Monday, October 3, 2011

Lessons learned about the Hague Service Convention

On November 15, 1965, members of the Conference on Private International Law met in The Hague, Netherlands, and signed a multi-lateral treaty called The Convention On The Service Abroad Of Judicial And Extra-Judicial Documents In Civil Or Commercial Matters (commonly referred to as the "Hague Service Convention" or the "Convention"). Among the stated purposes of the Convention were: (a) the need to create appropriate means to ensure that one contracting state's judicial and extra-judicial documents being served abroad would be brought to the attention of the addressee of such documents located in another contracting state "in sufficient time"; and (b) to improve "mutual judicial assistance" by simplifying and expediting the procedures around the service of documents .
To many observers in 1965, these goals had to be achieved if divergent legal systems were to follow the path that international commerce had begun to pave. Prior to the enactment of the Hague Service Convention, service abroad of Ontario's judicial documents in civil cases was generally effected by means of letters rogatory. These letters are a formal request from an Ontario court to a foreign court asking that court to give formal effect to serve Ontario's judicial documents on a party located in the receiving state.
Historically, foreign states had accepted such requests from Ontario courts on the basis of the doctrine of comity. Comity is often defined as reciprocity of treatment, in other words courts in one state will recognize and give effect to the laws of a foreign state only if the same recognition is given to the home state's laws by the courts of the foreign state.
As the Supreme Court of the United States said in the 19th century case of Hilton v. Guyot:
"Comity in the legal sense, is neither a matter of absolute obligation, on the one hand, nor of mere courtesy and goodwill, upon the other. But it is the recognition which one nation allows within its territory to the legislative, executive or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens or of other persons who are under the protection of its laws."
However, comity has often been criticized for relying too heavily on judicial discretion instead of a desire to show courtesy to other states . Instead, the critics sought to propound a theory of "vested rights" where the home state did not recognize or enforce foreign law as a matter of comity, but as a matter of justice which gave effect to private rights which, in the home state's judgment, a person had duly acquired under a foreign system of law.
In practice, the recognition and enforcement of Ontario's letters rogatory by foreign states proved to be cumbersome and time-consuming. Not all foreign states gave prompt effect to requests to serve judicial documents upon parties located within their borders.
The Hague Service Convention strove for more efficient and reliable procedures to serve judicial and extra-judicial documents on foreign parties.
The members of the Hague Conference recognized that by 1965, the world was a much different place than the world in which the judges who decided Hilton v. Guyot lived. There was an increasing need to "facilitate the flow of commerce, skills and people across international borders". The world economy was becoming increasingly more integrated and it was necessary for private international law to respond.
How The Convention Is Supposed To Work
Pursuant to the provisions of the Convention, each contracting state is required to designate a Central Authority to receive requests for service coming from other contracting states.
Article 5 of the Convention provides that the Central Authority of the receiving state can either serve the document itself, arrange to have it served by an appropriate agency in accordance with the receiving state's own internal laws for the service of documents or serve the documents by the method requested by the applicant (unless that method is incompatible with its laws).
Article 5 also provides that, if the document is to be served in accordance with the receiving state's own internal laws, 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 receiving state.
Article 10 of the Convention provides:
Provided 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; and
(c) the freedom of any person interested in a judicial proceeding to effect service of judicial documents directly through the judicial officers, officials or other competent officials of the State of destination.
How The Convention Does Work
In a recent case, we represented an Ontario corporation which that became involved in a contractual dispute with a Mexican non-profit entity as well as that entity's two principals. The client's headquarters were located in Toronto. All of the opposing parties resided in Mexico City.
Unable to resolve the dispute through negotiation, the client commenced legal proceedings against the Mexican nationals in the Ontario Superior Court of Justice.
Service Outside Ontario
Under Ontario's Rules of Civil Procedure ("Rules"), defendants to an action commenced in Ontario may be served outside Ontario with the originating process (in the case, the originating process was a statement of claim) without leave of the court if the case falls within the types of cases enumerated in the Rules: i.e. where the proceeding against that party consisted of a claim or claims in respect of, among other things, a tort committed in Ontario; damages sustained in Ontario arising from tort, breach of contract, breach of fiduciary duty or breach of confidence wherever committed; or where the defendants are ordinarily resident or carrying on business in Ontario.
