Process agents: What they do and when you need one

Many organisations — from family offices to multinational corporations — are familiar with the term and may even know that a process agent is necessary to execute certain cross-border contracts. But they don’t know the precise services provided by a process agent.

This article gives an overview of when you need a process agent, what a process agent does, and what to look for when engaging one.

When you need a process agent

When an organisation enters into a contract in a country where it has no legal presence, it may need to nominate a process agent within the contract. The process agent is required to ensure that the non-resident contract party can be served legal papers — typically, a notification that a party is being sued — in the country where the contract is signed.

To give a simple example, let’s say a couple from New York wants to buy a house in London. To purchase the property, the couple goes to a London bank and applies for a 20-year mortgage. Since the couple is not resident in the UK, the bank’s terms demand that the couple engages a local (that is, UK-based) process agent. The process agent is necessary so the bank can mail the couple legal documents to a local address in the event the couple fails to make a repayment on their mortgage or for other legal reasons related to the mortgage contract. The couple must retain a process agent to receive documents for the length of the contract term, in this case 20 years.

There are countless transactions that may require a process agent, and some transactions are far more complex than others. To give an example of a complex scenario, let’s say a Dubai-based airline leases an aircraft from an Ireland-based owner, with the contract to be governed by English law. This seemingly simple transaction may involve multiple contracts, one for the aircraft itself and one for each of the aircraft’s engines. And the Dubai-headquartered airline may have multiple legal entities involved in the lease — let’s say five entities in five different countries, each of which must enter into separate contracts to lease the aircraft and its engines. Each of these entities’ contracts will require a separate agreement with a UK-based process agent.

We’ve used the UK as an example in both scenarios, but virtually all jurisdictions have rules requiring non-resident individuals and organisations to retain local process agents when entering into legal agreements.

Now let’s look in more detail at what a process agent does.

What a process agent does — and doesn’t do

The essential services provided by a process agent could hardly be simpler: The agent agrees for their full name and contact details — including their local address — to be included in a contract for a non-resident client. In the event that local legal notices need to be served on the client, the server will send the notices to the process agent.

In the case of our New York couple, carrying out process agent services is indeed straightforward. If the London mortgage company needs to send a legal notice to the couple, it will deliver the notice to the UK process agent at the agent’s local address. (Typically, notices are hand delivered or sent on a signed-for basis for full traceability by the law firm serving the papers.) On receipt, the process agent will scan and forward the notice electronically —and usually also send the original by mail or courier — to the New York couple at whatever email and physical address the couple has specified in its agreement with the process agent.

In many cases, and depending on the contract terms and jurisdiction involved, legal notices will have strict deadlines. Part of the role of an effective process agent, then, is to act swiftly when forwarding documentation and information to the correct electronic and/or physical address of the client.

In our airline-leasing scenario, the process agent will fulfil its duties in much the same way. In that case, however, the process agent will have to perform more steps. It must ensure that all the relevant legal entities — the five entities located in different countries — are promptly notified.

In some cases, a process agent will represent a client that receives a notice on copy regarding a particular contract with multiple parties. That is, the client is not the entity being served; rather, it is being notified about another party to that contract that has been served. The process agent in this case will promptly forward the notice as usual, but also make clear that the client is being copied, not being served notice.

Given widespread confusion about the exact duties of a process agent, it’s worth noting some services a process agent does not provide.

Perhaps the most misunderstood fact about a process agent is that it cannot act on behalf of a client as a kind of standing process agent for any and all contracts. A local process agent must be engaged each time an agreement, or set of agreements, requires a process agent; in other words, each contract requires its own process-agent agreement.

That said, a reputable, experienced process agent can provide services to a client that is entering into multiple contracts that involve multiple entities. As we’ve noted, a single process agent can provide services for all five entities in our airline lease example.

Another common misconception is that a process agent will need to hold copies of the contracts for which it acts as agent. The process agent is not a party to the contracts it is named within, and it takes no part in concluding those contracts. So while a process agent must have full disclosure of the parties and types of contracts for which it acts as agent, it does not need to see the contracts themselves.

Finally, many people assume process agents serve notices on companies or individuals. As we’ve seen, process agents receive legal notices on behalf of their clients that are located outside their jurisdictions, they do not serve legal notices.

What to look for in a process agent

An effective process agent must above all be prompt and accurate. The risks of delay for any reason — from inaction after receiving a notice to misdirection when forwarding — can be significant. Remember that the process agent receives legal notifications. Depending on the jurisdiction, the nature of the transactions and other factors, a client’s failure to respond by imposed deadlines may result in legal action, fines, revocation of business licenses, court summonses or, in extreme cases, imprisonment.

When conducting due diligence on a process agent, ask about the details of their practices. Important questions to ask a process agent provider include:

• What is your process for entering into an engagement — for example, do you have a secure website that easily allows a company to request process agent services?
• How quickly can an organisation or individual obtain your services? (This is critical, as many parties to a contract must obtain process agent services during a very short window.)
• How do you store and update your client data?
• How do you ensure you can promptly and accurately match legal notices to contracts and clients?
• What is your average response time after receiving a legal notice?
• How do you ensure that information related to complex deals involving multiple entities and contracts is properly stored and easily accessed?
• How do you protect client data, including ensuring that the specifics of any contracts are kept secure?
• What are your processes in the event you can’t reach a client with the contact information on file?

It's important to keep in mind that contracts involving process agents typically span many years. Most organisations that need process agent services, then, will perform independent research on the company, looking for a reputable, established organisation that will likely be around to support its process agent commitments directly for the length of any contract. 

You should look for a process agent with a broad international footprint. In many cases, the process agent will be equipped to provide services in multiple jurisdictions, which can reduce the amount of time spent on future due diligence and lighten ongoing administrative burdens by reducing the number of third-party vendors to manage.

Finally, look for a process agent that has flexible engagement options. For example, some process agents allow their clients to enter recurring annual contracts for a given deal or pay a single, fixed-term service fee up front for the life of the engagement.