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The U.S. accuses Meng Wanzhou, seen here on Jan. 23, 2020, the chief financial officer of Huawei Technologies Co. Ltd., of fraud.

Jennifer Gauthier/Reuters

A Vancouver court’s ruling set for this Wednesday on the extradition case of Meng Wanzhou, a Chinese telecom executive, could affect Canada’s relationship with China for years to come.

Two Canadians, Michael Spavor and Michael Kovrig, have been detained for 533 days in China in apparent reprisal for the RCMP’s arrest of Ms. Meng at the request of the United States on Dec. 1, 2018. And while the ruling offers a possible way out – if the court orders Ms. Meng freed – it could also complicate Canada’s relationship with the United States if this country chooses not to appeal such an order.

The ruling is on whether the extradition meets the first threshold of such cases: that the crime Ms. Meng is accused of in the U.S. would be a crime if committed in Canada, a principle known as double criminality. The U.S. accuses Ms. Meng, the chief financial officer of Huawei Technologies Co. Ltd., of fraud, saying she lied to banks about whether her company used a subsidiary to evade U.S. sanctions against Iran. The Canadian government, acting for the U.S. justice department, says the crime is bank fraud, which exists in both countries; Ms. Meng’s defence team says it’s about sanctions against Iran, which Canada does not have.

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If Associate Chief Justice Heather Holmes of the B.C. Supreme Court decides that Canada failed to prove “double criminality,” then Ms. Meng would be released – barring a possible appeal by the Canadian government. (Even then, a legal battle would be almost certain over whether the court has authority to continue to detain her, on a form of house arrest, pending an appeal.)

Huawei founder and CEO Ren Zhengfei says the arrest of his daughter and CFO Meng Wanzhou was part of a political attack against the company by the U.S. Zhengfei was interviewed by The Globe's Nathan VanderKlippe in December 2019. The Globe and Mail

If Ms. Meng regains her freedom, it could open the door to China considering the release of Mr. Kovrig and Mr. Spavor, and reduce tensions between the two countries. But if the extradition request passes its first hurdle, the next phases of the proceedings could last for years, along with the continuing detention of the Canadians.

“The two Michaels were detained because of the Meng arrest,” said Lynette Ong, a China specialist at the University of Toronto. “We know that it is the hostage-diplomacy game that has been played.” If Ms. Meng is released, Mr. Kovrig and Mr. Spavor “should be released,” she said, which is up to Beijing, but “it’s also up to Ottawa, how they play it and whether they have the clout to play it.”

The case also affects Canada’s relationship with the United States. Should the Canadian government lose at this stage, and decide not to appeal, Ottawa might collide with the U.S. government, which has made a priority of battling Huawei on a number of fronts.

Asad Kiyani, who teaches law at the University of Calgary, said he would expect the Canadian government to appeal if the judge rules there is no double criminality. “The Crown would say this is an important precedent case, and relationships with the United States are really important.”

The ruling is to be released a little more than four months after a four-day hearing in January in which 150 members of the public and the media sat in a Vancouver courtroom separated from the proceedings by bullet-proof glass. Ms. Meng’s lead lawyer, Richard Peck, argued that while the criminal law’s core offences such as rape, murder and fraud vary little among countries, sanctions are “political law,” and Canada has shown its political independence by departing from the U.S. approach to sanctions on Iran. Without the existence of the U.S. sanctions, Ms. Meng would not have been arrested, he said.

“Fraud is a facade,” he told the court.

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Federal government lawyer Robert Frater replied that the case comes down to the common-sense proposition that businesses that tell lies in seeking loans do harm to banks, and that makes this case simply about fraud.

While Associate Chief Justice Holmes did not indicate which way she was leaning, she did say that not all frauds are alike – some may occur, at least theoretically, in a context that Canadians would find offensive, such as in a slavery regime. “Suppose, for example,” she said, “that the foreign legal context were utterly objectionable to Canadian values in a way that nobody could contest."

Some legal observers say the court should dismiss the case now. “Do they want Ms. Meng because she misrepresented something to a bank … or because she took efforts to break the sanctions that the Americans had on the Iranians,” said Alan Lenczner, who just retired after 50 years as a civil litigator, and is not involved with the Meng case.

Other legal observers say they are uncertain.

“It’s really novel,” Prof. Kiyani said. “I think I’m as curious as anyone else as to what Justice Holmes has to say about this.”

Ms. Meng has been living under a relaxed form of house arrest on $10-million bail, while residing at one of her two local mansions. Mr. Kovrig and Mr. Spavor have been incarcerated in harsh conditions with limited consular access.

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On Saturday evening, Ms. Meng posed for a photograph with friends and family on the courthouse steps, the CBC reported. “My gut is you don’t take photo ops unless you feel really confident about what’s going to happen,” Prof. Kiyani said. “I also know that Canadian courts are looking at the essence of the offence and not the technicalities. I wouldn’t be that confident myself.”

On the other hand, he said, while Canada usually surrenders individuals wanted by the U.S., "it’s hard to think of a situation where someone has been extradited from Canada for alleged fraud committed in respect of sanctions.”

The next phase of the proceedings had been scheduled to begin in June, but that may be pushed back because of the COVID-19 pandemic.

On Monday afternoon, a member of Ms. Meng’s security detail stood outside her gated Shaughnessy home as visitors came and went from the property. The black SUVs that have become fixtures on the quiet residential street were parked outside.

With a report from Andrea Woo in Vancouver.

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