The Supreme Court decided today to hear a very important case revolving around the issue of how much deference US courts (and presumably other governmental institutions as well) should give to a foreign government’s interpretation of that country’s law—the country in question in this case being China. The Second Circuit had said in 2016 that deference should be pretty automatic and complete. Here’s what SCOTUSblog has to say about it:
In Animal Science Products, Inc. v. Hebei Welcome Pharmaceutical Co. Ltd., the justices agreed to decide whether and to what extent a U.S. court should defer to a foreign government’s characterization of its own law. The case arose when U.S. companies that purchase Vitamin C from (among ) Chinese companies filed lawsuits against a group of Chinese companies, alleging that the Chinese companies had violated U.S. antitrust laws by conspiring, through a group known as the China Chamber of Commerce, to fix the prices and quantities of Vitamin C. The Chinese companies asked the U.S. court to throw the cases out. They acknowledged that they had fixed prices and quantities of Vitamin C, but argued that they were required to do so under Chinese law – an assertion confirmed in a “friend of the court” brief filed by the Chinese government.
The district court rejected the Chinese companies’ request, reasoning that (despite the argument to the contrary by the Chinese government) the price-fixing was not mandated by Chinese law. The case went to a jury, which awarded the U.S. companies $147 million in damages. On appeal, the U.S. Court of Appeals for the 2nd Circuit reversed, ruling that it was “bound to defer” to the Chinese government’s characterization of Chinese law.
The U.S. companies went to the Supreme Court, which initially asked the federal government to weigh in. In a brief filed in November, the U.S. government recommended that the justices grant review to take up the foreign-law question. The government told the justices that, although courts “should give substantial weight to a foreign government’s characterization of its own law,” that submission “need not be treated as conclusive in all circumstances.” It remains to be seen whether the justices will agree.
A couple of comments:
- I feel a bit sorry for the Chinese defendants. When Chinese exporters’ prices are too low, they get hit with anti-dumping complaints. When their prices are too high, they get hit with antitrust complaints. It seems that US authorities will be satisfied only with Baby Bear prices that are juuuuuuust right.
- But I don’t feel too sorry for them. In the WTO, China had announced that it had given up export administration of Vitamin C in 2002. But in the antitrust proceedings, it submitted an amicus brief saying that export controls over Vitamin C were alive and well, and quite mandatory. Can’t have it both ways, guys. My own view is that the government’s position is correct here.
Here are some relevant documents:
- District Court decision in favor of plaintiffs (2012)
- Paul, Weiss client memo discussing District Court decision
- Second Circuit decision in favor of defendants (2016)
- Dorsey & Whitney client memo approving Second Circuit decision
- Comment on Second Circuit decision by Prof. William Dodge (who submitted an amicus brief on behalf of plaintiffs when they requested the Supreme Court to take their appeal)
- Various filings and documents (briefs, etc.) at the Supreme Court in connection with the case.
You can easily find other commentary by just googling the terms “vitamin c”, “antitrust”, and “China”. The case will be argued in April.