2012Years Chinese Xi'an International Law Journal

Analysis of "act of state immunity defense" American antitrust law applicable law

 

Gong Baihua  

 

 

    Abstract To:In this paper America enterprises to China vitamin export enterprises price collusion against the anti trust act for the analysis of carrier, analysis of legal issues to China regulations ban is mandatory for defense USA antitrust extraterritoriality of. This article thinks, because the connection problem between relevant regulations of foreign trade system reform in the process of Chinese, the Chinese enterprises and government defense is difficult. Chinese enterprises in foreign trade, attention should be paid to the relationship between the anti-dumping, anti subsidy and anti monopoly law. Especially rare earth association new, should avoid direct "price self-discipline" measures, so as not to attract foreign extraterritorial application of anti-monopoly law. Academic circles should pay attention to the use of traditional international law theory and practice in our country in international economic law.

    Key word.The national compulsory behavior AntitrustExtraterritorial ApplicationVitaminPrice collusion

 

   In February 9, 2012, USA East New York federal court ruled on interlocutory appeal, maintain its in September 6, 2011 USA enterprises to China vitamin export enterprises price collusion violate antitrust law ruled, that China related laws and regulations have not forced the Chinese export enterprises engaged in violation of America Antitrust Act, does not support China enterprises on the basis of the national compulsive rules negative America court jurisdiction motion for summary judgment. This article thinks, because the connection problem between relevant regulations of foreign trade system reform in the process of Chinese, the Chinese enterprises and government defense is difficult. Chinese enterprises in foreign trade, attention should be paid to the relationship between the anti-dumping, anti subsidy and anti monopoly law. Especially rare earth association new, should avoid direct "price self-discipline" measures, so as not to attract foreign extraterritorial application of anti-monopoly law. Academic circles should pay attention to the use of traditional international law theory and practice in our country in international economic law.

 

A, The extraterritorial application of China industry associations to coordinate the export price and the USA antimonopoly law

 

In November 16, 2001, for the coordination of the disorderly competition situation, in China medicines and health products import and Export Chamber of commerce under the auspices of vitamin C, domestic enterprises held an industry meeting, China vitamin C manufacturers set up China medicines and health products import and Export Chamber of Commerce Branch of vitamin C, and in the chamber of Commerce Chinese website announced self-discipline agreement, voluntary control of quantity and the progress of export, preventing foreign anti-dumping investigations made.

Beginning in May 1, 2002, vitamin C is classified as customs valuation, chamber of Commerce, the pre nuclear signature goods. In 2004 China exports to USA vitamin C is the total amount of import USA vitamin C 85%. The average FOB price for $4.57 per kg, lower than the global average FOB price of $4.63.

In February 7, 2005 and February 17, 2005, American Animal Science Products and The Ranis Company , and some individuals in the San Francisco area American California high court, Massachusetts federal court, the Federal District Court, eastern Tennessee East New York federal court antitrust complaints, charges China 6 Chinese enterprises (of Shiyao group Weisheng pharmaceutical, North China Pharmaceutical group under the Wellcome pharmaceutical, Northeast Pharmaceutical, Huayuan Group under the Jiangshan pharmaceutical, China Pharmaceutical Group and Shijiazhuang Pharmaceutical Group Ltd), since 2001 December the manipulation of exports to the price and quantity of vitamin C America and other parts of the world, breaking the American and California state antitrust regulations, its products sell USA buyer price than did not join "price alliance," the company high price, resulting in two plaintiffs loss to the company. The two companies USA requesting the court finds that the defendant, unified export price behavior is not reasonable restrictions on trade, no unified export price behavior of defendant being implemented, and to take other appropriate injunction, the hope trial "in a reasonable loss calculation method", sentenced to the defendant to 3 times the damage results the amount of fines, and bear the cost of litigation.

In February 14, 2006, according to the relevant laws American USA, Eastern District of New York federal court with accepting this consists of 6 separate class action composition, across several federal court jurisdiction.

In July 7, 2006, America East New York federal court made a procedure on the judgment, denied Chinese enterprise proposed suspension of evidence investigation procedure. The court ruled against the defendants on the basis of "national force" theory, the theory and practice of international harmony difficult to reason and proposed suspending evidence investigation request. In 2008, America East New York federal court denied reject the request China Enterprises[1].

