2010 International Law Update, Volume 16, Number 6 (June)

2010 International Law Update, Volume 16, Number 6 (June)

Legal Analyses published by Mike Meier, Attorney at Law. Copyright 2017 Mike Meier. www.internationallawinfo.com. 

EXTRATERRITORIAL APPLICATION OF LAWS

In case of alleged securities fraud, U.S. Supreme Court holds that Section 10(b) does not provide a cause of action to foreign plaintiffs; when a statute gives no clear indication of extraterritorial application, it has none

The issue in the following case is whether Section 10(b) of the Securities and Exchange Act of 1934 provides a cause of action to foreign plaintiffs suing foreign and U.S. defendants for alleged misconduct in connection with securities traded abroad.

Respondent National Australia Bank Ltd. (“National”) was the largest bank in Australia. Its shares, however, were not traded in the U.S. One could only buy National’s American Depositary Receipts (ADRs) through the New York Stock Exchange. ADRs represent the right to receive a certain number of ordinary shares. In 1998, National bought Respondent HomeSide Lending, Inc. (HomeSide), a Florida mortgage servicing company. The value of HomeSide was written down in 2001 by more than $2 billion. National’s shares and ADRs dropped.

The Petitioners in this case are Australian citizens who purchased National’s shares shortly before the write‑down. They sued National, HomeSide, and several of their executives in the U.S. District Court for the Southern District of New York for securities violations. According to the Complaint filed in this case, HomeSide and some of its executives had manipulated financial models to make HomeSide appear more valuable. National was allegedly aware of the manipulation.

The District Court granted the Respondent’s motion to dismiss for lack of subject‑matter jurisdiction under Fed.R.Civ.P. 12(b)(1) and for failure to state a claim under Rule 12(b)(6). The District Court noted that the alleged acts that occurred in the U.S. were only a link in the chain of an alleged securities fraud that occurred abroad. The U.S. Court of Appeals affirmed because the alleged acts that occurred in the U.S. did not comprise the heart of the alleged fraud.

The U.S. Supreme Court granted certiorari. Justice Scalia delivered the opinion of the Court.

The Supreme Court first explains that the Second Circuit erroneously considered the extraterritorial reach of Section 10(b) as a matter of subject‑matter jurisdiction. Other Circuits have taken the same view.

“ ...[T]o ask what conduct §10(b) reaches is to ask what conduct §10(b) prohibits, which is a merits question. Subject‑matter jurisdiction, by contrast, ‘refers to a tribunal’s ‘’power to hear a case.’’’ ... It presents an issue quite separate from the question whether the allegations the plaintiff makes entitle him to relief. ... The District Court here had jurisdiction under 15 U.S.C. §78aa [district court’s exclusive jurisdiction of Exchange Act violations] to adjudicate the question whether §10(b) applies to National’s conduct.”

“In view of this error, which the parties do not dispute, petitioners ask us to remand. We think that unnecessary. Since nothing in the analysis of the courts below turned on the mistake, a remand would only require a new Rule 12(b)(6) label for the same Rule 12(b)(1) conclusion.” [Slip Op. 4‑5]

The Supreme Court then turns to the extraterritorial reach of Section 10(b). In general, a statute has no extraterritorial reach unless it clearly states so. It appears that the Second Circuit has mistakenly led the way to having courts interpret extraterritoriality into securities laws.

“It is a ‘longstanding principle of American law ‘that legislation of Congress, unless a contrary intent appears, is meant to apply only within the territorial jurisdiction of the United States.’’ EEOC v. Arabian American Oil Co., 499 U.S. 244, 248 (1991) (Aramco) ... This principle represents a canon of construction, or a presumption about a statute’s meaning, rather than a limit upon Congress’s power to legislate ... It rests on the perception that Congress ordinarily legislates with respect to domestic, not foreign matters. ... Thus, ‘unless there is the affirmative intention of the Congress clearly expressed’ to give a statute extraterritorial effect, ‘we must presume it is primarily concerned with domestic conditions.’ Aramco, supra, at 248 ... The canon or presumption applies regardless of whether there is a risk of conflict between the American statute and a foreign law ... When a statute gives no clear indication of an extraterritorial application, it has none.”

