Huawei and the Law, in U.S. and China

Huawei and the Law, in U.S. and China

Chinese telecom giant Huawei retaliated against criminal charges from the U.S. this week with a legal challenge to a ban on purchases of its products by U.S. government agencies or contractors. The suit follows another against the Canadian government by company CFO Meng Wanzhou, alleging her wrongful imprisonment pending possible extradition to the U.S.. Chinese Foreign Minister Wang Yi praised both Huawei and Meng on Friday for “taking up the weapons of the law to protect their interests and refusing to be victimized like a silent lamb,” adding that the broader case is “not just one company’s rights, but the reasonable rights of a nation and a people to develop.” (Huawei says it “did not consult any government” before filing the suit.)

Huawei’s prospects in court are widely seen as dim. But as The Washington Post’s Gerry Shih reports, any legal challenge to authorities at the national level presents a contrast with the situation in China:

Young nationalists cheered on the iconic company, a symbol of Chinese tech prowess. Skeptics pooh-poohed Huawei’s chances in court. Armchair analysts offered flinty takes on the U.S.-China battle for global tech supremacy. Still others marveled that the legal case was being waged at all. As in: you can really sue the American government — in America?

[…] The idea that a foreign company can take on the government in its own courts is all but moot in today’s China, where President Xi Jinping has forcefully argued against judicial independence and exhorted the Communist Party to tighten its grip over all aspects of society — lest, he claims, the country slide into instability.

So when Huawei’s chief legal officer Song Liuping argued this week that Congress was behaving like “lawmaker, prosecutor and juror all at once” — he was describing something like Xi’s vision for the Communist Party as the first and last word in the Chinese system.

[…] “Huawei at least has the right of redress to say, ‘we’ve been unfairly singled out,’” said George Magnus, an associate at the Oxford University’s China Center. “That’s not an option for foreign companies — or companies generally — in China. There’s no rule of law, only the Party’s law.” [Source]

This state of affairs also bears on a parallel argument involved in suspicions about Huawei: whether recent security legislation in China could be used to compel Huawei to compromise its products to serve Beijing’s interests. In recent interviews, normally reclusive company founder Ren Zhengfei has claimed that he would resist any such requirement, should it exist. Last year, the company commissioned a legal analysis from a Beijing law firm and a review by another based in the U.K., and widely cited these as evidence that no such legal requirement exists. Government spokespersons have stated the same. On Monday, Wired published an op-ed by Chinese Academy of Social Sciences Law institute vice president Zhou Hanhua in support of the company’s case.

Huawei’s opponents say that regardless of its intentions, Chinese law would force the company to insert backdoors in its network gear if the government ordered it to do so. To support this claim, they cite an Intelligence Law passed by China’s legislature, the National People’s Congress, in June 2017.

But attorneys from Clifford Chance, a global law firm headquartered in London, have a different perspective. Asked to review an analysis of the Intelligence Law done last year by Zhong Lun, an international law firm in Beijing, Clifford Chance attorneys independently assessed Zhong Lun’s analysis of Chinese laws governing counterespionage, anti-terrorism, cybersecurity, and national intelligence.

Their unambiguous conclusion: Nowhere does Chinese law give Beijing the authority to compel telecommunication equipment firms to install backdoors or listening devices—or to engage in any behavior that might compromise network security.

[…] Clifford Chance also concluded that the laws do not appear to have extraterritorial effect. They do not apply to Huawei’s subsidiaries, operations, or employees outside of China.

[…] To summarize: No Chinese laws compel the installation of backdoors or other spyware. If Huawei refused a request to spy, its executives would not face imprisonment. [Source]

In a February piece republished at CDT on Huawei’s earlier deployment of these legal opinions, Sinopsis and Jichang Lulu wrote that “while Huawei PR materials […] refer to advice including the Clifford Chance review as ‘independent legal opinions,’ the review itself, seen by Sinopsis, contains an explicit disclaimer that the material ‘should not be construed as constituting a legal opinion on the application of PRC law.'” MERICS researcher Mareike Ohlberg, meanwhile, tweeted this week that the review’s conclusions “are actually more complicated” than Zhou claimed.

