Dealing with difficult service in the UPC: The cases of Philips IP Ventures v Belkin and Panasonic v Xiaomi as examples.

The UPC is designed so that the registry of each court in which an action is filed is responsible for serving the Statement of claim. This is to be by email, if the defendant has provided an email address for the purpose, or more usually by registered letter, further to Regulation (EU) 2020/1784 (Service Regulation). If service is on a defendant outside the EU, the Hague Convention or diplomatic or consular channels must be used.

Practice already shows, however, that these methods are sometimes insufficient to achieve service. What happens then?

The ultimate fallback for the court is to order service of a statement of claim by a method or at a place not otherwise permitted under the Rules of Procedure of the UPC and the Service Regulation (Rule 275.1 of the Rules of Procedure). Such an order is made upon application by the claimant where there is ‘a good reason’. The order has to specify: (a) the method or place of service; (b) the date on which the statement of claim is deemed served; and (c) the period for filing the statement of defence. It is also possible for the court, upon a reasonable request by the claimant, to order that steps already taken to bring the statement of claim to the attention of the defendant by an alternative method, or at an alternative place, are good service (275.2). However, the order must not be contrary to the law of the state where service is to be effected.

Different divisions of the UPC have already, however, taken different approaches to using this fallback option.

Perfecting the applicant's attempts to serve - Philips IP Ventures v Belkin

In the case of Philips IP Ventures v Belkin (UPC_ORD_576855/2023, CFI_5/2023), a number of attempts at service were made by bringing a Statement claim to the attention of six defendants (1 and 2 located in Germany, and 3 to 6 were located outside the EU) but, after difficulty, the claimant requested that the court order its attempts at service on the third to sixth defendant to be viewed as legally valid service.

The claimant took the following steps:

• The claimant's legal representatives attempted recorded postal service on all defendants on 13 July, but postal delivery certificates indicating delivery on 14 July were received only for defendants 1) and 2).
• Prior to this, service had been attempted on defendants 3) to 6) by email through the CMS to the Chief Legal Officer of defendant 3). The claimant argued that, as regards defendant 4), service was effective through defendant 1), a director of defendant 4) and that this would be communicated to defendants 5) and 6).

In respect of defendant 4), the court held that information sent to the Chief Legal Officer by email could not be viewed as legally effective service because this individual was not an authorized person to receive service according to the CMS. However, because defendant 1) was a director of defendant 4), defendant 4) had already received legally valid service.

It was held, however, that transmission of the statement of claim together with an English translation to the legal representative of the defendants 1) and 2) did not constitute legally effective service to defendants 3), 5) and 6), because the legal representative of defendants 1) and 2) had not yet been mandated by defendants 3), 5) and 6)

This left defendants 3), 5) and 6) to be served:

• The claimant argued that defendants 2) and 4), as subsidiaries of defendant 3) would inform it about the claim.
  It was held, however, that these defendants had no legal status that allowed attribution of knowledge to defendant 3).
  In a further attempt:
• The legal representative of defendants 1) and 2), at DLA Piper, was asked if they had authorisation to receive service on behalf of defendants 3) to 6). This was declined. Nonetheless, to attempt to bring the claim to the attention of these defendants, the statement of claim was delivered to DLA Piper’s offices, where receipt was then refused. The claimant nonetheless argued that formal service under the Hague Convention was no longer necessary at this stage because defendants 3) to 6) were aware of the claim.

Judge Pichlmaier held that whilst knowledge could be assumed under Rule 275.2 if either there is a legal relationship according to which knowledge can be attributed (such as directors) or there are specific circumstances that justify gaining such knowledge, there was no legal relationship with these defendants that allowed such attribution of knowledge, and no evidence to support that it had happened.

Ultimately, the claimant arranged to have the statement of claim served on defendants 3) to 6) by personal delivery. In respect of defendant 3), 5) and 6), these were the only efforts by the claimant to effect service under Rule 275.2 that were held successful.

The role of knowledge: Panasonic v Xiaomi

Judge Tochtermann, in the Local Division Mannheim, has taken a different approach, in Panasonic v Xiaomi, (App_589186/2023, UPC_CFI_219/2023).

