Animal Sci. Products, Inc., v. Hebei Welcome Pharm. Co., 138 S. Ct. 1865 (2018) [click for opinion]
Petitioners were U.S.-based purchasers of vitamin C. Petitioners filed a class action suit against certain Chinese corporations manufacturing and exporting this product, alleging the corporations had agreed to fix the price and quantity of vitamin C exported to the United States from China in violation of antitrust law by forming a cartel. The Chinese corporations argued Chinese law mandated this conduct, and that they were therefore protected from liability under U.S. antitrust law. In support, they relied on an amicus brief from the Chinese Ministry of Commerce, and various expert evidence. Petitioners filed expert evidence in response, disputing the Ministry's interpretation. At issue was whether the court was required to defer to the Ministry's view as conclusive of Chinese law.
The Chinese sellers were initially unsuccessful. The district court held that the Ministry's amicus brief was "entitled to substantial deference," but was not necessarily "conclusive" of the proper interpretation of Chinese law. Following a jury trial, the Chinese sellers appealed to the Second Circuit. It reversed, articulating a "highly deferential" rule for these circumstances: "[W]hen a foreign government, acting through counsel or otherwise, directly participates in U.S. court proceedings by providing a [statement] regarding the construction and effect of [the foreign government's] laws and regulations, which is reasonable under the circumstances presented, a U. S. court is bound to defer to those statements." Holding that the Ministry's account of Chinese law was reasonable, the Second Circuit found for the Chinese sellers.
The Supreme Court granted certiorari on this issue. In a unanimous decision, the court noted that Federal Rule of Civil Procedure 44.1 had "fundamentally changed the mode of determining foreign law in federal courts." At common law, foreign law had been treated as a question of fact. Now, Rule 44.1 requires courts to treat determinations of foreign law "as a ruling on a question of law," for which they may consider "any relevant material or source." The court noted, however, that neither Rule 44.1 nor any other rule or statute "address[es] the weight a federal court determining foreign law should give to the views presented by the foreign government." This was the issue the court had to resolve.
The court held that "a federal court should carefully consider a foreign state's views about the meaning of its own law." However, it was not bound to adopt a foreign state's characterization of a particular law, nor was it required to ignore other relevant materials. Overall, faced with a particular interpretation of foreign law supported by that foreign state, "the appropriate weight in each case will depend on the circumstances." Relevant considerations included "the statement's clarity, thoroughness, and support; its context and purpose; the transparency of the foreign legal system; the role and authority of the entity or official offering the statement; and the statement's consistency with the foreign government's past positions."
The court concluded that the Second Circuit's "unyielding rule" was inappropriate and inconsistent with the broad approach of Rule 44.1. It noted by analogy that views of the attorney general of a U.S. state, while worthy of respect, were not controlling on federal courts. And, while the court had previously given conclusive effect to an official declaration, that submission was obtained by the U.S. through diplomatic channels, and there was no indication that the declaration was inconsistent with past statements or expert evidence in point. That case thus "scarcely suggests" that all submissions by a foreign government are entitled to the same weight, and indeed there was persuasive evidence here that the Ministry's interpretation may be incorrect. Finally, the court referenced two international treaties that "reflected an international practice" consistent with its approach. The court therefore vacated the Second Circuit's decision and remanded the case for further consideration.