US courts need not abide by foreign governments’ statements on the meaning of their own laws, the US Supreme Court has unanimously ruled, in a victory for plaintiffs seeking antitrust damages from vitamin C makers who claimed the Chinese government mandated their alleged collusion.

In a 14 June opinion penned by Justice Ruth Bader Ginsburg, the court reversed a US Court of Appeals for the Second Circuit findings that “the principles of international comity required the district court to abstain from exercising jurisdiction in this case.”

In 2011, the US District Court for the Eastern District of New York refused to dismiss a lawsuit seeking damages from Chinese vitamin makers that allegedly colluded in their exports to the US. Judge Brian Cogan said the companies could be liable under US antitrust law if they were not actually compelled by their government to coordinate prices, and that the Chinese government was merely trying to shield its companies by now claiming that they had been forced to coordinate.

A jury awarded US-based direct purchasers more than $100 million in damages from the cartel in 2013, a result that China’s Ministry of Commerce criticised as “unfair and inappropriate”.

The appeals court overturned that ruling in September 2016, finding that the trial court should not have allowed plaintiffs to obtain damages from the companies, as it should have accepted the Chinese government’s statement that the defendants “could not simultaneously comply with Chinese law and US antitrust laws”.

Last November, the solicitor general and the Antitrust Division supported the damages claimants’ request for Supreme Court review.

At oral arguments in April, several justices indicated scepticism of the position argued by lawyers for MOFCOM and vitamin maker Hebei Welcome, the only non-settling defendant. Justice Elena Kagan noted that “binding deference” is not the international norm for how courts treat a foreign government’s statement of its laws; they instead tend to give “respectful consideration”.

That apparent scepticism was born out in the ruling, issued on 14 June, in which the Supreme Court unanimously overturned the Second Circuit’s judgment.

Justice Ginsburg wrote: “A federal court should accord respectful consideration to a foreign government’s submission, but is not bound to accord conclusive effect to the foreign government’s statements.”

Until 1966, foreign laws had to be proven as a factual matter. Following the adoption of a new rule of civil procedure, US courts then ruled on the meaning of foreign law as a question of law, not fact. Justice Ginsburg said the purpose of the change was to ensure consistency in how federal courts determine the meaning of a foreign sovereign’s laws and how they determine the meaning of state laws in the US.

Rulings by a state’s highest court on the meaning of its laws are binding on federal courts, she said, but views on the law expressed by a state attorney general receive only “respectful consideration”.

While international comity necessitates carefully considering a foreign government’s views about its own laws, the justice wrote, “the appropriate weight in each case will depend upon the circumstances; a federal court is neither bound to adopt the foreign government’s characterisation nor required to ignore other relevant materials”.

She noted that MOFCOM’s statement – that the Chinese government had mandated collusion – was made in the context of litigation, but that China told the World Trade Organization that it stopped controlling vitamin C exports after 2001. In such circumstances, “there may be cause for caution in evaluating the foreign government’s submission,” Justice Ginsburg wrote.

US courts should consider 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 Supreme Court held.

Although the high court did not take a position on the correct interpretation of Chinese law, it did send the case back to the Second Circuit with a direction to rethink it in light of the materials identified by the trial court that contradicted MOFCOM’s statements.

This is an edited version of an article that first ran on PLN’s sister publication Global Competition Review. Further analysis can be found here.

Counsel to plaintiffs Animal Science Products and The Ranis Company

Boies Schiller Flexner

Partners Michael Gottlieb, Karen Dunn and William A Isaacson in Washington, DC, and David Boies in Armonk, New York

Counsel to Hebei Welcome Pharmaceutical and North China Pharmaceutical Group

Wilson Sonsini Goodrich & Rosati

Partner Jonathan Jacobson in New York

Counsel to amicus China’s Ministry of Commerce

Sidley Austin

Partners Joel M Mitnick in New York and Carter Phillips in Washington, DC