“Despite this principle of interpretation, long and often recited in our opinions, the Second Circuit believed that, because the Exchange Act is silent as to the extraterritorial application of §10(b), it was left to the court to ‘discern’ whether Congress would have wanted the statute to apply. ... This disregard of the presumption against extraterritoriality did not originate with the Court of Appeals panel in this case. It has been repeated over many decades by various courts of appeals in determining the application of the Exchange Act, and §10(b) in particular, to fraudulent schemes that involve conduct and effects abroad. That has produced a collection of tests for divining what Congress would have wanted, complex in formulation and unpredictable in application.” [...]

“... [T]he Second Circuit had excised the presumption against extraterritoriality from the jurisprudence of §10(b) and replaced it with the inquiry whether it would be reasonable (and hence what Congress would have wanted) to apply the statute to a given situation. As long as there was prescriptive jurisdiction to regulate, the Second Circuit explained, whether to apply §10(b) even to ‘predominantly foreign’ transactions became a matter of whether a court thought Congress ‘wished the precious resources of United States courts and law enforcement agencies to be devoted to them rather than leave the problem to foreign countries.’ ...”

“The Second Circuit had thus established that application of §10(b) could be premised upon either some effect on American securities markets or investors ... or significant conduct in the United States ... It later formalized these two applications into (1) an ‘effects test,’ ‘whether the wrongful conduct had a substantial effect in the United States or upon United States citizens,’ and (2) a ‘conduct test,’ ‘whether the wrongful conduct occurred in the United States.’ SEC v. Berger, 322 F. 3d 187, 192‑193 (CA2 2003). These became the north star of the Second Circuit’s §10(b) jurisprudence, pointing the way to what Congress would have wished. ... The Second Circuit never put forward a textual or even extratextual basis for these tests. ...” [...]

“Other Circuits embraced the Second Circuit’s approach, though not its precise application. Like the Second Circuit, they described their decisions regarding the extraterritorial application of §10(b) as essentially resolving matters of policy. ... While applying the same fundamental methodology of balancing interests and arriving at what seemed the best policy, they produced a proliferation of vaguely related variations on the ‘conduct’ and ‘effects’ tests. ...” [...]

“... The results of judicial‑speculation‑made‑law divining what Congress would have wanted if it had thought of the situation before the court demonstrate the wisdom of the presumption against extraterritoriality. Rather than guess anew in each case, we apply the presumption in all cases, preserving a stable background against which Congress can legislate with predictable effects.” [Slip Op. 5‑12]

The Supreme Court then specifically focuses on Section 10(b), and concludes that it does not apply extraterritorially.

“Rule 10b‑5, the regulation under which petitioners have brought suit, ... was promulgated under §10(b), and ‘does not extend beyond conduct encompassed by §10(b)’s prohibition.’ ... Therefore, if §10(b) is not extraterritorial, neither is Rule 10b‑5.”

“On its face, §10(b) contains nothing to suggest it applies abroad: ‘It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce or of the mails, or of any facility of any national securities exchange... [t]o use or employ, in connection with the purchase or sale of any security registered on a national securities exchange or any security not so registered,... any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the [Securities and Exchange] Commission may prescribe....’ 15 U.S.C. 78j(b).”

“Petitioners and the Solicitor General contend, however, that three things indicate that §10(b) or the Exchange Act in general has at least some extraterritorial application.”

“First, they point to the definition of ‘interstate commerce,’ a term used in §10(b), which includes ‘trade, commerce, transportation, or communication... between any foreign country and any State.’ 15 U.S.C. §78c(a)(17). But ‘we have repeatedly held that even statutes that contain broad language in their definitions of ‘commerce’ that expressly refer to ‘foreign commerce’ do not apply abroad.’ Aramco, 499 U.S., at 251 ... The general reference to foreign commerce in the definition of ‘interstate commerce’ does not defeat the presumption against extraterritoriality ...”

