ChangXin Memory Technologies sues the U.S. Pentagon: Legal pathways and risk analysis of Chinese enterprises' overseas rights-protection litigation

Introduction: A company sues the Pentagon, a Chinese chip giant's legal counterattack.

Recently, Changxin Memory Technologies Co., Ltd. (CXMT), a leading Chinese memory chip manufacturer, formally filed a lawsuit in a U.S. court, naming the U.S. Department of Defense and officials including its Secretary, Hegseth, as defendants, demanding that CXMT be removed from the "Chinese Military Companies" list (Section 1260H). This marks another Chinese tech company, following Huawei and DJI, taking legal action to challenge a U.S. administrative decision. The case has drawn widespread attention, as it involves not only a battle over commercial interests but also a complex legal confrontation spanning international law, U.S. domestic administrative law, and Chinese legal countermeasures. From a lawyer's perspective, Chinese companies defending their rights overseas are no longer merely responding to lawsuits passively but are beginning to take the initiative, leveraging local legal procedures to seek remedies. This article will analyze the key disputes, potential pathways, and implications for Chinese enterprises from a legal standpoint.

1. Core of the Incident: Why did ChangXin Memory Technologies file the lawsuit, and what is the legal basis?

ChangXin Memory Technologies has been added to the U.S. Department of Defense's "Chinese Military Companies" list, based on Section 1260H of the National Defense Authorization Act for Fiscal Year 2021. This provision authorizes the U.S. Department of Defense to identify "Chinese military companies operating in the United States" and prohibits U.S. entities from engaging in transactions with them starting June 2026. ChangXin Memory Technologies asserts that it is not owned or controlled by the Chinese military, that the designation lacks factual basis, has caused damage to its commercial reputation, and poses a substantive threat of transaction prohibitions.

During the litigation, Changxin Memory Technologies cited the U.S. Administrative Procedure Act (APA), accusing the Department of Defense of acting in an "arbitrary, capricious, and abusive exercise of discretion," and requested judicial review by the court. In similar cases, such as Xiaomi v. U.S. Department of Defense, U.S. courts have previously ruled in favor of companies, holding that the designation of a "military company" must be supported by "substantial evidence" rather than mere speculation. Changxin Memory Technologies' litigation strategy draws directly on the precedent of Xiaomi's successful lawsuit, using procedural challenges to compel government agencies to reassess their decision.

From a legal technical perspective, the core issue in this case is whether the "listing decision" constitutes a reviewable "final agency action." If the court finds that the Department of Defense failed to provide sufficient justification, it may vacate the designation. However, it should be noted that U.S. courts generally exercise judicial restraint in national security matters, and unless there is a clear procedural violation, it is difficult for the enterprise to prevail.

II. Legal Game: The Dual Dilemma of Domestic Litigation in the United States and Export Control Laws

ChangXin Memory Technologies' lawsuit not only involves removal from the list but also concerns the Entity List issue under the U.S. Export Administration Regulations (EAR). Although the Military End-User List and the Entity List differ in nature, both restrict the supply of U.S. technology and products. As a DRAM chip manufacturer, ChangXin Memory Technologies relies on U.S. semiconductor equipment (such as Applied Materials and Lam Research), thereby facing the risk of supply chain disruption.

At the domestic law level in the United States, companies can assert "due process" rights, requiring the Department of Defense to provide non-classified evidence and allow cross-examination. However, administrative agencies often refuse to disclose information on the grounds of "classified information," leaving companies with difficulties in presenting evidence. Moreover, U.S. court rulings are only binding on individual cases; if the government appeals, the litigation process may extend over several years, during which companies remain subject to the sanctions.

Notably, ChangXin Memory's litigation strategy may include a "delay-and-adapt" consideration—buying time through judicial proceedings while accelerating domestic substitution on the technological front. In legal practice, similar cases often involve negotiated settlements, such as companies pledging "no military-related activities" in exchange for removal from the list. However, given the tense geopolitical backdrop, the likelihood of a settlement remains low.

III. China's Legal Countermeasures: Enterprises Can Assert Their Rights Under the Anti-Foreign Sanctions Law

In the face of unilateral sanctions imposed by the United States, Chinese enterprises are not merely passive recipients. The Anti-Foreign Sanctions Law, which took effect in 2021, provides Chinese companies with countermeasures. Article 12 of the law explicitly stipulates that no organization or individual shall execute or assist in executing discriminatory restrictive measures imposed by foreign countries, and if such measures cause damage to the lawful rights and interests of Chinese citizens or organizations, legal proceedings may be initiated in accordance with the law.

ChangXin Memory Technologies can file a lawsuit against the U.S. Department of Defense or related entities in a Chinese court, asserting that the designation constitutes infringement and seeking compensation for damages. Although cross-border enforcement of judgments faces obstacles, such litigation carries symbolic significance, demonstrating to the international community Chinese enterprises' resolve to defend their rights while adding leverage to Sino-U.S. negotiations. Additionally, the company may apply, under the Provisions on the Unreliable Entity List, to have the relevant U.S. entities placed on the list as a countermeasure.

Lawyers advise that Chinese companies should establish a "dual-track response" mechanism: on one hand, actively defend lawsuits in the U.S., and on the other, initiate legal proceedings domestically to create pressure. At the same time, companies need to assess the impact of sanctions on contract performance and invoke Article 180 (force majeure) or Article 533 (change of circumstances) of the Civil Code to claim exemption or contract modification, thereby avoiding the risk of breach of contract.

IV. Practical Implications: How Enterprises Across China Should Respond to Overseas Sanctions Risks

The ChangXin Memory case provides an important reference for Chinese companies. First, companies should proactively identify compliance risks in their overseas operations, particularly in areas involving export controls and sanctions lists. It is recommended to engage professional lawyers to conduct a "sanctions risk assessment" to identify sensitive links in the supply chain.

Second, if placed on the sanctions list, companies should respond quickly and initiate judicial review proceedings within 60 days. In the Xiaomi case, the company filed a lawsuit within one month of being listed and ultimately won the case. Delays can lead to loss of evidence or changes in circumstances. At the same time, companies should retain all internal documents to prove they are not "military-related" and seek channels to communicate with the sanctioned party.

Finally, enterprises should make good use of domestic legal tools. They may file lawsuits under Article 12 of the Anti-Foreign Sanctions Law, or apply to the Ministry of Commerce for countermeasures under the "Unreliable Entity List." In addition, enterprises can seek policy support through industry associations or government diplomatic channels. When assisting enterprises, lawyers need to comprehensively apply both international and domestic law to develop multi-tiered rights protection strategies.

Conclusion: The law is a powerful tool for protecting rights, but it requires professional strategy.

ChangXin Memory Technologies' lawsuit against the Pentagon marks a new phase in Chinese companies' legal resistance against the United States. Although the outcome is uncertain, the action itself holds legal significance—it demonstrates that Chinese enterprises are willing to use U.S. judicial procedures to challenge unjust decisions. For businesses nationwide, overseas rights protection requires a rational assessment of costs and benefits, choosing the optimal path under the guidance of lawyers. Guangdong Zhiming Law Firm has long focused on cross-border disputes and international sanctions, offering full-process services from compliance prevention to litigation representation. In the face of a complex international legal environment, the involvement of professional lawyers often determines the direction of a case.

(This article is based on public news reports and does not constitute specific legal advice; it is for reference only.)