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How much is too much? Deference and the application of foreign laws in U.S. courts

The Supreme Court of the United States has granted certiorari on a case that could have international implications regarding conflicts of law between the U.S. and foreign nations.

Photo: Lawfare, Courtesy of Google Images

When it comes to the United States court system, most people would assume that American law reigns supreme.  In fact, many might find it ridiculous to imagine that a foreign country’s laws could apply in an American court;  however, given the increasingly globalized nature of business, the idea of incorporating foreign law is not so farfetched after all.  With foreign–owned and operated corporations allowing themselves to be hailed into court within the United States, important questions are necessarily raised as to whose law should apply and how much deference must be given to the laws of the foreign entity.

This very issue is scheduled to be argued before the Supreme Court later this month.  The case, Animal Science Products v. Hebei Welcome Pharmaceutical Co. (In re Vitamin C Antitrust Litigation), involves a multi–district class action lawsuit that was initially filed against Chinese producers of vitamin C in 2005.  The plaintiffs, U.S. purchasers of the vitamin, claimed that the Chinese–owned corporations violated U.S. antitrust laws by engaging in a price–fixing scheme and by attempting to create a shortage of the vitamin.  The defending Chinese corporations alleged that their conduct aligned with the laws created by the Chinese government.  Therefore, the corporations argued, the case should be dismissed based on the doctrine of state compulsion or international comity.

[T]he court reasoned, the case should have been dismissed pursuant to the principles of international comity.

To the dismay of the Chinese government, the case went to trial in 2013, where it was heard in the U.S. District Court for the Eastern District of New York.  Prior to trial, the Chinese Ministry of Commerce filed an amicus curiae brief with the court, in which it stated that it had regulated the foreign export of vitamin C by compelling producers to set prices and volumes.  The court, however, found that the defendants’ actions had not been compelled.  The jury returned a verdict for the plaintiffs, awarding them $147,000,000 and permanently enjoining the defendants from further violating the Sherman Act and the Clayton Act, which together form the basis of American antitrust law.  Unsurprisingly, the Chinese government was unhappy with this result.

The defendants filed their appeal with the U.S. Court of Appeals for the Second Circuit, and in 2016, the district court’s decision was vacated.  The Second Circuit specifically held that the district court abused its discretion by hearing the case; instead, the court reasoned, the case should have been dismissed pursuant to the principle of international comity.

Applying American law to the conduct of an appearing foreign nation may result in an unjust interference with that country’s authority, especially when the laws are in direct conflict with one another.  International comity works to protect against these instances, thus avoiding the potentially negative consequences of denying deference to the laws of these other countries.

Therefore, federal courts may decline jurisdiction to hear a case when the conduct at issue is prohibited by U.S. law, but allowed by the laws of the foreign nation involved.  When determining whether the principle of international comity applies, the court must first determine the nature of the conflict.  There must be a “true conflict,” meaning it would have been impossible to fully comply with U.S. laws, as well as with the laws of the foreign country.

International comity, the Second Circuit explained, applied directly to this case due to the fact that there was a “true conflict” between the antitrust laws of the United States and those of China.  Thus, a U.S. court is bound to defer to a foreign government’s interpretation of its own laws when there is a “true conflict.”  As a result, the statements made by the Chinese Ministry of Commerce in its amicus curiae brief should have been afforded due deference by the district court.

As a result, the Second Circuit accepted as fact that the vitamin C producers’ compliance with the laws of both countries would have been impossible.  No other evidence, such as motive or enforcement practices were considered.  Accordingly, the Second Circuit held that courts within the United States “[may] not embark on a challenge to a foreign government’s official representation to the court regarding its laws or regulations, even if that representation is inconsistent with how those laws might be interpreted under the principles of our legal system.”

Federal courts have broad discretion in determining what evidence may be used to determine the substance and content of foreign law.

This ruling by the Second Circuit is consistent with the Supreme Court’s holding in United States v. Pink (1942).  In that case, an officer of the Soviet government wrote an official declaration to the Court, in which he interpreted the meaning of relevant Soviet law.  The Court found that his interpretation of the law on the matter was conclusive.  Since that particular official held the legal authority to interpret the law in the U.S.S.R., his interpretation could also be applied extraterritorially.

Although the Second Circuit’s decision is in accordance with Pink, it could be inconsistent with Federal Rule of Civil Procedure 44.1, which was adopted in 1966.  This rule gives federal courts broad discretion in determining what evidence may be used to determine the substance and content of foreign law.  The rule clearly states that a “court may consider any relevant material or source” regarding the foreign law’s correct interpretation, and the determination will be treated as a question of law, meaning that it would be reviewed de novo if appealed.

Despite the broad discretion permitted by Rule 44.1, federal courts tend to give a substantial amount of deference to foreign government officials’ interpretations of their own laws.  In considering how much weight should be afforded to an official document filed with the court, such as an amicus curiae brief, the court may consider factors such as its context and purpose, the amount of clarity and thoroughness with which the document has been written, and the authority the author holds within the foreign government.  Since these factors are not explicitly outlined in Rule 44.1, however, it is frequently applied inconsistently among the various federal district and circuit courts.

The outcome of this case has the potential to have farreaching consequences, impacting many different types of disputes. 

Since there is a circuit split regarding this issue, the Supreme Court has granted certiorari to hear this case and decide the important issue of how much deference an American court should grant an appearing foreign nation’s characterization of its own laws.  The Fifth, Sixth, Seventh, Eleventh, and D.C. Circuits have held that, per Rule 44.1, a federal court may conduct its own independent review of the appearing foreign government’s interpretation of its law.  The Second and Ninth Circuits, on the other hand, have reasoned that a federal court must defer to the legal statement made by the foreign government, in alignment with the policy of international comity.

The Chinese Government has indicated that it views this case as being extremely important.  In its correspondence with the State Department, the Chinese Government stated that it felt “disrespected” by the U.S. court system prior to the Second Circuit’s decision.  In response, the Trump administration filed its own brief in support of the now–granted writ of certiorari.  The administration’s official stance is that, while great deference should be given to a foreign nation’s interpretation of its laws, other relevant evidence must be considered along with it.

Issues of international comity and the deference to be afforded to the interpretation of foreign laws may arise in a variety of contexts.  Therefore, the outcome of this case has the potential to have far–reaching consequences, impacting many different types of disputes.  In addition to antitrust disputes, such as the one at issue in In re Vitamin C Antitrust Litigation, foreign laws can potentially become implicated in other areas as well, including disputes related to human rights, anti–trafficking, securities litigation, and contractual claims involving international parties.

Miranda Tarlton
About Miranda Tarlton (4 Articles)
Miranda is a second year law student and serves as a Staff Writer for the Campbell Law Observer. Originally from Charlotte, NC, Miranda attended Campbell University where she obtained a degree in history and criminal justice. Before beginning law school, she worked for a number of years as a kindergarten and ESL teacher in Seoul, Korea. After her 1L year, Miranda worked in the legal department at Workplace Options. Her legal interests include criminal law and international human rights law.