When a case comes to the Supreme Court, the justices are usually interpreting U.S. laws – either the U.S. Constitution or a federal statute. But in today’s global economy, resolving cases brought under U.S. law in U.S. courts can also require an understanding of foreign laws. And that’s not always easy, especially when the foreign laws and legal systems at issue are different from our own. In these situations, should U.S. courts take a foreign government’s word about how a foreign law works? The justices considered that question today, in a case that could have implications not only for the enforcement of U.S. antitrust laws, but also for U.S. relations with China. After an hour of oral argument, the court seemed likely to hold that the rule adopted by the lower court, which would generally require deference to a foreign government’s interpretation of foreign law, is too rigid – even if the justices weren’t sure precisely what the contours of the new rule should be.
The case before the Supreme Court today was filed in 2005 by Animal Science Products, a Texas-based company that uses Vitamin C in the livestock supplements that it makes. The company alleged that Hebei Welcome and other Chinese manufacturers had fixed the prices of the Vitamin C that they exported to the United States, in violation of U.S. antitrust laws. Hebei Welcome has argued in U.S. courts that it struck deals on prices and quantities with other Chinese manufacturers because Chinese law required them to do so, and the Chinese ministries that regulate trade has told the U.S. courts the same thing. A jury awarded Animal Science nearly $150 million in damages, but a federal appeals court threw out that verdict and ruled for Hebei Welcome, holding that it was required to defer to the Chinese government’s interpretation of Chinese law. Animal Science took its case to the Supreme Court, which agreed to weigh in earlier this year.
At today’s oral argument, attorney Michael Gottlieb, who represents Animal Science, framed the dispute narrowly, telling the justices that the question before them was whether the district court must accept a foreign government’s submission in the “unusual” case in which the district court has questions about the clarity, completeness, or consistency of the submission.
Gottlieb quickly fielded a question from Justice Ruth Bader Ginsburg, the court’s procedure maven, that must have been encouraging to him, because it assumed that his client would prevail in the Supreme Court. Animal Science has asked the court to reverse the 2nd Circuit’s ruling, she noted. But if Animal Science is correct, she continued, shouldn’t the Supreme Court instead nullify the lower court’s decision and send it back “so that the Second Circuit can reassess, with the understanding that what the ministry said is not conclusive?”
Gottlieb conceded that sending the case back to the lower court for reconsideration would be appropriate, but he urged the justices to instead take the bigger step of reversing the ruling entirely, because the court of appeals had not challenged the district court’s interpretation of Chinese law.
Discussing what he characterized as the “significant costs” of the 2nd Circuit’s rule, Gottlieb emphasized that U.S. courts “should not give up their responsibility to say what the law is,” even when foreign law is involved. Indeed, he observed, they have been doing so for centuries, without “outsourcing that task to other entities just because those questions are difficult.”
On that note, Justice Neil Gorsuch pounced. U.S. courts do outsource determinations of the law sometimes, he noted – for example, by giving “conclusive weight to a determination by an agency as to what the law is.”
Justice Stephen Breyer soon steered the argument to two related topics that would occupy a good chunk of the oral argument. First, he asked Gottlieb, what is the difference between a standard that calls for “respectful deference” to a foreign sovereign’s submission and the standard that the 2nd Circuit applied, which requires U.S. courts to defer to “reasonable interpretations” by the foreign government?
Second, he asked Brian Fletcher, the assistant to the U.S. solicitor general who argued on behalf of the United States, how should the Supreme Court phrase its opinion if it decides it doesn’t want to “always accept” a foreign government’s submission? What, he continued, should the court write to avoid opening the door to “international chaos”?
Fletcher suggested a nuanced approach that would, at a minimum, guarantee “respectful consideration” to foreign government submissions. But in most cases, he added, submissions by a foreign government would ordinarily get “substantial weight,” although exactly what weight “is inevitably going to depend on the circumstances.”
Breyer returned to the question of the appropriate standard later on, during the argument by Carter Phillips, who represented the Chinese government before the court. When Breyer posited that “respectful consideration” might be the correct standard, Phillips’ response was strong. How do you square a standard of “respectful consideration,” he countered, with the district court’s ruling in this case that the Chinese government’s submission was simply a “post hoc attempt to shield” Hebei Welcome and the other countries from liability? Phillips urged the court to hold instead that a foreign government’s submission will be conclusive unless it contains an ambiguity or is “incredible on its face.”
With a question that became a lighter moment, Roberts expressed skepticism about the significance of the requirement that consideration be “respectful.” “I don’t understand,” said Roberts to Jonathan Jacobson, who argued on behalf of Hebei Welcome, “this constant emphasis on respectful. It doesn’t mean that you can’t disagree, right?” When someone says “with all due respect,” Roberts continued, that “usually means the person’s about to say you don’t know what you’re talking about.”
After asking Phillips whether Chinese courts would defer to a foreign government’s submission, Justice Elena Kagan expressed concern that adopting the 2nd Circuit’s rule would establish a more deferential standard than other countries use. “How,” Kagan asked Phillips, “can you say that the only thing that shows respect to foreign governments is to do something that we don’t know that any other country does?” “Presumably,” she continued, “all these foreign nations are doing something more like ‘respectful consideration.”
Justice Anthony Kennedy also seemed inclined to rule that the 2nd Circuit’s rule goes too far, and gives the foreign government’s submission too much weight. He told Phillips that he wasn’t convinced that the court’s 1942 decision in United States v. Pink, a dispute over the assets held by the New York branch of a Russian insurance company that had been nationalized by the Russian government, was as helpful to Hebei Welcome as Phillips had asserted. In that case, Kennedy emphasized, the Supreme Court had determined that an official declaration from the Russian government was reliable and accurate and therefore regarded it as “conclusive.” But the court did not say, Kennedy suggested, that it would accept foreign government submissions in every case. The middle ground that Kennedy described may provide a way for the Supreme Court to resolve this case; we’ll know more by the end of June.