Export-Import Bank of U.S. v. Asia Pulp Paper Co., Ltd.

Full title: EXPORT-IMPORT BANK OF THE UNITED STATES, Plaintiff, v. ASIA PULP PAPER…

Court: United States District Court, S.D. New York

Date published: May 11, 2005

03 Civ. 8554 (LTS) (JCF) (S.D.N.Y. May. 11, 2005)

Opinion

03 Civ. 8554 (LTS) (JCF).

May 11, 2005

MEMORANDUM AND ORDER

JAMES FRANCIS, Magistrate Judge

The Export-Import Bank of the United States ("Ex-Im") brings this action under the Federal Debt Collection Procedures Act (the "FDCPA"), 28 U.S.C. § 3001 et seq., to recover a judgment on debts allegedly due to it from Asia Pulp Paper Co., Ltd. ("APP") and its subsidiaries PT Indah Kiat Pulp Paper Tbk ("Indah Kiat"), PT Pabri Kertas Tjiwi Kimia Tbk ("Tjiwi Kimia"), and PT Pindo Deli Pulp Paper Mills ("Pindo Deli") (collectively, the "Subsidiaries"). Ex-Im asserts that it has attempted to serve the Subsidiaries by international registered mail, return receipt requested, and that it has successfully served them by DHL, an international courier service. Ex-Im now moves to declare service valid nunc pro tunc, and for leave to serve its Second Amended Complaint by DHL. For the reasons set forth below, the plaintiff's motion is granted. Background

Ex-Im is a corporation organized and existing under federal law as an agency of the United States of America. See 12 U.S.C. § 635. In this action, it asserts claims against APP and the Subsidiaries for breach of loan and guarantee agreements. (Declaration of Sarah E. Light dated Dec. 30, 2004 ("Light Decl."), attached to Plaintiff's Notice of Motion, ¶ 3). These agreements are embodied in various transaction documents which contain service of process provisions:

Subsidiary Transaction No. Service Provisions

Indah Kiat AP071268 Light Decl., Exh. A, ¶ 12.03 at US-000637-38 AP069195 Light Decl., Exh. B, ¶ 8.4 at US-000113-14 AP070292 Light Decl., Exh. C, ¶ 4(b) at US-000503 AP067169 Light Decl., Exh. D, ¶ 11.03 at US-000024 Tjiwi Kimia AP069899 Light Decl., Exh. J, ¶ 12.03 at US-000375-76 AP070294 Light Decl., Exh. K, ¶ 4(b) at US-000264 Pindo Deli AP071220 Light Decl., Exh. O, ¶ 13 at US-000159 The plaintiff commenced this action by filing a Summons and Complaint on October 29, 2003. (Declaration of Kenneth Puhala dated January 18, 2005 ("Puhala Decl."), Exh. B, Docket No. 1). Ex-Im has not asserted, however, that it attempted to serve this pleading on any of the Subsidiaries. (Specially Appearing Indonesian Defendants' Memorandum in Opposition to Plaintiff's Motion ("Def. Memo.") at 1-2). Rather, on February 11, 2004, it informed the Court that it planned to file a First Amended Complaint and requested an extension of certain Court deadlines "in light of . . . complex rules for service of process." (Puhala Decl., Exh. A). The Court granted Ex-Im's request on Febrary 17, 2004. (Puhala Decl., Exh. B).

Ex-Im claims that it initially "attempted service of the First Amended Complaint on each of the Subsidiaries . . . in accordance with the [parties'] agreements . . . by international registered mail, return receipt requested, dispatched by the Clerk of [the] Court." (Light Decl., ¶ 4). Ex-Im acknowledges, though, that it did not receive return receipts. (Light Decl., ¶ 4). Subsequently, Ex-Im itself tried to serve the Subsidiaries by international mail, return receipt requested, using the address of the parent company and co-defendant, APP. (Plaintiff's Memorandum of Law In Support of Motion to Declare Service ValidNunc Pro Tunc, and For Leave To Serve the Second Amended Complaint By DHL ("Pl. Memo.") at 10). But these packages were either "refused or otherwise undeliverable." (Light Decl., ¶ 4).