“Petitioners and the Solicitor General next point out that Congress, in describing the purposes of the Exchange Act, observed that the ‘prices established and offered in such transactions are generally disseminated and quoted throughout the United States and foreign countries.’ 15 U.S.C. §78b(2). The antecedent of ‘such transactions,’ however, is found in the first sentence of the section, which declares that ‘transactions in securities as commonly conducted upon securities exchanges and over‑the‑counter markets are affected with a national public interest.’ §78b. Nothing suggests that this national public interest pertains to transactions conducted upon foreign exchanges and markets. The fleeting reference to the dissemination and quotation abroad of the prices of securities traded in domestic exchanges and markets cannot overcome the presumption against extraterritoriality. Finally, there is §30(b) of the Exchange Act, 15 U.S.C. §78dd(b), which does mention the Act’s extraterritorial application: ‘The provisions of [the Exchange Act] or of any rule or regulation thereunder shall not apply to any person insofar as he transacts a business in securities without the jurisdiction of the United States,’ unless he does so in violation of regulations promulgated by the Securities and Exchange Commission ‘to prevent... evasion of [the Act].’ (The parties have pointed us to no regulation promulgated pursuant to §30(b).) The Solicitor General argues that ‘[this] exemption would have no function if the Act did not apply in the first instance to securities transactions that occur abroad.’ ...”

“We are not convinced. In the first place, it would be odd for Congress to indicate the extraterritorial application of the whole Exchange Act by means of a provision imposing a condition precedent to its application abroad. And if the whole Act applied abroad, why would the Commission’s enabling regulations be limited to those preventing ‘evasion’ of the Act, rather than all those preventing ‘violation’? The provision seems to us directed at actions abroad that might conceal a domestic violation, or might cause what would otherwise be a domestic violation to escape on a technicality. At most, the Solicitor General’s proposed inference is possible; but possible interpretations of statutory language do not override the presumption against extraterritoriality. See Aramco, supra, at 253.”

“Subsection 30(a) contains what §10(b) lacks: a clear statement of extraterritorial effect. Its explicit provision for a specific extraterritorial application would be quite superfluous if the rest of the Exchange Act already applied to transactions on foreign exchanges and its limitation of that application to securities of domestic issuers would be inoperative. Even if that were not true, when a statute provides for some extraterritorial application, the presumption against extraterritoriality operates to limit that provision to its terms. ... No one claims that §30(a) applies here.” [...]

“In short, there is no affirmative indication in the Exchange Act that §10(b) applies extraterritorially, and we therefore conclude that it does not.” [Slip Op. 12‑16]

The focus of the Exchange Act is upon the purchases and sales of securities in the U.S., not upon the place where the deception originated. Section 10(b) punishes only deceptive conduct “in connection with the purchase or sale of any security registered on a national securities exchange or any security not so registered.” 15 U.S.C. Section 78j(b).

“Section 10(b) reaches the use of a manipulative or deceptive device or contrivance only in connection with the purchase or sale of a security listed on an American stock exchange, and the purchase or sale of any other security in the United States. This case involves no securities listed on a domestic exchange, and all aspects of the purchases complained of by those petitioners who still have live claims occurred outside the United States. Petitioners have therefore failed to state a claim on which relief can be granted. We affirm the dismissal of petitioners’ complaint on this ground.” [Slip Op. 24]

Justice Stevens, joined by Justice Ginsburg, concurs in the judgment. The Petitioners have failed to state a claim upon which relief can be granted. This conclusion, however, does not warrant a reversal of the Second Circuit (and most of the U.S.’s) law for the past 40 years. The new “transactional test” announced by the Supreme Court applies Section 10(b) only to transactions in securities listed on domestic exchanges and domestic transactions in other securities. This novel approach will prevent private parties from bringing Section 10(b) actions whenever the relevant securities were sold or purchased abroad and are not listed on a domestic exchange.

Citation: Morrison v. National Australia Bank Ltd., No. 08‑1191 (U.S. Supreme Court June 24, 2010).

FOREIGN JUDGMENTS

Florida Court of Appeals affirms denial of recognition for Canadian default judgment because the Canadian court lacked jurisdiction over the defendant according to U.S. Constitutional Due Process requirements

EOS Transport, Inc. (EOS) is a Canadian company located in British Columbia. It sought recognition under the Florida Uniform Out‑of‑Country Foreign Money‑Judgment Recognition Act of a Canadian default judgment it had obtained against Agri‑Source Fuels, LLC (Agri‑Source).

Agri‑Source is a Florida company that had never conducted any business in Canada. It entered into an oral agreement for EOS to transport large steel tanks from Canada to Florida. The parties had a dispute as to payment for the shipments. EOS filed for breach of contract in the Supreme Court of British Columbia and obtained a default judgment. EOS then sought enforcement of the Canadian default judgment in Florida, in the Escambia County Circuit Court. Agri‑Source objected, claiming that the Canadian court lacked personal jurisdiction over Agri‑Source. The Circuit Court agreed with Agri‑Source and dismissed the case. EOS appeals.

