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Magness v. Russian Federation

As to service upon foreign states and their political subdivisions, 28 U.S.C. section 1608(a) requires strict compliance; however, substantial compliance can be sufficient to satisfy the requirements of section 1608(b) as to service upon an agency or instrumentality of a foreign state.

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Appeal from the United States District Court for the Southern District of Texas, Houston

During the Bolshevik Revolution of 1918, the Soviet government expropriated a piano factory and mansion owned by the Magness family in St. Petersburg, Russia. In 1994, the appellees, descendants of the Magness family, believed that changes in the laws of the Russian Federation may now authorize the recovery of their property. The Magness descendants met with Russian officials in St. Petersburg in an unsuccessful attempt to regain the real estate. This suit followed and a default judgment was entered against the Russian defendants in the amount of $234 million plus interest.

In this appeal we are called upon to interpret the service of process provisions of the Foreign Sovereign Immunities Act (“FSIA”), 28 U.S.C. � 1608(a-b), which outlines the methods for serving process upon foreign entities. Specifically, we must determine whether those provisions demand strict compliance therewith, or whether either of these provisions can be satisfied by some form of substantial compliance. In keeping with the plain language of the FSIA, we conclude that Congress intended to require strict compliance with section 1608(a) as to service upon foreign states and their political subdivisions. However, we also hold that substantial compliance–that is, actual notice of the suit and the consequences thereof–can be sufficient to satisfy the requirements of section 1608(b) as to service upon an agency or instrumentality of a foreign state. In conclusion, we vacate the default judgment and remand to allow proper service on the defendants.

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