The Permanent Court of Arbitration (PCA) has issued its award in the arbitration case between the Philippines and China. The Philippines had initiated arbitration proceedings against China in January 2013 under Annex VII to the United Nations Convention on the Law of the Sea (UNCLOS) “with respect to the dispute with China over the maritime jurisdiction of the Philippines in the West Philippine Sea”¹. The PCA tribunal has said that China does not have any ‘historic rights’ to the South China Sea and it has interfered with traditional Philippine fishing rights at Scarborough shoal². The Chinese reaction has been along expected lines with China declaring the award null and void. The ensuing days are sure to witness an increased degree of acrimony and a flurry of diplomatic activity with a lot of hyperbole considering the worldwide interest that this case has evoked in the recent past. A recapitulation of the important aspects of the case and the happenings of the recent past will lend the correct perspective to the likely fallout in the near future.

The South China Sea

The Dispute. Philippines and China are parties to an ongoing dispute over territorial claims wherein China’s proclaimed ‘Nine-Dash Line’ encompasses almost the entire expanse of the South China Sea. The dispute has been simmering in the area between China and the other claimants, namely the Philippines, Vietnam, Malaysia, Taiwan and Brunei, for the past four decades. All the claimants have occupied a number of features in the area with varying degrees of habitation and construction of both military and civilian facilities. In fact, the largest feature, Itu Aba is occupied by Taiwan. China’s recently ramped up construction and land reclamation activity in features that it occupies, has however added a new and sharper edge to this dispute. China’s aggressiveness in enforcing its claims by a variety of means has further complicated an already messy situation. To add to this potent mix, the US Navy has been carrying out frequent ‘Freedom of Navigation’ patrols to denounce the claims, not of only of China, but those of other countries as well.

The Filipino Stand. The Philippines had initiated the arbitration proceedings based on the following arguments³:-

1. China is not entitled to exercise what it refers to as ‘historic rights’.
2. The ‘nine-dash line’ has no basis under international law.
3. The various maritime features relied upon by China as a basis upon which to assert its claims in the South China Sea are not islands.
4. China has breached the Convention by interfering with the Philippines’ exercise of its sovereign rights and jurisdiction.
5. China has irreversibly damaged the regional marine environment.

The Chinese Stand. China had rejected the arbitration and maintained that the Tribunal had no jurisdiction in this matter. It had issued a position paper on 07 Dec 14 wherein it had stated that the arbitration concerned territorial sovereignty, which was beyond the scope of UNCLOS, and hence the PCA Tribunal had no jurisdiction in the matter⁴. The Tribunal had a number of hearings on the issue with the Philippines in attendance and observers from Australia, Indonesia, Japan, Malaysia, Singapore, Thailand, and Viet Nam. The tribunal had, in Oct 2015, ruled that the case was “properly constituted” under the UNCLOS and China’s non-appearance did not deprive the Tribunal of its jurisdiction⁵. China has since reiterated its stand of not participating in the proceedings and not agreeing to implementation of the subsequent award.

Developments Prior to the Award

Chinese Outreach. Notwithstanding its stated stand of non-participation in the Arbitration Proceedings at the PCA, China had gone into overdrive in garnering the support of various countries for its position that the tribunal lacks jurisdiction in the case and the ruling is therefore invalid. At last count, it had claimed the support of 60 countries in this issue⁶. However, according to Asian Maritime Transparency Initiative (AMTI), only eight countries had come out publicly in support of China’s position while the others have either publicly denied China’s claim or remained silent on the issue⁷. China had also reached out to the other claimants especially Malaysia and Vietnam with visits of important dignitaries to these countries. The Chief of the Malaysian Navy had also gone on record to say that the existing dispute over maritime territorial claims will not affect the relations between the militaries of the two countries⁸. It had also used various fora like the ASEAN and Shangri La dialogue to buttress its position. China’s influence was also visible when the foreign ministers of ASEAN withdrew an issued statement wherein they had expressed serious concern over the recent developments in the South China Sea⁹.