The District Court of Appeal Florida, First District, affirms. The default judgment is unenforceable because the Supreme Court of British Columbia lacked personal jurisdiction over Agri‑Source.

The Court first summarizes the applicable Florida law.

“The recognition of out‑of‑country foreign money judgments in Florida is governed by the Uniform Out‑of‑Country Foreign Money‑Judgment Recognition Act (the Act). See §§ 55.601‑.607, Fla. Stat. (2009). The Act was adopted ‘to ensure the recognition abroad of judgments rendered in Florida.’ ... When a Florida court grants recognition under the Act to a foreign judgment, the judgment is ‘immediately enforceable as though it were a final judgment of a Florida court.’ ... ‘It thus becomes identical in effect with a judgment entered by a Florida court.’ ...”

“The Act ‘applies to any out‑of‑country foreign judgment that is final and conclusive and enforceable where rendered.’ § 55.603, Fla. Stat. A judgment is conclusive between the parties to the extent that it grants or denies a sum of money. See §§ 55.603‑.604, Fla. Stat. Although such judgments are prima facie enforceable, the Act provides eleven grounds for which a foreign judgment may be denied recognition. See § 55.604‑.605, Fla. Stat. ... Here, Agri‑Source alleges that the Canadian judgment should not be recognized due to a lack of personal jurisdiction. This is a mandatory ground for non‑recognition under the Act; as such, the enforcing court must find that the foreign judgment should not be recognized if the foreign court lacked personal jurisdiction over the defendant. §55.605 (1)(b), Fla. Stat. ... [Slip op. 3‑4]

The first issue is what law to apply in analyzing personal jurisdiction. The Act does not specify which country’s law to apply when reviewing whether personal jurisdiction was proper. Most other jurisdictions with similar recognition laws use a two‑part analysis: (1) applying foreign law to determine whether the foreign court had jurisdiction; and (2) applying U.S. Constitution Due Process “minimum contacts” analysis and ensuring that the exercise of jurisdiction complies with the traditional notions of fair play and substantial justice.

The Court adopts the two‑part analysis. Under the Act, a trial court must determine whether the exercise of personal jurisdiction is proper under both the law of the foreign jurisdiction and the U.S. Constitutional Due Process requirements.

Here, Agri‑Source failed to argue that jurisdiction in Canada was improper. Thus, the Court only reviews whether Agri‑Source had sufficient contacts with Canada to satisfy U.S. Constitutional Due Process requirements.

“The U.S. Constitutional Due Process requirements consists of two prongs: ‘(1) whether the acts of the nonresident defendant give rise to sufficient ‘minimum contacts’ with the forum state such that (2) maintaining a suit there ‘does not offend traditional notions of fair play and substantial justice.’’ ...” [...]

“‘Factors that go into determining whether sufficient minimum contacts exist include the forseeability that the defendant’s conduct will result in suit in the forum state and the defendant’s purposeful availment of the forum’s privileges and protections.’ ... ‘[T]he foreseeability that is critical to due process analysis is . . . that the defendant’s conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there.’ World‑Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980). The Fourth District has noted that this is the ‘single most important factor to consider’ and that it should be viewed from the defendant’s perspective. ...”

“‘[T]he fact that a defendant has or has not `purposefully . . . directed his activities at forum residents’ is of great significance in determining the essential fairness of subjecting him to that jurisdiction.’ ... The ‘‘purposeful availment’ requirement ensures that a defendant will not be haled into a jurisdiction solely as a result of ‘random,’ ‘fortuitous,’ or ‘attenuated’ contacts ...’”

“Florida courts have consistently held that an out‑of‑state defendant’s purchase from a forum‑state entity and the subsequent failure to pay alone are not sufficient to establish minimum contacts with the forum state to satisfy due process. ... In addition, the ‘due process requirement of minimum contacts is not satisfied by a showing that a party has entered into a contract with a non‑resident.’ ... However, the exercise of jurisdiction may be proper where an out‑of‑state defendant enters into a contract with a forum‑state party ‘for substantial services to be performed in Florida; in that situation, the defendant has purposely availed himself of the privilege of conducting activities in Florida.’ ...”

