The Supreme Court ruled unanimously on Thursday, June 14, to return to the 2nd Circuit Court of Appeals a case brought in 2005 by Texas-based Animal Science Products Inc and New Jersey-based The Ranis Co Inc who accused Hebei Welcome Pharmaceutical and North China Pharmaceutical Group and other Chinese vitamin C makers of antitrust violations. A jury trial in 2013 resulted in the plaintiffs being awarded US$147 million in damages, but its ruling was overturrned by the 2nd Circuit on grounds that the court should have deferred to Chinese law as interpreted by that country’s government.
In its decision, written by Justice Ruth Bader Ginsburg, SCOTUS determined that while US courts should give “respectful consideration” to a foreign government’s interpretation of its own law, they are not “bound to accord conclusive effect to the foreign government’s statements.” Justice Ginsburg also noted Courts should carefully consider a foreign government’s statement about the meaning of its own laws, but the appropriate weight in each case will depend on the circumstances. 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 on the law.”
The ruling is sensitive under the current climate of trade tensions, particularly between China and the US, as it significantly impacts the way that the laws of foreign nations are to be considered by US courts when the governments of those countries intervene in the case. In an unusual turn, lawyers for both governments presented arguments before the court in May.
The Second Circuit’s argument in overturning the ruling for the plaintiffs, was that when a foreign government directly participates in a case American courts are obligated to defer to that country’s characteriszation of its own laws.
The Supreme Court has now sent the case back for reconsideration by the New York-based 2nd US Circuit Court of Appeals.
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