Huawei - Taking a Fall, Hoping for a Call

 

Pardon the soccer reference.  But to my mind, that is the Huawei move.  But Huawei has the support of the fans, at least in China, and they are vocal.

Don Clarke, professor of law at George Washington University, has penned this response to the declaration of the Zhong Lun law firm in Beijing, in support of Huawei as an innocent private company caught in a nasty trade spat.  According to the declaration, no company in China is ever required to comply with demands from the central government to install spyware or backdoors in any communication equipment.   Clarke points out that this is misleading and inaccurate.  Chinese law says nothing about what provincial and local governments might demand from a company, and in any case, law is not a constraint. 

“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.”

From Clarke's China Collection  blog -

Last May, two attorneys from the Zhong Lun law firm submitted a declaration to the FCC in support of Huawei’s position that it could not be compelled by the Chinese authorities to install backdoors, eavesdropping facilities, or other spyware in telecommunications equipment it manufactured or sold. I finally had the time to look at the declaration in detail. I don’t find it convincing. I have written up a pretty full analysis (over 10 single-spaced pages) and posted it here on SSRN. Enjoy.

Incidentally, my colleague Jacques deLisle of the University of Pennsylvania Law School also submitted a statement of his views, which largely support Huawei’s position. (I hope I have not characterized his statement unfairly.) Needless to say, I don’t agree, but the paper here is an analysis of the arguments of the Zhong Lun submission, not Jacques’. Those who are interested can read Jacques’ statement for themselves.

 Even we non-lawyers can read.  I wrote about this previously in Lie Down with Dogs, Get Up with Fleas

 Don Clarke's analysis -

The Zhong Lun Declaration on the Obligations of Huawei and Other Chinese Companies Under Chinese Law (March 17, 2019)

 

 

Added March 22:  Steve Dickinson at China Law Blog on the new foreign investment law, which has been touted as an improvement in business conditions and a response to forced technology transfer - https://www.chinalawblog.com/2019/03/chinas-new-foreign-investment-law-and-forced-technology-transfer-same-as-it-ever-was.html      Steve's conclusion - 

Article 22 of China’s new Foreign Investment Law is not relevant to the issue of forced technology transfer. On that front absolutely nothing has changed and nobody should expect it to either.

 

Added May 25: Christopher Balding and Donald Clarke on Who Owns Huawei?  Huawei claims to be employee-owned.  But their shares are not ownership, but contract rights in a profit-sharing plan.  To the extent ownership is vested in a trade union, Chinese law does not grant ownership rights to employees if the company or trade union go bust.  It appears that ultimately Huawei could be state-owned, since all trade unions are part of the state.

Huawei responds

Don Clarke's rebuttal.  Huawei makes no case for employee-ownership and does not refute any facts in the Balding-Clarke paper. 

 

 


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