More Than a Smartphone: the Story of Huawei's CFO and US Long-Arm Jurisdiction

Isaac Ong

On 1st December 2018, Ms Sabrina Meng Wanzhou was arrested in Canada at the request of a New York court, and now faces charges related to Huawei’s purported violations of US sanctions on Iran. This was enabled by the use of US ‘long-arm jurisdiction’, which allows the enforcement of US laws on foreign nationals. Ms Meng was released on bail on December 11th, and is residing in Vancouver whilst fighting extradition to the US. She remains well within the reach of the US justice system, living under an 11pm curfew and round-the-clock GPS tracking.

Her arrest via the use of said long-arm jurisdiction has sparked widespread controversy, and ties in with many contentious questions of geopolitics with a particular focus on China’s rise, national security, and the rule of law.

Long-Arm Jurisdiction

In general, long-arm jurisdiction is defined as the ability of one country to enforce its laws and rules over entities from another through its own courts.1 In the context of the US, such jurisdiction over non-US companies can be exerted through means such as national security reviews of foreign investments, anti-money laundering and anti-corruption laws, and securities regulations. Different states possess their own respective long-arm statutes, whether on specific types of cases or to grant jurisdiction more generally. Jurisdiction is also qualified by the Foreign Sovereign Immunities Act2 and the Eleventh Amendment to the US Constitution,3 which restrict foreign states from being sued in US courts. Rule 4(k) of the Federal Rules of Procedure states that:

Rule 4(k): Territorial Limits of Effective Service
(1) In General. Serving a summons or filing a waiver of service establishes personal jurisdiction over a defendant:
(A) who is subject to the jurisdiction of a court of general jurisdiction in the state where the district court is located;
(B) who is a party joined under Rule 14 or 19 and is served within a judicial district of the United States and not more than 100 miles from where the summons was issued; or
(C) when authorized by a federal statute.
(2) Federal Claim Outside State-Court Jurisdiction. For a claim that arises under federal law, serving a summons or filing a waiver of service establishes personal jurisdiction over a defendant if:
(A) the defendant is not subject to jurisdiction in any state’s courts of general jurisdiction; and
(B) exercising jurisdiction is consistent with the United States Constitution and laws.4

Long-arm jurisdiction remains controversial due to the dearth of clear definitions under international law. Generally, the exercise of such jurisdiction in antitrust (competition) law, or internationally endorsed sanctions is not widely disputed. However, more contention arises when it involves unilaterally imposed sanctions and export controls, which are typically the preserve of the US.

Given the abundance of both US and international MNCs whose operations span the globe, at times within somewhat gray areas with respect to such sanctions and regulations, the fact a high-ranking Huawei executive was the subject of this particular prosecution has sparked troubling questions on long-arm jurisdiction. While there is no conclusive evidence of coordinated Executive influence over this decision, its timing in the middle of an intense US-China trade war has evoked suspicion.5 It also prompts larger questions on whether the separation between federal law enforcement and foreign policy considerations is as distinct in practice as it is in theory.

Security Concerns over Huawei

As a large corporation with a global reach, heavily backed by government funding, Huawei has come under fire recently due to suspicions of potential security threats. There are concerns that with the expansion of Huawei’s infrastructure into many states’ domestic networks, and the proliferation of Huawei’s products across the world, this hardware can be tapped on for surveillance and espionage. The fact that the company’s founder is a former People’s Liberation Army Officer, has further fuelled the fires of suspicion.

As early as 2012, a House Intelligence Committee report proposed a US-wide ban on Huawei equipment, even including suggestions warning against the daily use of its mobile phones (despite the lack of any concrete proof of spying). While multiple congressional hearings and inspections of Huawei’s hardware have not presented conclusive evidence of a security threat,6 the current state of vigilance does not preclude the possibility of such activities being conducted in the future. Elsewhere around the world, concerns are also growing on potential threats by the telecommunications giant, with Japan, the UK and Australia all placing limits on the use of Huawei equipment.7

The Spectre of Tit-for-Tat Retaliation

With the public backlash against Ms Meng’s arrest mounting, fears of retaliation have grown amongst the international business community. In response, the official Chinese government line is that of reassurance, with Chinese foreign ministry spokesperson Geng stating China “has always protected the legitimate rights and interests of foreign nationals in China and they should obey Chinese laws [when they are in China]”.8

However, recent events have kept the mood amongst international commentators and executives tense. 13 Canadian citizens have been held by the Chinese government since December 20189 including businessperson Mr Michael Spavor and Mr Michael Kovrig, a former diplomat and an adviser with the International Crisis Group think-tank. While Canada maintains that these arrests were unrelated, speculation remains rife. In the US, official attitudes are even more critical, with the State Department issuing travel advisories warning against ‘arbitrary enforcement of local laws’.10 A December meeting organised by the U.S. Department of State’s Overseas Security Advisory Council in Singapore,11 executives from the likes of Walt Disney, Google and Facebook discussed concerns about the arrest’s effect on global markets and employees’ safety when travelling to China, highlighting the primacy of recent events in the deliberations of top MNCs.

Political tensions have clearly undermined faith in the rule of law, with the law being portrayed as an indiscriminate political tool rather than a force for stability in a phenomenon labelled ‘weaponised interdependence’ by political scientists Abraham Newman and Henry Farrell.12 With a global rivalry between the US and China on the horizon, there are fears that what was previously a power primarily associated with the US – that they have been able to temper the rule of law with a significant dose of discretion – will now be exercised by China as well. The ensuing implication would be that of international relations developing along the line of power rather than law and orderly cooperation.13

Fortunately, the highly interdependent relationship between the US and China involving trade ties, tourism and education amongst other areas, has not yet been materially affected. Nonetheless, it is hoped that a solution can be reached soon. With issues as fundamental as the personal safety of involved states’ citizens at stake, an impact might foreseeably be felt on movement of individuals and their ties at large.  















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