Standards of Protection: The State’s Sovereign Right to Regulate and its Limits
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In today’s globalised inter-connected economy, one that is supported by a safety net of international trade and investment agreements, foreign investment in spectrum, and telecommunications more generally, ought to be anodyne, conducted without controversy. However, spectrum’s privatisation and commoditisation, and its exponentially increasing relevance and value, have drawn sovereign intervention on the part of host states in the name of the public interest. That intervention is also increasingly rooted in national security concerns, particularly in the context of the allocation of 5G spectrum bands and the broader roll-out of 5G technology. Although host states’ sovereign right to regulate in the public interest and protect public policy are generally recognised principles of international law, the challenge is for that right to be exercised within the boundaries set by those host states’ obligations under international trade and investment agreements, including the standards of protection set forth therein, even when national security imperatives are at play. Before acting, both host states and investors ought not only to consider carefully domestic policy and legal considerations but also the applicable international legal framework – including in particular their respective rights and obligations arising therefrom – to navigate the attendant high-stakes risks of today’s telecommunications sector.
Introduction
According to the European Parliament, ‘radio spectrum is a vital and scarce natural resource’.[2] Others describe it as ‘among our most valuable natural resources’.[3] First discovered by Gugliemo Marconi in 1901 as an effective vehicle for human communication, spectrum is a natural phenomenon that consists of electromagnetic radio signals that are capable of traversing space without the need for physical intervention.[4] Although spectrum is a natural resource that is – by its very nature – ubiquitous (unlike other natural resources such as oil, gas or gold),[5] it is finite and thus often protected as a ‘public’ good in the legislation of certain states.[6] As is the case with other natural resources, spectrum and the revenues therefrom can be appropriated by militants and rebels.[7] Increasingly, its limited availability can give rise to political controversy[8] and – more pertinently for present purposes – investor-state disputes.[9]
A particular characteristic of spectrum, and telecommunications in general, is that they raise sensitive defence and national security concerns, including with regard to espionage, hacking, the allocation of spectrum for exclusive military use, control over information and censorship, and the protection of sensitive operations from foreign interference.[10] These concerns are accentuated in the context of the installation and operation of network equipment operating on the 5G spectrum for use by telecommunications service providers. Given the sheer internet speed of 5G (compared with 4G),[11] the Council of the European Union stated that ‘5G will form a part of crucial infrastructure for the operation and maintenance of vital and societal and economic functions’ and that ‘5G will increase the potential of mobile network service provision and at the same time enable innovative business models and public services across multiple sectors’.[12] It is that very enmeshment of 5G networks in all social, economic and public aspects of life that triggers security concerns.[13]
Last year, the United States’ Federal Communications Commission (FCC) auctioned its C-band spectrum for 5G use, collecting a staggering US$94 billion in gross proceeds; the C-band is expected to generate US$192 billion for the American economy by 2026.[14] The United Kingdom’s latest 5G auction in 2021 raised noticeably less (£1.3 billion) but the amounts at play remain significant and a testament to the importance of 5G.[15]
With the transformational socio-economic impact of 5G, the already alluded to security concerns and significant amounts of investment[16] at stake, an increasing number of states have rushed in recent years to overhaul their telecommunications legislation to entrench their powers to intervene in that sector in the name of national security.[17] These include the United Kingdom, which has adopted the Telecommunications (Security) Act 2021, the Electronic Communications (Security Measures) Regulations 2022 and the Telecommunications Security Code of Practice (the latter two being in force since 5 September 2022),[18] giving the government new powers ‘to manage the threat posed by high risk vendors’.[19] In parallel, several host states around the world, particularly in North America and Europe, have taken restrictive measures against foreign telecommunications equipment manufacturers as part of their 5G rollout, including most notably Chinese companies such as Huawei and ZTE.[20] The first to face an investor-state claim as a result of these measures was Sweden,[21] and Huawei notified the United Kingdom of a dispute under the China–United Kingdom bilateral investment treaty (BIT), following its designation as a ‘high risk vendor’ under the Communications Act 2003 (as amended by the above-mentioned Telecommunications (Security) Act 2021).[22] This is discussed in more detail, below.
This chapter considers two key areas of disputes in the telecommunications sector, which is proving to be a growing area for investor-state arbitrations.[23] Specifically, the first consists of disputes that either directly or indirectly relate to host states seeking to exert control over spectrum and the telecommunications sector on public interest grounds, such as market regulation, competition and, at times, resource nationalism.[24] The second area (and one that has increasingly been gaining momentum) consists of disputes arising out of restrictive host state measures on defence and national security grounds. In addressing both areas, this chapter focuses on the boundaries set by host states’ obligations under international trade and investment agreements, including the standards of protection set forth therein.
Disputes that either directly or indirectly relate to control over spectrum and the telecommunications sector
There is now a sizeable body of investor-state disputes involving host state control measures in the telecommunications sector,[25] namely measures through which host states seek directly or indirectly to seize control over operators’ assets, operations or allocated spectrum.