Wired identified Zhou as a CASS official, but did not explain the institution’s position “directly under the State Council” or its “basic mission” to “make Marxism-Leninism, Mao Zedong thought and Deng Xiaoping theory […] a guiding principle.” A separate report by Tom Simonite, however, did note that Zhou’s claims are contested:

Donald Clarke, a professor and specialist in Chinese law at George Washington University, says it’s possible that the letter of the Chinese law does protect the company, although it would take a careful analysis to check. But he says that it’s practically irrelevant given how China’s one-party government operates.

“There’s a whole variety of pressures that the government can bring to bear on a company or individual, and they are not at all limited to criminal prosecution,” Clarke says. “China is a Leninist state that does not recognize any limits to government power.”

Graham Webster, who works on Chinese digital policy at think tank New America, agrees. “The law has real effect in China, but in circumstances like national security it isn’t decisive,” he says. [Source]

At The Financial Times, Yuan Yang described Huawei’s key claims and several legal experts’ responses:

Wang Congwei, a partner at Beijing Jingshi law firm, said: “[Huawei] cannot refuse, the law stipulates that companies have an obligation to co-operate for national security and investigation needs. National security laws, the anti-terrorism law and other laws all require companies to assist the judiciary.”

[…] These laws do not clarify what counts as “co-operation”. Installing a backdoor — a route hidden to the user, by which authorities could access and control data — is not explicitly mentioned in law, as Huawei’s lawyers point out.

But this line of argument is “disingenuous”, said Lester Ross, a partner at WilmerHale in Beijing. “It doesn’t address the larger point, which is how Huawei is obliged to co-operate with Chinese intelligence work.”

[…] “There is no such case in China and no previous experience,” said a partner at a Chinese law firm who asked not to be named, when asked what would happen if Huawei refused to comply. “China does not have such a litigation path,” the lawyer concluded. [Source]

CNBC’s Arjun Kharpal reported yet more disagreement:

“There is no way Huawei can resist any order from the [People’s Republic of China] Government or the Chinese Communist Party to do its bidding in any context, commercial or otherwise. Huawei would have to turn over all requested data and perform whatever other surveillance activities are required,” Jerome Cohen, a New York University law professor and Council on Foreign Relations adjunct senior fellow, told CNBC by email.

“Not only is this mandated by existing legislation but, more important, also by political reality and the organizational structure and operation of the Party-State’s economy. The Party is embedded in Huawei and controls it,” said Cohen, who as a practicing attorney represented corporate clients in China and elsewhere in Asia.

[…] “The idea of fighting a request of this nature in the courts is not realistic. In truth the law only confirms what has long been true — that one must submit to the Party if called upon. Added to this, a company of Huawei’s size, working in what is considered a sensitive sector, simply cannot succeed in China without extensive links to the Party,” Martin Thorley, an expert on international engagement with China at U.K.-based University of Nottingham, told CNBC by email.

“For anyone at Huawei to oppose a serious request from the Party would require bravery bordering on recklessness — what do you do when your adversary is the police, the media, the judiciary and the government?” he added. [Source]

Several other commentators have similarly stressed the primacy of “political reality” over the letter of the law, with some arguing that focus on legal arguments may be either irrelevant or actively harmful:

FT’s Yuan Yang explained the logic behind addressing the legal argument:

Sinopsis and Jichang Lulu also addressed this question in February:

Ironically, the laws that now bring so much trouble to Huawei were originally adopted to streamline CCP control under the concept of “rule by law” (依法治国) — not to be mistaken for rule of law. […]

[…] Such explicit codification, acceptable to the Party as just crystallizing common practice, did offer its critics a ready-made tool to push back by eliminating the aspect of plausible deniability.

That’s why references to the relevant legislation now regularly appear in Western warnings against Huawei as a security risk, notably the Czech one before Christmas. In a public document, it is much easier to point to an existing law than explain the intricacies of the Chinese political system that essentially mandate the same thing. It is also easier than bringing out classified information about actual incidents. In a society based on “rule by law,” rather than rule of law, it is the practice that matters more than the law — but to simplify the argument, it is more efficient just to point out the PRC’s own legislation. There it is, black on white. [Source]

For more on Huawei and the accusations against it, read an extensive feature by Karishma Vaswani at the BBC.


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