In 2011 January, the case the trial judge Trager's death, the case over to the justice Cogan. In September 6, 2011, judge Cogan ruled, denied China enterprise proposed a motion for summary judgment.[2]
  

Two, The extraterritorial application of ban China Ministry of commerce can be used as a defense American antitrust law

 

China enterprise in the case of collusion protocols are not defense, but the main reason for the defense to exempt. China enterprises that the fixed price behavior is due to Chinese government decrees is forced to, and put forward according to the harmonious principle and national defense related activities. American court, Chinese enterprise based Chinese regulations did not force Chinese enterprises engaged in violations of its American antitrust law behavior. The following is USA Court on China enterprise is facing Chinese government forced the regulations, which may apply for the act of state doctrine as a defense against the analysis.

USA court first discussed Chinese transition background, the chamber of Commerce Chinese role, Ministry of Commerce and chamber of Commerce relations and other issues. At the same time American Court on 1996 to the relevant departments in 2002 and vitamin C export regulations, provisions to comb chamber of commerce. China export enterprises in this case no positive defense the existence of price collusion agreement, but try to cite three reasons American antitrust law extraterritorial application exceptions as a plea. Harmony, sovereign compulsion, foreign countries behavior of this three big reasons to apply to this case, need to have a premise, namely the related laws and regulations Chinese with forced properties, resulting in a head-on collision American applicable law and the application of China method. The following is America Court on Chinese export enterprises (i.e., in this case the defendant) citation analysis of act of state doctrine, and analysis of the China regulations are mandatory.

(a) On the China enterprise correctly refers to the act of state doctrine as a plea

 According to Article 3.33 USA "antitrust guidelines" provisions, act of state doctrine is America federal common law decision rules. The principle guiding USA court official behavior ruling those results to avoid foreign sovereign in its own territory and no legal cases, whether legitimate or not is based on the USA law, foreign law or international law.[3]Judge Cogan first summarizes the USA case law relevant countries act as exempt from the application of USA antitrust law conclusion. If the foreign policy explicitly restrict competition; foreign must actively supervise any private anti competitive behavior.

Chinese corporate defendants claim, its behavior is made by the Ministry of Commerce China forced, chamber of Commerce for import and export China medical care behavior "actually" belong to the Ministry of Commerce China behavior. Therefore, the essence of the defendant's conduct any question that is the question of the Chinese commerce ministry official behavior. Chinese corporate defendants also argued, applicable act of state doctrine does not necessarily require the existence of "forced". Chinese defendant companies think, according to the provisions of article 3.33 "antitrust guidelines", although in some cases, sovereignty dispute may compel the individual behavior, but this is not the doctrine of force required.

   America plaintiffs pointed out that in 2002, the pre nuclear signature system China did not involve any force, illegal China enterprise is a voluntary act, rather than Chinese the sovereignty of government behavior.

   The enterprise Interamerican Refining Corp. China quoted v. Texaco Maracaibo, the Inc. case to defend[4]. In this case, American court thinks, the legitimacy act of state doctrine prohibited America court review of related commands in Venezuela under the law. Judge Cogan said that, in this case the plaintiff did not advocate the establishment of America 2002 pre nuclear signature system China government instruction is not legal in Chinese under the law, so the Interamerican case largely with the case without correlation.

Judge Cogan said that West v., Multibank Comerex, S.A. case can be said in the case is more relevant to[5]. In the case of West, appellate circuit American ninth court decisions, act of state doctrine prohibited America courts to foreign officials have laws without enforcing their own. The plaintiff claims, Mexico banking system is merely "empty talk", in practice, Mexico officials did not comply with the implementation of these laws are not. USA Ninth Circuit Court of appeals cited the act of state doctrine rejected the claims the plaintiff, that the court should not be "practical review of the regulatory system, the lack of the investigation will be directly involved in foreign officials to enforce their own laws (whether intentionally or negligently)." American court then pointed out that, "based on comity, acting on our presumption Mexico officials with the Mexico law requires a consistent way."