Some of these measures have been aimed at gaining ownership or use of assets in the telecommunications sector, including spectrum. One of the most prominent examples concerns the Supreme Court of India’s revocation of more than 120 2G licences in 2012, on the basis that the then Minister of Communication and Information Technology and the Department of Telecommunications ‘virtually gifted away the important national asset [i.e., spectrum] at throw away prices’.[26] The Court was particularly critical of the decision to allocate spectrum in 2008 at prices that were determined in 2001,[27] and found that the licence allocation process ‘was wholly arbitrary, capricious and contrary to public interest apart from being violative of the doctrine of equality’.[28] Loop Telecom is one of the many operators that saw their 2G licences revoked. A Mauritian investor in Loop, Khaitan Holdings, brought a claim against India under the India–Mauritius BIT, which remains pending.[29] India unsuccessfully pursued an injunction to stay the arbitral proceedings before the Delhi High Court.[30] Although its decision was meant to be strictly procedural in nature, the Delhi High Court noted that the Supreme Court’s 2012 judgment ‘was pronounced . . . in [the] public interest’, that Loop Telecom was afforded the right to be heard and participate in a subsequent auction and had availed itself of judicial remedies under Indian law, thus suggesting that there was no breach of the India–Mauritius BIT.[31] In no ambiguous terms, the Delhi High Court added that ‘if any investment is expropriated for a public purpose after following due process of law, no compensation would be payable’.[32]
Many investor-state tribunals have systematically disagreed with this view, however.[33] In British Caribbean Bank v. Belize – in which the then prime minister of Belize accused the former administration of privatising shares in Belize Telecommunications Limited ‘at a rate and in a manner that was counterintuitive and counter nationalistic’ – the tribunal held that ‘a State is entitled to broad latitude to devise its public policy as it sees fit’ but that the obligation to make prompt, just and equitable compensation as enshrined under the United Kingdom–Belize BIT still stands.[34]
Naturally, not all public policy measures will result in a treaty breach and an ensuing payment of compensation. Tribunals have long recognised that host states have an inherent (and valid) right to regulate in protection of the public interest when enacting bona fide, non-discriminatory and proportionate regulations in accordance with due process (the Police Powers Doctrine).[35]
By way of illustration, in Global Telecom Holding v. Canada, the tribunal scrutinised a change in Canada’s telecommunications regulations by way of a ‘2013 Transfer Framework’ policy whereby Industry Canada, Canada’s government agency for trade and the economy, would conduct reviews of licence transfers so as to prevent the concentration of spectrum (i.e., the accumulation of the amount of spectrum held by a single market player) and ensure ‘the efficiency and competitiveness’ of the Canadian telecommunications market.[36] Indeed, the issue of spectrum concentration – often referred to, somewhat pejoratively, as ‘hoarding’ – has been a live one in several jurisdictions.[37] Global Telecom Holding (GTH) sought to challenge that change, which it alleged had the effect of preventing it from selling its subsidiary, Wind Mobile, to an incumbent, as being in breach of the Canada–Egypt BIT’s fair and equitable treatment (FET) standard. The tribunal disagreed. Noting that ‘the rising use of smartphones . . . made it critical for the government to control spectrum concentration’, the tribunal held that, absent specific commitments regarding the investor, ‘a change in that framework to reflect [] market evolution that is not arbitrary or aimed to harm the investor is not a breach of the FET standard’.[38] Although Canada successfully argued that international law gives host states a high level of deference with respect to domestic policy choices and the balancing of public interest and individual rights,[39] the key in Global Telecom Holding v. Canada is that the investor was not facing a host state measure that was targeting it specifically; rather, it was impugning the legitimacy of a policy measure of general application, which was found to have been adopted in a manner that was consistent with the BIT.
In a similar vein, America Móvil failed in its US$1.2 billion expropriation claim against Colombia under the Colombia–Mexico Free Trade Agreement (FTA).[40] America Móvil notably sought to impugn the Constitutional Court’s interpretation of Law 1341 of 2009, including its alleged expropriatory effect on its investments in Colombian operator, Comcel. Under this legislation, the state sought to change the then prevailing regime pursuant to which concessionaires would be required, at the term of their concession, to relinquish both assigned spectrum as well as all telecommunications assets (as set out in the Reversion Clause of Comcel’s relevant concessions).[41] Under the new regime, concessionaires would be required instead to relinquish the assigned spectrum only. In a 2014 judgment, the Constitutional Court held that Law 1341 of 2009 was constitutional; however, the Reversion Clauses of concessions predating that Law must be respected, meaning that, at the term of its concessions, Comcel had to relinquish both its assigned spectrum and telecommunications assets.[42] While the Court acknowledged that the state may modify the terms of concessions to serve the public interest, it held that there was no such interest in allowing the retroactive application of Law 1341 of 2009 so as to amend the Reversion Clauses of prior concessions, including Comcel’s.[43] The tribunal’s majority found that, on matters of interpretation of municipal law such as this one, it is bound by the judgments of municipal courts unless these are (1) the product of a procedural or substantive denial of justice, or (2) clearly incompatible with international law, resulting in ‘a direct violation of an international rule’.[44] On that basis, the majority concluded that, as a matter of Colombian law, Comcel did not have a right to the non-reversion of its assets, thus dismissing America Móvil’s claim for expropriation.[45]
Spain’s Telefonica has brought a similar claim against Colombia under the Spain–Colombia BIT (which, unlike the Colombia–Mexico FTA, contains an FET clause), alleging breaches of FET and indirect expropriation.[46] It remains to be seen whether the tribunal in the Telefonica case will reach the same findings as the America Móvil tribunal, including on the public interest questions at play.
