Huawei's Chief Financial Officer Meng Wanzhou has lost a key aspect of the trial on her extradition to the United States, a Canadian court announced on Wednesday.
Meng, a Chinese citizen, was arrested in December 2018 on a warrant issued by U.S. authorities, who accuse her of bank fraud and misleading HSBC about a Huawei-owned company's dealings with Iran, thereby breaking U.S. sanctions on Tehran.
Meng's lawyers argued that the case should be thrown out because the alleged offences were not a crime in Canada.
But British Columbia's Superior Court Associate Chief Justice Heather Holmes disagreed, ruling the legal standard of double criminality had been met.
"Ms. Meng's approach ... would seriously limit Canada's ability to fulfill its international obligations in the extradition context for fraud and other economic crimes," Holmes said.
The ruling paves the way for the extradition hearing to proceed to the second phase starting June, examining whether Canadian officials followed the law while arresting Meng.
Closing arguments are expected in the last week of September and first week of October.
Shortly after the ruling was released Meng, 48, arrived at the courthouse but made no comment. Meng says she is innocent.
The Chinese embassy in Ottawa did not immediately respond to a request for comment.
The case has strained relations between Ottawa and Beijing.
Huawei Technologies Co Ltd's legal team argued in January that since the sanctions against Iran did not exist in Canada at the time of her arrest, Meng's actions were not a crime in Canada.
Prosecutors representing the Canadian government countered that the lie itself was the fraud, regardless of the existence of sanctions.