How Chinese Companies Are Challenging National Security Decisions That Could Delay 5G Network Rollout

It’s also worth noting a 2019 tribunal decision that ordered Pakistan to pay US$6 billion in compensation to an injured foreign investor, mining company Tethyan Copper. If Huawei wins this or any other similar legal challenge, financial liabilities could be passed on to taxpayers.

Defining ‘National Security’
Huawei’s challenge of Sweden’s national security decision shows how brewing tensions and increasing distrust between China and western countries is affecting international trade and business.

Indeed, when countries adopt an expansive concept of “national security” in domestic law, companies might see it as a pretext for protectionism or a tool of geopolitical rivalry. Certainly, there is no conclusive evidence that Huawei products, for example, are inherently unsafe versus similar products from other companies, or that Huawei poses a national security threat.

To complicate matters further, some early Chinese BITs – between China and Sweden, and China and the UK for example – do not explicitly allow host states to prohibit foreign investment based on national security concerns. And so Huawei’s recent legal challenge should help determine:

·  when and why a host country can stop a foreign investment based on national security concerns

·  and how international arbitral tribunals are likely to review national security decisions in the future.

Challenging National Security Decisions
But what could this case mean for 5G rollout? In this specific example, Huawei is likely to fight an uphill battle to persuade a tribunal that Sweden’s decision is inconsistent with the China-Sweden treaty, for three reasons.

First, any potential threat to the security of 5G networks constitutes a national security risk because it means a country’s communications could be brought down by espionage, sabotage or system failure. Second, 5G networks are so complex that it is virtually impossible to find and eliminate every significant vulnerability. This means attempts by Huawei to argue for screening and control of software, for example, may not defuse national security concerns. And third, tribunals usually defer to a host country’s national security decisions.

Of course, tribunal decisions can go the other way. For example, several tribunals found against the Argentinian government that the country’s financial crisis in the 2000s was severe enough to qualify as a national security issue. But generally, these tribunals tend to decide that governments are best placed to make such judgements.

Huawei has not brought a case against the UK yet, but western countries generally should think about how to maintain and improve technology infrastructure – even if innovation comes from regions with which tensions are strained. Failure to do so could significantly impact consumer costs and access to cutting-edge technology.

Ming Du is Professor in Chinese law, Durham University. This article is published courtesy of The Conversation.