Disputes brought as a result of restrictive host state measures on defence and national security grounds
As is the case with public interest considerations, host states can and do intervene in the telecommunications sector on defence and national security grounds, ostensibly for the purposes of maintaining public policy.[47] Indeed, the investor-state disputes arena has seen numerous investors impugning restrictive measures by host states that were founded on defence and national security concerns.[48]
In CC/Devas v. India and Deutsche Telekom v. India, commenced under the Mauritius–India BIT and Germany–India BIT, respectively, India sought to revoke an agreement with the investors that would have seen them use satellite-generated S-band spectrum, allocating it instead to the Indian military.[49] A day prior to the revocation, India’s then prime minister announced that the government ‘should take a sovereign policy decision regarding the utilization of [S-band] spectrum having regard to the country’s strategic requirements’.[50]
Interpreting slightly different ‘essential security interests’ clauses in the two BITs,[51] the tribunals arrived at different conclusions on the interplay between national security and international standards for the protection of investments.
In Devas, the tribunal agreed with India that national security matters ‘absolve the Respondent from following the principles of international due process’, which include ‘the obligation of the host-state to notify the investor of the proposed expropriatory measure and give it the opportunity to be heard and/or mitigate the impact of the threatened measures’.[52] The Devas tribunal carved out the effect of India’s expropriatory measure that is covered by the BIT’s security exception, thus only compensating the investor partially.
In contrast, in Deutsche Telekom, the tribunal held that if the Devas agreement were ‘irreconcilable with military and societal needs, quod non, the Indian authorities should have engaged with [the investor] to seek a solution, which they failed to do’.[53] Finding that India breached the BIT’s FET standard, the tribunal disagreed with ‘India’s position that the very nature of the subject matter pertaining to national security prevented it from sharing information with the investor’ and that, without disclosing sensitive or classified information, India could have ‘simply [] advised Devas/DT in general terms that the military needed some of the spectrum, thus allowing the investor to be aware of the situation and act accordingly’.[54]
The tribunal in the Global Telecom Holding v. Canada case described above applied a similar approach to the Deutsche Telekom tribunal in reaffirming that international standards for the protection of investments do apply to questions of national security. Industry Canada subjected GTH to a review and approval process under the Investment Canada Act so as to decide whether GTH’s proposed transaction to gain voting control in its subsidiary Wind Mobile (1) is ‘likely to be of net benefit to Canada’ and (2) ‘could be injurious to national security’.[55] Although the Global Telecom Holding award is heavily redacted on the facts, press reports have suggested that Industry Canada’s review process was driven by a combination of GTH’s ultimate ownership by VimpelCom (now VEON), a Russian-controlled entity, and the use by Wind Mobile of Huawei network equipment.[56] On the merits of Industry Canada’s review, although the Global Telecom Holding tribunal recognised that full transparency in the context of a national security investigation may be difficult to achieve, the tribunal nonetheless held that the due process standard remains applicable. It stated that this standard:
should be deemed satisfied where the subject of the investigation is afforded a fair opportunity to make its case in relation to readily identifiable issues, and that opportunity is afforded reasonably ahead of an administrative decision being made based on objectively verifiable factors and after an appropriate time period which is not unnecessarily rushed.[57]
Ultimately, the tribunal concluded that Canada had provided GTH ‘with an adequate opportunity to make its case in relation to the regulatory and the national security reviews’ and that GTH ‘engaged fully in that exchange’, finding therefore that there had been no violation of the FET standard under the Canada–Egypt BIT.[58]
Since Global Telecom Holding, the most recent case raising national security issues concerns a claim brought by Huawei against Sweden under the China–Sweden BIT before the International Centre for Settlement of Investment Disputes – one that host states and operators worldwide will undoubtedly monitor carefully as it concerns alleged security concerns in the context of the roll-out of 5G. Specifically, Huawei complains of arbitrariness on the part of the Swedish telecommunications regulator, the Swedish Post and Telecom Agency (PTS), which decided that applicants for Sweden’s 5G spectrum auctions should not use network equipment from Huawei and ZTE (another Chinese manufacturer), and that any such equipment and services already in use for existing 3G and 4G networks must be phased out before January 2025.[59] The PTS decision expressly states that the motive for excluding Huawei is that ‘[t]he use of Huawei and ZTE products in central functions may harm Sweden’s security’.[60] There can be no doubt, therefore, that the PTS specifically targeted Huawei with a restrictive measure (as opposed to adopting a measure of general application aimed at protecting the security of its 5G network more broadly). It remains to be seen whether this factor will weigh in the tribunal’s analysis of Sweden’s potential liability under the China–Sweden BIT, including on arbitrariness and discrimination.[61] For now, the Huawei tribunal has issued notable procedural orders concerning the transparency and bifurcation of proceedings.[62] In respect of the former, it appears that the parties disagreed on the extent of public access to the dispute, with Huawei favouring stricter confidentiality.[63] The tribunal noted that it ‘must balance, on the one hand, the public interest in disclosing a given category of information, and, on the other, the extent to which said disclosure may affect the integrity of the proceedings, aggravate the dispute, or infringe on either Party’s due process rights’.[64] Although it may appear as a mere procedural matter, the Huawei tribunal’s recognition of the public interest at stake in the dispute presages the difficult balancing act that it will need to engage in when addressing matters of substance.
