Can Parties Waive the Service Provisions of the Foreign Sovereign Immunities Act?

The answer is yes, sometimes.

Failure to Raise the Defense

To begin with the easiest situation, a defendant that fails to raise the defense of improper service of process, as required under the Federal Rules of Civil Procedure (FRCP), will waive the defense as provided by FRCP 12(b)(5) and (h). The strict timing requirements apply to all defendants, including foreign sovereigns.

Contractual Provisions for Alternative Methods of Service

Contractual waivers raise more difficult questions. Some contracts between foreign sovereigns and private parties provide for a specific method of service, such as service upon an agent designated by the foreign sovereign. In a recent state court case from New York, for example, the defendant – a state-owned oil company – signed a promissory note in which it “irrevocably appointed Corporation Service Company (CSC) as their agent for service of process.” In the case, Sendibel Trading, S.A. v. Petróleos de Venezuela S.A., an intermediate appellate court reasoned that the language in the note constituted a “special arrangement for service between the plaintiff and the agency or instrumentality” as provided in 28 U.S.C. § 1608(b)(1) of the Foreign Sovereign Immunities Act (FSIA). The same language applies to serving foreign states themselves under 28 U.S.C. § 1608(a)(1).

Because a “special arrangement” for service is explicitly permitted under the FSIA, service pursuant to such an arrangement is not a waiver of the FSIA but is instead an alternative way of satisfying the statute. Note that the language of the FSIA refers to an arrangement between the “plaintiff” and the foreign state, not to an agreement or arrangement between or among foreign states. In other words, the relevant language in the FSIA is not referring to a treaty about service of process. Its application to private contractual agreements is straightforward enough.

Some contractual language is not specific or clear enough to qualify as a “special arrangement for service.” A district court correctly held in Enron Nigeria Power Holding, Ltd. v. Fed. Republic of Nigeria, for example, that a provision for “notices or other communications required or permitted to be given hereunder” did not apply to service of process. On the other hand, the court in International Road Federation v. Embassy of the Democratic Republic of the Congo (D.D.C. 2001) held that a notice provision applicable to “[a]ll notices, demands, or requests between [the parties]” did apply to service of process, even though service was not specifically identified. In my view, even if that contractual language might be interpreted as applying to service of process, it should not qualify as a “special arrangement” for that purpose. In other words, the question is not just about the best interpretation of the contract, it is about whether the language of the FSIA is satisfied.

Contractual Waivers of FSIA Service Requirements

This leaves contractual waivers that do not constitute a “special arrangement,” but instead purport to waive the right to service under the FSIA or just waive all rights under the FSIA. Chile, for example, signed a lease in New York that “waive[d] all such claims and/or benefits and/or rights of immunity including, but not limited to, (a) rights of immunity and service of process provisions under the Foreign Sovereign Immunities Act of 1976.” A Venezuelan state-owned company signed an agreement that waived “any and all rights it may have under the Foreign Sovereign Immunities Act of 1976, 28 U.S.C. § 1602 et seq., including, without limitation, any immunity [CAVN] may have from pre-judgment seizure, arrest or attachment.” As a matter of contract interpretation, the answer appears easy. And courts did enforce the waivers against both Chile, in Stahl 3 Dag, LLC v. The Permanent Mission of Chile to the United Nations (Civ. Ct. 2005), and against Venezuela in Triton Container Int’l Ltd. v. Compania Anonima Venezolana de Navegacion, 1994 WL 774521 (D. Guam Oct. 7, 1994).

It is not clear that those courts reached the right result, however. After all, private parties can contract around some procedural rules, but not others. Parties may not, for example, agree to new deadlines that displace those put in place by the FRCP – unless the court so orders. Parties cannot contractually create subject matter jurisdiction, either. With respect to the FSIA, as we have seen, the statute provides for agreements about alternative methods of service and it also addresses waiver of immunity from suit and from execution.  By contrast, it has no language providing for waivers of service of process, suggesting that the statute does not permit waivers of its service provision.

The link between service of process and personal jurisdiction in the FSIA also suggests that waiver of the service requirements is inconsistent with the statute. 28 U.S.C. § 1330(b) provides that “[p]ersonal jurisdiction over a foreign state shall exist as to every claim for relief over which the district courts have jurisdiction under subsection (a) where service has been made under section 1608 of this title.” District courts have jurisdiction under subsection (a) if an exception to immunity applies. In other words, if an exception to immunity applies, district courts have personal jurisdiction, but only if service “has been made under [the FSIA service provision].” If service is waived, that means that service has not been made under §1608, and thus there is no personal jurisdiction under §1330.  Cleaving personal jurisdiction away from 28 U.S.C. § 1330, upsets the “carefully calibrated” structure of the FSIA. The Supreme Court has twice in recent years relied upon that careful calibration to construe the scope of the FSIA.

Conclusion

Some procedural rules can be modified through the agreement of the parties and some cannot. Scholars have advanced different ways of deciding which rules should fall into which categories. Some argue, for example, that a core of procedural rights cannot be altered by agreement because they are important for maintaining the legitimacy of the adjudicatory system. The precise requirements of service of process may not fall within that core, so long as the defendant receives actual notice of the action. But service arguably plays a more important role in the FSIA than it does in other litigation because many cases are decided by default and because determining whether foreign governments actually received effective notice may be more complicated.  Perhaps not – but hopefully these questions and the distinctive role of service within the structure of the FSIA will receive greater attention and briefing in future cases.