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Thursday, June 14, 2018

SCOTUS Term: Figuring Out Foreign Law

Today’s Supreme Court decision in Animal Science Products v. Hebei Welcome Pharmaceuticals holds that federal courts need not give conclusive deference to a foreign government’s amicus filing explaining its own law. Although the Court concludes that federal courts should “carefully consider a foreign state’s views about the meaning of its own laws,” it also states that courts should consider “other relevant materials,” and should consider the foreign sovereign’s statements in light of “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’s unanimous opinion is a rare win for class-action plaintiffs, who had filed suit an antitrust action against Chinese exporters of Vitamin C, alleging that the exporters engaged in price-fixing. The defendants had argued that they were shielded from liability because their pricing arrangements were mandated under Chinese law, a position that the Chinese government confirmed in an amicus filing. The plaintiffs argued that the defendants’ (and Chinese government’s) position was contradicted by statements that China had made to the WTO. The district court agreed, but the Second Circuit held that the court erred by failing to give conclusive deference to the Chinese government’s statement of its own law.

The Supreme Court’s decision that a foreign government’s statements should be given respectful consideration but not conclusive deference seems quite clearly right to me. An amicus brief from professors of conflict of laws and civil procedure points out that the Supreme Court’s holding comports with the expectations of most countries; most nations do not give conclusive deference to foreign statements in filed cases, and leading international agreements expressly allow courts to consider foreign sovereign government’s statements about their own law without being bound by such statements.

But even if the decision is right in the abstract, I believe it should be a rare case in which a court’s “respectful consideration” of a foreign sovereign’s statement of its own law reaches a different decision. In this case, the district court concluded that the Chinese government’s statement was inconsistent with its earlier actions. An amicus brief filed in the Supreme Court by the Chinese Ministry of Commerce attempts to reconcile the seeming inconsistencies, bolstering the defendants’ argument that they lacked independent pricing power. On remand, the Second Circuit can certainly consider these arguments. As the Supreme Court pointed out in its opinion, questions of foreign law have been recognized as questions of law rather than fact ever since the adoption of FRCP 44.1 in 1966. As a result, the Second Circuit is not bound by the district court’s conclusion about the defendants’ ability to set their own prices. If the Second Circuit on remand agrees that the defendants' pricing strategies were required by Chinese law (a question explicitly left open by the Supreme Court), then the class-action plaintiffs' victory may be short-lived.

Posted by Cassandra Burke Robertson on June 14, 2018 at 04:31 PM in 2018 End of Term | Permalink

Comments

That's helpful.

As a matter of antitrust law, the district court's decision and the Court's assumption that this case is really about an issue of foreign law, as opposed to the brute fact of compulsion, however lawful, seem odd. The defendants made a so-called foreign sovereign compulsion defense, as well as a comity defense; the district court seems to have thought that a foreign sovereign's compulsion must be lawful under foreign law to be a defense. I can't quite imagine why that would be. Now the Second Circuit reversed only on grounds of comity, which does turn on comity with foreign law, so vacating and remanding does make sense. But ultimately, if China really compelled the defendants to price-fix, I think that should be the end of the case, even if their compulsion were illegal under Chinese law.

Posted by: Asher Steinberg | Jun 16, 2018 12:58:14 PM

Asher, I would expect that the negotiations would involve the conduct rather than the case and would apply ex ante to future trade--so, for example, the governments could reach a trade agreement authorizing the foreign government's desired pricing strategies, etc. That would allow the exporters to comply with the foreign regulations without being subject to antitrust liability in the U.S. Of course, such a negotiation could go the other way as well, in term of getting the foreign government to agree *not* to require such a pricing strategy. But either way, the underlying issue would be addressed outside of litigation.

In terms of dealing ex post with issues of liability--well, if the plaintiffs are going to actually recover monetary damages, they will probably need some level of support from the Chinese government. Plenty of cases have found liability against foreign defendants, but actually enforcing the judgment is much more difficult and usually requires some level of international cooperation.

