Volkswagen Aktiengesellschaft v. Schlunk
486 U.S. 694 (1988)

Annotate this Case

U.S. Supreme Court

Volkswagen Aktiengesellschaft v. Schlunk, 486 U.S. 694 (1988)

Volkswagen Aktiengesellschaft v. Schlunk

No. 86-1052

Argued March 21, 1988

Decided June 15, 1988

486 U.S. 694

CERTIORARI TO THE APPELLATE COURT OF ILLINOIS, FIRST

DISTRICT

Syllabus

After his parents were killed in an automobile accident, respondent filed a wrongful death action in an Illinois court, alleging that defects in the automobile designed and sold by Volkswagen of America, Inc. (VWoA), in which the parents were driving, caused or contributed to their deaths. When VWoA's answer denied that it had designed or assembled the vehicle, respondent amended his complaint to add as a defendant petitioner here (VWAG), a German corporation which is the sole owner of VWoA. Respondent attempted to serve the amended complaint on VWAG by serving VWoA as VWAG's agent. Filing a special and limited appearance, VWAG moved to quash the service on the grounds that it could be served only in accordance with the Hague Service Convention, and that respondent had not complied with the Convention's requirements. The court denied the motion, reasoning that VWoA and VWAG are so closely 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 concluded that, because service was accomplished in this country, the Convention did not apply. The Appellate Court of Illinois affirmed, ruling that the Illinois long-arm statute authorized substituted service on VWoA, and that such service did not violate the Convention.

Held: The Hague Service Convention does not apply when process is served on a foreign corporation by serving its domestic subsidiary which, under state law, is the foreign corporation's involuntary agent for service. Pp. 486 U. S. 698-708.

(a) The service of process in this case is not covered by Article I of the Convention, which provides that the Convention "shall apply . . . where there is occasion to transmit a judicial . . . document for service abroad." "Service" means a formal delivery of documents that is legally sufficient to charge the defendant with notice of a pending action. Since the Convention does not itself prescribe a standard for determining the legal sufficiency of the delivery, the internal law of the forum state controls. Thus, where, as here, the forum state's law does not define the applicable method of serving process as requiring the transmittal of documents

Page 486 U. S. 695

abroad, the Convention does not apply. This interpretation is consistent with the negotiating history and the general purposes of the Convention. One purpose of the Convention is to provide means to facilitate service of process abroad. The Convention implements this purpose by requiring each state to establish a central authority to assist in the service of process, and nothing in the present decision interferes with that requirement. Another purpose of the Convention is to assure foreign defendants adequate notice. The present decision does not necessarily advance this purpose, because it makes application of the Convention depend on the forum's internal law; however, it is unlikely that any country will draft its internal laws deliberately so as to circumvent the Convention in cases in which it would be appropriate to transmit judicial documents for service abroad. Furthermore, this decision does not prevent voluntary compliance with the Convention even when the forum's internal law does not so require, and such compliance can be advantageous. Pp. 486 U. S. 698-706.

(b) VWAG's contention that service upon it was not complete until VWoA transmitted the complaint to it in Germany, and that this transmission "for service abroad" rendered the Convention applicable to the case under Article I, is without merit. Where, as here, service on a domestic agent is valid and complete under both state law and the Due Process Clause without an official transmission of documents abroad, the inquiry ends and the Convention has no further implications. Pp. 486 U. S. 706-708.

145 Ill.App.3d 594, 503 N.E.2d 1045, affirmed.

O'CONNOR, J., delivered the opinion of the Court, in which REHNQUIST, C.J., and WHITE, STEVENS, SCALIA, and KENNEDY, JJ., joined. BRENNAN, J., filed an opinion concurring in the judgment, in which MARSHALL and BLACKMUN, JJ., joined, post, p. 486 U. S. 708.

Page 486 U. S. 696

JUSTICE O'CONNOR delivered the opinion of the Court.

This case involves an attempt to serve process on a foreign corporation by serving its domestic subsidiary which, under state law, is the foreign corporation's involuntary agent for service of process. We must decide whether such service is compatible with the Convention on Service Abroad of Judicial and Extrajudicial Documents in Civil and Commercial Matters, Nov. 15, 1965 (Hague Service Convention), [1969] 20 U.S.T. 361, T.I.A.S. No. 6638.

