The plaintiffs alleged that Chinese pharmaceutical companies Hebei Welcome Pharmaceutical Co. Ltd., Jiangsu Jiangshan Pharmaceutical Co., Ltd., JSPC America, Inc., Northeast Pharmaceutical (Group) Co. Ltd., Weisheng Pharmaceutical Co. Ltd., Shijiazhuang Pharmaceutical (USA), Inc., and China Pharmaceutical Group Ltd. conspired to fix prices and control export output of Vitamin C beginning in 2001.
During proceedings in the District Court of the Eastern District of New York, these Chinese vitamin C manufacturers (as well as Aland Jiangsu Nutraceutical Co. and Northeast Pharmaceutical Co. Ltd., which settled earlier in the case), were found to have reached an agreement to control export quantities and raise prices by restricting their exports of vitamin C to create a shortage of supply in the international market.
The Chinese corporate defendants argued that Chinese law had compelled them to engage in price-fixing in violation of U.S. laws, and thus they should be excused from liability under principles of comity or the doctrine of foreign sovereign compulsion. The District Court concluded that “[t]he Chinese law relied upon by defendants did not compel their illegal conduct. Although defendants and the Chinese government argue to the contrary, the provisions of Chinese law before me do not support their position, which is also belied by the factual record.”
The defendants appealed the decision, supported by amicus briefs from the Chinese Ministry of Commerce, again arguing that Chinese law had compelled them to engage in price-fixing in violation of U.S. laws, and thus they should be excused from liability under principles of comity or the doctrine of foreign sovereign compulsion. The U.S. Court of Appeals for the Second Circuit overturned the District Court’s judgment, holding that it was “bound to defer” to the Chinese government’s characterization of its law.
Writing on behalf of a unanimous court on June 14, 2018, Justice Ginsburg reversed and remanded, holding 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.” Agreeing with the class plaintiffs (and the official position of the United States, as advocated by the Solicitor General), the Court pointed to Federal Rule of Civil Procedure 44.1 (in determining foreign law, “the court may consider any relevant material or source . . . whether or not submitted by a party”), and remanded the case to the Court of Appeals to consider the evidence of foreign law, as the District Court had done.