Foreign Law in Domes ...

Foreign Law in Domestic Lawsuits: Whose Interpretation Takes Precedence?

September 13, 2018 | by Kat Carrington

In the products arena, it is not every day that foreign law becomes relevant to a domestic lawsuit. When it does, however, it can create confusion and uncertainty amongst the litigants and the court. Although Federal Rule of Civil Procedure 44.1 was created more than 50 years ago to alleviate such confusion and uncertainty, case law over the decades reflects that this goal has not quite been achieved. On June 14, 2018, the Supreme Court of the United Stated added a new wrinkle to this uncertain area of law: a foreign government’s interpretation of its own laws is not binding on a U.S. court faced with the application of that law in its court.

In Animal Science Products, Inc. v. Hebei Welcome Pharmaceutical Co. Ltd., 138 S. Ct. 1865 (2018), a group of U.S. purchasers of vitamin C filed a class action against four Chinese corporations manufacturing and exporting the vitamin to the States. The class alleged the Chinese sellers were fixing the price and quantity of vitamin C in violation of section 1 of the Sherman Act, 15 U.S.C. § 1. In response, the Chinese sellers moved to dismiss on the ground that Chinese law required them to fix the prices and quantities of the products they exported, i.e. they were immune from antitrust liability by their own domestic laws. The Ministry of Commerce of the People’s Republic of China filed an amicus brief in support of the motion and in support of the legal interpretation put forth by the Chinese sellers.

The District Court denied the motion. Following discovery and an unsuccessful motion for summary judgment, a jury found in favor of the class. The Second Circuit Court of Appeals reversed, finding the District Courte erred in denying the Chinese sellers’ motion to dismiss. According to the Second Circuit, “a U.S. court must not embark on a challenge to a foreign government’s official representation.”

The Supreme Court of the United States granted certiorari to resolve the following question: “Is a federal court determining foreign law under Rule 44.1 required to treat as conclusive a submission from the foreign government describing its own law?” The Supreme Court answered no.

As the Supreme Court explained, Rule 44.1 does not address the weight to be afforded to a foreign government’s interpretation of its own laws. Instead, the Rule simply states that a 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.” Fed. R. Civ. P. 44.1 (emphasis added). Accordingly, the Supreme Court said that “in the spirit of international comity,” it is important that a court “carefully consider a foreign state’s views about the meaning of its own laws,” but “a federal court is neither bound to adopt the foreign government’s characterization nor required to ignore other relevant materials” in reaching its own interpretation. The Supreme Court explained:

Given the world’s many and diverse legal systems, and the range of circumstances in which a foreign government’s views may be presented, no single formula or rule will fit all cases in which a foreign government describes its own law. Relevant considerations include 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.

As this opinion reflects, the rare occasion when foreign law may apply in a domestic product liability case remains a challenge to the litigants and the court. Although the Supreme Court has provided guidelines for the weight to be afforded to a foreign government’s interpretation of its own law, there is by no means any certainty that such an interpretation will be accepted and applied. Litigants proffering a certain interpretation of foreign law in favor of their foreign client should be prepared for an uphill battle.