South China Sea

Tribunal Issues Landmark Ruling in South China Sea Arbitration

By Robert D. Williams
Tuesday, July 12, 2016, 11:28 AM

The wait is over: a judgment has been issued in the Philippines v. China South China Sea arbitration. A five-judge tribunal constituted under the Permanent Court of Arbitration (PCA) in The Hague has released its much-anticipated Award concerning the Philippines’ challenge to a number of China’s maritime claims and activities in the region. The Philippines initiated the arbitration in January 2013 under the dispute settlement procedures of Annex VII to the 1982 United Nations Convention on the Law of the Sea (UNCLOS).

The unanimous, 501-page Award and the eleven-page press release from the PCA can be found here.

Bottom line: A nearly across-the-board win for the Philippines, and a searing verdict on the lawfulness of China’s artificial island construction and other actions in the South China Sea. 

Summary of Key Claims and Holdings

The Philippines’ claims fell into four general categories. The ruling of the Tribunal on each category of claims is summarized below: 

1. The broadest claim was a challenge to China’s “nine-dash line” covering most of the South China Sea. China has never clarified whether the line represents a claim to the islands within the line and their adjacent waters; a boundary of national sovereignty over all the enclosed waters (including, but not limited by, the land features inside the line); or a “historic” claim of sovereignty or some other set of historic rights to the maritime space within the line. The Philippines sought a declaration that the countries’ respective rights and obligations regarding the waters, seabed, and maritime features of the South China Sea are governed by UNCLOS. As such, China’s claims based on any “historic rights” to waters, seabed, and subsoil within the nine-dash line are contrary to UNCLOS and invalid. (See Table: Claims 1 and 2)

Holding: UNCLOS “comprehensively” governs the parties’ respective rights to maritime areas in the South China Sea. Therefore, to the extent China’s nine-dash line is a claim of “historic rights” to the waters of the South China Sea, it is invalid. 

Reasoning: Whatever historic rights China may have had were extinguished when UNCLOS was adopted, to the extent those rights were incompatible with UNCLOS. 

2. The Philippines sought a determination as to whether certain land features in the Spratly Islands claimed by both China and the Philippines are properly characterized as islands, rocks, low tide elevations (LTEs), or submerged banks. Under UNCLOS, an “island” generates both a territorial sea of 12 nautical miles and an exclusive economic zone (EEZ) of up to 200 nautical miles, subject to delimitation of a maritime boundary with any other countries’ overlapping territorial seas or EEZs. A “rock” is entitled to a territorial sea no greater than 12 nautical miles, but not an EEZ. LTEs and submerged banks do not generate any such entitlements. (See Table: Claims 3, 4, 6, and 7)

Holding: None of the features in the Spratly Islands generates an EEZ, nor can the Spratly Islands generate an EEZ collectively as a unit. As such, the Tribunal declared certain areas are within the Philippines’ EEZ and not overlapped by any possible Chinese entitlement. 

Reasoning: The baseline of analysis is what the features can sustain in their “natural condition” (i.e., not after construction of artificial islands, installation of desalination plants, etc.). Based on historical evidence, none of the features in the Spratly Islands can sustain either a stable community of people or economic activity that is not dependent on outside resources or purely extractive in nature. The current presence of personnel on the features is dependent on outside support and does not reflect the capacity of the features in their natural condition. 

3. The Philippines sought a declaration that China violated UNCLOS by interfering with the Philippines’ rights and freedoms within its EEZs. This includes preventing Philippine fishing around Scarborough Shoal, violating UNCLOS’s environmental protection provisions through construction and fishing activities that have harmed the marine environment (including at Scarborough Shoal, Second Thomas Shoal, and Mischief Reef), and by dangerously operating law enforcement vessels around Scarborough Shoal. (See Table: Claims 5, 8, 9, 10, 11, 12, and 13)

Holding: China violated the Philippines’ sovereign rights in its EEZ. It did so by interfering with Philippine fishing and hydrocarbon exploration; constructing artificial islands; and failing to prevent Chinese fishermen from fishing in the Philippines’ EEZ. China also interfered with Philippine fishermen’s traditional fishing rights near Scarborough Shoal (without prejudice to the question of sovereignty over Scarborough Shoal). China’s construction of artificial islands at seven features in the Spratly Islands, as well as illegal fishing and harvesting by Chinese nationals, violate UNCLOS obligations to protect the marine environment. Finally, Chinese law enforcement vessels unlawfully created a serious risk of collision by physically obstructing Philippine vessels at Scarborough Shoal in 2012. 

