Punitive Damages and Service of Process. Serving U.S. Punitive Damages Claims on Defendants in the EU

Abstract

The field of service of process is the first area of private international law in which the Common Law concept of punitive damages comes into contact with continental Europe. The commencement of a law suit in the U.S. requires the service of the claim on the defendant. When the defendant is not domiciled or not present in the U.S., service will have to take place abroad. The United States and all European Union Member States (except – at least for now – Austria and Malta) are Members of the Hague Convention on service abroad of 15 November 1965 (the Hague Service Convention). This instrument provides a mechanism for allowing the formal transmission of judicial or extrajudicial documents in civil and commercial matters from one Contracting State to another, for service in the latter State. Each Contracting State designates a Central Authority which arranges for the document to be served or serves it itself. The Convention facilitates service because it replaces time-consuming means of service (such as service through diplomatic channels). By expediting and simplifying cross-border transmission of documents, the Convention improves legal certainty of service. This chapter looks at issues that have arisen when serving U.S. punitive damages claims in the EU. In Germany there have been instances where service of such a claim has been denied. This part of the book examines the grounds in the Hague Service Convention on which these refusals of service have been based. First, it analyses the cases in which punitive damages have been classified as falling under criminal/public law. As article 1 of the Hague Service Convention provides that the Convention only applies to civil and commercial matters, this reasoning allows a refusal to serve punitive damages claims under the Convention. Second, the chapter discusses the cases regarding the exception clause of the Convention. Article 13.1 allows states to refuse service if it would violate the requested state's sovereignty or security. There is German case law denying the service of punitive damages on the basis of this provision. We argue that service of U.S. punitive damages should not be refused. Claims for punitive damages do fall under the scope of the Hague Service Convention as defined in article 1. The requested state also cannot rely on the escape mechanism of article 13.1 to deny service because punitive damages claims do not violate the requested state's sovereignty or security.