Conclusion
Host states will intervene in the name of the public interest if they consider that valuable national resources, including, of course, spectrum, are being ‘gifted away . . . at throw away prices’ – to quote India’s Supreme Court.[65] Investor-state tribunals unequivocally recognise state police powers and their right to regulate in the public interest and protect public policy. Therefore, it is not about whether that right can be exercised – it is about how. The taking of investors’ property – no matter how laudable the underlying motive – will nonetheless result in them being compensated under international law. Defence and national security imperatives – irrespective of how acute they are – do not alter this principle. That said, absent specific commitments on the part of host states, investors may face hurdles in impugning non-discriminatory and proportionate regulations of general application that were adopted in good faith, in accordance with due process.
In short, before acting, both host states and investors ought not only to consider carefully domestic policy and legal considerations but also the applicable international legal framework – including, in particular, their respective rights and obligations arising therefrom – to navigate the attendant, high-stakes risks of today’s telecommunications sector.
Footnotes
[1] Reza Mohtashami KC and Leilah Bruton are partners and Farouk El-Hosseny is a senior associate at Three Crowns LLP. The authors thank Anton Chaevitch, Ionut Rus and Krishnan Shakkottai for their research assistance.
[2] European Parliament, Committee on Industry, External Trade, Research and Energy, European Parliament, ‘Report on the Commission communication to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions on “Next Steps in Radio Spectrum Policy – Results of the Public Consultation on the Green paper”’, COM(1999) 538 – C5-0113/2000 – 2000/2073(COS), 19 April 2000, p. 5/12 (https://www.europarl.europa.eu/doceo/document/A-5-2000-0122_EN.pdf (accessed 7 September 2023)).
[3] P Ryan, ‘Application of the Public-Trust Doctrine and Principles of Natural Resource Management to Electromagnetic Spectrum’, (2014) 10:2 Michigan Telecommunications and Technology Law Review, 285, 287.
[4] C Herter, ‘The Electromagnetic Spectrum: A Critical Natural Resource’, (1985) 25 Natural Resources Journal, 651, 652.
[5] P Ryan, ‘Treating the Wireless Spectrum as a Natural Resource’, (2005) 35 Environmental Law Reporter, 10620, 10623; see also R Holland, ‘Is Spectrum the New Oil? Trends in Investor-State Disputes in the Telecommunications Sector’, (2018) 12:2 Dispute Resolution International.
[6] For example, Argentina’s Digital Law provides that: ‘radioelectric spectrum is an intangible, finite and public domain resource, whose administration, management and control is the non-delegable responsibility of the national State’: see Law 27,078 on Information Technology and Communications (Argentina Digital Law), 18 December 2014, Article 26 (https://observatoriolegislativocele.com/en/Argentina-digital-law-27078/ (accessed 7 September 2023)). Similarly, Mexico’s Federal Telecommunications and Broadcasting Law provides that: ‘Radioelectric spectrum and orbitral resources are goods of the public domain of the Nation, which ownership and administration falls to the State’: see Ley Federal de Telecomunicaciones y Radiodifusión, 14 July 2014, Article 54 (https://www.gob.mx/cms/uploads/attachment/file/346846/LEY_FEDERAL_DE_TELECOMUNICACIONES_Y_RADIODIFUSION.pdf (accessed 7 September 2023)).
[7] The UN Panel of Experts on Yemen reported that ‘[t]elecommunications companies are the main source of revenue for the Houthis in Sana’a’ and that the Houthi rebels had collected US$159 million of revenue per annum from those companies: see UN Panel of Experts Established pursuant to Security Council Resolution 2140 (2014), Final report of the Panel of Experts on Yemen (S/2018/594), 26 January 2018 (https://digitallibrary.un.org/record/1639536?ln=en, 128 (accessed 7 September 2023)).
[8] For a discussion surrounding the auctioning of spectrum and rollout of 5G in the United States, see, for example, T Wheeler, ‘Spectrum: The pathway of the 21st century’, Brookings Institute (12 March 2021) (https://www.brookings.edu/blog/techtank/2021/03/12/spectrum-the-pathway-of-the-21st-century/ (accessed 7 September 2023)) and D Robyn, ‘Hard landing: Why the 5G rollout was so contentious and what we can learn from it’, Brookings Institute (2 February 2022) (https://www.brookings.edu/blog/fixgov/2022/02/02/hard-landing-why-the-5g-rollout-was-so-contentious-and-what-we-can-learn-from-it/ (accessed 7 September 2023)).
[9] See, for example, CC/Devas (Mauritius) Ltd. and ors. v. The Republic of India, PCA Case No. 2013-09, Award on Jurisdiction and Merits, 25 July 2016; Deutsche Telekom AG v. The Republic of India, PCA Case No. 2014-10, Interim Award, 13 December 2017.
