U.S. District Judge Rudolph Contreras supported Xiaomi in his lawsuit that challenged the US authorities’ decision to include it in a list of companies allegedly supported by Chinese military personnel. The Trump administration added the device’s manufacturer to the list of the 1999 National Defense Authorization Act in January. This would have prevented American investors from buying Xiaomi shares and related securities as of next week and would have required all current investors to sell any shares they owned until 11 November. The initial injunction issued by the federal judge, however, temporarily blocks the ban.
Xiaomi filed a legal complaint against the U.S. Department of Defense and Treasury a few weeks after being added to the military list. He argued that the investment ban was “illegal and unconstitutional” and something that would do him “irreparable harm”, while denying any connection to the Chinese military. According Bloomberg, Contreras agreed with the manufacturer, calling the ban “arbitrary and capricious” in his decision. He also said that the authorities’ decision deprived the manufacturer of its rights to due process and that Xiaomi is likely to win a full reversal.
Xiaomi recently became the world’s third-largest smartphone maker – according to data from IDC, Counterpoint Research and Gartner – after overtaking Apple last year. In a statement sent to Bloomberg, the company said it would continue its legal struggle to remove its designation as a company owned by the Chinese military.