Judge Cogan said that, overall, references to the national behavior as the exemption, remains to be determined the nature of foreign law enforcement.   

(two) on the analysis Chinese regulations have compulsory nature of interpretation        

   Judge Cogan focuses on the analysis of the Ministry of Commerce on 2009 Chinese industry association self-discipline issued a statement explaining. Cogan believed, there are 3 critical defect Chinese 2009 Ministry of Commerce statement. First, the statement just announced that according to the self-discipline management requirements, vitamin C exporters to "according to related regulations and rules Chinese coordinate export prices and production", but avoid specify the relevant rules and regulations. Second, the statement contains many ready to accept either course terms and phrases, especially relates to the self-discipline system of punishment. Third, although the system of 1997 (1997 China medicines and health products import and Export Chamber of commerce makes related vitamin C export notification) and 2002 customs seal system are obviously different, but the 2009 statement did not distinguish between the two system. Fourth, some compulsory measures said in that statement, is actually a remedial approach this case occurred after the.

    Judge Cogan also has a detailed analysis of the China enterprises do not abide by the self-discipline rules whether there exists the potential issue of punishment. Ministry of Commerce: China China defendant enterprises are required to become a branch of the members; if the defendant does not participate in the "price" is not the export of vitamin C. However Chinese MOFCOM does not explain, according to the 2002 and 2002 constitution system, club membership is how to get the China; Ministry of commerce did not explain, according to the 2002 system, if the defendant did not participate in the price setting and production development activities, its export rights will suffer what effect.

  America court think, records that in this case, some government instructions and chamber of Commerce files on the surface of provisions of the 2002 system no longer require membership. The 2003 regulations, "for non member exporters to submit application for vitamin C, chamber of commerce should give them the same treatment and membership exporters." May 2002 protocol show that, "non vitamin C charter members of the company can export (export quantity of vitamin C but need to be confirmed by other companies)." In addition, the government instructions and chamber of commerce file requires membership in 2002 no longer effective system. To sum up, apparently even if a company is revoked in branch membership (or the company has not a member), the company can still export vitamin C.

The Ministry of Commerce and Chinese Chinese corporate defendants were not explained, since the branch no longer requires membership, how will the defendant was forced to join the price and output set. Although the Ministry of Commerce announced in 2009 China insists, adding disciplined people "fully aware that they do not abide by the self-discipline behavior will be punished", including the "loss of export rights", but China Ministry of commerce did not explain these questions: why do these people "fully aware of the fact that"; in 2002 the institutional background, "loss of export" what is the meaning of the right system; in 2002, will be how to realize the loss of export rights; there are other what punishment.

    To sum up, the conclusion is: in 2002 the Cogan system in the clause, including equal treatment clause, not force a defendant to reach an agreement.

   Even assuming that the interim regulations system in 2002 and 1996 rules potential sanctions, asked the defendant to agree to and abide by the lowest price (and possibly also yield limit), judge Cogan remains uncertain, as the defendant in the exercise of discretion by the set only can avoid anti-dumping litigation and is lower than the minimum price cost pricing and yield limit level, the chamber of Commerce or China commerce will to intervene through coercive measures. Set price above that level is beyond the scope of any force, therefore cannot refer to foreign sovereign compulsion defense exemption.

    

Three,  Make good use of the state action immunity defense for American antitrust law

 

A country's anti-monopoly law is extraterritorial application, academic controversy, a lot of America the extraterritorial application of anti-monopoly law attack, but from the practice USA court, USA has created a will apply American antitrust law jurisprudence and judicial precedent. In 1945 the Aluminum Company of America established the principle of America extraterritorial application of the antimonopoly law "" (Effects Doctrine), as long as the limit competition behavior influence or effect in America domestic market, whether this behavior occurs in what place, can be applied to the Sherman method USA "". "Rule" was in 1965 "USA restatement of foreign relations" (second) and 1977 USA Department of justice "antitrust law" the implementation guide further confirmation, elaborate, play and systematic, and be quite a long time the courts follow the precedent. Chinese enterprises want to deny the America market "effect" is more difficult, because, America judicial practice of "influence" to adopt a broad interpretation, almost any behavior will have influence on the American market "". Therefore, enterprises need to China "exemption from the extraterritorial application of" reason to defend.

