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From Antitrust Law Daily, April 24, 2018

Weight afforded foreign government’s views considered by High Court

By Jeffrey May, J.D.

The U.S. Supreme Court justices today grappled with the appropriate weight to be applied to a foreign government's characterization of its own law. At issue is a decision of the U.S. Court of Appeals in New York City. The Second Circuit held that a federal court is bound to defer to an interpretation offered by a foreign government that "directly participates in U.S. court proceedings" that is "reasonable under the circumstances." The case involved a price fixing action against Chinese manufacturers and exporters of vitamin C. U.S. vitamin C purchasers asked the Court to review the Second Circuit decision, which vacated a district court order in their favor, after affording deference to the views of the Chinese government, which purportedly sanctioned the price fixing conduct (Animal Science Products, Inc. v. Hebei Welcome Pharmaceutical Co. Ltd.Dkt. 16-1220).

The U.S. government, in supporting the petitioners, urged the High Court not to articulate a Chevron-type rule, or a sort of one-size-fits-all rule that federal courts are bound to a foreign government's interpretation of its law, if the foreign sovereign's interpretation is reasonable or if it meets some other standard. When pressed by the justices for what standard should be applied, Brian H. Fletcher, Assistant to the U.S. Solicitor General, said that a submission from a foreign government should be entitled to substantial weight, but the weight that it is entitled to is inevitably going to depend on the circumstances.

Carter Phillips of Sidley Austin LLP, appearing on behalf of the Ministry of Commerce of the People's Republic of China as amicus curiae, argued that the Second Circuit’s standard, that a foreign sovereign’s reasonable interpretation should be conclusive, should be upheld. According to Phillips, the Second Circuit’s decision was the right one in the case. China’s minimum price regime dictated the outcome of the case. Chinese law required the defendants to do precisely what they did. The Second Circuit standard also offers respect to the foreign government, he contended.

"What the Chinese law required was unambiguously price fixing that was in conflict with U.S. law, and that is why, in reaching the determination whether to—to affirm, vacate, or reverse, we believe the appropriate disposition is to affirm," said Jonathan M. Jacobson of Wilson Sonsini Goodrich & Rosati, P.C., arguing on behalf of the respondents.

In responding to a question raised by Justice Elana Kagan, Michael Julian Gottlieb of Boies Schiller Flexner LLP for the petitioners suggested during rebuttal that the Second Circuit went too far and that no other nation in the world applies the rule advocated by the petitioners and Ministry of China. "China doesn't apply this kind of binding deference," said Gottlieb. "The United States doesn't ask for it. It doesn't apply it."

Attorneys: Michael J. Gottlieb (Boies Schiller Flexner LLP) for petitioners. Jonathan M. Jacobson (Wilson Sonsini Goodrich & Rosati, P.C.) for respondents. Carter G. Phillips (Sidley Austin LLP) for Ministry of Commerce of the People's Republic of China as amicus curiae.

MainStory: TopStory Antitrust

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