Chicago Daily Law Bulletin

Illinois Opinions
Service of process: Hague Convention

By THEODORE POSTEL

Syllabus:
Process served on a foreign corporation by serving its domestic subsidiary which, under state law, is the foreign corporation's involuntary agent for service of process is proper. Compliance with the Hague Convention is not necessary.

US. Supreme Court (1988).

Chicago's Jack Ring has obtained a precedent-setting 9-0 ruling from the U.S. Supreme Court concerning the issue of service of process on a foreign corporation. Prior to this ruling, the law on this subject was iii conflict. Jack obtained the resolution of the conflict that is most favorable to the plaintiffs' bar. The facts of the case are as follows:
The parents of respondent Herwig Schlunk were killed in an automobile accident in 1983. Schlunk filed a wrongful death action on their behalf in the Circuit Court of Cook County.
Schlunk alleged that Volkswagen of America, Inc., (VWOA) had designed and sold the automobile that his parents were driving, and that defects in the automobile caused or contributed to their deaths.
Schlunk successfully served his complaint to. VWoA, and VWoA filed an answer denying that it had designed or assembled the automobile in question. Schlunk then amended the complaint to add as a defendant Volkswagen Aktiengesellschaft (VWAG).
VWAG, a corporation established under the laws of the Federal Republic of Germany, has its place of business in that country. VWoA is a wholly owned subsidiary of VWAG. Schlunk attempted to serve his amended complaint on VWAG by serving VWoA as VWAG's agent.
VWAG filed a special and limited appearance for the purpose of quashing service. VWAG asserted that it could be served only in accordance with the Hague Service Convention, and that Schlunk had not complied with the Convention's requirements.
The Circuit Court denied VWAG's motion. It first observed that VWoA is registered to do business in Illinois and has a registered agent for receipt of process in Illinois. The court then reasoned that VWoA and VWAG are so clearly related that VWoA is VWAG's agent for service of process as a matter of law, notwithstanding VWAG's failure or refusal to appoint VWoA formally as an agent.
The court relied on the facts that VWoA is a wholly owned subsidiary of VWAG, that a majority of the members of the board of directors of VWoA are members of the board of VWAG, and that VWoA is by contract the exclusive importer and distributor of VWAG products sold in the United States. The court concluded that, because service was accomplished within the United States, the Hague Service Convention did not apply.
The Illinois Appellate Court affirmed (145 Ill.App.3d 594). The Illinois Supreme Court denied leave to appeal. (112 Ill.2d 595).
The U.S. Supreme Court granted certiorari and in a 9-0 decision written by Justice Sandra Day O'Connor, stated as follows:
"The Hague Service Convention is a multilateral treaty that was formulated in 1964 by the 10th Session of the Hague Conference of Private International Law. The Convention revised parts of the Hague Convention on Civil Procedure of 1905 and 1954. The revision was intended to provide a simpler way to serve process abroad, to assure that defendants sued in foreign jurisdictions would receive actual and timely notice of suit, and to facilitate proof of service abroad...
"Article I defines the scope of the Convention, which is the subject of controversy in this case. It says: '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...
"Schlunk does not purport to have served his complaint in VWAG in accordance with the Convention. Therefore, if service of process in this case falls within Article I of the Convention, the trial court should have granted VWAG's motion to quash...
"In this case, the Illinois long-arm statute authorized Schlunk to serve VWAG by substituted service on VWOA, without sending documents in Germany... VWAG has not petitioned for review of the Illinois Appellate Court's holding that service was proper as a matter of Illinois law.
"VWAG contends, however, that service on VWAG was not complete until VWoA transmitted the complaint to VWAG in Germany. According to VWAG, this transmission constituted service abroad under the Hague Service Convention...
"We reject this argument. Where service on a domestic agent is valid and complete under both state law and the due process clause, our inquiry ends and the Convention has no further implications...
"We conclude that this case does not present an occasion to transmit a judicial document for service abroad within the meaning of Article 1. Therefore the Hague Service Convention does not apply, and service was proper. The judgment of the Appellate Court is affirmed."
(Comment: Prior to this case the law on this subject was in conflict, with several courts holding that the Hague Service Convention was the exclusive means of serving a foreign corporation.)