Meng Wanzhou, the chief financial officer of Huawei, is reported to have sued Canada for civil rights breaches just days after Canadian authorities kicked off extradition proceedings for her transfer to US soil on charges of fraud.
Meng has filed claims against Canada's government, border agency and police, according to a BBC report, for allegedly holding her under false pretences when she was first detained last December.
She has been charged by American prosecutors with lying to a US bank about Huawei's activities in Iran, which is currently subject to US trade sanctions. Huawei also stands accused of stealing technology from T-Mobile US, one of the country's biggest network operators.
According to the BBC report, Meng claims officials did not immediately inform her of the reasons for her detention, acting as they did to get information they "did not believe would be obtained if the plaintiff was immediately arrested."
Her defence team says this violated her rights under Canadian law.
The latest developments came days after Canada said yes to the start of extradition proceedings, according to mainstream press reports. Meng is due to appear in court on March 6, when the date for an extradition hearing will be set.
If she is eventually transferred to the US, and found guilty of the charges against her, Meng could face a long jail sentence in North America, while Huawei could be cut off from the US technology used in many of its products.
Last year, US officials banned ZTE, a smaller Chinese equipment maker, from buying any US components after it had previously breached trade sanctions against Iran and North Korea. The ban, lifted after ZTE agreed to pay a fine and make organizational changes, nearly drove the company out of business.
Although Huawei is less dependent than ZTE on US technology, the risk of a ban has alarmed service providers in Europe and Asia. Some customers of Huawei and ZTE are drawing up contingency plans -- which include stockpiling and inserting clauses on technology transfer into contracts -- out of concern that a US ban could limit access to equipment and expertise, Light Reading revealed last week.
Separately, the US is understood to have leaned on European governments to exclude Huawei and ZTE on grounds of national security. Opponents of the Chinese vendors say their products may include "backdoors" that China's government could exploit to spy on other countries.
Nevertheless, while authorities in Australia and New Zealand have taken steps to exclude Chinese vendors, others seem less keen.
They include the UK and Germany, where service providers have grown heavily dependent on Huawei's technology and insist any ban would hold up the rollout of next-generation 5G technology.
Delays to a network overhaul are bound to alarm regional authorities amid criticism that Europe is lagging on the development of 5G, which promises to underpin a new range of connectivity services that could spur future economic growth.
Meng's arrest has already strained relations between Canada and China, and her formal extradition and trial would mark a huge escalation of the US trade dispute with China. Third-party observers say the campaign against Huawei is fueled by fear that China is beating the US in the technology race.
Huawei has repeatedly denied all the charges against it.
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— Iain Morris, International Editor, Light Reading