Posted by: CBR | Jun 16, 2018 10:45:47 AM

Could you elaborate on how foreign governments would correct errors that result in foreign company liability through political or diplomatic processes? Suppose that the Chinese government really ordered this price-fixing scheme, which they understandably might not truthfully disclose to the WTO, or announce in publicly promulgated regulations. How does China politically or diplomatically correct the district court's mistake so that its sellers aren't held liable for antitrust violations?

Of course, there's a classic jurisprudential debate over whether such a secret state command, that differs from the content of "written law or regulation[s]," op. at 3, is law at all. This somewhat hoary question has gained new life in recent years, thanks in part to another guest-Prawfsblawgger. See this paper on Will Baude's "Illuminati Problem":

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2915564

Posted by: Asher Steinberg | Jun 15, 2018 7:59:35 PM

Asher, I don't think that's a fanciful concern--I think you're probably right that if the goal is minimizing the number of cases in which a US court makes a mistake about the content of foreign law, a conclusive deference standard is likely to be more effective. But I wonder about the cost of various potential errors. Some errors of foreign law are correctable through the political and diplomatic process, while others are harder to correct. An error that results in foreign company liability is one that foreign governments might be motivated to correct through political or diplomatic processes. And error going the other direction is more likely to slip through the cracks. Plus, of course, a conclusive deference standard can be gamed in order to protect domestic enterprises (which was the plaintiffs' theory of the case in Hubei). I'm more skeptical that that was actually happening in Hubei, but I do worry about the potentially problematic incentives that are created if the parties cannot argue for varying interpretations of foreign law.

Posted by: CBR | Jun 15, 2018 3:58:14 PM

Asher ,

you can read the ruling, and read by yourself , that anyway , clear and careful reading of the foreign law , is absolutely warranted . I shall not dig to much here for general justifications , but see and read , that anyway , one of the parties , shall challenge probably the version of the other side ( concerning the right interpretation of the law or practice even ) here I quote , p.2- 3 :


" The Chinese sellers moved to dismiss the U. S. purchasers’ complaint on the ground that Chinese law required them to fix the price and quantity of vitamin C exports.Therefore, the Chinese sellers urged, they are shielded from liability under U. S. antitrust law by the act of state doctrine, the foreign sovereign compulsion doctrine, and principles of international comity. The Ministry of Commerce of the People’s Republic of China (Ministry) filed a brief as amicus curiae in support of the Chinese sellers’….

Now , read what the other side did in exchange :

In response, the U. S. purchasers disputed that Chinese law required the Chinese sellers to engage in price fixing .Among other things, the U. S. purchasers noted that the Ministry had not identified any written law or regulation expressly ordering the Chinese sellers’ price agreement.2 They also highlighted a Chamber announcement that the manufacturers “were able to reach a self-regulated agreement . . . whereby they would voluntarily control the quantity and pace of exports . . . without any government intervention.” App. 109. In addition, the U. S. purchasers presented expert testimony that the Chinese Government’s authorization of a Vitamin C Subcommittee within the Chamber did not necessarily mean that the subcommittee’s price fixing was mandated by law.

End of quotation :

So , in a way or other , it would be challenged and become messy . So , the best way or model , is to appoint an objective expert ( by the court appointed ) and get so , the basis for well admissible and coherent and professional opinion . One can't treat law like amateur . Fate of too many people or money is at stake here . Suppose , reading US statute or code , without amendments incorporated. It is laughable of course . Imagine apple sails of iphones of billions of dollars affected overnight due to reckless reading of law . This is not a game !

Thanks

P.S : Pages 2-3 to the opinion , not the sylabus

Posted by: El roam | Jun 15, 2018 3:33:12 PM

Could I throw out a possibly fanciful concern? Some foreign states don't adhere too closely to their written law, like perhaps China itself, or Russia, or Venezuela. What the law really "is" in these states may be more accurately reflected by a pattern of practices, or the statements of high non-judicial officials, then by a careful reading of written laws, statements to the WTO, or even judicial decisions. I worry that a respectful consideration standard will result in more errors, in applying the law of such states, than conclusive deference would.