Reasoning: This set of holdings depended on the Tribunal finding that certain areas are within the Philippines’ EEZ and not subject to possible overlapping Chinese entitlements. It also depended on finding that activities such as island construction are, in accordance with China’s own public statements, not “military activities” and therefore not excluded from jurisdiction under UNCLOS. Once this was established, the Tribunal considered Chinese activities in the relevant areas and found that China had (a) interfered with Philippine petroleum exploration at Reed Bank, (b) purported to prohibit fishing by Philippine vessels within the Philippine EEZ, (c) protected and failed to prevent Chinese fishermen from fishing within the Philippine EEZ at Mischief Reef and Second Thomas Shoal, and (d) constructed artificial islands/installations at Mischief Reef without the Philippines’ authorization. As for Scarborough Shoal, regardless of who has sovereignty, both Philippine and Chinese fishermen have “traditional fishing rights” at the Shoal that were not extinguished by UNCLOS, and China violated the Philippines’ rights by entirely preventing Filipino fishermen from fishing near Scarborough Shoal after May 2012. In addition, Chinese artificial island construction has caused “severe harm to the coral reef environment” and China has failed to stop its nationals from engaging in “harmful” and “destructive” harvesting and fishing of endangered sea turtles, coral, and giant clams in violation of UNCLOS. Finally, Chinese law enforcement vessels violated maritime safety obligations by creating a serious risk of collision on two occasions in April and May 2012 during the Scarborough Shoal standoff. 

4. The Philippines sought a declaration that China’s recent actions, specifically its land reclamation and construction of artificial islands in the Spratly Islands after the arbitration was commenced, violated the obligations UNCLOS places on states to refrain from conduct that “aggravates and extends” a dispute while dispute resolution proceedings are pending. (See Table: Claim 14)

Holding: China has aggravated and extended the disputes through its dredging, artificial island-building, and construction activities. 

Reasoning: While these proceedings were pending, China has built a large island on Mischief Reed, an LTE within the Philippines’ EEZ; caused irreparable harm to the marine ecosystem; and permanently destroyed evidence of the natural condition of the features at issue. 

Table of Philippine Claims and Tribunal Rulings*

Submission Number

Philippines’ Claim

Jurisdictional Ruling

Merits Ruling

1

China’s maritime entitlements in South China Sea may not exceed those established by UNCLOS

(Deferred to merits stage)

 

Jurisdiction granted

 

Yes: UNCLOS comprehensively allocates rights to maritime areas

 

Philippines win

2

China’s “nine-dash line” claim is invalid to the extent it exceeds the limits established by UNCLOS

 

(Deferred to merits stage)

 

Jurisdiction granted

 

Yes: There is no legal basis for China to claim historic rights to waters in the South China Sea (so, to the extent that is what the nine-dash line means, it is invalid)

 

Philippines win

 

3

Scarborough Shoal generates no EEZ or continental shelf

 

Jurisdiction granted

Yes: Scarborough Shoal is a rock that generates no EEZ

 

Philippines win

 

4

Mischief Reef, Second Thomas Shoal, and Subi Reef are all LTEs that do not generate territorial seas or EEZs, and are not subject to appropriation

 

Jurisdiction granted

Yes: Mischief Reef, Second Thomas Shoal, and Subi Reef are LTEs

 

Philippines win

 

5

Mischief Reef and Second Thomas Shoal are part of the Philippines’ EEZ and continental shelf

 

(Deferred to merits stage)

 

Jurisdiction granted

 

Yes: Mischief Reef and Second Thomas Shoal are part of the EEZ and continental shelf of the Philippines

 

Philippines win

 

6

Gaven Reef and McKennan Reef (including Hughes Reef) are LTEs that generate no maritime entitlements, but may be used to determine baselines to measure territorial sea

 

Jurisdiction granted

No: Both Gaven and McKennan Reef are above water at high tide; they are rocks that generate territorial seas but no EEZ or continental shelf

 

Philippines loss

 

7

Johnson Reef, Cuarterton Reef, and Fiery Cross Reef generate no entitlements to EEZ or continental shelf

 

Jurisdiction granted

Yes: Johnson Reef, Cuarterton Reef, and Fiery Cross Reef are rocks that generate no EEZ or continental shelf

 