I

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, Illinois. 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 also alleged that the driver of the other automobile involved in the collision was negligent; Schlunk has since obtained a default judgment against that person, who is no longer a party to this lawsuit. Schlunk successfully served his complaint on 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), which is the petitioner

Page 486 U. S. 697

here. 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 closely 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 Circuit Court certified two questions to the Appellate Court of Illinois. For reasons similar to those given by the Circuit Court, the Appellate Court determined that VWoA is VWAG's agent for service of process under Illinois law, and that the service of process in this case did not violate the Hague Service Convention. 145 Ill.App.3d 594, 503 N.E.2d 1045 (1986). After the Supreme Court of Illinois denied VWAG leave to appeal, 112 Ill.2d 595 (1986), VWAG petitioned this Court for a writ of certiorari to review the Appellate Court's interpretation of the Hague Service Convention. We granted certiorari to address this issue, 484 U.S. 895 (1987), which has given rise to disagreement among the lower

Page 486 U. S. 698

courts. Compare Ex parte Volkswagenwerk A.G., 443 So.2d 880, 881 (Ala.1983) (holding that the Hague Service Convention does not apply if a foreign national is served properly through its agent in this country); Zisman v. Sieger, 106 F.R.D.194, 199-200 (ND Ill.1985) (same); Lamb v. Volkswagenwerk A.G., 104 F.R.D. 95, 97 (SD Fla.1985) (same); McHugh v. International Components Corp., 118 Misc.2d 489, 491-492, 461 N.Y.S.2d 166, 167-168 (1983) (same), with Cippolla v. Picard Porsche Audi, Inc., 496 A.2d 130, 131-132 (R. I.1985) (holding that the Hague Service Convention is the exclusive means of serving a foreign corporation); Wingert v. Volkswagenwerk A.G., Civ. Action Nos. 3:86-2994-16 and 3:86-2995-16 (S.C. May 19, 1987), slip op. at 3-4 (same).

II

The Hague Service Convention is a multilateral treaty that was formulated in 1964 by the Tenth Session of the Hague Conference of Private International Law. The Convention revised parts of the Hague Conventions 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. 3 1964 Conference de la Haye de Droit International Prive, Actes et Documents de la Dixieme Session (Notification) 75-77, 363 (1965) (3 Actes et Documents); 1 B. Ristau, International Judicial Assistance (Civil and Commercial) § 4-1 (1984 and 1 Supp.1986) (1 Ristau). Representatives of all 23 countries that were members of the Conference approved the Convention without reservation. Thirty-two countries, including the United States and the Federal Republic of Germany, have ratified or acceded to the Convention. Brief for United States as Amicus Curiae 2, n. 2 (filed Sep. 12, 1987).

The primary innovation of the Convention is that it requires each state to establish a central authority to receive requests for service of documents from other countries. 20

Page 486 U. S. 699

U.S.T. 362, T.I.A.S. 6638, Art. 2. Once a central authority receives a request in the proper form, it must serve the documents by a method prescribed by the internal law of the receiving state or by a method designated by the requester and compatible with that law. Art. 5. The central authority must then provide a certificate of service that conforms to a specified model. Art. 6. A state also may consent to methods of service within its boundaries other than a request to its central authority. Arts. 8-11, 19. The remaining provisions of the Convention that are relevant here limit the circumstances in which a default judgment may be entered against a defendant who had to be served abroad and did not appear, and provide some means for relief from such a judgment. Arts. 15, 16.

Article 1 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."

20 U.S.T. at 362. The equally authentic French version says,

"La presente Convention est applicable, en matiere civile ou commerciale, dans tous les cas ou un acte judiciaire ou extrajudiciaire doit etre transmis a l'etranger pour y etre signifie ou notifie."

Ibid. This language is mandatory, as we acknowledged last Term in Societe Nationale Industrielle Aerospatiale v. United States District Court,482 U. S. 522, 482 U. S. 534, n. 15 (1987). By virtue of the Supremacy Clause, U.S.Const., Art. VI, the Convention preempts inconsistent methods of service prescribed by state law in all cases to which it applies. Schlunk does not purport to have served his complaint on 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.

When interpreting a treaty, we "begin with the text of the treaty and the context in which the written words are used.'"

Page 486 U. S. 700

Societe Nationale, supra, at 482 U. S. 534 (quoting Air France v. Saks,470 U. S. 392, 470 U. S. 397 (1985)). Other general rules of construction may be brought to bear on difficult or ambiguous passages.

"'Treaties are construed more liberally than private agreements, and, to ascertain their meaning, we may look beyond the written words to the history of the treaty, the negotiations, and the practical construction adopted by the parties.'"

Air France v. Saks, supra, at 470 U. S. 396 (quoting Choctaw Nation of Indians v. United States,318 U. S. 423, 318 U. S. 431-432 (1943)).

