On June 14, 2018, in Animal Science Products, Inc. v. Hebei Welcome Pharmaceutical Co., the Supreme Court held that Courts are not obliged to accept statements from a foreign government agency on the meaning and effects of its laws but should consider other evidence in addition to such statements to judge their value. The Court overruled a Second Circuit decision that treated the statements themselves as determinative.
The case involves price fixing of vitamin C. A group of purchasers sued four Chinese companies in the Eastern District of New York alleging the companies had engaged in a price fixing conspiracy in violation of Section 1 of the Sherman Act. The sellers moved to dismiss on the grounds that the government of the People’s Republic of China required them to engage in the behavior, and so it was immune under the state action and foreign sovereign compulsion doctrines and international comity. China’s Ministry of Commerce filed an amicus stating that China required such agreements by law. The plaintiffs argued that there was in fact no written law or regulation, that China had announced the pricing scheme would be voluntary and that China had made the opposite representations to the World Trade Organization. The trial court did not find the statement compelling, denied the motion to dismiss and a motion for summary judgment, and the defendants ultimately lost with a jury finding them liable for $147 million in damages after trebling. The Second Circuit reversed finding that the court should have dismissed because the statement from the Ministry of Commerce was determinative.
In deciding against the Second Circuit, the Court held that a court should “carefully consider a foreign state’s views about the meaning of its own laws” but should only offer “respectful consideration” of those views. A court needs to look at the totality of the circumstances, at 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.”
Animal Science stands for the proposition that defendants, when asserting their anticompetitive behavior was accomplished pursuant to a foreign law, have to do more than secure a statement from the government that the law in fact compels that behavior. Defendants counsel should do diligence into the law and be prepared to support the assertion. A statement from the government should still be useful, but one would want to consult local attorneys, hiring one perhaps as an expert, who would be able to offer an opinion that the defendants could seek to be admitted as an expert opinion.