Change of Guard in the Philippines. The Philippines has recently elected a new President, Rodrigo Duterte, who had called for bilateral talks with China to resolve the South China Sea issue even before he had taken office¹⁰. This overture was also accompanied by public calls from influential Filipinos to negotiate bilaterally with China for resolving the dispute¹¹. China had also softened its aggression and permitted Filipinos to fish around the disputed Scarborough Shoal without being harassed by its Coast Guard. The Philippines also needs Chinese investment in infrastructure in the province of Mindanao to spur development, something Duterte is eager to kick start. It therefore appears that Duterte is looking to soften the aggressive stand that the previous administration under Benigno Aquino II had taken against China. In fact, he had also categorically stated that he was not ‘ready to go to war’ and that he would be ‘happy to have peace by just talking’¹². However, Duterte had recently made it clear that any talks with China will have to wait for the award by the PCA.

ASEAN and the DoC. The ASEAN countries involved in the dispute had signed the ‘Declaration on the Conduct of Parties in the South China Sea’ in 2002 which expressly states that “the Parties concerned undertake to resolve their territorial and jurisdictional disputes by peaceful means, without resorting to the threat or use of force, through friendly consultations and negotiations by sovereign states directly concerned, in accordance with universally recognized principles of international law”. Malaysia and Vietnam have emphasized on dialogue to find a way forward on the contentious dispute. The internal dissension between the ASEAN nations, as witnessed by the recent withdrawal of an issued statement by the foreign ministers, has precluded the development of a cohesive approach to resolution of this dispute.

Extra-Regional Stakes. Meanwhile, the USA, which claims not to take any stand on the issue of sovereignty in the disputes of the South China Sea, continues to maintain a large naval presence in the area. It has also repeatedly carried out the so-called ‘Freedom of Navigation’ patrols since last October. USN ships are continuing to visit these waters, though not specifically for ‘Freedom of Navigation’¹³. The USS Ronald Reagan carrier strike group is also deployed in these waters. It appears that the US was preparing to dissuade China from any aggressive military retaliation in the event of an unfavourable award by the PCA. Other countries like France have also mooted conduct of patrols in the South China Sea to ‘contain the risk of conflict’¹⁴. India has all along maintained that the involved parties should abide by the 2002 Declaration on the Conduct of Parties in the South China Sea, and work together to ensure peaceful resolution of disputes under the framework of UNCLOS.

The Award

The Tribunal had earlier, in October 2015, decided that “China’s non-participation does not deprive the Tribunal of jurisdiction” and also rejected China’s argument that the dispute was about territorial integrity and hence did not concern UNCLOS. The Tribunal however, continued to take cognizance of the position paper put out by China on the issue in December 2014.

The Tribunal in its award issued on 12 Jul 16 on the merits of the Philippines’ claims has essentially decided the following in response to the 15 submissions by the Philippines¹⁵:-

1. There was no legal basis for China to claim ‘historic’ rights to resources within the sea areas falling within the ‘nine-dash line’. The Tribunal also noted that the question of pre-existing rights to resources (in particular fishing resources) was considered during the negotiations on the creation of the exclusive economic zone and that a number of States wished to preserve historic fishing rights in the new zone. This position was rejected and the final text of the Convention gives other States only a limited right of access to fisheries in the exclusive economic zone and no rights to petroleum or mineral resources.
2. None of the Spratlys islands is capable of generating extended maritime zones nor can they generate the same collectively as a unit. The Tribunal agreed with the Philippines that Scarborough Shoal, Johnson Reef, Cuarteron Reef, and Fiery Cross Reef are high-tide features and that Subi Reef, Hughes Reef, Mischief Reef, and Second Thomas Shoal were submerged at high tide in their natural condition. However, the Tribunal disagreed with the Philippines regarding the status of Gaven Reef (North) and McKennan Reef and concluded that both are high tide features. The Tribunal therefore concluded that all of the high-tide features in the Spratly are legally “rocks” that do not generate an exclusive economic zone or continental shelf.
3. Certain sea areas are within the EEZ of Philippines. Having found that Mischief Reef, Second Thomas Shoal and Reed Bank are submerged at high tide, form part of the exclusive economic zone and continental shelf of the Philippines, and are not overlapped by any possible entitlement of China, the Tribunal concluded that the Convention is clear in allocating sovereign rights to the Philippines with respect to sea areas in its exclusive economic zone. China had violated Philippines’ sovereign rights in its EEZ and Chinese law enforcement vessels had unlawfully created a serious risk of collision when they physically obstructed Philippine vessels.
4. The Tribunal found that China’s recent large scale land reclamation and construction of artificial islands at seven features in the Spratly Islands has caused severe harm to the coral reef environment and that China has violated its obligation under Articles 192 and 194 of the UNCLOS to preserve and protect the marine environment with respect to fragile ecosystems and the habitat of depleted, threatened, or endangered species. The Tribunal also found that Chinese fishermen have engaged in the harvesting of endangered sea turtles, coral, and giant clams on a substantial scale in the South China Sea, using methods that inflict severe damage on the coral reef environment. The Tribunal found that Chinese authorities were aware of these activities and failed to fulfill their due diligence obligations under the Convention to stop them.
5. The Tribunal lacked jurisdiction to consider the implications of a stand-off between Philippines marines and Chinese naval and law enforcement vessels at Second Thomas Shoal.