The judicial practice in the USA antitrust law, set up by "foreign sovereign compulsion" limit the extraterritorial application of antitrust law theory USA. The defendant because behavior is in the sovereign government areas were forced to engage in, the defendant must obey orders and completely lost their independence, their behavior can be turned into sovereignty behavior.

In this case the defendant China corporate defense strategy is to get rid of America court jurisdiction. Therefore, China enterprises, China enterprise behavior is motivated by the mandatory provisions to Chinese government in export prices, because establish mandatory export prices is sovereign act of government of a country, USA court should according to the doctrine of international comity, the state compulsory behavior or "the act of state doctrine" related businesses to give immunity. The essence of this three reason is the same.

On the use of international comity as defense, USA Federal Supreme Court in the Hartfort Fire case in 1993 has been the international comity principles applicable to do limited. The decision to apply to the principle established the following restrictions: comity principles apply only to the special case, namely the foreign law must be specified, enterprises must carry out some "Sherman method" deviate behavior, so that enterprises can not comply with the law and America antitrust law.

"The national compulsory principle" (the doctrine of government compulsion) is also called "sovereign compulsory principle", "the government compulsory principle", is American judicial practice in a jurisdiction immunity. This principle is the theoretical basis of international relations "comity" concept. USA court in the judicial practice established "to solve the parties cannot comply with the two principles of conflict law"[6]. As long as the parties that, in violation of the law America (antitrust) is compulsory measures imposed by a foreign government. According to the American federal appeals court case[7]The three elements, the defendant can apply national compulsory principle is: first, there is a because of government or quasi government functions can be identified as "sovereign" institutions; second, the agency has the power to force the defendant to comply with the standards; third, the agency actually force the defendant to comply with certain standards, and the agency's enforcement is the basic reason American accused of violating law. Compulsory fact exist in the analysis of the state, need to consider three factors: the mandatory related sources; if does not comply with the mandatory theoretically the most serious consequences; the actual existence of punitive force.

 "The act of state doctrine" (Act of State Doctrine) first appeared in the Parker case in 1943, according to the rules, those can be attributed to the "national itself acts", can obtain the anti-monopoly law exemption. "The act of state doctrine" is a federal common law judge made law derived from the self constraint, is established in the international comity and decentralization is based on the principle of the court. The principle that a state court cannot decide the dispute the legitimacy of political sensitivity, also can not judge the foreign sovereign act. "The act of state doctrine" can be applied in USA multiple antitrust case, its concrete content is also expanding. Sometimes, the court does not consider the limit competition behavior to be whether the judgment for the state legislature expected or really necessary for completing a government target, other courts will be "the act of state doctrine" extended to the quasi government entities, the applicable conditions of the theory was too broad to criticism. Therefore, in the Goldfarb case in 1975 , court on the Parker case established "the act of state doctrine" of restrictive interpretation, that the institutions of the fixed price must accept the "Sherman method" review.

The focus of the case is provided Chinese related industry associations are mandatory, because this is the premise of "act of state doctrine" exemption reason to apply. A related problem, need to prove Chinese industry association or chamber of commerce is Chinese government (Ministry of Commerce) agent, they in the implementation of a mandatory regulations Chinese Ministry of Commerce or implement its provisions. China Ministry of Commerce first as a "friend of the court" to help China corporate defendants, and then issued a statement on the mandatory provisions and explain the. Because of the contradiction between Chinese, relevant laws and regulations are not connected, or unable to make USA Court (such as China expert witness that Chinese some "oral" indicating mandatory), leading to American court does not accept the China commerce department, and the interpretation method to analysis their Chinese regulations. The same reason, America court does not explain the relevant foreign trade system Chinese admissible Chinese expert witnesses do. Of course, American court does not accept the Ministry of Commerce China interpretation of Chinese regulations are based on the full, America court their own interpretation of the Chinese regulations is correct, it is possible to argue that.