“Here, Agri‑Source initiated contact with EOS for EOS to transport goods from Canada to Florida. Payment was to occur in Canada and ultimately EOS alleged that Agri‑Source failed to make all payments due under the contract. Aside from the shipments from Canada and the payments in Canada, no other substantial services in performance of the contract occurred in Canada. Given the facts of this case, Agri‑Source did not purposely avail itself of the privilege of conducting activities in Canada. Accordingly, Agri‑Source would not have reasonably anticipated being haled into Canada based upon such random, fortuitous, and attenuated contacts. We, therefore, find that Agri‑Source did not have sufficient minimum contacts with the Canadian forum to satisfy U.S. Constitutional Due Process requirements.” [Slip Op. 7‑10]

Citation: EOS Transport, Inc. v. Agri‑Source Fuels, LLC, Case No. 1D09‑4300 (Fla. App. 2010).

FORUM NON CONVENIENS

Texas Supreme Court grants mandamus petition to dismiss wrongful death action on forum non conveniens grounds where incident occurred on oil rig in Singapore waters

Paul Merema (“Paul”), an Australian citizen, was a contract worker on the oil rig ENSCO 104 in the territorial waters of Singapore. He was killed when a valve assembly malfunctioned. Singapore authorities investigated the incident. Paul’s employment contract through Total Marine Services (TMS) provided that the laws of Western Australia applied, and any dispute was to be resolved through arbitration in Perth, Western Australia.

Paul’s widow, Margaret Merema (“Merema”), filed suit in Australia against TMS. She also sued the owner of the oil rig and its parent company (jointly “ENSCO”) in Dallas, Texas. ENSCO moved to dismiss the Dallas case based on forum non conveniens because none of the alleged negligent acts occurred in Texas. The trial court denied ENSCO’s motion. The court of appeals denied ENSCO’s mandamus request. ENSCO then filed for a writ of mandamus with the Supreme Court of Texas.

The Supreme Court of Texas, in a per curiam opinion, conditionally grants the mandamus because the trial court abused its discretion by failing to dismiss the case based on forum non conveniens.

As for the procedure, the Court notes when a motion to dismiss on forum non conveniens is erroneously denied, an appeal is not appropriate, but mandamus relief.

In Texas, a statute lists the factors to be considered by a trial court in ruling on forum non conveniens:

“If a court of this state, on written motion of a party, finds that in the interest of justice and for the convenience of the parties a claim or action to which this section applies would be more properly heard in a forum outside this state, the court shall decline to exercise jurisdiction under the doctrine of forum non conveniens and shall stay or dismiss the claim or action. In determining whether to grant a motion to stay or dismiss an action under the doctrine of forum non conveniens, the court shall consider whether:”

“(1) an alternate forum exists in which the claim or action may be tried;

(2) the alternate forum provides an adequate remedy;

(3) maintenance of the claim or action in the courts of this state would work a substantial injustice to the moving party;

(4) the alternate forum, as a result of the submission of the parties or otherwise, can exercise jurisdiction over all the defendants properly joined to the plaintiff’s claim;

(5) the balance of the private interests of the parties and the public interest of the state predominate in favor of the claim or action being brought in an alternate forum, which shall include consideration of the extent to which an injury or death resulted from acts or omissions that occurred in this state; and

(6) the stay or dismissal would not result in unreasonable duplication or proliferation of litigation.”

“TEX. CIV. PRAC. & REM.CODE § 71.051(b). The word ‘shall’ in the statute ‘requires dismissal of the claim or action if the statutory factors weigh in favor of the claim or action being more properly heard in a forum outside Texas.’” [311 S.W.3d 924]

The Court then proceeds to apply the factors to the case at bar. ENSCO argues that either Australia or Singapore offer an adequate forum for this case. Merema responds that ENSCO was attempting to obscure by lumping Australia and Singapore together as potential forums. The Court disagrees. Section 71.051 does not require the designation of one specific forum when there are several available forums.

A forum is inadequate if the remedies it offers are so unsatisfactory that they provide no remedy at all. Merema further argues that ENSCO should have explained the trial procedures of Australia and Singapore to show that they are adequate. The Court again disagrees. Comparative analysis of procedures in different forums is generally not appropriate in a forum non conveniens analysis. Such exercises involve complicated analysis in comparative law, and should only be used if the potential forum offers no remedy at all.

