Meng, a Chinese citizen, was arrested in December 2018 in Vancouver 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.

Huawei’s legal team had 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.

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.

Prosecutors representing the Canadian government had said in court that the lie itself was the fraud, regardless of the existence of sanctions.

The ruling paves the way for the extradition hearing to proceed to the second phase starting in 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. Shortly after Meng’s arrest, Chinese authorities detained two Canadian men in China on state security charges. Beijing has also since restricted imports of Canadian canola seed.

ICE canola futures dipped on Wednesday, giving up gains after the release of the court ruling. Most-active July canola shed $1.30, to $463.50 per tonne.

— Reporting for Reuters by Moira Warburton in Toronto and Tessa Vikander in Vancouver; additional reporting by Steve Scherer in Ottawa and Rod Nickel in Winnipeg.

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