[10] See, for example, the then UK Trade Secretary’s decision to exercise his ‘call-in’ powers under Section 1 of the National Security and Investment Act 2021 to review the proposal by Altice (a company ultimately owned and controlled by Mr Patrick Drahi, a French, Israeli and Portuguese national) to increase its stake in BT from 12.1 per cent to 18 per cent. Under the Act, the Secretary may issue a ‘call-in’ notice to review a transaction if the Secretary ‘reasonably suspects that— (a) a trigger event has taken place in relation to a qualifying entity or qualifying asset, and the event has given rise to or may give rise to a risk to national security, or (b) arrangements are in progress or contemplation which, if carried into effect, will result in a trigger event taking place in relation to a qualifying entity or qualifying asset, and the event may give rise to a risk to national security’: see National Security and Investment Act 2021, Section 1(1); see also T Seal, ‘UK to Probe Drahi’s BT Stake on National Security Concerns’, Bloomberg (26 May 2022) (https://www.bloomberg.com/news/articles/2022-05-26/uk-to-probe-drahi-s-stake-in-bt-on-national-security-concerns?sref=dWW9TlvL (accessed 7 September 2023)).
[11] 5G speed can deliver up to 20 gigabits per second (Gbps), compared with 4G’s maximum download speed of up to around 100 megabits per second (Mbps).
[12] Council of the European Union, ‘Council Conclusions on the significance of 5G to the European Economy and the need to mitigate security risks linked to 5G’ (3 December 2019) (https://www.consilium.europa.eu/media/41595/st14517-en19.pdf (accessed 7 September 2023)). See also former President Donald Trump’s remarks stating that ‘[s]ecure 5G networks will absolutely be a vital link to America’s prosperity and national security in the 21st century’ and that 5G ‘will transform the way our citizens work, learn, communicate, and travel’ – see G Sullivan and J Sink, ‘Trump Says U.S. Must Win 5G Race as FCC Plans “Bold” Actions’, Bloomberg (13 April 2019) (https://www.bloombergquint.com/politics/trump-says-u-s-must-win-5g-race-as-fcc-plans-bold-actions (accessed 7 September 2023)).
[13] See House of Commons Defence Committee, ‘The Security of 5G’, Second Report of Session 2019–2 (22 September 2020), 14–17 (https://committees.parliament.uk/publications/2877/documents/27899/default/ (accessed 7 September 2023)). For a technical analysis, see H Kim, ‘5G core network security issues and attack classification from network protocol perspective’, (2020) 10:2 Journal of Internet Services and Information Security 1, 4.
[14] R Layton, ‘5G Versus Wi-Fi: Challenges for Economic, Spectrum, and Security Policy’, (2021) 11 Journal of Information Policy, 524.
[15] N Fildes, ‘5G spectrum auction raises just £1.3bn for UK government’, Financial Times (7 March 2021) (https://www.ft.com/content/41a10fce-4b6a-443d-8c0f-26f62bf2470c (accessed 7 September 2023)).
[16] The current economic importance of the telecommunications sector can be seen from the global value of cross-border merger and acquisition deals in that sector. According to the United Nations Conference on Trade and Development (UNCTAD), it totalled US$29 billion for 2020, representing a 372 per cent increase compared with 2019: see UNCTAD, ‘World Investment Report 2021: ‘Investing in sustainable recovery’ (29 June 2021), 12 (https://unctad.org/webflyer/world-investment-report-2021 (accessed 7 September 2023)).
[17] Some examples include Australia’s Security Legislation Amendment (Critical Infrastructure) Act 2021 and the US Secure Equipment Act of 2021. India’s overhaul of its telecommunications legislation is being closely watched, with a proposed Telecommunication Bill (2022) out in draft form for public deliberation: see V Luniya, ‘Key features of the Draft Indian Telecommunication Bill, 2022 – Overview’, Lexology (3 October 2022) (https://www.lexology.com/library/detail.aspx?g=73211051-bc53-4596-af3c-4a708ebce9bd (accessed 7 September 2023)). The same applies to Canada, which tabled before the House of Commons in 2022 an Act Respecting Cybersecurity, aimed at enabling ‘the Government to take action to promote the security of the Canadian telecommunications system, which could include taking measures with respect to high risk suppliers’: see Government of Canada, ‘Overview of the Proposed Changes to the Telecommunications Act’ (14 June 2022) (https://www.canada.ca/en/public-safety-canada/news/2022/06/overview-of-the-proposed-changes-to-the-telecommunications-act.html (accessed 7 September 2023)).
[18] See Telecommunications (Security) Act 2021, 17 November 2021 (https://www.legislation.gov.uk/ukpga/2021/31/contents/enacted (accessed 7 September 2023)); The Electronic Communications (Security Measures) Regulations 2022, 1 September 2022 (https://www.legislation.gov.uk/uksi/2022/933/introduction/made (accessed 7 September 2023)); and Telecommunications Security Code of Practice (December 2022) (https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1120531/E02781980_Telecommunications_Security_CoP_Accessible.pdf (accessed 7 September 2023)).
[19] See UK Department for Digital, Culture, Media & Sport, ‘Proposals to issue a designation notice and designated vendor direction for Huawei - government response to consultation’ (13 October 2022) (https://www.gov.uk/government/publications/targeted-consultations-on-proposed-designated-vendor-direction-and-designation-notice/proposals-to-issue-a-designation-notice-and-designated-vendor-direction-for-huawei-government-response-to-consultation (accessed 7 September 2023)). Under the same framework, the Office of Communications (Ofcom) – the United Kingdom’s communications regulator – was given new oversight and enforcement powers over telecommunications providers in relation to their compliance with security-related duties under the Telecommunications (Security) Act 2021: see Ofcom, ‘Ofcom begins new role overseeing security of telecoms networks’ (3 October 2022) (https://www.ofcom.org.uk/news-centre/2022/ofcom-begins-new-role-overseeing-security-of-telecoms-networks (accessed 7 September 2023)).