The Court then reviews the third factor, whether litigating the case in Texas would work a substantial injustice to the moving party, ENSCO. Here, the Court agrees with ENSCO. The lack of compulsory process in Texas for the majority of the foreign witnesses is substantially unjust.

Also, the fact that ENSCO has a suit pending against TMS in Australia mandates dismissal, because it is more convenient to resolve all claims in one trial.

The fourth statutory factor, whether the alternate forum has jurisdiction over the defendants, weighs in favor of ENSCO, as all defendants have agreed to submit to jurisdiction in either Singapore or Australia.

The Court then turns to the fifth statutory factor, the balancing of the public and private interest factors.

“A consideration in this balancing is the extent to which Paul’s death resulted from acts or omissions that occurred in Texas. ... Private interest considerations include ease of access to proof, availability and cost of compulsory process, and other practical problems that make trial easy, expeditious, and inexpensive. ... ENSCO points out that in this case relevant documents and potential witnesses are located around the world. For example, the investigating officials and employees of the shipyard are in Singapore. Paul’s family, a psychologist who provided services after the incident, and TMS and its employees are located in Australia. ... Of the twenty‑nine men assigned to work on the ENSCO 104 at the time of the incident, twenty‑one were TMS employees and all but two of the men on duty at the time of the incident were citizens of Australia or New Zealand, as were three of the four men who witnessed the incident. ... Even if some witnesses are located in the United States, the fact remains that compulsory process is unavailable for the vast majority of witnesses. See TEX.R. CIV. P. 176.3. Similarly, although Merema asserts that copies of documents located in Australia and Singapore can be shipped or sent by email, that fact does not cure the problems and difficulties posed by the lack of compulsory process to secure production of the documents and other evidence. ...”

“Aside from the fact that compulsory process is unavailable to compel the majority of witnesses to appear in Dallas County or to require production of documents, the practical problems that make trial easy, expeditious, and inexpensive must be considered. ... The physical evidence is in storage in Singapore and onboard the ENSCO 104, which was operating off the shores of Malaysia when the trial court rendered its decision and off the shores of Australia when ENSCO filed its brief. This evidence is under ENSCO’s control, but ENSCO presented evidence that the cost of airfare from Singapore or Australia to Dallas was approximately five times the cost of airfare between Australia and Singapore. Travel time between Australia and Singapore was five hours compared to over twenty hours for travel between Australia or Singapore and Dallas. ... The cost, time, and scheduling difficulties to obtain evidence and present witness testimony would be far greater if the case were tried in Texas.”

“Another consideration in the fifth factor is the extent to which Paul’s death resulted from acts or omissions that occurred in this state. TEX. CIV. PRAC. & REM.CODE § 71.051(b)(5). Merema asserts that she need not prove that Paul’s death resulted from acts or omissions occurring in Texas by a preponderance of the evidence, but that she need only make a prima facie showing that it did so. She claims her burden was fulfilled by evidence that actions and inactions of ENSCO corporate management led in part to Paul’s death. Merema relies on a statement in a report produced by TMS entitled ‘Human Factors Investigation into the fatality that occurred on board the jack‑up rig ENSCO 104 on 23 April 2005.’ [...]”

“We disagree with Merema’s premise as to her burden of proof. The forum non conveniens statute does not place the burden of proof on either party. To the extent evidence is necessary to support a party’s position, the trial court must base its decision on the greater weight of the evidence. ... Here, Merema has not identified any corporate policy linked to Paul’s death, and the report on which she relies states that if safety practices were not being performed, failure to comply was possibly due to a lack of commitment from ENSCO shore management. ENSCO presented uncontroverted evidence that persons addressed by the report ‘rig management and shore management’ were employed by a separate corporation located in Singapore and land‑based personnel were based in Singapore and Australia. Accordingly, the report is no evidence that Paul’s death resulted from an act or omission that occurred in Texas.”

“The public interest factors to consider in determining the fifth factor include administrative difficulties related to court congestion, imposition of jury duty on citizens who have no relation to the litigation, local interest in having localized controversies decided at home, and trying the case in a forum that is at home with the law that governs the case. ... But as previously noted, Merema did not offer evidence that the ENSCO defendants’ actions or omissions in Texas contributed to Paul’s death. Nor did she identify any other Texans who have an interest in the case. The case involves an injury that happened in Singapore’s territorial waters on a Liberian‑flagged vessel to an Australian citizen employed by an Australian company. ...Further, the fact that the trial court has jurisdiction over the defendants because their offices are in Dallas is a separate issue from whether the case should be dismissed on forum non conveniens grounds. ...”