Here, the claimant argued for the purpose of Rule 275.2, that defendants 1), 2), and 8), domiciled in the People's Republic of China, and 7), domiciled in Hong Kong, had been validly served with Statements of claim at the business address of defendant 3), in Germany. In particular, the court’s attention was drawn to the following arguments:

• According to the most recent annual report, the parent company of the defendants held all shares in defendants 1), 2), 3), 7) and 8) either directly or indirectly through intermediate companies in which the intermediary companies in which the parent group in turn holds all shares.
• Defendant 3) was the German headquarters of the defendant's group, the German distribution company and responsible for the German-language homepage of the defendant's group. The homepage showed the executive board of the parent company, Xiaomi Corporation, but not the managing directors of defendant 3). The defendant group of companies was thus presenting itself to the outside world as a unit and not as a bundle of national companies.
• Defendant 3) concluded transactions in the name of the parent group.
• Defendants 1), 7) and 8) were aware of the Mannheim action from references made in proceedings before the UK High Court.
• The knowledge of the Defendants 1), 2), 7) and 8) of the proceedings was also apparent from email correspondence with the defendants and was also publicly known through press releases.

The claimant argued that the steps that had already been taken to effect service were sufficient to assume legally valid service under Rule 275.2 and that, pursuant to the Munich Local Division decision in Philips v Belkin, the application did not require service to be effected in accordance with Rules 270 to 274. As stated in that case, it was argued, knowledge could be assumed if a legal relationship permitted knowledge or if there are concrete circumstances that could justify the acquisition of knowledge, as the claimant argued were present here.

The application was rejected. The attempt at service had to be made in accordance with the Hague Convention, pursuant to Rule 274(a)(ii), since the People's Republic of China and Hong Kong do not fall within the scope of the Service Regulation. But no such attempt at service had yet taken place.¹ Rather, the registry had requested the documents required for service, in particular translations, but these had not yet been submitted by the plaintiff to effect service abroad. Contrary to the opinion expressed in Philips v Belkin, Rule 275.2 cannot permit service without having previously attempted service in accordance with the provisions applicable to service abroad (Rules 273 and 274).

Instead, Rule 275.2 is an exceptional provision and only if service was attempted in accordance with Rules 270 to 274 but was unsuccessful and alternative service was then ordered on request in accordance with Rule 275.1 could it apply. It then opens up the possibility, as a last resort, in individual cases, of allowing steps already taken to suffice for service, even if the alternative service thus ordered was not successful. However, the rule does not allow the international treaties binding the member states of the UPCA such as the Hague Convention and to regard service as having been effected on the basis of an imputation of knowledge within the corporate group. The formal service on the defendant is an internationally recognized principle and not a superfluous formality.²

Our experience

Our experience of the court's practice in serving Statements of claim in the UPC, is in keeping with Panasonic v Xiaomi. The division in question will expect its associated registry to make every attempt it can to serve before permitting the parties to attempt service using conventional methods (for example, as permitted under the Service Regulation or Hague Convention) under Rule 271.4. It is only exceptionally, where such conventional methods fail, that the court will consider deeming 'service by knowledge' or other circumstances as sufficient to effect service under Rule 275.2

^{1: Whilst it is acknowledged that Rule 271.5 is the only rule allowing for the possibility of service within the Contracting Member States at a place of business, it is not clear why that Rule was not used in this case. See also Panasonic v Xiaomi, UPC_CFI_213/2023, 220/2023, 224/2023, Zigann (4 December 2023).}

^{2: If Rule 275.2 of the Rules of Procedure were allowed to override provisions of the EU Service Regulation and the Hague Convention on the Service of Documents, this would constitute a violation of Union and international law. Neither permit the imputation of knowledge advocated by the claimant as a substitute for formal service. The Hague Convention requires that such documents have actually been transmitted in accordance with a procedure provided for in Article 15(2)(a). The Service Regulation also stipulates the same in Art. 22. See also CJEU case C-325/11 (19 December 2012) Article 1(1) Brussels Regulation and recital 7, and Article 42 TRIPS.}