International Litigation and Arbitration
International Litigation and Arbitration
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The first fact of taking on account is that the Texas Oil and Gas exploration Company “ Hercules” received investment from Mr. Shi Pei Poo who is an accountant in the Beijing affiliate of Touche Ross and from additional investors from Germany, Libya and Iran through a Company called MFM, which is secretly controlled by the Arabian Oil and Gas Company which is owned by Dr. Kaled Al –Naif, to form, capitalize and operate two oil and gas companies MPE and TKC, to make explorations in order to find Natural Gas in Gulf of Mexico and in Caspian Sea respectively.
According to this fact, we must suppose that the investment from foreign companies and persons were made by contracts, which must include the applicable law or arbitration clause, so could give the parties a secure procedure to claim on in cases of disagreements. However in case that this clause was obviated, we can go directly to international rules of contracting that says that the applicable law will be the one from the country of claimant that for our case is United States more exactly the State of Texas. This means that the motions filed by defendants dismissing Hercules´ Texas suit for lack of personal jurisdiction can´t prosper because of international rules of contracting.
The damage caused, was because MFM Company refused to provide all of its promised investment, so Hercules did not receive more investment from other entities such as Chinese Companies which may want to invest in MPE and/or TKC projects, letting the business go down.
In this order of ideas, the first thing that Hercules´ Company must do is to identify where is going to be the jurisdiction of the process; then to identify which are going to be the defendants parties to be served with process in the respective jurisdiction. The rest of the issue is up to the law firm hired for the case; they will have to suggest the court how and where service of process will be effected.
The analysis of the case will be done according to the Federal Law of Texas, taking on account that the principal domicile of Hercules´ Company is in the State of Texas in the United States of America, even if the two places where the explorations were supposed to be held were in Mexico and in Turkmenistan, and also without taking on account that the defendants are from several foreign countries.
Now, in order to identify the entities to be served with process in the Texas lawsuit, we have to consider which ones of the mentioned, were used to cause damages to Hercules´ Company:
The Mexican Company MPE was created by Hercules´ Company for the purpose of discovering commercial quantities of natural Gas in the Gulf of Mexico; this Company received investment from other companies as we mentioned in the first paragraph of this paper. Hercules withdrew its investments from this Company after they noticed the fraud made by MFM.
The Turkmenistan Company TKC with headquarters in Ashgabat was created by Hercules´ Company for the purpose of exploring natural gas around the Caspian Sea; this Company also received investment from other companies as we mentioned in the first paragraph of this paper. Hercules withdrew its investments from this Company after they noticed the fraud made by MFM.
MFM is a foreign Company controlled by the Arabian Oil and Gas Company owned by Dr. Kaled Al –Naif which was acting as an intermediary of several investors from Germany, Iran and Libya to invest in Hercules´s projects. This foreign Company refused to provide all of its promised investments what caused big damages to Hercules about its MPE and TKC projects.
The only entity that caused the damage to Hercules´s Company is MFM that includes the Arabian Oil & Gas Company as its controller; Dr. Kaled Al –Naif, as the owner of the Arabian Oil & Gas Company; the investors from Germany, Iran and Libya, who did the investments through MFM Unbeknownst to Hercules. Mr. Shi Pei Poo and Touche Ross were not investors, but they were giving the assurance for both projects, so they are acting as third parties liable.
In this order of ideas, the entities and persons to be served with process in the Texas lawsuit as a jurisdictional place like we mentioned before, are MFM, Arabian Oil & Gas Company, Dr. Kaled Al –Naif and all the investors from Germany, Iran and Libya. Respect to Mr Shi Pei Poo and Touche Ross, they must be included in the process as third parties liable just because they were the assurance of the projects.
Dr. Kaled Al –Naif, Mr. Shi Pei Poo and Touche Ross can be served according to rule number 109a of the Texas rules of Civil Procedure, which says that Court can order another substitute service if there are other ways to notify defendants; this can be done taking on account that these people has some connection with United States. Meanwhile the foreign investors from Germany, Libya and Iran can be served according to rule number 108a of the Texas rules of Civil Procedure, which talks about service of process in foreign countries.
The service must be effected according to rule number 108a of the Texas rules of Civil Procedure which says that there are several ways to service of process in foreign countries, for example in an action in any of the courts of the foreign country; by a way that is not prohibited by the foreign country; or by diplomatic or consular officials when authorized by the United States Department od State.
Another rule that can be used is rule number 109a which stipulates another substituted service, according to this rule the court may prescribe a different method of substituted service. This rule says that:
“ RULE 109a. OTHER SUBSTITUTED SERVICE
Whenever a citation by publication is authorized, the court may, on motion, prescribe a different method of substituted service, if the court finds, and so recites in its order, that the method so prescribed would be as likely as publication to give defendant actual notice. When such method of substituted service is authorized, the return of the officer executing the citation shall state particularly the manner in which service is accomplished, and shall attach any return receipt, returned mail, or other evidence showing the result of such service. Failure of a defendant to respond to such citation shall not render the service invalid. When such substituted service has been obtained and the defendant has not appeared, the provisions of Rules 244 and 329 shall apply as if citation had been served by publication.”
According to this rule, the effective service can be done by many ways, if the court aloud it; so it means, that Hercules can notify the defendants according to the information that are already known, such as properties Mr. Shi Pei Poo has in United States; the annual meeting of Touche Ross global executives which takes place in United States; The private bank accounts in New York of Dr. Kaled Al-Naif; the Boeing 767 Business jet which is property of Arabian Oil & Gas Company, e. t. c.
The problems with the effecting service of process are almost latent every time in every country, more often when the effecting service of process is in foreign countries. The defendants could not be notified, so the process will be slowly, but it does not mean that it can´t be held; the effecting service of process is to give the defendants the opportunity to defend them selves in the current process, but if they can´t be served, the process must continue without their presence and they will be represented by the government.
– Texas Rules of Civil Procedure. nd. np. PDF file
– Jeffrey E. Grell, Esq (http. Ricoact. com) nd. np.
– HCCH. Hague Conference on Private International Law/ Hcch. net
– Lupicinio Eversheds. Formal Aspects of the International Contracts. Nd. np. PDF file