Monday, March 05, 2012

Defendant in SEC Enforcement Action Properly Served in Costa Rica

The U.S. District Court for the Southern District of New York held in an SEC enforcement action that a senior officer of a hedge fund adviser was properly served with process in Costa Rica. A private investigator served the defendant in Costa Rica. As argued by the defendant, Costa Rican law prohibited the method used by the SEC to serve the officer.

The defendant asserted that Costa Rican Law 8687, which governs the domestic service of summons for actions in Costa Rican courts, only allows for personal service by an officer of the court or by a judicially authorized Costa Rican notary public. Moreover, when Costa Rican courts are called upon to execute the judgments of foreign courts, they must determine whether notice was served by the foreign court in accordance with the Costa Rican public order. According to the defendant, a Costa Rican court would look to the requirements of Law 8687 to make this determination. They argued that since Law 8687 does not authorize personal service by a private investigator, a Costa Rican court asked to enforce a judgment of this court would refuse on the ground that plaintiff’s service violated the principles of Costa Rica public order.

As argued by the SEC, Law 8687 did not apply to the service of foreign summons in Costa Rica. The district court agreed, citing Costa Rican case law holding that Costa Rican case law explicitly condoned service of a foreign complaint in Costa Rica by methods not authorized for domestic summons, unless the service is “unlawful in the place of origin.” In addition, courts in Costa Rica have held that foreign notice comports with the Costa Rican public order if (1) the respondent was correctly served in accordance with the laws of the foreign country; and (2) the defendant received the summons and had the opportunity to defend himself. The district court concluded that personal service by a private investigator is lawful in the United States under Rule 4(c)(2) of the Federal Rules of Civil Procedure. In addition, the defendant duly received the summons and presently has the opportunity to defend himself.

SEC v. Juno Mother Earth Asset Management LLC (SD NY, Dkt. No. 11 Civ. 1778 (TPG))