Hesai Photo: VCG

Chinese LiDAR manufacturer Hesai prevailed on Tuesday local time in its challenge to the US Department of Defense's (DOD) Section 1260H "Chinese military company" designation, according to a statement sent to the Global Times. The ruling marks a significant legal victory for Hesai in its challenge to the Section 1260H designation.
 
According to Hesai's statement, the US Court of Appeals for the District of Columbia Circuit reversed the prior district court judgment in favor of the Department of Defense and remanded the case, requiring the Department of Defense to cure the relevant procedures and reconsider Hesai's designation.

In January 2024, the US Department of Defense first added Hesai to its Section 1260H list of "Chinese military companies." Hesai subsequently filed a lawsuit challenging the designation. During the litigation, the US Justice Department said Pentagon had delisted Hesai on the basis of the original grounds, but now  plans to relist the company "based on the latest information available."

In a decision issued on August 18, 2026, a three-judge panel of the D.C. Circuit reversed the district court's prior judgment against Hesai and unanimously held that the Department of Defense violated Hesai's Fifth Amendment right to due process. 

The Court found that the Department of Defense's designation of Hesai — issued without any advance notice, disclosure of evidence, or opportunity to respond — failed to satisfy these minimum constitutional requirements, according to the statement. 

The Court found that a Section 1260H designation not only inflicts the reputational harm associated with being labeled a "Chinese military company," but also automatically deprives the designated company of certain US government contracts and certain forms of federal financial support, and that the designation therefore implicates constitutionally protected substantive interests, according to the statement.

While the Court did not immediately order Hesai's removal from the Section 1260H list — citing deference to "national security and foreign policy realities" — it directed the district court to remand the matter to the Department of Defense, which must now provide Hesai with the unclassified evidence against the Company and allow it a full opportunity to respond before issuing any new final determination, the statement said.

Hesai stressed that there was no legitimate basis for its inclusion on the list. Going forward, the company said it will follow the procedures required by the court, fully present the facts and its position, and safeguard its legitimate rights and interests.  

Global Times