The Convention does not specify the circumstances in which there is "occasion to transmit" a complaint "for service abroad." But at least the term "service of process" has a well established technical meaning. Service of process refers to a formal delivery of documents that is legally sufficient to charge the defendant with notice of a pending action. 1 Ristau § 4-5(2), p. 123 (interpreting the Convention); Black's Law Dictionary 1227 (5th ed.1979); see 4 C. Wright & A. Miller, Federal Practice and Procedure § 1063, p. 225 (2d ed.1987). The legal sufficiency of a formal delivery of documents must be measured against some standard. The Convention does not prescribe a standard, so we almost necessarily must refer to the internal law of the forum state. If the internal law of the forum state defines the applicable method of serving process as requiring the transmitter of documents abroad, then the Hague Service Convention applies.

The negotiating history supports our view that Article I refers to service of process in the technical sense. The committee that prepared the preliminary draft deliberately used a form of the term "notification" (formal notice), instead of the more neutral term "remise" (delivery), when it drafted Article 1. 3 Actes et Documents at 78-79. Then, in the course of the debates, the negotiators made the language even more exact. The preliminary draft of Article 1 said that the present Convention shall apply in all cases in which there are grounds to transmit or to give formal notice of

Page 486 U. S. 701

a judicial or extrajudicial document in a civil or commercial matter to a person staying abroad. Id. at 65 ("La presente Convention est applicable dans tous les cas ou il y a lieu de transmettre ou de notifier un acte judiciaire ou extrajudiciaire en matiere civile ou commerciale a une personne se trouvant a l'etranger") (emphasis added). To be more precise, the delegates decided to add a form of the juridical term "signification" (service), which has a narrower meaning than "notification" in some countries, such as France, and the identical meaning in others, such as the United States. Id. at 152-153, 155, 159, 366. The delegates also criticized the language of the preliminary draft because it suggested that the Convention could apply to transmissions abroad that do not culminate in service. Id. at 165-167. The final text of Article 1, supra, eliminates this possibility and applies only to documents transmitted for service abroad. The final report (Rapport Explicatif) confirms that the Convention does not use more general terms, such as delivery or transmission, to define its scope because it applies only when there is both transmission of a document from the requesting state to the receiving state and service upon the person for whom it is intended. Id. at 366.

The negotiating history of the Convention also indicates that whether there is service abroad must be determined by reference to the law of the forum state. The preliminary draft said that the Convention would apply "where there are grounds" to transmit a judicial document to a person staying abroad. The committee that prepared the preliminary draft realized that this implied that the forum's internal law would govern whether service implicated the Convention. Id. at 80-81. The reporter expressed regret about this solution, because it would decrease the obligatory force of the Convention. Id. at 81. Nevertheless, the delegates did not change the meaning of Article 1 in this respect.

The Yugoslavian delegate offered a proposal to amend Article 1 to make explicit that service abroad is defined according

Page 486 U. S. 702

to the law of the state that is requesting service of process. Id. at 167. The delegate from the Netherlands supported him. Ibid. The German delegate approved of the proposal in principle, although he thought it would require a corresponding reference to the significance of the law of the state receiving the service of process, and that this full explanation would be too complicated. Id. at 168. The President opined that there was a choice to be made between the phrase used by the preliminary draft, "where grounds exist," and the Yugoslavian proposal to modify it with the phrase, "according to the law of the requesting state." Ibid. This prompted the Yugoslavian delegate to declare that the difference was immaterial, because the phrase "where grounds exist" necessarily refers to the law of the forum. Ibid. The French delegate added that, in his view, the law of the forum, in turn, is equivalent to the law of the requesting state. Id. at 169. At that point, the President recommended entrusting the problem to the drafting committee.

The drafting committee then composed the version of Article 1 that ultimately was adopted, which says that the Convention applies "where there is occasion" to transmit a judicial document for service abroad. Id. at 211. After this revision, the reporter again explained that one must leave to the requesting state the task of defining when a document must be served abroad; that this solution was a consequence of the unavailability of an objective test; and that, while it decreases the obligatory force of the Convention, it does provide clarity. Id. at 254. The inference we draw from this history is that the Yugoslavian proposal was rejected because it was superfluous, not because it was inaccurate, and that "service abroad" has the same meaning in the final version of the Convention as it had in the preliminary draft.

VWAG protests that it is inconsistent with the purpose of the Convention to interpret it as applying only when the internal law of the forum requires service abroad. One of the two stated objectives of the Convention is

"to create

Page 486 U. S. 703

appropriate means to ensure that judicial and extrajudicial documents to be served abroad shall be brought to the notice of the addressee in sufficient time."

20 U.S.T. at 362. The Convention cannot assure adequate notice, VWAG argues, if the forum's internal law determines whether it applies. VWAG warns that countries could circumvent the Convention by defining methods of service of process that do not require transmission of documents abroad. Indeed, VWAG contends that one such method of service already exists, and that it troubled the Conference: notification au parquet.

