The Supreme Court today ruled that a U.S. court does not need to take at face value a foreign government’s word about how that country’s laws operate. Instead, the justices explained, although courts should “carefully consider” what a foreign government says about its own laws, they are not bound by those views; they can also take into account other materials that might shed light on what the foreign law at issue means. In our global economy, in which resolving cases brought under U.S. law in U.S. courts can also require an understanding of foreign laws, the decision is an important one.
The case was a victory for Animal Science, a Texas-based company that uses Vitamin C in the livestock supplements it manufactures. In 2005, the company sued Hebei Welcome, a Chinese company, in U.S. courts, alleging that Hebei Welcome and other Chinese manufacturers had fixed the prices of the Vitamin C that they sold to the United States – a violation, the company said, of U.S. antitrust laws.
A federal appeals court ruled that Animal Science’s claims should be thrown out. It explained that U.S. courts should defer to evidence provided by the Chinese government indicating that Chinese law required Hebei Welcome and the other companies to agree on their prices and quantities. Such deference, the U.S. Court of Appeals for the 2nd Circuit emphasized, is appropriate whenever a foreign government, as here, “directly participates” in a case in U.S. courts by offering sworn evidence about “the construction and effect of its laws and regulations” and that evidence is “reasonable under the circumstances presented.”
Animal Science challenged that decision in the Supreme Court, which today invalidated the 2nd Circuit’s decision on the ground that it gave too much deference to the Chinese government’s views. In a 12-page unanimous opinion by Justice Ruth Bader Ginsburg, the court pointed to Federal Rule of Civil Procedure 44.1, which specifically indicates that, when determining what a foreign law means, courts “may consider any relevant material or source,” even if it isn’t submitted by one of the parties and even if it would not necessarily be admissible in court. This means, the court explained, that although federal courts “should carefully consider a foreign state’s views about the meaning of its own laws,” they are “neither bound to adopt the foreign government’s characterization nor required to ignore other relevant materials” – particularly when the foreign government has made inconsistent statements about what its laws require or when its interpretation comes during the course of litigation over that question. The court also emphasized that there is no “single formula or rule” to apply whenever foreign governments weigh in on the content of foreign law; instead, it suggested, courts should consider factors such as the “clarity, thoroughness, and support” of the foreign government’s interpretation; the statement’s “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.”
Turning to the dispute before it, the court deemed the 2nd Circuit’s “unyielding rule” to be “inconsistent with Rule 44.1.” In particular, the court observed, the 2nd Circuit focused so closely on the statement by the Chinese government that it did not consider evidence in the record before the district court that pointed in the other direction – for example, China’s statement to the World Trade Organization averring that the Chinese government was no longer regulating exports from China.
While emphasizing that it was not ruling on whether Chinese law indeed required the defendants in this case to fix prices for Vitamin C, the court made clear that, in its view, “the materials identified by the District Court were at least relevant” to the weight that the Chinese government’s views should receive. The justices therefore sent the case back to the lower courts for them to take another look at the question.
This post was also published on SCOTUSblog.