Alibaba Gets Temporary Reprieve From US Military Label and Lobbying Restrictions

A US district judge has ruled that the Pentagon must not treat Chinese online retailer Alibaba as a Chinese military company for the purpose of new lobbying restrictions, according to Bloomberg. The decision follows Alibaba's lawsuit against the US government after it was placed on the Pentagon's 1260H entity list. Alibaba argued that the listing had no basis in fact or law and violated its constitutional rights to free speech and due process.

The 1260H list differs from the OFAC sanctions list that completely bars companies like DJI from US business, but recent legislative changes now prevent the Department of Defense from contracting with any company that hires lobbyists or lobbying firms representing any 1260H-listed company. Alibaba claimed this new clause prevented it from hiring representation to challenge the government, thereby infringing its free speech rights.

On Sunday, US District Judge Eumi K. Lee ordered the Pentagon not to treat Alibaba as a Chinese military company regarding the lobbying rule until she resolves Alibaba's motion or 60 days after a court hearing, whichever comes first. The ruling could affect other current and future companies on the list. Alibaba stated it has no ties to the Chinese military and should be removed, noting that all its registered lobbyists had withdrawn after the listing.

While the Pentagon argued the lobbying restriction was constitutional, it acknowledged that a limited stipulation would benefit both parties. Meanwhile, US House select committee members John Moolenaar and Elise Stefanik urged Defense Secretary Pete Hegseth to strictly enforce the lobbyist ban, emphasizing the need to avoid partnerships with firms advancing Chinese Communist Party military ambitions.