The award of the Tribunal is a stinging indictment of China’s ‘historic’ claims encompassed by the so-called ‘nine-dash’ line. China is a signatory to the UNCLOS which came into force in 1982 and hence its continued adherence to the ‘nine-dash’ line was contradictory since UNCLOS does not recognize such ‘historic rights’. The so called historical fishing and navigation by the Chinese in the South China Sea was also deemed to have been an exercise of ‘high seas freedoms’ since these areas were legally part of the high seas prior to UNCLOS. The Tribunal has thus turned China’s fallacious argument of ‘historic rights’ on its head since such claims are ‘incompatible’ with the maritime zones provided by the UNCLOS.

The Tribunal’s clear award was actually facilitated by a very adept framing of the case by the Philippines. The Philippines case was based purely on maritime rights and not on the issue of sovereignty which enabled the PCA to circumvent this contentious issue while delivering its award. The Tribunal also rejected the argument set out in China’s Position Paper that the Parties’ dispute is actually about maritime boundary delimitation and therefore excluded from dispute settlement by Article 298 of the Convention and a declaration that China made on 25 August 2006 pursuant to that Article. The Tribunal noted that a dispute concerning whether a State has an entitlement to a maritime zone is a distinct matter from the delimitation of maritime zones in an area in which they overlap.

The ruling also puts China’s plans of utilizing facilities in the Spratlys for its Anti-Access/Area Denial strategy at serious risk. China had also planned to utilize the South China Sea for building a manned deep-sea platform to hunt for minerals in the South China Sea which could also have a military purpose¹⁶. China also has a number of plans for further exploitation of the resources of the South China Sea as spelt out in its 13th Five Year Plan¹⁷. China will therefore have to re-visit its strategy for the South China Sea after this ruling since execution of its future plans will face severe opposition from the other states.

The Tribunal has also clearly decided that none of the features in the Spratlys earn maritime zones as mandated by UNCLOS since they do not qualify as islands and are rocks at best. The Tribunal has also decreed that all historic economic activity was only ‘extractive’ and the temporary use of these features does not amount to inhabitation. Moreover, the current human presence and facilities on these features require outside support precluding the entitlement of Article 121 of UNCLOS regarding islands wherein they have to sustain stable human habitation in their natural condition. This cast iron judgement, therefore, prevents any change of the current status of these features into islands in the future.

The Tribunal has also awarded certain sea areas to the Philippines as its EEZ. Consequently, China’s earlier stance of enforcing restrictions on the ‘Freedom of Navigation’ in these waters was illegal and vindicates the stand taken by the US and other states. The Philippines has recently stated that they were willing to undertake joint exploration of this area for mutual benefit¹⁸.

China’s stand towards the arbitration has been one of defiance against the existing international order. China is a permanent member of the United Nations Security Council and is also a signatory to the UNCLOS. Its refusal to recognize the arbitration and the ensuing award, when viewed against its desire to be a leading player in the world, mandates further debate and action by the international community. This stand seems more duplicitous, especially when it demands other countries like India, to adhere to international treaties like the NPT, of which India is not a signatory.

