Process agent
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Negotiation Anatomy™
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What is one?
Process agent
/ˈprəʊsɛs ˈeɪʤᵊnt/ (n.)
An agent located in a jurisdiction who is appointed by a contracting counterparty outside that jurisdiction to accept service of legal proceedings filed against it in the courts of that jurisdiction, to discharge the procedural requirement that they are physically served within the jurisdiction.
For English law contracts the jurisdiction in question is that of “the courts of England and Wales” — there is no such thing as United Kingdom law — the rules of English civil court procedure[1] require process physically to be served within England or Wales (or, in theory, their adjacent territorial waters[2]). Service in Scotland — or its territorial waters — will not do. This means you can serve process on someone rowing a boat in the Bristol Channel, but not in Inverness, much less on someone escaping in rowing a boat to, for example, the Isle of Skye.
A contracting counterparty whom you cannot rely on being in England or Wales should you have to sue it — one who has no permanent place of business there — you might ask to appoint as its agent a company who reliably will be there, and who is prepared to receive process served upon the counterparty and pass it on to head office. That person is a “process agent”.
The best kind of process agent is an English-domiciled affiliate of the contracting entity who is happy to perform that role, as it generally will do it for free. But if you don’t have one, there are dedicated process agency businesses who will act as your process agent for, naturally enough, a suitably outrageous fee.
Who needs one?
Any counterparty who does not have a permanent place of business in England or Wales. Or their adjacent territorial waters. Process agents are standard in English law contracts with overseas counterparties.
If your process agent is moored on a barge — say, off the coast of Berwick-upon-Tweed — then depending on the prevailing current, you may or may not be able to service process there.
What kinds of contract?
A process agent is a prudent precaution in any contract subject to the jurisdiction of English courts where there is a legitimate risk of litigation kicking off at a point in time where the respondent has no onshore presence. That means there must be a decent amount of money at stake.
Embarking on English law litigation is ruinously expensive, so unless you would stand to gain an even ruinously larger amount, you might think it not worth the bother — cost and aggravation — of insisting on a process agent. On the other hand, the larger the litigation the less of a relative bother arranging for substituted means of service is, so there is that.
So a finance contract — a loan, an ISDA Master Agreement, a prime brokerage agreement is generally a sensible candidate for a process agent. An NDA? Not so much.[3] A domestic lease — since it requires said foreigner to have a place of business on British soil, probably not.
How do I get one?
Many corporate trust and agency businesses act as process agents, although they charge outrageously for the service. Law firms used to do it, but they charged even more, and even then complained they couldn’t make any money out of it.
If you have an affiliate, agent or investment manager or buddy in England or Wales, best ask them if they will accept service on your behalf.
It would make a great play
It would be kind of cool to set up a process agency business on a barge moored in the Bristol Channel, just to make service on that process agent as hard as is humanly possible, and potentially impossible if a great storm blew in from the Atlantic on the last day of the statute of limitations. It would make a great play. Actually, now you mention it — Hunter Barkley’s The ISDA Protocol. We quite like the idea of a process agent so in thrall to McKinsey it has outsourced its whole operation to India.
Isn’t there an international convention?
Surely there is some sensible international convention that should make bilateral process agency arrangements unnecessary? Er, well yes, there is.
The Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters, of November 15, 1965 — the “Hague Service Convention” simplified and expedited the foreign service of civil process across international borders. Under this convention, each signatory — there are presently, 82 covering most key jurisdictions of the global supply chain[4] — designates a central authority as a hub for receiving and distributing legal process under local laws and regulations.
So, why d—? It is perceived as slow, unwieldy and costly, requiring translations, and the process can take months. You might think they could and should try to update the convention in light of the technological and network advances of the last half century to make it all a lot quicker, but —
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See also
- Process Agent - ISDA provision
- Part 6 of the Civil Procedure Rules, governing the service of process
References
- ↑ Rule 6.11 of Part 6, details freaks.
- ↑ I find the idea of serving in territorial waters strangely fascinating. In the rules of English civil court procedure “jurisdiction” is defined as “unless the context requires otherwise, England and Wales and any part of the territorial waters of the United Kingdom adjoining England and Wales” so, therefore, those of the Her Majesty’s territorial waters which adjoin Scotland or Northern Ireland are out of bounds.
- ↑ Though, do not be surprised to see larger institutions, in thrall as they tend to be, to machines of bureaucratic loving grace, insisting on one anyway.
- ↑ Notable absentees: Indonesia, Malaysia, Nigeria and much of the Middle East.