US Court grants preliminary injunction preventing enforcement of restrictions linked to Alibaba’s Chinese military company designation

29 October 2026

The US District Court for the Northern District of California has granted a preliminary injunction preventing the US government from enforcing restrictions linked to Alibaba’s designation as a Chinese military company (CMC) under section 1260H of the National Defense Authorization Act 2021, pending Alibaba’s challenge to that designation – Alibaba v State Department.

Section 1260H requires the US government to identify Chinese military companies operating directly or indirectly in the USA. A company may be designated if it engages in commercial activity and is owned, controlled by, or affiliated with the Chinese military or certain Chinese state bodies. See our US-China pages for the list. Under 10 USC § 4663, the Department of Defense may not contract with companies that use the same lobbyists as a designated CMC.

Alibaba, a Chinese e-commerce and cloud-computing company, was designated as a CMC for links to China’s State-owned Assets Supervision and Administration Commission (SASAC) and Ministry of Industry and Information Technology (MIIT). Following the designation, several lobbying firms stopped representing Alibaba because they feared losing Department of Defense contracts under section 4663. Alibaba challenged the designation, arguing that the resulting restrictions infringed its First Amendment rights.

Pending trial, Alibaba sought a preliminary injunction. The Court granted it because it said:

• Alibaba was likely to succeed on its First Amendment claim. The Court found that section 4663 effectively restricted Alibaba’s ability to retain lobbyists and communicate with government officials.

• The government had not shown that the restriction was necessary to achieve a compelling national-security objective or that less restrictive alternatives would be inadequate.

• Alibaba was likely to suffer irreparable harm because it had lost opportunities to lobby policymakers, and the public interest favoured preventing likely violations of constitutional rights.

The Court declined to remove Alibaba from the CMC list or rule on its broader constitutional challenge to s4663 at this stage; the injunction prevents enforcement of section 4663 against Alibaba pending a full hearing on the merits. For other US sanctions judgments in First Amendment cases including challenges to the US ICC sanctions regime and visa policies, see the US judgments section of this site.