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On June 14, the United States Supreme Court unanimously held in Animal Science Products v. Hebei Welcome Pharmaceutical Co. that “[a] federal court should accord respectful consideration to a foreign government’s submission, but is not bound to accord conclusive effect to the foreign government’s statements.”

The court further noted that the determination of applicable foreign law is a question of law, and not a finding of fact, even though at common law such was treated as a question of fact. The court vacated the Second Circuit decision that specifically addressed the question “of what laws and standards control when U.S. antitrust laws are violated by foreign companies that claim to be acting at the express direction or mandate of a foreign government,” and held itself bound by the foreign government’s exposition of its own law.

American lawyers speak regularly of the rule of law and our fervent support for that. What goes unexplored is the clash between support for someone else’s rule of law except when it conflicts with our rule of law. In Animal Science, the Chinese government issued a formal statement in the United States court in which it asserted that Chinese law “required defendants to set prices and reduce quantities of Vitamin C sold abroad,” which meant defendants would simultaneously be violating U.S. antitrust laws. Defendants moved to dismiss the complaint based on the act-of-state doctrine, defense of foreign sovereign compulsion and principles of comity. The defendants’ motion for summary judgment was denied, and at trial they were held liable for violating Section 1 of the Sherman Act.

Focusing on principles of comity, the Second Circuit discussed the impact of Rule 44.1 (allowing application of non-U.S law), and “reaffirm[ed] the principle 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 construction 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. If deference by any measure is to mean anything, it must mean that a U.S. court not embark on a challenge to a foreign government’s official representation to the court regarding its laws or regulations, even if that representation is inconsistent with how those laws might be interpreted under the principles of our legal system.”

The Supreme Court has rejected this. The factors for a court’s consideration “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.” Such statement, though, is not opaque; the district court may go behind and around it. The court did not address the “correct” interpretation of Chinese law, but noted that “the materials identified by the District Court were at least relevant to the weight the Ministry’s submissions should receive and to the question whether Chinese law required the Chinese sellers’ conduct,” and should not have been disregarded.

The literal language of Rule 44.1 uses “may,” not shall, in indicating that when determining foreign law, “the court may consider any relevant material or source … whether or not submitted by a party,” and as the comments indicated, even conduct its own research.

The Second Circuit opinion was lengthy and covered much territory; the Supreme Court essentially limited itself to the Rule 44.1 analysis, noting that given the diversity of global legal systems, there could not be a one size fits all approach. That is fair enough, but we should expect reciprocal treatment when the tables are turned, and as the old saying goes, be careful for what you wish, for you may get it. Where American companies are complying with U.S. law and find themselves in conflict with non-U.S. law, State Department and Department of Justice statements may not be enough to provide a defense. We have already moved down this road by enacting the Securing the Protection of our Enduring and Established Constitutional Heritage (SPEECH) Act, in which we have refused, as a matter of federal law, to recognize defamation judgments that do not comport with our notions of the First Amendment, even though a well-respected legal system (that of England and Wales) has a rule of law that says otherwise.

The rule of law as an abstract concept sounds right, and we believe in it, but when the rubber hits the road, it is always a question of whose rule and whose law.