Cartel Defendants Not Entitled To Rely On 'Foreign Sovereign Compulsion' Defense To Antitrust Liability, Desipite Official Statement That Conduct Was Compelled

In re Vitamin C Antitrust Litigation, 06-MD-1738 (BMC)(JO) (E.D.N.Y. Sept. 2011), addresses on summary judgment the Vitamin C cartel's arguments over the so-called "foreign sovereign compulsion" (FSC) and related defenses. In rejecting reliance on those defenses and thereby denying the motions for summary judgment, the decision contains extended discussion of several important international litigation issues.

The defendants in the case "do not dispute that the cartel agreements at issue violate the antitrust laws" except for a single defense: "that they were compelled by the Chinese government to fix prices". The motion for summary judgment relied on the FSC defense as well as defenses based on comity and the Act of State Doctrine. The motion was supported by an amicus brief filed by the Chinese government explaining the Chinese government's regulation of vitamin C. The District Court found: "According to the Ministry, defendants' actions were compelled by the Chinese government".

The rulings in the case that are noteworthy from an international practice perspective include:

First, to prove non-U.S. law, the Court applied Fed. R. Civ. P. 44.1 and found what it concluded was Chinese law based on plaintiffs' reliance on the "plain language" of various official directives and statements and not on the basis of any expert (defendants used an expert; plaintiffs did not).

Second, in analyzing what degree of deference should be accorded to the non-U.S. government's own statement of non-U.S. law, the Court acknowledged that, prior to the enactment of Rule 44.1, "the Supreme Court held that such statements should be considered 'conclusive'. Still, the Court quoted the more recent decision from the Second Circuit, Karaha Bodas Co. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 313 F.3d 70 (2d Cir. 2002), stating that "a foreign sovereign's views regarding its own laws merit — although they do not command — some degree of deference". The District Court went on to reject China's statement on the basis of the Court's own reading of Chinese law as well as on the basis of a highly...