DJI to Appeal Court Decision Denying Challenge to Chinese Military Company Listing
Chinese drone maker SZ DJI Technology said this week that it will appeal a recent decision from the U.S. District Court for the District of Columbia denying the company's challenge to its designation as a Chinese military company. DJI will take the case to the U.S. Court of Appeals for the D.C. Circuit (SZ DJI Technology v. U.S. Department of Defense, D.D.C. # 24-02970).
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Last month, the D.C. district court rejected a host of substantive and procedural claims that DJI made against its designation on the Section 1260H List of Chinese military companies. The Pentagon found that the drone maker was a Chinese military company due to its Chinese ownership and its status as a "civil-military fusion contributor."
In support of the finding that DJI is a civil-military fusion contributor, the DOD noted that the company is recognized as a National Enterprise Technology Center by China's National Development and Reform Commission (NDRC), which is part of the Chinese military industrial planning apparatus. The Pentagon also said the NDRC aids DJI through the National Enterprise Technology Center program.
DJI made two statutory arguments on whether Section 1260H requires a "direct connection" between the assistance the company receives and Chinese "military industrial planning" and whether the statute "requires the DoD to find that DJI is currently receiving assistance."
District Court Judge Paul Friedman held that DJI's claim that the Pentagon must show that the National Enterprise Technology Center program is part of the "military industrial planning apparatus" is "at odds with the text of" Section 1260H. The better reading of the statute "is that DJI must receive assistance from the Chinese government 'through science and technology efforts' that are 'initiated under the Chinese military industrial planning apparatus,'" the judge said. The statute doesn't require a link between the assistance and the "Chinese military industrial planning apparatus."
Friedman also found that there was enough evidence on the record, when reviewed deferentially to the Pentagon, that DJI was currently receiving assistance through the National Enterprise Technology Center program.
In addition, while DJI claimed its listing was arbitrary and capricious, since DOD failed to include other "similarly situated" entities, the judge said the drone maker rested its argument on an "incorrect reading of the statute." Section 1260H gives the secretary of defense deference to "determine which entities to place on the Section 1260H List."
However, Friedman did review various aspects of the Pentagon's listing and found it lacking sufficient evidence. For instance, he rejected the agency's conclusion that DJI resided in a "military-civil fusion enterprise zone."