Ex-Im then obtained addresses for the Subsidiaries from the World Wide Web, though these differed from the addresses contained in the parties' agreements. (Light Decl., ¶ 4; Pl. Memo. at 10). Copies of the Summons and First Amended Complaint were successfully delivered to the Subsidiaries at these addresses by the international courier service DHL. (Light Decl., ¶ 4).

Discussion

Ex-Im seeks an order under either Rule 4(f)(2)(C)(ii) or Rule 4(f)(3) of the Federal Rules of Civil Procedure declaring service on the Indonesian Subsidiaries valid nunc pro tunc and granting leave to serve the Second Amended Complaint.

A. Rule 4(f)(2)(C)(ii)

Rule 4(f)(2)(C)(ii) provides that service may be effected outside the United States "by . . . any form of mail requiring a signed receipt, to be addressed and dispatched by the clerk of the court to the party to be served." This Rule is limited to instances where "there is no internationally agreed means of service or the applicable international agreement allows other means of service." Fed.R.Civ.P. 4(f)(2). In addition, service cannot be effected under this Rule in a manner "prohibited by the law of the foreign country." Fed.R.Civ.P. 4(f)(2)(C). Ex-Im contends that its efforts at service both by international mail and by DHL courier were effective under this rule.

As a threshold matter, Indonesia is not party to any applicable treaty or agreement. See Dee-K Enterprises Inc. v. Heveafil Sdn. Bhd., 174 F.R.D. 376, 378 (E.D. Va. 1997); Graval v. P.T. Bakrie Brothers, 986 F. Supp. 1326, 1329 n. 2 (C.D. Cal. 1996); United States Department of State, Treaties in Force, available at http://www.state.gov/s/1 (site last visited May 11, 2005). However, the attempted service by mail was ineffective here both because, in some instances, the service was initiated by the plaintiff rather than by the Clerk of the Court, and because the Subsidiaries never executed return receipts. (Light Decl., ¶ 4 Pl. Memo. at 10). See Marine Trading Ltd. v. Naviera Comercial Naylamp S.A., 879 F. Supp. 389, 392 (S.D.N.Y. 1995) (service by mail not effective where no receipt returned).

The plaintiff has furnished proof of service by DHL. (Light Decl., Exhs. M, N, P, Q, R, S, T, U, V). Again, however, the Clerk of the Court was not responsible for dispatching the summons and complaint, as required by Rule 4(f)(2)(C)(ii). Furthermore, because Indonesia appears to prohibit service by international courier, service would not have been effective under this subsection in any event.¹

1 The parties have not addressed whether an international courier like DHL even qualifies as a "form of mail" within the terms of Rule 4(f)(2)(C)(ii). Cf. In re Cinar Corp. Securities Litigation, 186 F. Supp. 2d 279, 304 (E.D.N.Y. 2002) (questioning, without deciding, whether an international courier constituted a "postal channel" under the Hague Convention provisions for service). That question need not be decided here, however, as there are other grounds for finding service inadequate under that subsection of the Rule.

A court determines foreign law as a matter of law. See Vishipco Line v. Chase Manhattan Bank, 660 F.2d 854, 859-60 (2d Cir. 1981); Norex Petroleum Ltd. v. Access Industries, Inc., 304 F. Supp. 2d 570, 577 (S.D.N.Y. 2004). In that determination, the court "may consider any relevant material or source." Fed R. Civ. P. 44.1.

The Subsidiaries have presented the Declaration of Marx Andryan, an Indonesian attorney (Declaration of Marx Andryan dated Jan. 14, 2005 ("Andryan Decl.")), and §§ 6.1 and 6.2 of the "Guidelines to Carrying Out of the Task and Administration of the Court-Book II, the Supreme Court of the Republic of Indonesia" (the "Guidelines"). (Andryan Decl., Exh. A). The Guidelines state that "[s]ummons to parties to attend a court proceeding must be delivered by a bailiff." (Guidelines, § 6.1). Furthermore, according to Mr. Andryan, under Indonesian law, "service of legal proceedings commenced outside of Indonesia must and can only be effected through an Indonesian court-appointed bailiff." (Andryan Decl., ¶ 3). Accordingly, the Subsidiaries argue that "[s]ervice by private parties, including service by mail or courier service is prohibited and ineffective as it offends Indonesian law and sovereignty." (Andryan Decl., ¶ 3).

