How much deference a U.S. court should give to a foreign government’s characterization of its own law? This question is now before the Supreme Court.
On January 12, 2018, the Supreme Court decided to hear a price-fixing case against Chinese Vitamin C manufacturers where the Court must decide whether U.S. judges must defer to Chinese’ government’s interpretation of its law.
Who is suing whom?
The plaintiffs are U.S. vitamin C buyers.
The defendants are Hebei Welcome Pharmaceutical and North China Pharmaceutical Group Corporation. They are Chinese vitamin C manufacturers.
What is the claim?
The plaintiffs filed an antitrust class action against Chinese vitamin C manufacturers, alleging that the defendants established an illegal cartel to cut down the supply of vitamin C in order to boost the price for sale to the U.S. companies.
What is the defense?
The Chinese manufacturers asked the court to throw the case out.
They conceded that they fixed prices and quantities of Vitamin C, but argued that they were required to do so under Chinese law.
What is so special about this case?
For the first time ever, the Chinese government, for the first time, appears as amicus curiae in a U.S. court to submit a statement supporting the defense of Chinese companies.
The Ministry of Commerce of the People’s Republic of China explained that it required all Chinese vitamin C manufacturers to agree on the price at which vitamin C would be sold abroad.
What did the district court hold?
Despite the Ministry’s amicus brief, the district court denied the motion, stating that the factual record was “simply too ambiguous to foreclose further inquiry into the voluntariness of defendants’ actions.” On a subsequent motion for summary judgment, the district court, again, “decline[d] to defer to the Ministry’s interpretation of Chinese law.”
What did the jury decide?
The case went to the jury, which awarded the U.S. companies $147 million in damages.
What did the court of appeal decide?
On appeal, the U.S. Court of Appeals for the Second Circuit reversed ruling that it was “bound to defer” to the Chinese government’s characterization of Chinese law.
The U.S. companies petitioned to the Supreme Court to hear their case.
What is the issue in front of the Supreme Court?
The question is: whether a court may exercise independent review of an appearing foreign sovereign’s interpretation of its domestic law, or whether a court is “bound to defer” to a foreign government’s legal statement, as a matter of international comity, whenever the foreign government appear before the court.
What to expect?
This would be an interesting case to follow, as it raises delicate issues on the political, economic, and legal questions about U.S. courts’ approach to a foreign government’s interpretation of its own law.
Since this case is the first time the Chinese government appears as “friend of court” in the U.S., the Supreme Court decision would have an impact on whether we are going to see more Chinese government’s involvement in international litigation, especially in the U.S.
Stay tuned for further developments . . .
China Antitrust 