“Another consideration in determining the fifth statutory factor is whether Texas law will govern the case. ... ENSCO and Merema disagree regarding what law will govern. ENSCO asserts that Merema’s claims are governed by the law of Australia or Singapore because those forums have the most significant relationship to the underlying incident. ... Merema counters that if the suit is maintained in Texas, the trial court will apply Texas law or the federal Death on the High Seas Act. See 46 U.S.C. § 30301. But Merema does not explain why Texas law would apply. The applicable law is determined in Texas by the Restatement’s ‘most significant relationship’ test. ... [RESTATEMENT (SECOND) OF CONFLICT OF LAWS §§ 6, 145 (1971)]. The factors to consider in determining the applicable law for a tort case such as this are (1) the place where the injury occurred; (2) the place where the conduct causing the injury occurred; (3) the residence, nationality, and place of business of the parties; and (4) the place where the relationship, if any, between the parties is centered. ... [RESTATEMENT (SECOND) OF CONFLICT OF LAWS § 145(2) (1971)]; see also TEX. CIV. PRAC. & REM.CODE § 71.031(c) (providing that in an action for the death caused by actions outside the state, the court shall apply the rules of substantive law that are ‘appropriate under the facts of the case’). There is evidence of only one of these factors that points to Texas: the residence, nationality, and place of business of ENSCO. And if Merema’s claim falls under the federal Death on the High Seas Act, a similar analysis applicable to maritime cases is required to determine whether foreign law applies. ... Even assuming Texas law applies, however, all other public interest factors favor dismissal of the case. ... We conclude that the fifth statutory factor weighs in favor of granting ENSCO’s motion.” [311 S.W.3d 926‑8]

Finally, also the sixth statutory factor counsels dismissal on forum non conveniens. Dismissal of this suit does not result in unreasonable duplication or proliferation of litigation. TEX. CIV. PRAC. & REM.CODE § 71.051(b)(6). If this case is dismissed, it may result in consolidation of this claim with other claims that are already pending in Australia.

The Court therefore conditionally grants the mandamus. The writ will issue if the trial court fails to dismiss the case.

Citation: In re Ensco Offshore International Company, 311 S.W.3d 922 (Texas 2010).

SERVICE OF PROCESS

In reviewing Service of Process on Estate in Germany, as matter of first impression, Supreme Court of Iowa finds that such service must comply with Hague Service Convention despite Iowa civil procedure rules on service of process abroad

The Petitioners in the following case are tenants in a commercial building in Des Moines, Iowa, previously owned by Clemens Graf Droste zu Vischering (hereinafter “Clemens”). Clemens was a member of a centuries‑old German aristocratic family. Shortly before his death, he transferred the office building to his son Benedikt. Years after Clemens’ death in 1998 and the closing of his Estate in 2006, the Petitioners attempted to re‑open his Estate because Clemens had allegedly defrauded them by increasing their rents pursuant to a secret formula.

The Iowa district court scheduled a hearing and ordered the Petitioners to serve a copy upon Benedikt in Germany. The Petitioners attempted to serve the documents upon Benedikt, while the Executor of Clemens’s estate moved to quash the service because it failed to comply with the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters of 1965 [20 U.S.T. 361; T.I.A.S. 6638; 658 U.N.T.S. 163, in force for U.S. February 10, 1969] (the HSC). In particular, the HSC requires such documents be served through the German Central Authority and include a German translation.

The Petitioners argued that they did not have to comply with the HSC. The district court issued an interlocutory order that found compliance with the HSC unnecessary because the Iowa civil procedure rules define the applicable method of serving process abroad.

The Executor now appeals the interlocutory order.

The Supreme Court of Iowa holds that the district court erred.

“The Hague Service Convention is a multilateral treaty that was formed in 1964 at the Hague Conference of Private International Law. Volkswagenwerk Aktiengesellschaft v. Schlunk, 486 U.S. 694, 698 ... (1988). We have never had occasion to consider the Hague Service Convention and its interplay with the Iowa Rules of Civil Procedure concerning the service of process when the party to be served is living abroad in one of the signatory countries to the Convention.”