[20] For example, France’s cybersecurity agency has restricted the use of Huawei equipment and plans to phase out equipment currently in use by 2028: see Euractiv, ‘EU countries keep different approaches to Huawei on 5g rollout’ (19 May 2021) (https://www.euractiv.com/section/digital/news/eu-countries-keep-different-approaches-to-huawei-on-5g-rollout (accessed 7 September 2023)). Similarly, Romania passed an ‘anti-Huawei law’ that effectively bars Huawei from taking part in the rolling out of its 5G network: see R Marinas, ‘Romanian president signs bill into law to ban Huawei from 5G’, Reuters (11 June 2021) (https://www.reuters.com/business/media-telecom/romanian-president-signs-bill-into-law-ban-huawei-5g-2021-06-11 (accessed 7 September 2023)).
[21] Huawei Technologies Co, LTD v. The Kingdom of Sweden, ICSID Case No. ARB/22/2, Request for Arbitration, 7 January 2022; see also C Sanderson, ‘Huawei brings ICSID claim against Sweden over 5G ban’, Global Arbitration Review (24 January 2022) (https://globalarbitrationreview.com/huawei-brings-icsid-claim-against-sweden-over-5g-ban (accessed 7 September 2023)).
[22] See footnote 59, below.
[23] The International Centre for Settlement of Investment Disputes (ICSID) reported in its 2021 annual report that, of its 67 newly registered cases, 11 per cent related to the information and communication technology sector: see ICSID, ‘2021 Annual Report’ (7 September 2021), at 27 (https://icsid.worldbank.org/sites/default/files/publications/ICSID_AR21_CRA_bl1_web.pdf (accessed 7 September 2023)); see also footnotes 24 and 47 below.
[24] For further discussion on the concept of control measures, see Holland, op. cit. note 5, 134–38. According to Holland, telecommunications disputes may be divided into two categories defined by control measures (which ‘may entail a state seizing control of an operator, or the implementation of policies designed to encourage an operator to cede control to the state’), and clawback measures (the effect of which ‘is not the taking of a business for the purpose of gaining a share of its profits, but obtaining additional revenue from a business which otherwise remains in the hands of its investors’). The latter category includes taxation measures, which are not addressed in this chapter.
[25] See William Nagel v. The Czech Republic, SCC Case No. 049/2002; TSA Spectrum de Argentina S.A. v. Argentine Republic, ICSID Case No. ARB/05/5; Rumeli Telekom A.S. and anr. v. Republic of Kazakhstan, ICSID Case No. ARB/05/16; Millicom International Operations B.V. and anr. v. Republic of Senegal, ICSID Case No. ARB/08/20; Turkcell İletişim Hizmetleri A.Ş. v. The Islamic Republic of Iran (UNCITRAL); E.T.I. Euro Telecom International N.V. v. Plurinational State of Bolivia, ICSID Case No. ARB/07/28; Dunkeld International Investment Limited v. The Government of Belize (I), PCA Case No. 2010-13; British Caribbean Bank Ltd. v. The Government of Belize, PCA Case No. 2010-18; Orascom Telecom Holding S.A.E v. People’s Democratic Republic of Algeria, PCA Case No. 2012-20; Orascom TMT Investments S.à r.l. v. People’s Democratic Republic of Algeria, ICSID Case No. ARB/12/35; Juvel Ltd and Bithell Holdings Ltd. v. Poland, ICC Case No. 19459/MHM; Khaitan Holdings Mauritius Limited v. India, PCA Case No. 2018-50; Michael Dagher v. Republic of the Sudan, ICSID Case No. ARB/14/2; Orange SA v. Hashemite Kingdom of Jordan, ICSID Case No. ARB/15/10; América Móvil S.A.B. de C.V. v. Republic of Colombia, ICSID Case No. ARB(AF)/16/5; Italba Corporation v. Oriental Republic of Uruguay, ICSID Case No. ARB/16/9; Global Telecom Holding S.A.E. v. Canada, ICSID Case No. ARB/16/16; Agility Public Warehousing Company K.S.C. v. Republic of Iraq, ICSID Case No. ARB/17/7; Penwell Business Ltd v. Kyrgyz Republic, PCA Case No. 2017-31; LTME Mauritius Limited and Madamobil Holdings Mauritius Limited v. Republic of Madagascar, ICSID Case No. ARB/17/28; Eutelsat SA v. United Mexican States, ICSID Case No. ARB(AF)/17/2; Telefónica, S.A. v. Republic of Colombia, ICSID Case No. ARB/18/3; Telcell Wireless, LLC and International Telcell Cellular, LLC v. Georgia, ICSID Case No. ARB/20/5; Orange S.A. v. Republic of Iraq, ICSID Case No. ARB/20/42; Public Joint Stock Company Mobile TeleSystems v. Turkmenistan, ICSID Case No. (AF)/18/4..
[26] Centre for Public Interest Litigation and Others v. the Union of India and Others (No. 423 of 2010) and Dr. Subramanian Swamy v. Union of India and Others (No. 10 of 2011), Supreme Court of India, judgment dated 2 February 2012, 73.