Reactions to the Award

China: The Chinese Foreign Ministry in a statement has declared that the award is null and void and has no binding force and China neither accepts nor recognizes it¹⁹. The statement has been further burnished by reiteration of China’s continued stand of non-recognition of the jurisdiction of the tribunal and the arbitration. It also reiterates China’s stand of not accepting third party intervention in territorial disputes. The official statement is on expected lines though the coming days will see a ratcheting up of the rhetoric by the state sponsored media to fever pitch which will cater to the domestic nationalistic constituency. It may also serve to deflect the glare from the problems of the slowing economy and of the internal fissures that China is experiencing due to its internal policies.

Philippines: The Philippines has been rather muted in its official statement with the Secretary of Foreign Affairs saying that the award was under study and calling for ‘restraint and sobriety’ by all concerned²⁰. The Philippines seems to be taking a ‘softly softly’ approach so as not to ruffle Chinese feathers at this rather prickly moment. It also fits in with the earlier conciliatory statements of President Duterte for talks with China on the issue. The former Department of Foreign Affairs Secretary Albert del Rosario, who argued the Philippines case, has said that China has to ‘respect the rule of law’²¹. However, the fact that this is a clear win for Philippines, cannot be understated and this will likely have an echo in the national discourse with possible jingoistic overtones. It will require a calibrated approach from the new government to reign in overtly nationalistic sentiments which could aggravate the already precarious situation.

USA: The Americans have called for both parties to comply with their obligations under UNCLOS²². There is no specific reference to China’s violations of UNCLOS, which the US has yet to ratify. The US has also called for all claimants to work together to manage and resolve the dispute.

India: India’s statement was along expected lines and in accordance with its consistent stand wherein it has called for all States to resolve this dispute through peaceful means²³. It has also stressed on the importance of freedom of navigation and overflight as also unimpeded commerce. It also urged the parties to show respect for UNCLOS. It will be in India’s interest to closely monitor the future developments on this front, in the other claimant states, especially Vietnam.

Vietnam: Vietnam, in an official statement, has re-affirmed its ‘sovereignty over Hoang Sa (Paracel) and Truong Sa (Spratly) Archipelagoes, and over the internal waters and territorial sea and sovereign rights and jurisdiction over the exclusive economic zone and continental shelf’²⁴. Vietnam has very close economic relations with China which has been its largest trading partner for the last decade²⁵. The Communist Parties of the two nations also share very close links. China has also settled a maritime dispute with Vietnam in the Beibu Gulf. Consequently Vietnam will have to walk a fine line with China to resolve its dispute. Whether Vietnam will also resort to the arbitration route is a moot point.

The Seas Ahead

The South China Sea experiences fairly rough weather at this time of the year with typhoons lashing its coasts. The award by the tribunal follows in the wake of a super typhoon hitting the Chinese and Taiwanese coasts last week and compounds the damage brought on by this natural phenomenon. The unfavourable ruling is a major loss of face for China, both domestically and internationally. It is unlikely that China will withdraw from its current stand of claiming territorial sovereignty over the features of the South China Sea. The internal dynamics of China, considering the state of its economy, internal re-structuring and ongoing political initiatives like the anti-corruption campaign, require the current administration to exercise prudence in handling this situation. The possibility of adopting an aggressive stance to deflect the fallout from its domestic policies and buttress the image of a ‘strong’ China may serve the administration well for its domestic constituency but will severely damage its international credibility and upset the regional ‘applecart’.

The declaration of an Air Defence Identification Zone (ADIZ) has been talked about by a number of experts and has also not been ruled out by China till date. This will have the effect of imposing severe restrictions of military aircraft flying in the South China Sea. However, the immediate ability of China to aggressively enforce the ADIZ, considering available facilities in the features of the SCS, is also suspect since most of these facilities do not have the required permanent capabilities.

Some Chinese media have also talked about withdrawal from the UNCLOS as a reactionary measure²⁶. However, this seems to be more of posturing as China would dent its international credibility being a signatory to the UNCLOS.

