Page 4 - Litigation

S4 | MONDAY, DECEMBER 12, 2016 | Litigation
| NYLJ.COM
When a Court Interprets Foreign Law, There Is No Secret Password
rized to regulate foreign trade,” submitted an amicus brief asserting that Chinese law mandates the price xing conduct at issue in the case. The district court rejected the comity defense; the plaintiffs then prevailed at trial and were awarded a judgment of $147 million.
On appeal, the Ministry again asserted, as amicus curiae, that Chinese law required the defendants to set prices for their Vita- min C exports. Considering this, the panel believed it was required to defer to the Min- istry’s interpretation. It held that “when a foreign government, acting through counsel or otherwise, directly participates in U.S. court proceedings by providing a sworn evidentiary proffer regarding the construc- tion and effect of its laws and regulations, which is reasonable under the circumstances presented, a U.S. court is bound to defer to those statements” (emphasis added). As a result, the panel concluded that because of the “true con ict” between Chinese and U.S. law, the district court should have declined to exercise jurisdiction over the case.
The Rule of Deference to Be Applied
Any decision in which a U.S. court sets out clear circumstances in which it is “bound” to accept a particular interpretation of foreign law out of comity will no doubt get attention. Vitamin C already has been recognized as a “landmark for comity” and one that has “boosted international comity.” While we agree with these statements, we question whether the decision represents the sea change in the law of comity others describe it to be.
The Second Circuit’s condition that the foreign state’s interpretation be “reasonable under the circumstances presented” indicates that courts must consider the circumstances under which a foreign state submits an inter- pretation of its own laws in determining what level of deference to afford that interpretation. The Vitamin C panel expressly recognized that certain circumstances may not warrant deference, including where there is no “docu- mentary evidence” or speci c “reference of law” proffered to support the foreign state’s interpretation. Because of this, we believe the Vitamin C decision is in harmony with prior decisions that have scrutinized a sovereign state’s proffered interpretation and found it to be unreasonable under the particular circumstances of the case.
In the different but analogous context of determining what deference to give a U.S. agency’s interpretation of U.S. law, the land- mark case of Chevron, U.S.A. v. Nat. Res. Def. Council, 467 U.S. 837, 844 (1984), established that “considerable weight” should be given to an executive agency’s “construction of a statutory scheme it is entrusted to adminis- ter.” Generally speaking, Chevron deference applies where Congress has delegated inter- pretive authority to an agency. See United States v. Mead, 533 U.S. 218, 226-28 (2001). But not every agency interpretation war- rants strong Chevron deference. As the U.S. Supreme Court recognized in Mead, “[t]he fair measure of deference to an agency adminis- tering its own statute has been understood to vary with circumstances, and courts have looked to the degree of the agency’s
BY DENNIS HRANITZKY, JOHN BIANCAMANO AND LINDSAY RAY
T he Second Circuit recently issued a land- mark decision concerning the amount of deference to be given to a foreign state’s
interpretation of its own laws in U.S. courts. See In re Vitamin C Antitrust Litigation, No. 13-cv-4791, 2016 WL 5017312 (2d Cir. Sept. 20, 2016). The case involved allegations of price xing by several Chinese companies, and the court held that it was “bound” to accept the interpretation of Chinese law regulating the defendants’ conduct provided in an amicus
DENNIS HRANITZKY is a partner, and JOHN BIANCA- MANO and LINDSAY RAY are associates, at Dechert in New York.
brief by a Chinese government ministry, which led to the case being dismissed on the grounds of international comity.
The clarity of the opinion, and the seem- ingly strong rule of deference it applies, have led many commenters to characterize it as a strengthening of the doctrine of international comity, calling for courts to give more defer- ence to the interpretations of foreign states. We think these commenters are reading too much into the decision. Vitamin C can be harmonized with other cases involving foreign states’ interpretations of their own laws aris- ing in different contexts. When read together, these cases instruct that courts considering whether to defer to a foreign state’s inter- pretation should engage in a task similar to that performed by courts considering U.S. federal agencies’ interpretations of federal statutes. The overall circumstances of each case are important, and various factors will
direct where along a sliding scale of deference each case falls.
Second Circuit’s Decision in ‘Vitamin C’
The plaintiffs in the Vitamin C litigation were purchasers of Vitamin C who alleged that the defendants illegally set prices for their exports of Vitamin C from China—a per se violation of the Sherman Act. The defen- dants responded by raising a defense based on international comity. They claimed that Chinese law had required them to agree on their prices, and because they were unable to comply with both Chinese law and U.S. law, the district court should refrain from exercising jurisdiction over the case. Support- ing the defendants was the Chinese govern- ment itself. The Ministry of Commerce for the People’s Republic of China, the “highest administrative authority in China autho-
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