 In this case, the Ministry of Commerce China seems in a dilemma, on the one hand, in this case, is independent of the government tries to prove Chinese Industry Association is not, but Chinese agent of the government, industry associations China export enterprises through China constrained China government price control of style; on the other hand, Chinese business in the WTO trade policy review, to prove Chinese abide by WTO commitments, Chinese export trade system has a considerable market, including vitamin C industry export restrictions have little or cancelled. Such conflicting positions, may affect the future relates to China Industry Association of countervailing litigation. Because according to this logic Chinese Industry Association is very easy to be characterized as "agreement on subsidies and countervailing measures" of "government" or "public institutions".

  One of the characteristics of the trial process, America Court on another case. At the same time, the American enterprises v. China magnesite sales enterprise in violation of antitrust laws USA price collusion[8]. In April 1, 2010, the federal judge USA District Court in New Jersey, China magnesite enterprises maintain the price alliance behavior of the export price, is affected by the exercise of government functions China guild regulations for compulsory and, therefore, according to the "national mandatory doctrine" theory, USA court should not be American antitrust law extraterritorial application to Chinese enterprises, American court no jurisdiction.[9]But in August 17, 2011, America third circuit court of appeals overturned its own past precedent, that "foreign trade antitrust Improvement Act" is the limitation of the jurisdiction of the court and not prohibited under the jurisdiction of the court, and revoked America New Jersey federal decision, request remand.[10] In March 19, 2012, the supreme court denied American Chinese Minmetals company and China Steel Group's appeal.[11]The magnesite case, court of Chinese "self-discipline" meaning, meaning that the surface cannot from westerners understand to explain, but a hidden mandatory provisions. The "self" is state designated agencies under the supervision of the. But the court in this case did not admit the mandatory self-discipline such hidden. In that case, the court of magnesite, China government forced to comply with a minimum price. Because the behavior is subject to the force, therefore, the court for the accused of violating behavior America trust without jurisdiction. But, the court finally argues that "based on the requirements of the act of state doctrine of the court give up jurisdiction requirements not established".

Also involved in this case how to America court interpretation of the scope Chinese "method". Although the expert witness China attempts to illustrate, China sometimes "oral Herald" legally mandatory considerable, but this claim to be America court.

This case is also very interesting to WTO expert group on the China export restrictions on raw materials in ruling. In this case, expert group thinks, China Minmetals chamber of Commerce for import and export Limited export price measures are Chinese government behavior. Although this conclusion in the case of Chinese adverse, but this conclusion to this case and to Chinese corporate defendants plea. Judge Cogan to expert group did not discuss the measures of "mandatory" and put Chinese defense.

The judgment of the case and magnesite case, all of Chinese disadvantaged enterprises. The two case indicates that the America enterprises have begun to use the antitrust lawsuit of this new trade protectionism weapons to control Chinese export enterprises[12]. The China enterprises into the antitrust litigation may make Chinese enterprise cost. USA court antitrust litigation procedure is complicated, lengthy (in this case has lasted 7 years). The respondent enterprises once lost economic losses, or even criminal responsibility. China enterprises may be more directly or indirectly related to the American antitrust litigation.[13]

In response to the USA protectionist measures in countries, Chinese government, China enterprises should pay attention to related legal issues of various such as anti-dumping, the price at the time of slaughter led anti-monopoly of price collusion, industry association and government subsidy at. The antitrust law American extraterritorial application is not from the beginning of China enterprises. Prior to this, there have been many European companies, the Japanese enterprises faced the extraterritorial application of antitrust law American[14]Japan in particular, enterprises are faced with the "anti dumping and anti trust" this "dual" situation in the last century seventy's, the litigation strategy for our reference. This needs us to study USA related cases.[15]

According to "people's Republic of China anti monopoly" provisions of article sixteenth, the trade association shall not organize the business operators in the industry monopoly agreement. However, the same as Europe and the United States, China also provides foreign trade exemption. "Anti monopoly law" provisions of article fifteenth, "to protect the legitimate interests of" foreign trade and foreign economy and monopoly agreement, "the provisions of this article thirteenth, article fourteenth does not apply". But in our country the legal behavior not by his country's ban. Therefore, in the application of extraterritorial anti Toth, Chinese need to actively carry out the judicial cooperation.

In a word, using international law also need to pay attention to traditional international law theory in international economic law in practice.