The area could also witness an increased naval presence, especially, in the vicinity of Philippine occupied features, which would serve to send the message to the Philippines of the consequences of ‘messing’ with China. The past few weeks have seen an increase in naval presence with the Chinese fleet undertaking weapon firing and other exercises while the USS Ronald Reagan Carrier Strike Group remains deployed in the area. However, it is unlikely that the Chinese will undertake any venture which could raise the spectre of conflict.

On the other hand, the actions of the Philippines will also be closely watched as they have gained immensely from this award as the only nation to call China’s bluff. However, their need for Chinese investment and the current state of their military will weigh heavily on their future dealings with China. The American influence is another determining factor in Philippines calculus, which presently seems to be muted possibly because of the looming Presidential elections. If the recent indications of willingness for talks with China, from the Philippine President as also civil society, are anything to go by, the likelihood of escalation of tensions in the South China Sea may be minimized.

Notwithstanding the fulminations of China and the Philippines in the weeks to come, the South China Sea will continue to create headlines worldwide.

Endnotes

1. Press Release of PCA on Arbitration between the Republic of the Philippines and the People’s Republic of China, 27 Aug 13. https://pcacases.com/web/sendAttach/227. Accessed on 20 Aug 15.
2. Press Release of PCA on Arbitration between the Republic of the Philippines and the People’s Republic of China, 12 Jul 16.
   https://pca-cpa.org/wp-content/uploads/sites/175/2016/07/PH-CN-20160712-Press-Release-No-11-English.pdf. Accessed on 12 Jul 16.
3. Press Release of PCA on Arbitration between the Republic of the Philippines and the People’s Republic of China, 13 Jul 15. https://pcacases.com/web/sendAttach/227. Accessed on 20 Aug 15.
4. Position Paper of The Government Of The People's Republic Of China On The Matter Of Jurisdiction In The South China Sea Arbitration Initiated By The Republic Of The Philippines. 07 Dec 14. http://www.fmprc.gov.cn/mfa_eng/zxxx_662805/t1217147.shtml. Accessed on 04 May 16
5. Press Release of PCA on Arbitration between the Republic of the Philippines and the People’s Republic of China, 29 Oct 15. https://pcacases.com/web/sendAttach/227. Accessed on 01 Nov 15.
6. Foreign Ministry Spokesperson Lu Kang's Regular Press Conference on June 14, 2016. http://www.fmprc.gov.cn/mfa_eng/xwfw_665399/s2510_665401/2511_665403/t1372136.shtml. Accessed 20 Jun 16.
7. Arbitration Support tracker. http://amti.csis.org/arbitration-support-tracker/. Accessed on 08 Jul 16.
8. ‘RMN Chief: Maritime Challenges Won't Affect Malaysia-China Ties’, Tho Xin Yi. 24 May 16. ww.thestar.com.my/news/nation/2016/05/24/rmn-chief-maritime-challenges-wont-affect-malaysia-china-ties/. Accessed on 25 May 16.
9. ‘Southeast Asian Countries Retract Statement Expressing Concerns On South China Sea’, Rozanna Latiff, Jun 15, 2016. http://www.reuters.com/article/us-southchinasea-asean-idUSKCN0Z10KX. Accessed on 16 Jun 16.
10. Duterte’s Proposed ‘Bilateral Talk’ Calms China’s Aggression In South China Sea. Noel Tarrazona on June 8, 2016 in Asia Times News & Features, Southeast Asia. http://atimes.com/2016/06/dutertes-proposed-bilateral-talk-calms-chinas-aggression-in-south-china-sea/. Accessed on 09 Jun 16
11. Philippine Politicians, Experts, Opinion Leaders Call for Independent Foreign Policy, Bilateral Talks with China on South China Sea, Wang Wen and Yang Tianmu. 09 Jun 16.
