Volkswagenwerk Aktiengesellschaft v. Schlunk

1988-06-15

Headline: Served by its U.S. subsidiary: Court allows serving a foreign parent company through its domestic subsidiary and rules the Hague Service Convention does not apply when state law and due process make domestic service complete.

Holding: The Court held that serving a foreign parent by serving its wholly owned U.S. subsidiary was permissible because the Hague Service Convention applies only when the forum’s law requires transmission abroad, and state law and due process made service complete.

Real World Impact:

Allows plaintiffs to serve foreign companies through U.S. subsidiaries when state law and due process permit.
Means Hague Service Convention applies only if forum law requires sending documents abroad.
May make enforcing U.S. judgments abroad harder unless parties use the Convention voluntarily.

Topics: serving foreign companies, international service of documents, Hague Service Convention, due process notice, corporate subsidiaries

Summary

Background

Herwig Schlunk sued after his parents died in a car crash and added a German company (the foreign parent) as a defendant by serving its wholly owned U.S. subsidiary. The subsidiary had been served in Illinois under that State’s long-arm law, and the parent asked the Illinois courts to quash service, arguing that service should have followed the Hague Service Convention’s procedures for serving documents abroad.

Reasoning

The Court asked whether the Convention applies whenever a foreign company ultimately learns of a suit abroad. It concluded that the Convention covers only situations where the forum’s internal law requires sending documents to another country as part of completing service. Because Illinois law authorized substituted service on the subsidiary and that method satisfied the Due Process requirement of providing notice, the Convention did not apply here. The Court affirmed the Illinois decision and said private or informal transmissions from the subsidiary to the parent are not the “service abroad” that the Convention governs.

Real world impact

The ruling means plaintiffs in U.S. courts may serve foreign corporations through their U.S. subsidiaries when state law and constitutional notice rules make that service complete. The Court also noted parties may still use the Convention voluntarily, and following it can help enforce judgments overseas, but the Convention is not mandatory whenever a defendant later receives notice abroad.

Dissents or concurrances

Justice Brennan, joined by two colleagues, agreed with the result but disagreed with the Court’s interpretation, arguing the Convention should impose a substantive, notice-based limit on when a forum can treat service as purely domestic.