[27] ibid.
[28] id., 77.
[29] Khaitan Holdings (Mauritius) Limited v. Republic of India, PCA Case No. 2018-50.
[30] Union of India v. Khaitan Holdings (Mauritius) Limited & Ors., Judgment of the High Court of Delhi on India’s Request for an Injunction to Stay the Arbitration Proceedings (India v. Khaitan Holdings) [CS (OS) 46/2019, I.As. 1235/2019 & 1238/2019], 29 January 2019, 54.
[31] For further discussion on the Delhi High Court decision, see R Kabra, ‘Indian Court Defers to Arbitrators by Refusing to Enjoin Mauritian Investor Khaitan Holdings’ BIT Arbitration against India, but then Muses on Jurisdictional and Merits Issues in the Dispute’, IA Reporter (30 January 2019) (https://www.iareporter.com/articles/indian-court-defers-to-arbitrators-by-refusing-to-enjoin-mauritian-investor-khaitan-holdings-bit-arbitration-against-india-but-then-muses-on-jurisdictional-and-merits-issues-in-the-dispute/ (accessed 7 September 2023)).
[32] India v. Khaitan Holdings, op. cit. note 30, 40.
[33] See, for example, Compañia del Desarrollo de Santa Elena S.A. v. Republic of Costa Rica, ICSID Case No. ARB/96/1, Award, 17 February 2002, 72 (‘Expropriatory environmental measures – no matter how laudable and beneficial to society as a whole – are, in this respect, similar to any other expropriatory measures that a state may take in order to implement its policies: where property is expropriated, even for environmental purposes, whether domestic or international, the state’s obligation to pay compensation remains’); Marion Unglaube v. Republic of Costa Rica, ICSID Case No. ARB/08/1, Award, 16 May 2012, 203–05 (‘The Tribunal has carefully considered all of these arguments and the answers of Respondent regarding whether or not Respondent has adequately complied with each of the Treaty requirements for a lawful expropriation. As stated in a leading treatise: “It is today generally accepted that the legality of a measure of expropriation is conditioned on three (or four) requirements. These requirements are contained in most treaties. They are also seen to be part of customary international law. These requirements must be fulfilled cumulatively” . . . Thus, while there can be no question concerning the right of the government of Costa Rica to expropriate property for a bona fide public purpose, pursuant to law, and in a manner which is neither arbitrary or discriminatory, the expropriatory measure must be accompanied by compensation for the fair market value of the investment’).
[34] British Caribbean Bank Limited v. The Government of Belize, PCA Case No. 2010-18, Award, 19 December 2014, 94, 236.
[35] See, for example, Methanex Corporation v. United States of America, UNCITRAL, Final Award of the Tribunal on Jurisdiction and Merits, 3 August 2005, Part IV, Chapter D, 7; Saluka Investments B.V. v. The Czech Republic, UNCITRAL, Partial Award, 17 March 2006, 255; LG&E Energy Corp., LG&E Capital Corp., and LG&E International, Inc .v. Argentine Republic, ICSID Case No. ARB/02/1, Decision on Liability, 3 October 2006, 195; Marfin Investment Group v. The Republic of Cyprus, ICSID Case No. ARB/13/27, Award (Redacted), 26 July 2018, 826.
[36] Global Telecom Holding S.A.E. v. Canada, ICSID Case No. ARB/16/16, Award of the Tribunal, 27 March 2020, 87.
[37] By way of example: for India, see ‘Are mobile operators hoarding spectrum?’, The Economic Times (19 May 2008) (https://economictimes.indiatimes.com/are-mobile-operators-hoarding-spectrum/articleshow/3051715.cms (accessed 7 September 2023)); for Canada, see R Trichur, ‘Big telcos “hoarding” spectrum, Internet service providers complain’, The Globe And Mail (12 May 2013) (https://www.theglobeandmail.com/technology/big-telcos-hoarding-spectrum-internet-service-providers-complain/article11880886/ (accessed 7 September 2023)); for the Philippines, see Techerati, ‘Philippines to end mobile spectrum hoarding’ (24 February 2017) (https://www.techerati.com/the-stack-archive/cloud/2017/02/24/philippines-to-end-mobile-spectrum-hoarding/ (accessed 7 September 2023)); for Chile, see C Donkin, ‘Chile orders operators to return spectrum’ (27 June 2018) (https://www.mobileworldlive.com/featured-content/top-three/chile-orders-operators-to-return-spectrum (accessed 7 September 2023)).
[38] Global Telecom Holding S.A.E. v. Canada, ICSID Case No. ARB/16/16, Award of the Tribunal, 27 March 2020, 563, 565.
[39] id., 474.
[40] América Móvil S.A.B. de C.V. v. Republic of Colombia, ICSID Case No. ARB(AF)/16/5, Award, 7 May 2021.
[41] id., 76.
[42] id., 375–81.
[43] id., 380.
[44] id., 347.
[45] id., 396.
[46] Telefónica, S.A. v. Republic of Colombia, ICSID Case No. ARB/18/3; see also C Sanderson, et al., ‘Colombia defeats telecoms and banking claims’, Global Arbitration Review (10 May 2021) (https://globalarbitrationreview.com/colombia-defeats-telecoms-and-banking-claims (accessed 7 September 2023)).