    http://news.xinhuanet.com/english/2016-06/09/c_135423268.htm. Accessed on 09 Jun 16
12. Philippine President Duterte Aims "Soft-Landing" In Talks with China, 07 Jul 15. http://www.globaltimes.cn/content/992784.shtml. Accessed on 07 Jul 16
13. U.S. Navy Destroyers Stalk China's Claims in South China Sea, David Larter, Navy Times. 06 July, 2016. http://www.navytimes.com/story/military/2016/07/06/us-navy-destroyers-stalk-chinas-claims-south-china-sea/86777268/. Accessed on 07 Jul 16
14. ‘France to Push for Coordinated EU Patrols in South China Sea’, David Roman, 05 Jun 16. http://www.bloomberg.com/news/articles/2016-06-05/france-to-push-for-coordinated-eu-patrols-in-south-china-sea. Accessed on 06 Jun 16
15. Press Release of PCA on Arbitration between the Republic of the Philippines and the People’s Republic of China, 12 Jul 16.
    https://pca-cpa.org/wp-content/uploads/sites/175/2016/07/PH-CN-20160712-Press-Release-No-11-English.pdf. Accessed on 12 Jul 16.
16. ‘China Is Planning a Massive Sea Lab 10,000 Feet Underwater’.
    http://www.bloomberg.com/news/articles/2016-06-07/china-pushes-plan-for-oceanic-space-station-in-south-china-sea. Accessed on 10 Jun 16
17. "Thirteen Five Year Plan" Blue Aspect. 08 Mar 16. http://www.cima.gov.cn/_d276820512.htm. Accessed on 17 May 16.
18. Philippines willing to share South China Sea, 08 Jul 16.
    http://www.freemalaysiatoday.com/category/world/2016/07/08/philippines-willing-to-share-south-china-sea/. Accessed on 11 Jul 16.
19. Statement of China's Foreign Ministry on award of South China Sea arbitration initiated by Philippines. 12 Jul 16. http://news.xinhuanet.com/english/2016-07/12/c_135507744.htm
    Accessed on 12 Jul 16.
20. Statement Of The Secretary Of Foreign Affairs. 12 July 2016.
    http://www.dfa.gov.ph/index.php/newsroom/dfa-releases/9900-statement-of-the-secretary-of-foreign-affairs-2. Accessed on 12 Jul 16
21. ‘Ex-DFA Sec. del Rosario calls on China to respect tribunal ruling’, 13 Jul 16. http://www.gmanetwork.com/news/story/573464/news/nation/ex-dfa-sec-del-rosario-calls-on-china-to-respect-tribunal-ruling. Accessed on 13 Jul 16.
    - See more at: http://www.gmanetwork.com/news/story/573464/news/nation/ex-dfa-sec-del-rosario-calls-on-china-to-respect-tribunal-ruling#sthash.RUPsV5CO.dpuf
22. Decision in the Philippines-China Arbitration, Press Statement, John Kirby, Assistant Secretary and Department Spokesperson, Bureau of Public Affairs, Washington, DC. 12 Jul 2016. http://www.state.gov/r/pa/prs/ps/2016/07/259587.htm. Accessed on 12 Jul 16
23. Statement on Award of Arbitral Tribunal on South China Sea Under Annexure VII of UNCLOS. 12 Jul 16.
    http://mea.gov.in/press-releases.htm?dtl/27019/Statement_on_Award_of_Arbitral_Tribunal_on_South_China_Sea_Under_Annexure_VII_of_UNCLOS. Accessed on 12 Jul 16
24. Remarks of the Spokesperson of the Ministry of Foreign Affairs of Viet Nam.
    http://www.mofa.gov.vn/en/tt_baochi/pbnfn/ns160712211059. Accessed on 12 Jul 16
25. ‘China, Vietnam to fulfil trade target of $100b in 2016’. Xinhua, 2016-03-09. http://www.chinadaily.com.cn/business/2016-03/09/content_23791827.htm. Accessed on 03 Jun 16.
26. Denouncing UNCLOS Remains Option for China after Tribunal Ruling, Stefan Talmon. Global Times, 03 Mar 16. http://www.globaltimes.cn/content/971707.shtml. Accessed on 28 Jun 16

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Published Date: 14^th July 2016, Image Source: http://www.freemalaysiatoday.com
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of the Vivekananda International Foundation)