A few weeks ago, the Defence Depart of the United States under the Donald Trump administration had tagged Xiaomi as a company with ties to the Chinese military, putting financial restrictions on the Chinese firm, which were scheduled to go into effect next week.
However, before the restrictions could go into effect, a U.S. District Jude has put a temporary halt on the ban. The judge sided with Xiaomi in a lawsuit that argues that the move by the United States government was “arbitrary and capricious” and deprives the company of its due process rights.
In mid-January, Xiaomi and eight other Chinese companies were added to a list by the Defence Department that requires Americans to sell their interests in the firms. Soon after that, Xiaomi filed a complaint in a Washington court seeking to be removed from the list, calling its inclusion “unlawful and unconstitutional” and arguing it was not controlled by the People’s Liberation Army.
Xiaomi is the world’s third-largest smartphone manufacturer by volume. The company is likely to win a full reversal of the ban as the litigation unfolds. After the ban was announced, the company faced the prospect of being delisted from U.S. exchanges and deleted from global benchmark indexes.
In the ruling, U.S. District Judge Rudolph Contreras in Washington, D.C., said that the court “concludes that defendants have not made the case that the national security interests at stake here are compelling.”
In a statement, a Xiaomi spokesperson welcomed the ruling and said that the designation of Xiaomi as a Chinese military company “arbitrary and capricious.” It also indicates that Xiaomi plans to continue to request that the court declare the designation unlawful and to permanently remove the designation.
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