News & Updates: Foreign Company Who Contracted To Waive Formal Service of Process May Not Hide Behind The Hague Convention To Escape Judgment

On April 2, 2020, the California Supreme Court ruled that a party who agreed to a waiver of formal service of process under California law may not invoke the Hague Service Convention to void a $414 million judgment. Rockefeller Technology Investments (Asia) VII v. Changzhou SinoType Technology Co., Ltd., Case No. S249923 (April 2, 2020). In so ruling, the California Supreme Court reversed the decision of the Court of Appeal and affirmed the parties’ right to contract around formal rules of service. (My discussion of the Court of Appeal decision can be found here.)

Briefly, the facts are these: SinoType, a Chinese company, entered into a MOU with Rockefeller, an American company. After their relationship soured, Rockefeller obtained a favorable award in a JAMS arbitration proceeding in which SinoType never appeared. Although SinoType received notice of the proceeding on several occasions by Federal Express and email as specified in the MOU, its Chairman decided to ignore them. When Rockefeller had the award confirmed and sought to enforce the judgment, SinoType finally appeared and moved to set aside the judgment on the ground that Rockefeller had failed to follow the requirements of the Hague Service Convention for service of process. While the Superior Court denied SinoType’s motion, the Court of Appeal reversed. Rockefeller Technology Investments (Asia) VII v. Changzhou SinoType Technology Co., Ltd., 24 Cal. App. 5th 115 (2018).

The Supreme Court rejected SinoType’s argument and the Court of Appeal’s decision. Key to the Supreme Court’s ruling was its conclusion that the Hague Service Convention did not apply to this case. This is because the Hague Service Convention does not determine which documents need to be served; rather, it specifies the rules to be followed when service of process is required. The determination of whether a document should formally be served rests with the law of the forum, which, in this case, was California.

Under California law, the contracting parties have the right to not only consent to the jurisdiction of California courts but also to waive its right to service of process. Here, Rockefeller and SinoType agreed to binding arbitration and also agreed to provide notice to each other by Federal Express, with copies by fax or email. The parties further specified they would submit to the jurisdiction of federal and state courts in California and “consent to service of process in accord with the notice provisions above.” The Supreme Court found this was a voluntary, knowing, and intelligent waiver by SinoType of its statutory right to service of process. To negate the parties’ clear agreement and apply the Convention “would sow confusion and encourage gamesmanship and sharp practices,” such as leaving the country.

The Supreme Court’s decision restores order by confirming that parties can, in fact, rely on the terms of the contract they signed.