Prior to May 22, 2017, there was a split among U.S. federal appellate courts as to whether service of process abroad, through postal channels, is permissible under the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil and Commercial Matters (“Hague Service Convention”). That changed when the U.S. Supreme Court handed down its ruling in Water Splash, Inc. v. Menon, 581 U.S. ____ (2017) (“Water Splash“). In an 8-0 unanimous decision, the Water Splash Court resolved the “service by mail” question in “cases governed by the Hague Service Convention” with a yes, subject to two conditions: “first, the receiving state has not objected to service by mail; and second, service by mail is authorized under otherwise-applicable law.” In so holding, the Court not only formally aligned the U.S. with the view of its own State Department; the Court also aligned the U.S. with an array of other countries, including the United Kingdom and Canada.
Facts and Procedural History
In Water Splash, the petitioner (“Water Splash”) was a Texas-based aquatic playground systems corporation that sued its former employee (“Menon”) in Texas state court over allegedly working for a competitor while still under Water Splash’s employment. But Menon was a resident of Canada, and was based there by the time that Water Splash attempted to serve her with process. So Water Splash sought permission to, and did, effect the service on Menon in Canada through certified mail. Menon declined to answer, and the Texas trial court entered a default judgment against her. Menon then moved to set aside the default judgment on the basis that she had been improperly served. After the trial court denied Menon’s motion, the majority panel on the Texas appellate court reversed, agreeing with Menon’s argument that service by mail does not comport with the requirements of the Hague Service Convention. The issue eventually reached the U.S. Supreme Court, which heard oral argument on March 22, 2017 and rendered its decision in Water Splash’s favor exactly two months later.
Water Splash Court’s Ruling and Analysis
The Supreme Court in Water Splash reversed the Texas appellate court — and held that the Hague Service Convention does not prohibit service by mail — for reasons based both within and beyond the Convention’s text. The Court first observed that the plain text of the Hague Service Convention favors the interpretation that accommodates service abroad through postal channels. The Court evaluated Article 10(a) of the Convention, in particular, which permits the “freedom to send judicial documents, by postal channels, directly to persons abroad” provided that the “State of destination does not object“. The Court referred to the definition of “send”, set forth in Black’s Law Dictionary, and construed the term within the meaning of Article 10(a) to be a “broad term”, explaining that “there is no apparent reason why it would exclude transmission of documents for a particular purpose (namely, service).”
The Court then addressed the structure of Article 10(a) in relation to its sister provisions, (b) and (c), which use the word “service” and do not use the word “send”. The Court considered the Convention’s preamble, Article 1, and its prior ruling in Volkswagenwerk Aktiengesellschaft v. Schlunk, 486 U.S. 694, 701 (1988), to recognize that the broader Convention language contemplates service of process abroad. The Court rejected Menon’s argument that Article 10(a) only applied to “post-answer” documents, stating that it would be “quite strange if Article 10(a) — apparently alone among the Convention’s provisions — concerned something other than service of documents.” If the “drafters wished to limit Article 10(a) to a particular subset of documents, they presumably would have said so“. Indeed, “[n]othing about the word ‘send’“, according to the Court, “suggests that Article 10(a) is narrower than 10(b) and 10(c), let alone that Article 10(a) is somehow limited to ‘post-answer’ documents.” (Emphasis in original.) The Court also cited the “equally authentic” French version of the Convention, noting that the word “addresser”, the French “counterpart to the word ‘send’ in Article 10(a),” has been “consistently interpreted as meaning service or notice.” The Court’s review of the Convention’s text and structure, therefore, favored the conclusion that service abroad by registered mail was not prohibited.
Not stopping there, however, the Court likewise rooted its holding in the Hague Service Convention’s drafting history along with the views of the U.S. Executive branch and other Convention signatories. The Court emphasized that the member of the U.S. delegation most closely involved in the Convention’s drafting, Philip W. Amram, had stated that “Article 10 permits direct service by mail … unless [the receiving] state objects to such service.” The “Rapporteur’s report on a draft version of Article 10” supported the same position. As for the views of the U.S. Executive, the Court noted that in the “half century since the Convention was adopted, the Executive has consistently maintained that the Hague Service Convention allows service by mail.” Among other things, the Court pointed to the U.S. State Department’s website, which provides that “[s]ervice by registered … mail is an option in many countries in the world“. Finally, as to other Convention signatories, the Court observed that “[m]ultiple foreign courts have held that the Hague Service Convention allows for service by mail“, citing to decisions made in the UK, Canada, and elsewhere. The Court added that other Convention signatories “have either objected, or declined to object, to service by mail under Article 10, thereby acknowledging that Article 10 encompasses service by mail.” Several Special Commissions, consisting of contracting countries, have also “expressly stated that the Convention does not prohibit service by mail.”
Having completed its analysis, the Supreme Court concluded that the “traditional tools of treaty interpretation unmistakeably demonstrate that Article 10(a) encompass service by mail.” The Court was careful to limit its Water Splash ruling, however: “To be clear, this does not mean that the Convention affirmatively authorizes service by mail.” (Emphasis in original.) The Court clarified that “in cases governed by the Hague Service Convention, service by mail is permissible if two conditions are met: first, the receiving state has not objected to service by mail; and second, service by mail is authorized under otherwise-applicable law.”
Potential Implications of Water Splash on Arbitration?
The Supreme Court’s Water Splash decision should streamline the initiation of legal court actions in the U.S. against certain non-U.S. defendants. However, precisely how far this ruling will extend to other contexts, including the arbitration context, is not yet clear. For one, per the Court’s admonition, Water Splash does not mean that service through the mail is acceptable everywhere. The ruling is expressly confined to the situation in which the receiving state is a non-objecting member to the Hague Service Convention and service of process by mail does not violate “otherwise applicable law.”
Moreover, the Water Splash Court did not specifically address whether, and to what degree, its holding may apply to arbitral matters. It is possible that Water Splash could have a direct impact in the arbitral enforcement context. Parties looking to enforce an arbitral award in the U.S. may now have an easier time — by using the postal service — serving requests to confirm the arbitral award on opposing parties based abroad, so long as the “receiving state” has not objected and “otherwise-applicable law” is not violated. However, even if this possibility materializes, other questions remain. For example, will a U.S. claimant’s delivery of a demand for a U.S.-seated arbitration, through registered mail on a non-signatory respondent that resides in Canada, be deemed sufficient service of process under the Hague Service Convention? The Water Splash decision does not speak to such a scenario, and in fact does not define the phrase, “in cases governed by the Hague Convention“. Thus, although Water Splash clearly answered the question presented with a “yes”, it answered only that question and, by implication, left others for another day.