The plaintiff, in turn, submits a flyer published by the United States Department of State entitled "Indonesia Judicial Assistance," (the "DOS Circular") (attached as Exh. W to Supplemental Declaration of Sarah E. Light dated Jan. 25, 2005). The DOS Circular states that "[s]ervice of process can be effected in Indonesia [by] [i]nternational registered mail, return receipt requested." (DOS Circular, ¶ entitled "Service of Process"). But the flyer also states that "it is not an opinion on any aspect of . . . foreign . . . law," and that "[t]he U.S. Department of State does not intend by [its] contents . . . to take a position on any aspect of any pending litigation." (DOS Circular, ¶ entitled "Proviso"). Therefore, the DOS Circular cannot be considered an authoritative source on Indonesian law for the purposes of this motion.

The caselaw is divided. The plaintiff argues that Resource Ventures, Inc. v. Resources Management International, Inc., 42 F. Supp. 2d 423, 430 (D. Del. 1999), and Dee-K, 174 F.R.D. at 381-82, hold that service of process by mail and by international courier are not prohibited methods of service in Indonesia. TheResource Ventures opinion, however, was grounded on an Indonesian lawyer's affidavit which stated that a bailiff in Indonesia may serve process by registered mail. Resource Ventures, 42 F. Supp. 2d at 430. In light of this, the court found that service of process by international registered mail was "not prohibited." Id. Here, Ex-Im has proffered no such evidence.

Similarly, in Dee-K the court relied on an Indonesian lawyer's declaration that "service by any form of mail, including DHL, with or without a return receipt, is not effective service under Indonesian law." 174 F.R.D. at 381-82 (internal quotations omitted). But, the court reasoned, "[a]n ineffective or invalid form of service is not necessarily a prohibited form of service."Id. at 381. And, since "explicit permission for a form of return receipt mail service is not required by [Rule 4(f)](2)(C)(ii)]," the court held that service in Indonesia by DHL was valid. Id.

Here, by contrast, Mr. Andryan explicitly states in his affidavit that "service by mail or courier service isprohibited" in Indonesia. (Andryan Decl., ¶ 3) (emphasis added). That construction is supported by the Guidelines, at least in the translation that has been submitted to the Court. If a summons "must" be delivered by a bailiff, then alternative forms of service are indeed prohibited, even if no penalty is imposed on the party who initiates them. It would be a different situation if Indonesian law merely provided that service "may" be effected by the bailiff; in that circumstance, alternative means of service, while not expressly authorized, would nevertheless not be prohibited. Based on similar evidence, the court inGraval, 986 F. Supp. at 1329, concluded that service by mail could not be made in Indonesia pursuant to Rule 4(f)(2)(C)(ii). There, Indonesian lawyers advised that Indonesian law "prohibits service by mail, including service by mail with a return receipt requested." Id.

In sum, while the authority is divided, the record in this case tips in favor of a determination that service made by mail in Indonesia would not be effective under Rule 4(f)(2)(C)(ii).

B. Rule 4(f)(3)

That conclusion, however, does not preclude a finding that service by mail or DHL may be effective under Rule 4(f)(3). That subsection provides that service may be effected "by other means not prohibited by international agreement as may be directed by the court." As the Ninth Circuit Court of Appeals has observed,

service under Rule 4(f)(3) must be (1) directed by the court; and (2) not prohibited by international agreement. No other limitations are evident from the text. In fact, as long as court-directed and not prohibited by an international agreement, service of process ordered under Rule 4(f)(3) may be accomplished in contravention of the laws of the foreign country.

