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Courts in China, specifically in Hong Kong, have demonstrated its legal system’s continuing embrace of technology.

The city’s Court of First Instance — the highest court in Hong Kong that can hear a case at first instance with unlimited jurisdiction in criminal and civil matters — granted the plaintiff’s application for service of process through access to a data room. This is the first time, according to reports, that this novel method of service of process has been used in Hong Kong. The decision is a clear showing of the Chinese courts’ efforts to incorporate the use of technology in courtroom proceedings.

The Case

The underlying case had to do with misappropriations of funds. The act occurred through numerous bank accounts and the suit included 28 defendants. None of the defendants actively participated in the legal proceedings. The court granted service out of jurisdiction for 16 of the overseas defendants. Notably, certain court documents require personal service while others may use the method of ordinary service (by mail or leaving at the proper physical address). The Hong Kong court granted the plaintiff’s proposal to serve documents by access to a data room because of the numerous defendants and potential joinder of future defendants to the legal proceedings.

Permitted Service

The lower court in Hwang Joon gave the following directions to the serving party for service by access to a data room:

  • Creating an online data room containing all the relevant documents;
  • Providing a link to the data room to all intended recipients through a method previously approved by the court;
  • Providing an access code to the data room, as well as instructions on how to access the room in a separate email or post mail to the recipient(s).

An English court had previously allowed service by access to a data room in CMOC Sales & Marketing Ltd v Persons Unknown and 30 others [2018] EWHC 2230 (Comm). The COMC case involved email scams as well as fraudulent transfers of monies.

Bottom Line

It is true that in recent years courts both in the United States and around the world have become more amenable to the use of technology in legal proceedings as well as service of process methods. The Hwang Joon court stressed, however, that the approach to technology use in service of process is not a “one size fits all.” Specifically, the court noted that the party seeking the method of service of process will need to establish that the chosen method is good and service will still be properly effectuated. While the Hwang Joon decisions are welcomed, these decisions remain the exception and not the rule of permitted methods of service of process.

The case is Hwang Joon Sang & another v Golden Electronics Inc. and Ors [2020] HKCFI 1084.

For more information, check out Service in Hong Kong.

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.