nor does it allow them to accept these terms, the California Court of Appeals reversed the ruling noting China had filed objections to the provisions of the Hague Service Convention addressing other methods of service, which included service by mail.

 

The California Supreme Court’s review of the case is particularly important as it highlights the close examination over the use of the Hague Convention in countries where service via the postal service is not considered valid. Not surprisingly, based on the outcome of the California Supreme Court’s decision in the matter – and any other subsequent decisions by a higher court – American companies that have international contracts may want to reconsider how those agreements are written when it comes to addressing service of process in the event of a business dispute.

Generally speaking, service of process is the procedure by which a party to a lawsuit provides notice of the start of a legal action to the party being sued so that the court can exercise jurisdiction over that party and the case. Georgia’s Rules of Civil Procedure as well as the Federal Rules of Civil Procedure lay out the numerous ways in which process may be served upon a defendant to a lawsuit. There are several traditional manners of service. These include personal service by a process server, substituted service, mail service, or service through publication. With the evolution of technology, this notice requirement has expanded to more innovative means including email, fax, and – most recently – social media.

Service of Process Through Social Media Works

When defendants flee to a foreign country or make it difficult to be located, on point of contact likely stays available – social media. Our global society is a connected one, with more than 2.2 billion active Facebook users, 1 billion active Instagram users, and more than 330 million active Twitter users in the world. Accordingly, while physically finding someone may prove to be difficult, especially if the person is located in a foreign country, at the very least, social media provides a medium by which a person may be contacted.

In the past, courts across the country have allowed litigants to serve process on parties to a lawsuit via email. Accordingly, it is not surprising that litigants are also looking to use a defendant’s social media account to serve process after traditional methods of service of process have proven either ineffective or impossible. In 2015, a New York court noted that the “next frontier” in the area of service of process was the use of social media to deliver a summons to a party to a lawsuit. In New Jersey, a trial court allowed a defendant to be served with process via his Facebook account. A San Francisco court approved service on a Kuwait national via Twitter.

That being said, some courts across the country have denied applications to effect service of process through a defendant’s social media account when a plaintiff has failed to show a basis for the need of alternative means of service stipulated in the applicable rules of procedure.

Establishing Alternative Means are Necessary

As can be seen by the examples above, it seems that under the right circumstances, requests to use a defendant’s social media account as an alternative means of effectuating service of process will be granted by a U.S. court. The different decisions by U.S. courts, however, suggest that the plaintiff must meet his or her burden to show that traditional methods of service were impossible or ineffective and the alternate means will effectively put the defendant on notice. Accordingly, plaintiff’s counsel must give serious consideration and time to researching the defendant’s social media presence during pre-suit investigation of facts. This information will be critical if the defendant later tries to avoid service when more traditional methods are used.