Posted by: Asher Steinberg | Jun 15, 2018 2:22:58 PM

Just to emphasize the punch line , of the second comment (the illustration) :

So , in the case presented there in the supreme court , different federal statutes , deal differently with the issue the court dealt with . The fact that there are several relevant federal statutes generally speaking , is a matter of fact ( first matter of fact , before reaching even relevancy and interpretation) . As such , one can't have a pick up , and pick one federal statute most relevant subjectively . But :
As a matter of fact , an expert needs to present first for example , how many statutes are relevant , and what are they ( generally speaking ) . And of course , testify , translate them for a judge and parties at a foreign court , and submitted and confirmed by authorized notary and so forth mess …..

For it doesn't make sense , that such complicated issue, like the Chinese law , that can affect , so many American global companies for example , would be cut in such , legally reckless or improvised manner of course with all due respect .

Thanks

Posted by: El roam | Jun 15, 2018 8:23:36 AM

Just a link to the ruling mentioned :

https://www.supremecourt.gov/opinions/17pdf/16-1519_o7jp.pdf

Thanks

Posted by: El roam | Jun 14, 2018 8:37:49 PM

Just illustrating it , through a recent ruling of the supreme court ( Lagos Vs. United states ) . In that ruling , the issue was , I quote :

" We must decide whether the words “investigation” and “proceedings” are limited to government investigations and criminal proceedings, or whether they include private investigations and civil proceedings. In our view, they are limited to government investigations and criminal proceedings. "

But , there are different statutes dictating different provisions and interpretations , here I quote :

" The Mandatory Victims Restitution Act is one of several federal statutes that govern federal court orders requiring defendants convicted of certain crimes to pay their victims restitution."

And finally according to the supreme court , I quote :

" And given those differences between the Mandatory Victims Restitution Act and other restitution statutes, we conclude that the considerations we have mentioned, particularly those based on a reading of the statute as a whole, tip the balance in favor of our more limited interpretation."

End of quotation :

So , if such issue , had to be faced by foreign court , dealing with the US law , then , the matter of fact ( before of law ) had to be first , to establishe , what are the relevant statutes dealing with the meaning of " victim " or " investigation " or proceedings and so forth for example .

Must be established as matter of fact , before concluding any matter of law , which is , what is the right and most conclusive interpretation of the law , but first , the factually , relevant law , or statute or code or provision as illustrated above .

Thanks


Posted by: El roam | Jun 14, 2018 8:20:04 PM

Thanks for that interesting ruling . The whole attitude is more than bit unreasonable :

In order for an issue to be or become " question of law " one must treat and set first , the set of facts or the factual configuration. This is not so different at all in issues of foreign laws . That is to say , that first , you must conclude , what is the law as matter of fact ( facts here , means : the text , the code , history , amendments and so forth…) and only after tracing those facts , you can conclude , what is the right interpretation of that foreign law , and then , and only then , it does become indeed : " question of law " . However , and whatsoever :

Legally , It can't be satisfactory , to rely on a statement , not written by a legal expert . amicus filing , is not sufficient if not written by legal expert . The court must hear and cross examine the written opinion of a legal expert . For it is Universally so , that only authorized legal experts , can interpret the law ( surly foreign law , in foreign court ) .

So , rule 44.1 reads so indeed , I quote :

" A party who intends to raise an issue about a foreign country's law must give notice by a pleading or other writing. In determining foreign law, the court may consider any relevant material or source, including testimony, whether or not submitted by a party or admissible under the Federal Rules of Evidence. The court's determination must be treated as a ruling on a question of law. "

End of quotation :

So , the court :

" may consider any relevant material or source ….. " But , this must be , on the solid basis , of authorized and admissible legal expert directly testifying and opining on the issue, and then , if it is yet ambiguous in the eyes of the court , he may observe other additional sources .

Thanks

Posted by: El roam | Jun 14, 2018 7:59:59 PM

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