Philippines win

 

8

China has interfered with the Philippines’ exercise of sovereign rights over living and non-living resources within its EEZ and continental shelf

 

(Deferred to merits stage)

 

Jurisdiction granted

 

Yes: China has interfered with Philippine sovereign rights to fishing and hydrocarbon exploration within its EEZ

 

Philippines win

 

9

China has failed to prevent its nationals and vessels from exploiting the living resources in the Philippines’ EEZ

 

(Reserved to merits stage)

 

Jurisdiction granted

 

Yes: China failed to prevent Chinese fishermen from fishing within the Philippine EEZ

 

Philippines win

 

10

China has prevented Philippine fishermen from pursuing their livelihoods through traditional fishing activities around Scarborough Shoal

 

Jurisdiction granted

Yes: China violated the Philippines’ “traditional fishing rights” at Scarborough Shoal

 

Philippines win

 

11

China has violated UNCLOS’s environmental protection obligations at Scarborough Shoal and Second Thomas Shoal

 

Jurisdiction granted

Yes: China engaged in environmentally harmful fishing/harvesting practices at Scarborough Shoal and Second Thomas Shoal

 

Philippines win

 

12

China’s occupation and construction on Mischief Reef violate UNCLOS provisions on artificial islands and environmental protection, and are unlawful acts of attempted appropriation

 

(Deferred to merits stage)

 

Jurisdiction granted

 

Yes: Environmental protection provisions were violated at Mischief Reef; artificial island construction violated Philippine sovereign rights within its EEZ; the “appropriation” claim is moot because Mischief Reef is an LTE not capable of appropriation

 

Philippines win

 

13

China has violated UNCLOS by dangerously operating law enforcement vessels creating serious risk of collision near Scarborough Shoal

 

Jurisdiction granted

Yes: China violated UNCLOS and other treaty provisions on maritime safety

 

Philippines win

 

14

China has unlawfully aggravated and extended the dispute by interfering with the Philippines’ rights of navigation near Scarborough Shoal, preventing the rotation and resupply of Philippine personnel stationed at Second Thomas Shoal, and endangering the health of the personnel there

 

(Deferred to merits stage)

 

Jurisdiction granted in part, denied in part

Yes: Although there is no jurisdiction over disputes involving military activities such as the Second Thomas Shoal standoff, China has aggravated/extended the disputes through recent large-scale land reclamation and artificial island construction in the Philippine EEZ

 

Philippines win

 

15

Going forward China shall respect the rights and freedoms of the Philippines under UNCLOS and comply with its duties under UNCLOS

 

(Deferred to merits stage)

 

Jurisdiction granted

 

Qualified yes: This claim simply asks China to do what it is required to do under UNCLOS; therefore, no further statement is necessary

 

 

* See p. 34-35 of Tribunal’s Award on Jurisdiction and Admissibility; p. 5 of the PCA’s 12 July 2016 Press Release; and p. 4 of this paper by Paul Gewirtz.

 

Initial Takeaways

1. Not many people predicted that the Philippines would all but run the table in this case. It’s hard to imagine a much more favorable outcome for their legal team.

2. One of the ironies of the Award is that China has vociferously argued in public statements that it is not “militarizing” the South China Sea and that its actions there are for civilian purposes. Those claims turned out to be crucial to the Tribunal’s conclusion that it had jurisdiction to consider the legality of certain Chinese actions such as construction of artificial islands in the South China Sea, because Article 298(1)(b) of UNCLOS excludes disputes concerning “military activities” from compulsory dispute settlement. Despite China’s non-participation in the proceedings, the Tribunal went out of its way to review the December 2014 position paper issued by China’s Ministry of Foreign Affairs as well as numerous public statements of Chinese leaders. This was an example of where those public statements worked against China’s legal interests in the arbitration.

3. The Tribunal rejected the possibility that China could claim the entirety of the Spratly Islands as a single archipelagic feature, as suggested in recent statements by the Ministry of Foreign Affairs as well as a white paper issued last month by the Chinese Society of International Law. As Julian noted earlier, this was a bit of a preemptory legal strike against “any Chinese attempt to draw ‘straight baselines’ around the Spratlys and thus treat the whole area as a single entity for generating maritime rights.”

