Service of Process by Contractually Agreed Method under PRC Law
By Patrick Zheng | Charles Qin
In many jurisdictions, it is a common practice to specify the place and manner in which service of court process may be effected. The legal basis for such clauses may be found in legislation[1] or court rules[2] under which a writ is deemed to have been served on the defendant if the service is made following the agreed terms.
For service of process to parties without a domicile within the territory of the PRC in proceedings involving foreign parties or foreign elements, the Supreme People's Court provides four options in its judicial interpretation (“Service Provisions”)[3]:
First, the foreign party’s legal representative and the principal person-in-charge within the territory of the PRC. Secondly, unless otherwise clearly excluded in the power of attorney, the foreign party’s agent ad litem. Thirdly, the person’s PRC representative entity. Lastly, upon authorization, the foreign party’s branch office or business agent within the territory of PRC.
But the Chinese courts’ position is less clear whether in addition to the above four methods, a mode of service contractually agreed by the parties is another viable option to foreign parties. In a case of the recognition and enforcement of a Hong Kong judgment, the Xiamen Intermediate People’s Court of Fujian Province (“the Court”) gave effect to the process agent clause agreed by the parties, which might be illustrative of the Chinese courts’ position.
I. Background
In 2014, Right Margin Limited applied to the Court for the recognition and enforcement of Judgment HCA 265/2013 rendered by the Hong Kong High Court between Right Margin Limited and Tian Liang Limited, Tian Yao (Xiamen) Property Development Company Limited (“Tian Yao Company”), Chan Shu Chun. The defendant Tian Yao Company raised an objection to the effect that in the trial proceedings before the Hong Kong High Court, Tian Yao Company had not been properly served with the writ of summons and the judgment and thus was denied a party’s right to appear and defend itself in court. Consequently, Article 9(4) of the Agreement between Mainland China and Hong Kong in terms of mutual recognition and enforcement of judgment[4] was violated and therefore Judgment HCA 265/2013 should not be recognized by the mainland court.
The Court observed that:
First, according to the Rules of the High Court[5], the writ shall be deemed to have been duly served on the defendant if the contract provides that the process may either be served on the defendant, or on such other person on his behalf.
Secondly, Tian Liang Limited and Tian Yao Company had both appointed Mr. Chan as the process agent in the Exclusive Sales Agency Agreement concluded by the parties.
Thirdly, in the trial proceedings before the Hong Kong High Court, the writ of summons and the judgment had been duly served to the address as agreed in the Exclusive Sales Agency Agreement.
II. Decision
The Court rejected Tian Yao Company’s arguments and held that the process agent clause agreed upon by the parties was effective under The Rules of the High Court, which was the applicable law to the Hong Kong proceedings. Therefore, having agreed upon the appointment of the process agent, the parties must bear the legal consequences resulting therefrom.
III. Comments and Recent Developments
This case illustrates that Chinese courts will give effect to the contractually agreed method of service if such an agreement is effective under the lex fori of the foreign proceedings.
For domestic litigations, in September 2016, the Supreme People’s Court issued a judicial interpretation[6] formally recognizing the effect of process agent clauses, i.e. the agreement on the mode of process, by stipulating that “Where the parties concerned have agreed on the address for service before their disputes arise, the competent people's court may treat the address as the confirmed address for the service of litigation documents.” In July 2017, the Supreme People’s Court further clarified through another judicial interpretation[7] that such an agreement may be reached in contracts or by correspondences.
However, it is unclear whether the above provisions apply to cases where the foreign parties are domiciled outside the territory of the PRC. So the enforceability of contractually agreed method of service between Chinese parties and foreign parties without domicile in China still remains to be seen.
【Endnote】
[1] For example, in English law, Rule 6.11 “Service of the claim form by contractually agreed method” under PART 6 of The Civil Procedure (Amendment) Rules 2008 provides that “6.11.—(1) Where—(a) a contract contains a term providing that, in the event of a claim being started in relation to the contract, the claim form may be served by a method or at a place specified in the contract; and (b) a claim solely in respect of that contract is started, the claim form may, subject to paragraph (2), be served on the defendant by the method or at the place specified in the contract.”
[2] For example, in Hong Kong law, Order 10 of The Rules of the High Court provides that “3.Service of writ in pursuance of contract (O. 10, r. 3) (1)Where—(a) a contract contains a term to the effect that the Court of First Instance shall have jurisdiction to hear and determine any action in respect of a contract or, apart from any such term, the Court of First Instance has jurisdiction to hear and determine any such action, and (25 of 1998 s. 2) (b)the contract provides that, in the event of any action in respect of the contract being begun, the process by which it is begun may be served on the defendant, or on such other person on his behalf as may be specified in the contract, in such manner, or at such place (whether within or out of the jurisdiction), as may be so specified, then, if an action in respect of the contract is begun in the Court and the writ by which it is begun is served in accordance with the contract, the writ shall, subject to paragraph (2), be deemed to have been duly served on the defendant.
[3] Articles 3, 4, and 5, Certain Provisions of the Supreme People's Court on Issues Concerning Service of Judicial Documents in Civil or Commercial Cases Involving Foreign Elements (《最高人民法院关于涉外民事或商事案件司法文书送达问题若干规定》).
[4] Arrangement of the Supreme People's Court between the Courts of the Mainland and the Hong Kong Special Administrative Region on Mutual Recognition and Enforcement of Judgments of Civil and Commercial Cases under the Jurisdiction as Agreed to by the Parties Concerned (《最高人民法院关于内地与香港特别行政区法院相互认可和执行当事人》).
[5] Article 3 “Service of writ in pursuance of contract (O. 10, r. 3)”, Order 10, Cap. 4, The Rules of the High Court.
[6] Article 3, Several Opinions of the Supreme People's Court on Further Distinguishing Simple Cases from Complicated Ones and Optimizing the Allocation of Judicial Resources (《最高人民法院关于进一步推进案件繁简分流优化司法资源配置的若干意见》).
[7] Article 8(1), Several Opinions of the Supreme People's Court on Further Strengthening the Service of Legal Instruments During Civil Proceedings (《最高人民法院关于进一步加强民事送达工作的若干意见》).
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