US District Court dismisses Huawei lawsuit that federal ban is unconstitutional

'Contracting with the federal government is a privilege, not a constitutionally guaranteed right,' according to a US District Court judge.

A US District Court judge has dismissed a lawsuit filed by Huawei that challenged the constitutionality of a US law that bans federal agencies and contractors from buying and using telecommunications equipment from the Chinese company.

First reported by Reuters, the US District Court in East Texas ruled on Tuesday that Congress was within its rights, and thereby acted constitutionally, to enforce a ban against telecommunications equipment made by Huawei and fellow Chinese telecommunications giant ZTE through section 889 of the National Defense Authorization Act (NDAA).

"Contracting with the federal government is a privilege, not a constitutionally guaranteed right -- at least not as far as this court is aware," District Judge Amos Mazzant said in the ruling when addressing Huawei's arguments. 

Throughout the lawsuit, Huawei had argued that the NDAA was a "Bill of attainder" -- a piece of legislation that declares an entity as being guilty without a fair trial which would be unconstitutional.
 
Mazzant determined however, that Congress' enactment of section 889 of the NDAA -- which precludes US federal agencies and their contractors from buying equipment from Huawei and ZTE due to security concerns -- was in fact constitutional as the crux of the law is to control how federal government spends its money, rather than prevent Huawei from doing business in the US. 

"[Huawei can still] conduct business with every other company and individual in America as well as the remaining 169 countries and regions it currently does business with throughout the world," Mazzant said.

And while the District Court judge acknowledged that some senators had made stifling comments when the NDAA first entered into Congress, such as Huawei deserves "the death penalty", he came to the conclusion that the words of individual lawmakers are not reflective of the entirety of Congress. 

The lawsuit by Huawei was originally filed in March last year, with the Chinese networking giant arguing that Congress had illegally deprived its rights by being precluded from bidding on government and private contracts. It also repeatedly denied claims that it has installed backdoors in its telecommunications equipment.

"The US government has long branded Huawei a threat. It has hacked our servers and stolen our emails and source code," Guo Ping said at the time. "Despite this, the US government has never provided any evidence supporting their accusations that Huawei poses a cybersecurity threat.

"Still, the US government is sparing no effort to smear the company and mislead the public about Huawei. Even worse, the US government is trying to block us from the 5G markets in other countries."

Huawei then updated its lawsuit in May, arguing that section 889 of the NDAA specifically targets Huawei, saying the legislation disrupts the company's existing contracts; stigmatises the company and its employees as supposed tools of the Chinese government; and seriously threatens the company's ability to do business in the US. 

A Huawei spokesperson said they were disappointed with the ruling and would consider further legal options.  

"Huawei is disappointed in today's ruling and 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 spokesperson said.

Huawei is currently in the midst of several legal battles against the US government, with the US Department of Justice last week charging Huawei and four of its subsidiaries with racketeering and conspiracy to steal trade secrets. In addition to this, Huawei is facing two other charges in relation to allegations that it stole trade secrets from T-Mobile and violated US sanctions by misrepresenting its business dealings in Iran to at least four banks

Meanwhile, Huawei CFO Wanzhou Meng is currently under arrest in Canada and fighting against her extradition to the US, where she faces an indictment in relation to the US sanctions charge.

Updated at 4:20 pm AEST, 19 February 2020: Added comment from Huawei.

Related Coverage