Capital Markets: Challenges and Developments

The SEC and Hague Service Convention

Explained | International Relations | Mains Paper 2: Important International Institutions
Note4Students

From UPSC perspective, the following things are important :

Prelims level: Hague Service Convention;

Why in the News?

On February 18, 2025, the U.S. Secuirty and Exchange commission asked the Indian government under the Hague Service Convention, to serve summons on Gautam Adani and Sagar Adani in a securities and wire fraud case.

What is the Hague Service Convention? 

  • The Hague Service Convention, formally known as the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters (1965), is a multilateral treaty that facilitates the service of legal documents across international borders in civil and commercial cases.

How does it work? 

  • The Hague Service Convention standardizes the process for serving legal documents across borders in civil and commercial matters. It operates through Central Authorities in member countries, ensuring efficient service, protecting defendants’ rights, and allowing alternative methods like postal service if permitted. It excludes criminal cases and non-signatory nations.

How is the U.S. Securities and Exchange Commission attempting to serve summons on the Adanis? 

  • Invoking the Hague Service Convention: The SEC has requested assistance from India’s Ministry of Law and Justice under Article 5(a) of the Hague Service Convention to officially deliver the summons to Gautam Adani and Sagar Adani.
  • Exploring Alternative Service Methods: The SEC is considering alternative methods under Rule 4(f) of the U.S. Federal Rules of Civil Procedure, which allows service through means like email or social media, if conventional methods face delays.
  • Proceeding Despite FCPA Suspension: Although the Trump administration has temporarily paused the Foreign Corrupt Practices Act (FCPA) enforcement for 180 days, the SEC argues that the pause does not apply retroactively, allowing their investigation into the Adanis to continue.

What are India’s reservations under the Convention? 

  • Opposition to Alternative Service Methods: India rejects all alternative service methods under Article 10 of the Convention, including postal service, diplomatic channels, and direct service by foreign judicial officers.
    • Example: A U.S. court cannot serve legal documents in India via U.S. consular channels unless the recipient is a U.S. national residing in India.
  • Mandatory Use of Central Authority: All service requests must go through India’s Ministry of Law and Justice, which is the designated central authority for processing foreign summons. Requests must be in English or include an English translation.
    • Example: In Punjab National Bank (International) Ltd. v. Boris Shipping Ltd. (2019), a U.K. court ruled that service through alternative methods was invalid due to India’s reservations.

How long does the service process typically take?

  • The service process under the Hague Service Convention in India typically takes six to eight months. After receiving a request, India’s Ministry of Law and Justice verifies and forwards it to the appropriate authority. Upon completion, an acknowledgement is issued to the requesting country, confirming successful service.

Way forward: 

  • Expedite Processing Mechanisms: Implement digital tracking and streamlined workflows within the Ministry of Law and Justice to reduce delays in handling service requests.
  • Strengthen Bilateral Cooperation: Enhance legal cooperation with key countries through bilateral agreements to complement the Hague Service Convention and facilitate faster document service.

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