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U.S. District Judge Rudolph Contreras sided with Xiaomi in his lawsuit challenging U.S. officials’ decision to put him on a list of companies allegedly backed by the Chinese military. The Trump administration added the maker of the device to the list under the National Defense Authorization Act 1999 in January. This would have prevented US investors from buying Xiaomi shares and related securities from next week and would have forced all current investors to sell the shares they hold before November 11. The initial injunction issued by the federal judge, however, temporarily blocks the ban.
Xiaomi filed a complaint against the US Defense and Treasury Departments weeks after it was added to the military list. He argued that the investment ban was “illegal and unconstitutional” and something that would cause him “irreparable harm” while denying any connection with the Chinese military. According to Bloomberg, Contreras agreed with the manufacturer, calling the ban “arbitrary and capricious” in its decision. He also said the authorities’ decision stripped the manufacturer of its due process rights and Xiaomi was likely to win a full overthrow.
Xiaomi recently became the third largest smartphone maker in the world – according to data from IDC, Counterpoint Research and Gartner – after overtaking Apple last year. In a statement sent to Bloomberg, the company said it will continue its legal fight to withdraw its designation as a company owned by the Chinese military.
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