Service Abroad of Judicial and Extra-Judicial Process on Chinese Defendants in China – Or, Jumping Through Flaming Hoops

Judicial and Extra-Judicial Process on Chinese Defendants in China

One of the most basic and fundamental elements of litigation is service of process.  While litigation starts with the plaintiff filing the complaint, it does not really begin until the other side gets served.  For most of us here in the U.S., service of a Summons and Complaint is a perfunctory task that is taken for granted.  Being perfunctory, service is often something that is left to an associate, paralegal or a secretary to perform.

 Typically, it is simply a matter of posting an envelope certified mail, return receipt requested, or handing a summons and complaint to your process server to hand deliver.  But what may be a nuts and bolts routine in the context of domestic service becomes a wholly different mechanism in foreign litigation involving Chinese defendants.

If the Chinese defendant has sufficient contact with the U.S. or tangible assets in a jurisdiction outside China, a writ of attachment may be obtained in order to forcibly hale them into Court.

A lis pendens can also be a shot across the bow and further efforts to take hold of a Chinese defendant obfuscating the legal process.

Under Fed.R.Civ.P. service of an individual “not within any judicial district of the United States” must be accomplished by either service under a treaty such as The Hague Convention on the Service of Judicial and Extra-Judicial Documents (the “Hague” or “Hague Convention”) or if no such international agreement exists, “by a method that is reasonably calculated to give notice.” For better or for worse, China is a signatory to The Hague Convention and therefore service of process under that treaty is the exclusive means by which service must be accomplished.  But that does not assure that your efforts to name a Chinese corporation will be welcome.

Service under The Hague Convention is an indirect method of service.  The papers to be served must first be presented to the Chinese Central Authority (preferably by an experienced Chinese lawyer who works closely in conjunction with a qualified international lawyer), who then is supposed to transmit the documents to local authorities for service upon the individual defendants.  This takes significant time, in the absence of a foreign law firm that works closely in cooperation with savvy and experienced Chinese legal counsel.

The process does take time because the summons and complaint must first be translated into Chinese.  The more technical or unusual documents or exhibits there are, the greater the time required for translators to complete their translations. As pleading requirements have become more heightened to meet the new plausibility standard, complaints have become longer and more complicated. Therefore, it is best to work with a law firm that has a professional Chinese translator who is well-educated, and Chinese and Western lawyers that work in partnership in a law firm that is diverse in this area.

In addition to the time and expense required for the mere preparation of the documents to be served, it is quite normal for the entire process of service through the Central Authority in China to take 6-8 months. Chinese process servers generally advise that foreign government officials usually effect service pursuant to international treaty law in four to six months, and another two to three months are usually required for the Proof of Service to be completed, sealed and returned to the United States.

We had such a situation recently with a large Korean multinational corporate defendant (dilatory tactics by the Korean authorities combined with obfuscation by the defendant Korean multinational lead to our requiring an extension beyond 120 days). It is well established that Federal courts have the ability to stay the 120 day period for service of process under Rule 4(m). See, Snyder v. Hall, 2008 WL 2838814, * 2 (C.D.Ill. 2008) (complete stay of the litigation operated to stay plaintiff’s duty to serve the defendant within 120 days of the filing of the complaint)

In the absence of working with an experienced legal team that is composed of foreign and Chinese lawyers working together, certain governmental authorities have refused to serve other firms’ complaints where the authorities have disagreed with verbiage used in the body of the complaint, such as, namely, politically sensitive topics that shouldn’t be in a business pleading drafted by a competent lawyer in any instance.

The Hague Convention acknowledges that some member nations may be dilatory in either serving process or in returning proof of service.  A provision of the treaty allows the plaintiff to enter a default judgment if a proof of service is not received within a reasonable period not less than six months from the date of submission, and, if reasonable follow-up efforts have been made by the plaintiff to obtain service in accordance with the Treaty.

Given the delays and numbers of refusals to accept service of process, foreign plaintiff’s in U.S. Courts have obtained many default judgments against Chinese entities.  But only after the appropriate due diligence has been exercised to create a record of complying with the process. At the appropriate time, these judgments will be pursued – although that subject is beyond the scope of this article of work.

The bottom line is that pursuing service on a defendant in China is a serious undertaking that requires the assistance of an international law firm with deep roots in the Chinese legal and political system. Nothing can be taken for granted, not even names or addresses.  Experience has proven that efforts to perfect service of process in China are dependable if the right team of lawyers is chosen. The team must be an experienced international law firm that has Chinese lawyers on the ground in China that work directly in conjunction with highly qualified non-Chinese lawyers who have well-established relations in China.

Nevertheless, The Hague Convention provides the basic framework by which service (under the right circumstances) can be accomplished.

 

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