Notification au parquet permits service of process on a foreign defendant by the deposit of documents with a designated local official. Although the official generally is supposed to transmit the documents abroad to the defendant, the statute of limitations begins to run from the time that the official receives the Documents, and there allegedly is no sanction for failure to transmit them. 3 Actes et Documents at 167-169; S.Exec.Rep. No. 6, 90th Cong., 1st Sess., 12 (1967) (statement of Philip Amram, member of the United States delegation); 1 Ristau § 4-33, p. 172. At the time of the 10th Conference, France, the Netherlands, Greece, Belgium, and Italy utilized some type of notification au parquet. 3 Actes et Documents at 75.

There is no question but that the Conference wanted to eliminate notification au parquet.Id. at 75-77. It included in the Convention two provisions that address the problem. Article 15 says that a judgment may not be entered unless a foreign defendant received adequate and timely notice of the lawsuit. Article 16 provides means whereby a defendant who did not receive such notice may seek relief from a judgment that has become final. 20 U.S.T. at 364-365. Like Article 1, however, Articles 15 and 16 apply only when documents must be transmitted abroad for the purpose of service. 3 Actes et Documents at 168-169. VWAG argues that, if this determination is made

Page 486 U. S. 704

according to the internal law of the forum state, the Convention will fail to eliminate variants of notification au parquet that do not expressly require transmittal of documents to foreign defendants. Yet such methods of service of process are the least likely to provide a defendant with actual notice.

The parties make conflicting representations about whether foreign laws authorizing notification au parquet command the transmittal of documents for service abroad within the meaning of the Convention. The final report is itself somewhat equivocal. It says that, although the strict language of Article 1 might raise a question as to whether the Convention regulates notification au parquet, the understanding of the drafting Commission, based on the debates, is that the Convention would apply. Id. at 367. Although this statement might affect our decision as to whether the Convention applies to notification au parquet, an issue we do not resolve today, there is no comparable evidence in the negotiating history that the Convention was meant to apply to substituted service on a subsidiary like VWoA, which clearly does not require service abroad under the forum's internal law. Hence neither the language of the Convention nor the negotiating history contradicts our interpretation of the Convention, according to which the internal law of the forum is presumed to determine whether there is occasion for service abroad.

Nor are we persuaded that the general purposes of the Convention require a different conclusion. One important objective of the Convention is to provide means to facilitate service of process abroad. Thus the first stated purpose of the Convention is "to create" appropriate means for service abroad, and the second stated purpose is "to improve the organisation of mutual judicial assistance for that purpose by simplifying and expediting the procedure." 20 U.S.T. at 362. By requiring each state to establish a central authority to assist in the service of process, the Convention implements this enabling function. Nothing in our decision today interferes with this requirement.

Page 486 U. S. 705

VWAG correctly maintains that the Convention also aims to ensure that there will be adequate notice in cases in which there is occasion to serve process abroad. Thus compliance with the Convention is mandatory in all cases to which it applies, see supra,486 U. S. 700-701, and Articles 15 and 16 provide an indirect sanction against those who ignore it, see 3 Actes et Documents at 92, 363. Our interpretation of the Convention does not necessarily advance this particular objective, inasmuch as it makes recourse to the Convention's means of service dependent on the forum's internal law. But we do not think that this country, or any other country, will draft its internal laws deliberately so as to circumvent the Convention in cases in which it would be appropriate to transmit judicial documents for service abroad. For example, there has been no question in this country of excepting foreign nationals from the protection of our Due Process Clause. Under that Clause, foreign nationals are assured of either personal service, which typically will require service abroad and trigger the Convention, or substituted service that provides

"notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections."

Mullane v. Central Hanover Bank & Trust Co.,339 U. S. 306, 339 U. S. 314 (1950). *

Page 486 U. S. 706

Furthermore, nothing that we say today prevents compliance with the Convention even when the internal law of the forum does not so require. The Convention provides simple and certain means by which to serve process on a foreign national. Those who eschew its procedures risk discovering that the forum's internal law required transmittal of documents for service abroad, and that the Convention therefore provided the exclusive means of valid service. In addition, parties that comply with the Convention ultimately may find it easier to enforce their judgments abroad. See Westin, Enforcing Foreign Commercial Judgments and Arbitral Awards in the United States, West Germany, and England, Law & Policy Int'l Bus. 325, 340-341 (1987). For these reasons, we anticipate that parties may resort to the Convention voluntarily, even in cases that fall outside the scope of its mandatory application.

III

In this case, the Illinois long-arm statute authorized Schlunk to serve VWAG by substituted service on VWoA, without sending documents to Germany. See Ill.Rev.Stat., ch. 110,

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