U.S. District Judge Rudolph Contreras sided with Xiaomi in his lawsuit, which challenged the U.S. government’s decision to put it on a list of companies allegedly backed by Chinese military. The Trump administration added the device maker to the list in January 1999 to the National Defense Authorization Act. That would have prevented U.S. investors from buying Xiaomi shares and related securities from next week, and would have required all current investors to sell shares they own by November 11th. However, the initial order issued by the federal judge temporarily blocks the ban.
Xiaomi filed a lawsuit against the U.S. Department of Defense and Treasury a few weeks after it was added to the military list. It argued that the investment ban was ‘illegal and unconstitutional’ and something that would cause it ‘irreparable damage’, while also denying any connection to the Chinese military. According to Bloomberg, Contreras agreed with the manufacturer and called the ban in its ruling “arbitrary and fickle”. He also said that the government decision has deprived the manufacturer of its rights to law and that Xiaomi is likely to get a full reversal.
Xiaomi recently became the third largest smartphone maker in the world – according to data from IDC, Counterpoint Research and Gartner – after Apple overtook it last year. In a statement sent to Bloomberg, the company said it would continue its legal battle to remove the designation as a company owned by the Chinese military.