[47] Host states’ ability to enact measures to protect public policy is reflected in Article XIV of the General Agreement on Trade in Services (GATS), which provides as follows: 'Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where like conditions prevail, or a disguised restriction on trade in services, nothing in this Agreement shall be construed to prevent the adoption or enforcement by any Member of measures: (a) necessary to protect public morals or to maintain public order'. See also the reference to 'essential security interests' at Article XIVbis of the GATS, which provides: '1. Nothing in this Agreement shall be construed: . . . (b) to prevent any Member from taking any action which it considers necessary for the protection of its essential security interests: . . . (iii) taken in time of war or other emergency in international relations' (General Agreement on Trade in Services, 1869 U.N.T.S. 183; 33 I.L.M. 1167 (1994)).
[48] Yemen Company for Mobile Telephony-Sabafon v. The Government of the Republic of Yemen, PCA Case No. 2010-03; Turkcell İletişim Hizmetleri A.Ş. v. The Islamic Republic of Iran (UNCITRAL); Maxim Naumchenko, Andrey Poluektov and Tenoch Holdings Limited v. The Republic of India, PCA Case No. 2013-23; CC/Devas (Mauritius) Ltd. and ors. v. The Republic of India (CC/Devas v. India), PCA Case No. 2013-09; Deutsche Telekom AG v. The Republic of India, PCA Case No. 2014-10 (Deutsche Telekom v. India); Global Telecom Holding S.A.E. v. Canada, ICSID Case No. ARB/16/16; Huawei Technologies Co, LTD v. The Kingdom of Sweden, ICSID Case No. ARB/22/2.
[49] CC/Devas v India, PCA Case No. 2013-09, Award on Jurisdiction and Merits, 25 July 2016, 137, 146; Deutsche Telekom v. India, PCA Case No. 2014-10, Interim Award, 13 December 2017, 90-91.
[50] Deutsche Telekom v. India, PCA Case No. 2014-10, Interim Award, 13 December 2017, 90.
[51] The Mauritius–India bilateral investment treaty (BIT) provides under Article 11(3): ‘The provisions of this Agreement shall not in any way limit the right of either Contracting Party to apply prohibitions or restrictions of any kind or take any other action which is directed to the protection of its essential security interests, or to the protection of public health or the prevention of diseases in pests or animals or plants’. In contrast, the Germany–India BIT provides under Article 12: ‘Nothing in this Agreement shall prevent either Contracting Party from applying prohibitions or restrictions to the extent necessary for the protection of its essential security interests’, see CC/Devas v. India, PCA Case No. 2013-09, Award on Jurisdiction and Merits, 25 July 2016, 211; Deutsche Telekom v. India, PCA Case No. 2014-10, Interim Award, 13 December 2017, 225.
[52] CC/Devas v. India, PCA Case No. 2013-09, Award on Jurisdiction and Merits, 25 July 2016, 392, 416.
[53] Deutsche Telekom v. India, PCA Case No. 2014-10, Interim Award, 13 December 2017, 362; id., 375.
[54] id., 377.
[55] Global Telecom Holding S.A.E. v. Canada, ICSID Case No. ARB/16/16, Award of the Tribunal, 27 March 2020, 71.
[56] R Trichur, et al., ‘Ottawa delaying Wind Mobile deals on national security concern’, The Globe And Mail (14 June 2013) (https://www.theglobeandmail.com/report-on-business/security-concerns-delay-wind-deal/article12538800 (accessed 7 September 2023)).
[57] Global Telecom Holding S.A.E. v. Canada, ICSID Case No. ARB/16/16, Award of the Tribunal, 27 March 2020, 608.
[58] id., 612.
[59] Huawei Technologies Co, LTD v. The Kingdom of Sweden, ICSID Case No. ARB/22/2, Request for Arbitration, 7 January 2022, paras. 8, 45. It bears noting that not all host states share Sweden’s security concerns regarding Huawei: see A Satariano, ‘U.A.E. to Use Equipment From Huawei Despite American Pressure’, The New York Times (26 February 2019) (https://www.nytimes.com/2019/02/26/technology/huawei-uae-5g-network.html (accessed 7 September 2023)).
[60] id., para. 47.
[61] As alluded to above, it has been reported by the UK Department of Industry and Trade that Huawei submitted a notice of dispute against the United Kingdom in October 2022 under the China–United Kingdom BIT. Although details of the dispute remain unclear, it likely relates to the UK government’s decision to exclude Huawei from the rollout of 5G networks (pursuant to a designation notice issued under the Communications Act 2003) because of national security concerns (see J Ballantyne, ‘Huawei retains Simmons for treaty dispute with the UK’, Global Arbitration Review (13 July 2023) (https://globalarbitrationreview.com/article/huawei-retains-simmons-treaty-dispute-uk (accessed 7 September 2023)).
[62] Huawei Technologies Co, LTD v. The Kingdom of Sweden, ICSID Case No. ARB/22/2, Procedural Order No. 2, 26 September 2022; Procedural Order No. 3, 28 April 2023.
[63] Huawei Technologies Co, LTD v. The Kingdom of Sweden, ICSID Case No. ARB/22/2, Procedural Order No. 2, 26 September 2022, footnote 7.
[64] id., 10.
[65] See footnote 26, above.