“The Hague Service Convention was intended to revise parts of the Hague Convention Treaties on Civil Procedure from 1905 and 1954. ... The revisions were intended to simplify the service of process abroad so as to insure that judicial and extrajudicial documents to be served abroad are brought to the notice of the addressee in sufficient time, and to make available one method of service that will avoid the difficulties and controversy attendant to the use of other methods.”

“ ... Both the United States and Germany have ratified or acceded to the Convention. Volkswagenwerk, 486 U.S. at 698 ...”

“The scope of the Convention is defined by Article 1. ... It states: ‘The present Convention shall apply in all cases, in civil or commercial matters, where there is occasion to transmit a judicial or extrajudicial document for service abroad.’ Hague Service Convention art. 1, 20 U.S.T. at 362. The United States Supreme Court has declared that this language is mandatory. Volkswagenwerk, 486 U.S. at 699 ... ‘By virtue of the Supremacy Clause, U.S. Const. Art. VI, the Convention pre‑empts inconsistent methods of service prescribed by state law in all cases to which it applies.’ ...” [782 N.W.2d 144‑5]

The issue here is whether the HSC applies. In this case, the district court looked to Iowa Rules of Civil Procedure 1.305 and 1.306, which provide acceptable forms of personal service under Iowa law.

The HSC does apply, and the district court therefore erred.

“In the case at issue, the district court ordered the petitioners to serve Benedikt at his residence in Germany and, in fact, documents have been served abroad, first by mail and then by personal service. ‘If the ... forum state defines the applicable method of serving process as requiring the transmittal of documents abroad, then the Hague Service Convention applies.’ Id. at 700 ... While the internal law of the forum state may determine whether serving notice on a defendant must be accomplished through personal service abroad, once the court orders documents to be transmitted abroad, the provisions of the Convention apply. ...”

“Iowa Rule of Civil Procedure 1.306 allows for defendants outside of Iowa to be served in the manners set forth in rule 1.305. Iowa R. Civ. P. 1.306. It also states that ‘[n]othing herein shall limit or affect the right to serve an original notice upon any ... individual ... within or without this state in any manner now or hereafter permitted by statute or rule.’ Id. The district court appears to have interpreted this provision as declaring that anything that conflicts with the methods of service allowed by the law of Iowa is void or need not be followed.”

“The Supremacy Clause establishes the United States Constitution, federal statutes, and U.S. treaties as ‘the supreme Law of the Land.’ U.S. Const., Art. VI, ‘ 2. The United States has ratified the Hague Service Convention. ... It is the supreme law of the land and pre‑empts any inconsistent service methods allowed by state law. ... Iowa Rules of Civil Procedure do not trump the Hague Service Convention and allow Benedikt be personally served in Germany when the Convention requires that he be served through the German Central Authority. ... The district court erred in determining the Hague Service Convention did not apply in this case.” [782 N.W.2d 146‑7]

The Court then discusses the manner in which service can be accomplished.

“Three liberal methods of service employed by the petitioners are permitted under the Hague Service Convention. ... First, service may go through the central authority of the receiving country. ... [HSC art. 5, 20 U.S.T. at 362]. Second, service may go through diplomatic or consular agents that the receiving country considers ‘non‑objectionable.’ ... [HSC art. 8‑11, 20 U.S.T. at 363‑64]. Third, service may be done by any method permitted by the internal law of the receiving country. ... [HSC art. 19, 20 U.S.T. at 365]. In Germany, service is only permitted through the Central Authority although personal service may be affected by court personnel if specifically requested through the Central Authority. Hague Convention Conference on Private International Law, Germany‑Central Authority & practical information, Replies to the 2003 and/or 2008 Service Convention Questionnaire, ...”

“The petitioners attempted to serve Benedikt at his residence in Germany by mail and through personal service. The record contains a return receipt which confirms that they attempted to serve Benedikt personally in compliance with German law through the Coesfeld District Court in Germany; however we are unable to discern if this attempted service was properly commenced through the Central Authority. We are also unable to determine whether the documents were translated into German before being served. As these are two central requirements of the Hague Service Convention, on this record we are unable to determine whether the petitioners complied with the requirements of the Convention.” [782 N.W.2d 147]

The Court therefore remands for the district court to determine whether the service met the HSC requirements.

Citation: In the Matter of the Estate of Clemens Graf Droste zu Vischering, 782 N.W.2d 141 (Iowa 2010).