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Xiaomi is suing the US for lifting the Chinese language navy designation and sharing the funding ban

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Customers wait in line at Xiaomi's flagship store in Mong Kok, Hong Kong.

Miguel Candela | SOPA pictures | LightRocket | Getty Images

In response, Xiaomi filed a lawsuit against the U.S. Treasury Department and the U.S. Department of Defense in Columbia District Court on Friday, according to the Investor Relations website on Sunday.

Xiaomi claimed that the Chinese military designation was "unconstitutional because it deprives Xiaomi of freedom and property rights without due process," and therefore violates the Fifth Amendment to the US Constitution.

The Chinese company also said the ban on investors' purchase of shares will "do irreparable damage."

"As Xiaomi's foreclosure from the US capital markets, the designation and associated restrictions affect the company's ability to run, grow and finance its business, sell its products, maintain and develop its relationships, and recruit and to hold, "the company said in the lawsuit.

Xiaomi shares rose 1.2% in Hong Kong trading at 11:46 a.m. HK / SIN time.

The company also said it is "not owned or controlled by the Chinese government or the Chinese military, or is otherwise affiliated with, or owned or controlled by any entity associated with the Chinese defense industry."

Xiaomi said that no Chinese government or military entity has the ability to "exercise control over the management or affairs of the company."

Huawei, a target of the Trump administration, has also attempted to use the U.S. legal system to overturn the measures Washington was taking.

In March 2019, Huawei sued the United States over a law prohibiting government agencies from purchasing equipment from the Chinese tech giant. That lawsuit was denied by a federal judge last year.

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Katherine Clark