This Rule codifies, in part, the common law principle of "jurisdiction simpliciter" which allows an Ontario court to assume jurisdiction over non-resident defendants where there is a "real and substantial connection" between Ontario and such non-resident defendants.
In this case, damages had been sustained by our client in Ontario. In addition, the contract in question provided that the courts of Ontario were to have jurisdiction over legal proceedings "in respect of the contract". On that basis we believed that Ontario courts could assume jurisdiction over the Mexican defendants.
The Rules also incorporate the Hague Service Convention by reference and provide that "an originating process or other document to be served outside of Ontario in a contracting state shall be served, (a) through the Central Authority in the contracting state; or (b) in a manner that is permitted by Article 10 of the Convention and that would be permitted by the Rules if the document were to be served in Ontario.
Canada signed the convention in September of 1988 and Mexico ratified it in November of 1999.
Mexico is one of Canada's largest trading partners, a partner in NAFTA, it's third largest trading partner by share of total imports and fifth largest by share of total exports. There is a vast amount of business conducted between Canadian and Mexican entities on a daily basis. One would think that forty-five years after the Convention was enacted, it would not be difficult to effect service of an Ontario statement of claim on Mexican defendants.
Lesson No. 1: Retain The Assistance Of Lawyers In The Foreign State
Shortly after the contractual dispute arose, the client retained Mexican lawyers to negotiate with the Mexican defendants. The client's Mexican lawyers proved to be invaluable in guiding us through what was supposed to be a simple procedure. We encountered a series of rules and barriers, not imposed by the Convention but which had been established by the Mexican authorities in applying the Convention.
After the settlement negotiations between the parties had broken down, I wrote a letter to the Mexican defendants setting out the substance of our client's claim against them. I enlisted the assistance of our client's Mexican lawyers to deliver the letter on our behalf. This simple process of making a demand for payment was our first indication that suing Mexican defendants might be more formal and rule-oriented than we had anticipated.
The Mexican lawyers recommended that the client provide them with a power of attorney so that they could deliver the letter by means of a notary public. This, they explained would make the demand more formal and "serious". Accordingly, the client executed the appropriate form of power of attorney and we couriered five original copies of the demand letter to the Mexican lawyers.
No satisfactory response to the letter was received and we issued a statement of claim in Ontario against all three defendants. Accordingly, it was necessary to effect service of the statement of claim pursuant to the provisions of the Hague Service Convention.
The Mexican lawyers advised that, although Mexico was a signatory to the Convention, when that country ratified the Convention, it objected to serving judicial documents pursuant to the procedures set out in Articles 8 (Article 8 allows a contracting state to serve documents upon persons outside of its borders directly through diplomatic or consular agents. However, any state may declare that it is opposed to such service within its territory (which Mexico clearly did) unless the document is to be served upon a citizen of the originating state) and 10 of the Convention. That posed a problem for us as Article 10 had been specially incorporated into Ontario's Rules.
Article 10 of the Convention states that, provided the state of designation does not object (again which Mexico clearly did) the Convention would not interfere with such things as the freedom to send judicial documents by mail, through judicial officers or other competent persons in the state of designation.
This objection was a further indication of the "formal" approach that Mexico takes in these matters. The Mexican lawyers advised us that Mexico had designated a branch of its Ministry of Foreign Relations as its Central Authority to receive documents for service from other countries. The Ministry upon satisfying itself as to the content of the documents, would then transmit the documents to the Federal Court of Mexico in order to have them served.
The Mexican lawyers advised us that to comply with Mexican law, we would need to take the following steps to properly serve the statement of claim on the Mexican defendants:
1. complete, in duplicate, a "Request for Service Abroad of Judicial or Extra-Judicial Documents" form ("Request Form");
2. translate the Request Form and the statement of claim into Spanish using an official translator in Mexico;
3. submit the Request Form, statement of claim and translations thereof in duplicate to the Mexican Central Authority;
4. retain Mexican lawyers to pursue the client's request for service with the Mexican Central Authority and the Mexican Federal Court and grant the Mexican lawyers a second power of attorney to enable them to represent the client before the Mexican Central Authority and Federal Court. We were advised that the power of attorney would have to be notarized and "legalized" at the Mexican Consulate in Mexico City.
