Huawei loses constitutional challenge against US for restrictions

A federal judge in Texas on Tuesday rejected Chinese telecommunications equipment maker Huawei Technologies Co Ltd’s constitutional challenge to a United States law that restricted its ability to do business with federal agencies and their contractors.

In a 57-page decision, US District Judge Amos Mazzant ruled in favour of the US, concluding that Congress acted within its powers by including the restriction in the National Defense Authorization Act, which also aimed to limit Chinese company ZTE Corp.

A Huawei spokesman said the company was disappointed in the loss.

“While we understand the paramount significance of national security, the approach taken by the US government in the 2019 NDAA provides a false sense of protection while undermining Huawei’s constitutional rights. We will continue to consider further legal options,” the spokesman said.

The government was pleased with the ruling, a Justice Department spokesman said.

The decision comes as the US has a wide-ranging effort under way to prevent Huawei technology from being used in sensitive telecommunications equipment in the US or elsewhere.

Huawei filed the lawsuit in March 2019, saying a law limiting its US business was unconstitutional.

Huawei had challenged Section 889 of the National Defense Authorization Act, signed into law by US President Donald Trump, which bars federal agencies and their contractors from procuring its equipment and services. Huawei lost on a summary judgement decision.

Among its many arguments, Huawei argued that the NDAA was overboard in restricting its sales and violated due process.

Judge Mazzant of the US District Court for the Eastern District of Texas disagreed on both counts, saying that the NDAA was “appropriately tailored to the burdens imposed” and said he was not persuaded that the law impairs Huawei’s existing and future contracts.

Huawei’s lawsuit said its “equipment and services are subject to advanced security procedures, and no backdoors, implants, or other intentional security vulnerabilities have been documented in any of the more than 170 countries in the world where Huawei equipment and services are used.”

While Huawei had very little share of the US market before the bill, it is the world’s biggest telecoms gear maker and is seeking to be at the forefront of a global rollout of fifth-generation (5G) mobile networks and services.

The Trump administration is also considering changing US regulations to allow it to block shipments of chips to Huawei from companies such as Taiwan Semiconductor Manufacturing Co Ltd (TSMC), the world’s largest contract chipmaker, two sources familiar with the matter said.