U.S. SUPREME COURT HOLDS THAT FOREIGN GOVERNMENT SUBMISSIONS ARE NOT BINDING
July 19, 2018
In Animal Science Products Inc. et al. v. HeBei Welcome Pharmaceutical Co. Ltd. et al., the U.S. Supreme Court set forth important precedent for how U.S. courts will address the legal interpretations of foreign governments (in this case, China) in the future. The case focused on the Chinese government’s interpretation that Chinese law compelled two companies to fix prices for their products. As a result, the decision has implications for foreign carriers in the broader context of U.S. antitrust law, DOT oversight of competition issues, and U.S. courts’ deference to a foreign government’s legal authority.
The Supreme Court rejected a lower court’s decision that it was “bound to defer” to the Chinese ministry’s legal interpretation of Chinese laws and approval of the price fixing at issue. Before the case was appealed to the Supreme Court, the trial court had expressed concern that the litigation had harmed U.S.-China relations and that the Chinese government had repeatedly expressed that it considered the case offensive and attached great importance to it. The Supreme Court ignored these concerns of the trial court and set precedent that other U.S. courts will not automatically be bound to defer to a foreign government’s legal interpretation in this context.
The decision could affect future aviation antitrust cases which involve legal interpretations by a foreign government. Foreign entities will now have to present, in addition to a foreign government submission itself, evidence of a number a factors in order to rely on either a foreign compulsion defense or international comity defense in antitrust litigation. As noted in the Court’s majority opinion, these factors 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.”
If you have any questions, please contact Evelyn Sahr (esahr@eckertseamans.com or 202-659-6622); Drew Derco (dderco@eckertseamans.com or 202-659-6665), or Alexander Matthews (amatthews@eckertseamans.com or 202-659-6633).
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