Lesson No. 2: If Possible, Obtain An Advance Ruling From The Receiving State's Central Authority
The client's Mexican lawyers sent the required form of power of attorney for the client's execution. The client signed and returned it. Some weeks later, the Mexican lawyers advised that the power of attorney was "invalid" because it didn't bear a "legalization" stamp from the Mexican Consulate in Toronto (something they had not advised us of before). Accordingly, the Mexican lawyers returned the power of attorney to us so that we could get it stamped by the Mexican Consulate.
The next day, the Mexican lawyers advised us that before being stamped by the Mexican Consulate, the power of attorney must first be approved by Canada's Ministry of Foreign Relations. They advised that alternatively, the client could attend at the Mexican Consulate to sign a new power of attorney in accordance with Mexican law. We took the second route and returned the power of attorney to Mexico.
A few days later, the Mexican lawyers advised us that the Request Form should not only refer to the statement of claim but also to all of the documents that were required to be served on the defendants. They indicated that these documents should include the client's certificate of status as a corporation and the power of attorney. We made all such amendments suggested by the Mexican lawyers, in triplicate (also at their suggestion). The Mexican lawyers advised that we should return the documents either through the Central Authority in Ontario or have them stamped by the Ontario Court. We opted for the first route.
After we had delivered the documents back to Mexico, the Mexican lawyers advised us that the Mexican Central Authority had determined that the documents were acceptable "in principle", but were missing the "official stamp and signature" of the Canadian Central Authority. In response, we contacted the Central Authority in Haileybury, Ontario to obtain the Central Authority's signature. Once again we returned all of the documents to the Mexican lawyers.
Several weeks later, the Mexican lawyers advised us that the Mexican Central Authority had rejected the documents again because the Request Form had not been signed by an official of the Ontario Court (although it had been signed by the Central Authority as they had requested) and the "notice to the defendants" in the statement of claim (the pre-printed preamble) did not specify whether the time for responding to the claim was to be calculated in business or calendar days.
It took some brilliant advocacy by our law clerk to persuade the Registrar of the Ontario Superior Court of Justice at Toronto to sign the Request Form, particularly after she advised him that it was the court's policy not to do so. We then sent the full set of documents back to the Central Authority in Haileybury to obtain an updated Request Form.
Lesson No. 3: Make Additional Originals Of Everything
After we received the documents from the Central Authority in Haileybury, but before we returned them to Mexico, the Mexican lawyers advised us that the Mexican Central Authority was now asking for two sets of original documents (as opposed to copies) for each of the three defendants that we wished to serve. This was a completely new requirement. Accordingly, our clerk was required to re-attend before the Superior Court Registrar and ask her sign the Request Form once again.
The Mexican lawyers advised that the request for duplicate originals was indeed new and although such a request was not a requirement of the Convention or even Mexican law, it was a requirement of the clerk at the Mexican Central Authority who was seized with reviewing our request.
Once again, we returned the full set of documents to the Mexican lawyers. They advised us that the documents were complete and that they would send them to be translated into Spanish before they filed them with the Mexican Central Authority.
Several weeks later we were informed by the Mexican lawyers that the Mexican Central Authority had once again rejected the documents because they continued to be of the view that the preprinted preamble of the statement of claim did not clearly distinguish between business days or calendar days even though we had specifically made that distinction in the request summary.
Accordingly, we resigned ourselves to going through the process once again. However, to our surprise the Mexican Ministry of Foreign Relations, on its own initiative, informed us that they had decided to accept the documents and had transmitted them to the Superior Court in Mexico City to proceed with service.
Lesson No. 4: Start Early
The Mexican defendants were served with the statement of claim approximately 10 months after it was issued. As the Rules provide that a statement of claim must be served within six months after it is issued, it was necessary to obtain an order extending the time for service.
Accordingly, I recommend that you make contact with lawyers in the foreign jurisdiction even before an Ontario claim is issued to ensure that you have a good handle on the unique requirements of the jurisdiction for service of Ontario judicial process. Doing so will save you time and inconvenience, and save your client money. It would also achieve the main goal of the authors of the Convention – by simplifying and expediting the process.

Blair W.M. Bowen – Fogler, Rubinoff LLP, Toronto, Canada

No comments:

Post a Comment