Rio Properties, Inc. v. Rio International Interlink, 284 F.3d 1007, 1014 (9th Cir. 2002) (citation omitted). Nevertheless, a district court may:

require parties . . . to show that they have reasonably attempted to effectuate service on the defendant(s) and that the circumstances are such that the district court's intervention is necessary to obviate the need to undertake methods of service that are unduly burdensome or that are untried but likely futile. This threshold requirement, although not expressly provided by [Rule] 4(f)(3) is necessary in order to prevent parties from whimsically seeking alternative means of service and thereby increasing the workload of the courts.

Ryan v. Brunswick Corp., No. 02-CV-0133, 2002 WL 1628933, at *2 (W.D.N.Y. May 31, 2002) (citation omitted). In the interests of comity, a district court exercising its discretion under Rule 4(f)(3) should indeed make "an earnest effort . . . to devise a method of communication that is consistent with due process and minimizes offense to foreign law." Fed.R.Civ.P. 4 advisory committee's note, 1993 Amendment. This does not mean, however, that a district court should read Rule 4(f)(3) to require a party to "attempt every permissible means of service of process before petitioning the court for alternative relief." Ryan, 2002 WL 1628933, at *2 (citation omitted).

Here, Ex-Im's application is hardly whimsical. It has repeatedly attempted to effect service in the manner provided for in each of the transaction documents, only to be frustrated by the Subsidiaries. For example, two signatory Subsidiaries — Indah Kiat and Tjiwi Kimia — were required to maintain an agent for service of process. Specifically, Indah Kiat irrevocably appointed CT Corporation system as its service agent pursuant to Agreements AP071268 (Light Decl., Exh. A, ¶ 12.03(a) at US-000637), AP069195 (Light Decl., Exh. B, ¶ 8.4 at US-000113), and AP070292 (Light Decl., Exh. C, ¶ 4(b) at US-000503). And, it was required to maintain a service agent in New York at all times pursuant to Agreements AP071268 (Light Decl., Exh. A, ¶ 12.03(d) US-000638), AP070292 (Light Decl., Exh. C, ¶ 4(b) at US-000503), and AP067169 (Light Decl., Exh. D, ¶ 11.03(d) at US-000024). Likewise, Tjiwi Kimia irrevocably appointed CT Corp. as it service agent — and was required to maintain a service agent at all times — pursuant to Agreements AP069899 (Light Decl., Exh. J, ¶ 12.03(a) at US-000375) and AP070294 (Light Decl., Exh K, ¶ 4(b) at US-000264). But, in the words of their counsel, these two "specially appearing Indonesian defendants breached a contractual obligation to maintain an agent." (Transcript of oral argument dated March 23, 2005 at 24).

Similarly, two Subsidiaries agreed to service of process by international registered mail, return receipt requested: Indah Kiat consented in Agreement AP069195 ² (Light Decl., Exh. B, ¶ 8.4 at US-000113-14), and Pindo Deli consented in Agreement AP071220 (Light Decl., Exh. O, ¶ 13 at US-000159). Yet when the plaintiff tried to serve process at the addresses identified in the parties' agreements, either the defendants failed to return receipts or the packages were undeliverable to those addresses. (Light Decl., ¶ 4 Pl. Memo. at 10).

2 Again, in this agreement, Indah Kiat also agreed to service of process by courier. (Light Decl., Exh. B, ¶ 8.4 at US-000113-14).

In short, the agreements between the parties provided for simple and inexpensive means of service. The Subsidiaries thwarted service under these agreements. It would therefore be unduly burdensome to require Ex-Im to initiate letters rogatory in order to have the pleadings served by a bailiff in Indonesia. The alternative — service by an international courier — has already proven effective. Even if it is technically in violation of Indonesian service requirements, any offense to that country's sovereignty is minimal. Such service is not disruptive, and any party that engages in international transactions must anticipate the use of generally accepted forms of service, especially where it has, through its own actions, frustrated the methods of service provided for in the underlying transaction documents.

Conclusion

For the reasons set forth above, the plaintiff's motion to declare service valid nunc pro tunc and for leave to serve the Second Amended Complaint by DHL international courier is granted.

SO ORDERED.