The Hindu: Published on 28th Feb 2025:
Why in News?
The U.S. Securities and Exchange Commission (SEC) has sought assistance from the Indian government under the Hague Service Convention to serve summons on Gautam Adani and Sagar Adani in a securities and wire fraud case. The SEC has invoked Article 5(a) of the Convention and requested India's Ministry of Law and Justice to facilitate the summons. Given India's reservations under the treaty and its limitations on alternative service methods, this case has significant legal and diplomatic implications.
Key Issues Raised
What is the Hague Service Convention?
- A multilateral treaty (1965) that regulates how judicial and extrajudicial documents are served in cross-border litigation.
- Ensures timely and actual notice of legal proceedings for foreign defendants.
- 84 signatory states, including India and the U.S.
- Each country designates a central authority to process service requests from other signatory states.
Allows multiple modes of service, such as:
- Through the designated central authority (primary method).
- Diplomatic/consular channels.
- Direct communication between judicial officers of both states.
- Postal services (if permitted by the receiving state).
How is the SEC Attempting to Serve Summons on the Adanis?
Invoking Article 5(a): The SEC has formally requested India’s Ministry of Law and Justice to serve summons on the Adanis.
Exploring Alternative Methods: The SEC is also looking into Rule 4(f) of the U.S. Federal Rules of Civil Procedure, which allows alternative service methods.
Challenges from the U.S. Executive Order: The Foreign Corrupt Practices Act (FCPA), under which the Adanis are charged, has been paused for 180 days by the Trump administration. However, the SEC maintains that this pause does not apply retroactively, meaning their case can still proceed.
What are India’s Reservations Under the Hague Convention?
- India acceded to the Convention in 2006 but with strict conditions:
- India prohibits all alternative service methods under Article 10.
- Judicial documents can only be served through India’s Ministry of Law and Justice.
- Diplomatic/consular service is only allowed if the recipient is a U.S. national in India.
- Documents must be in English or accompanied by an English translation.
- India can reject requests if they threaten sovereignty or security under Article 13.
- However, India cannot reject a request simply because it claims exclusive jurisdiction over the subject matter.
How the process works in India:
The SEC sends the request to India’s Ministry of Law and Justice.
The Ministry reviews and either accepts or rejects the request.
If accepted, it serves the summons through Indian courts under Section 29(c) of the Code of Civil Procedure, 1908.
The Indian government provides a service acknowledgment to the SEC.
This process typically takes 6-8 months.
Can the U.S. Court Issue a Default Judgment?
- If India fails to act, a default judgment can be issued under Article 15 of the Hague Convention.
- Conditions for a default judgment:
- At least six months have passed since the request was transmitted.
- No certificate of service has been received despite reasonable efforts.
- The request was made through recognized Hague Convention methods.
- India allows its courts to issue default judgments even if no proof of service is received, provided that all Article 15 conditions are met.
- Precedent: In Duong v. DDG BIM Services LLC (2023), a U.S. court ruled that if India’s central authority does not act, the court may proceed with a default judgment.
Implications of the Case
Diplomatic Sensitivities – The case involves a high-profile Indian business figure, which could impact U.S.-India legal cooperation.
Legal Precedent – If India refuses the SEC’s request, it could set a precedent for handling future international legal matters.
Timeline Considerations – With delays of 6-8 months, the SEC must navigate procedural and diplomatic challenges.
Risk of Default Judgment – If India fails to process the request, the U.S. court could rule against the Adanis by default.
What Happens Next?
India’s Ministry of Law and Justice will review the SEC’s request and decide whether to process or reject it.
If India cooperates, summons will be served, and the case will proceed as per legal norms.
If India refuses, the U.S. court may grant a default judgment under Article 15.
Legal experts and policymakers will closely watch this case as it could affect future cross-border litigation.
Key Takeaways:
- The SEC is invoking the Hague Convention to serve summons on Gautam and Sagar Adani through India’s Ministry of Law and Justice.
- India has strict reservations under the Hague Convention, prohibiting alternative service methods.
- The service process in India typically takes 6-8 months.
- If India does not act, the U.S. court may issue a default judgment after six months.
- This case could impact future international legal cooperation and cross-border enforcement actions.