4. Of all the rulings on the status of features in the Spratly Islands, perhaps none will generate more discussion than the conclusion that Itu Aba (Taiping Island) is a rock and not an island. Many observers thought that Itu Aba, the largest naturally occurring land feature in the Spratly Islands, had the strongest claim to being deemed an island entitled to both a territorial sea and an EEZ. The concepts the Tribunal employed to determine what makes something a “rock[] which cannot sustain human habitation or economic life of [its] own” are likely to guide future legal determinations of this character.

It will take time to digest this portion of the opinion, but the Tribunal’s “habitability and economic life” factors seem to include:

  • The objective capacity of the feature in its natural condition (i.e., “without external additions or modifications” and without outside support), to sustain, over an extended period of time, either
    • (a) a stable community of people for whom the feature constitutes a home and on which they can remain, or
    • (b) economic activity that is not
      • (i) dependent on outside resources, or
      • (ii) purely extractive in nature without the involvement of a local population.
  • Factors contributing to the natural capacity of a feature to do so “include the presence of water, food, and shelter in sufficient quantities to enable a group of persons to live on the feature for an indeterminate period of time.”
  • In assessing these “capacity” factors, the Tribunal stated, “the most reliable evidence of the capacity of a feature will usually be the historical use to which it has been put.” Applying that standard here, the Tribunal saw “no indication that anything fairly resembling a stable human community has ever formed on the Spratly Islands. Rather, the islands have been a temporary refuge and base of operations for fishermen and a transient residence for labourers engaged in mining and fishing.”   

5. Given its sweeping conclusions favoring the Philippines, the Award may seem to have nothing positive in it for China.  But the Tribunal offered an important qualification to its judgment, and perhaps a bit of an olive branch toward the end of a decision it knew would not be well received in Beijing.  We should not assume, said the Tribunal, that these disputes are the product of bad faith on the part of the PRC; rather, they are the result of basic disagreements about respective rights and obligations and the applicability of UNCLOS.  From paragraph 1198 of the Award:

“The root of the disputes presented by the Philippines in this arbitration lies not in any intention on the part of China or the Philippines to infringe on the legal rights of the other, but rather—as has been apparent throughout these proceedings—in fundamentally different understandings of their respective rights under the Convention in the waters of the South China Sea.  In such circumstances, the purpose of dispute resolution proceedings is to clarify the Parties’ respective rights and obligations and thereby to facilitate their future relations in accordance with the general obligations of good faith that both governments unequivocally recognise.”   

6. Where does this leave us? China’s position all along with respect to these proceedings can be summed up as “no acceptance, no participation, no recognition, and no implementation.” The PRC Ministry of Foreign Affairs predictably wasted no time releasing a statement declaring that “the award is null and void and has no binding force.” The Philippine Foreign Affairs Secretary welcomed the decision, stating: “The Philippines strongly affirms its respect for this milestone decision as an important contribution to ongoing efforts in addressing disputes in the South China Sea.” No surprises here, especially given that the Tribunal resolved virtually all the key issues in favor of the Philippines. For its part, the U.S. State Department issued a measured statement remarking that “[t]he decision today by the Tribunal in the Philippines-China arbitration is an important contribution to the shared goal of a peaceful resolution to disputes in the South China Sea.” 

As these statements suggest, the issuance of this Award by no means puts to rest the disputes or the tensions in the South China Sea. The arbitration was never going to resolve issues of sovereignty over the islands and rocks in the South China Sea, because disputes over territorial sovereignty are beyond the jurisdiction of an UNCLOS Tribunal. And since the Tribunal has no power to enforce its nominally binding decision, questions now turn to what any form of “implementation” might look like and the effect this ruling will have on future negotiations over territorial sovereignty.

China, the Philippines, ASEAN countries, and the United States face a range of strategic questions about the best way forward. Will Beijing demonstrate its disregard for the decision by engaging in land reclamation at Scarborough Shoal or declaring an Air Defense Identification Zone in the South China Sea, as some have predicted? Will it continue to insist on conditioning any future bilateral negotiations with the administration of new Philippine President Rodrigo Duterte on his government’s rejection of the Tribunal’s Award? Will it worry that some of these behaviors will push the Philippines and other ASEAN nations closer to the United States? Will we see the U.S. Navy conducting “pure” freedom of navigation operations (FONOPs) within 12 nautical miles of the Spratly Island features the Tribunal says are not entitled to a territorial sea?

There is much to digest here and much more left to shake out. National governments will be under pressure to respond quickly, but let’s hope they first take the time to carefully read the Tribunal’s mammoth 501-page decision.