Animal Science Products, Inc. v. Hebei Welcome Pharmaceutical Co. Ltd.

Whether a court may exercise independent review of an appearing foreign sovereign’s interpretation of its domestic law, or whether a court is bound to defer to a foreign government’s legal statement, as a matter of international comity, whenever the foreign government appears before the court.

Petitioner alleges that Respondent, a Chinese pharmaceutical corporation, conspired to fix pricing on vitamin C and limit its supply and export to the United States in violation of the Sherman and Clayton Acts. Respondent asserts that the Ministry of Commerce for the People's Republic of China required price fixing and that Respondent has no choice but to comply. Respondents filed a motion to dismiss and a motion for summary judgment on the grounds of act of state doctrine, the defense of foreign sovereign compulsion, and the principle of international comity. The district court denied Respondent’s motions because the evidence, it determined, was sufficient to conclude that Respondents conspired to fix prices. At trial, a jury found for Petitioner and awarded damages. The district court enjoined Respondent from limiting its supply and fixing prices. On appeal, the Second Circuit reversed because the Chinese Government was entitled to deference with regard to its interpretation of its own laws and that a true conflict existed between the laws of China and the laws United States. Petitioner argues that the Second Circuit deference to China’s law was improper because it undermines the federal laws of the United States and authorizes courts to allow foreign entities to abstain from U.S. antitrust laws.