Alibaba just sued the US Department of Defense.
Filed in the US District Court for the Northern District of California (San Jose Division), the complaint asks the court to remove Alibaba from the Pentagon's "Chinese Military Companies" list (the Section 1260H list under the FY2021 NDAA).
The instinctive question: can you actually sue DoD in a US court? Yes—and a Chinese company has won this kind of case before.
How this works
Listing under Section 1260H does not by itself trigger sanctions. What it does is create two layers of risk:
- Reputational damage—investors, partners and regulators treat a listed company as if it carried a "military affiliation" label.
- Cascading risk—US executive orders and sanctions programs can later be layered on top of the listing (as we saw with E.O. 13959 a few years ago).
The legal vehicle is the Administrative Procedure Act (APA). The plaintiff argues that DoD's designation lacks evidentiary support, is arbitrary and capricious, or violates required procedures.
The precedents matter
Xiaomi sued DoD in early 2021, obtained a preliminary injunction in March, and reached a settlement in May—removed from the list.
Hesai Technology sued in 2024; DoD briefly removed it, then relisted it months later, and the court ultimately upheld the designation—Hesai is now on appeal. A reminder that the same path does not guarantee the same result.
What it means for cross-border practice
For Chinese companies operating globally, designation by a US agency—whether 1260H, the Entity List, or SDN—is not a final verdict. US administrative action is reviewable. Companies have legal remedies. But the strategy must be coordinated: litigation, investor communications, regulatory engagement, and media must move in sync.
Three takeaways for in-house and cross-border counsel:
- Track the listing mechanism, not just the headlines. Each list has its own legal architecture and its own litigation path.
- Build the administrative record early. Once you're on a list, the time to challenge the agency's reasoning is now, not after the next election cycle.
- Litigation is one lane of a multi-lane response. Public affairs and capital-markets messaging matter as much as the brief.
If your company has cross-border exposure to US regulatory risk and needs a China-side perspective coordinated with US counsel, happy to compare notes.
#CrossBorderLaw #ChinaUS #InternationalLaw #ExportControls #Compliance
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Mike Wu, China-licensed Attorney · Cross-border practice
4 languages (CN/EN/ES/JA)
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