A New Legal Landscape in the South China Sea

We need to fully grasp the significance of the Philippines v. China verdict.

By Nguyen Ba Son

On July 12, 2016, the arbitral tribunal in the South China Sea arbitration case instituted under Annex VII of the United Nations Convention on the Law of the Sea (UNCLOS) between the Philippines and China handed out its final Award. It has been widely reported that the Philippines with this Award has scored a sweeping victory against China with regard to the latter’s maritime claims in the South China Sea. But describing this arbitration as a fight in which there is a winner and a loser belies the function of the dispute settlement system of UNCLOS. Nor does such a view properly appreciate the significance of the Tribunal’s ruling in the South China Sea disputes as well as its contribution to future cooperation in the interest of peace and prosperity in the region and beyond.

Authoritative Answers to Critical Legal Questions

As the Tribunal correctly observes, “[t]he root of the disputes […] lies not in any intention on the part of China or the Philippines to infringe on the legal rights of the other, but rather […] in fundamentally different understandings of their respective rights under the Convention in the waters of the South China Sea.”

Indeed, most of the Philippines’ 15 submissions placed before the Tribunal boil down to two key legal issues that have long bewildered international lawyers. These issues can be framed in two interrogative sentences as follows: “Is China’s claim to historic rights in the South China Sea compatible with UNCLOS so that it can exceed the limits of China’s maritime entitlements under the latter?” and “Can the tiny features in the Spratly Islands be classified as ‘fully entitled islands’ capable of generating an exclusive economic zone and continental shelf of their own?” To these closed questions, the respective “yes” and “no” answers by China and the Philippines have necessarily pitted them against each other.

It is against that background that one should perceive the purpose of UNCLOS dispute settlement system. Indeed, the very idea of a compulsory binding dispute procedure under UNCLOS — of which Annex VII arbitration is, in the absence of the parties’ decision to the contrary, the default mechanism — arose from a realistic awareness that states parties might possibly hold irreconcilable views in their interpretation and application of this treaty, such that a decision by a third party would be necessary, if not inevitable. Annex VII to UNCLOS also expressly addresses the situation of non-participation by one of the parties to the arbitration and provides that such non-participation will not constitute a bar to the proceedings.

The Tribunal in the South China Sea arbitration progressed exactly as designed and accomplished precisely what UNCLOS negotiators envisioned, a testimony to the effectiveness of UNCLOS dispute settlement system. Most importantly, the Tribunal has given useful answers to critical legal questions concerning the source and limits of maritime entitlement in the South China Sea. The Tribunal’s decision is authoritative, all the more so because it was reached unanimously with meticulous reasoning by five eminent law of the sea experts.

 Compliance and Recognition

The Tribunal, in its July 12 2016 Award, approved the Philippines’ arguments, declaring “that […] China’s claims to historic rights, or other sovereign rights or jurisdiction, with respect to the maritime areas of the South China Sea encompassed by the relevant part of the ‘nine-dash line’ are contrary to Convention and without lawful effect to the extent that they exceed the geographic and substantive limits of China’s maritime entitlements under Convention.” The Tribunal also found “that none of the high-tide features in the Spratly Islands generate entitlements to an exclusive economic zone or continental shelf.”

China, as expected, immediately decried the decision of the Tribunal just as it had done for months before. But irrespective of what China has argued, as a matter of law – and this is enshrined under UNCLOS and emphasized by the Tribunal itself – the Award is final and must be complied by the parties in good faith. It is also worth pointing out that the various arguments that China has repetitiously made so far in order to denounce the legitimacy of the arbitration proceeding have been fully addressed and persuasively rejected by the Tribunal.

Yet, there remains much skepticism about China’s possible compliance with the Award. The reason is twofold: China’s apparently fierce reactions to the arbitration and consequently the lack of a mechanism to deal with China’s possible non-compliance. While the former is not necessarily true in the long term, the latter to some extent misses the point.

So far, China has unrelentingly spoken in defiance of the Tribunal’s ruling. Should such an attitude have been translated into actions after the issuance of the Award, it would have indeed given rise to concern not only about peace and stability in the region but also about the rule of law in international relations. On the other hand, the very attitude of China toward to the arbitration amply demonstrates that China does care about the result of this arbitration and its subsequent impact on China’s future conduct. Otherwise, why does it not simply ignore the proceedings altogether? That the Tribunal disagreed with China on many issues has clearly upset Beijing.

From that perspective, China’s uproar is understandable. But as Jerome A. Cohen, a veteran specialist in Chinese law and politics, has observed, “China’s foreign policies and legal positions are not written in stone.” To this, one may add, China could sooner or later recognize the benefits of this arbitration and accordingly revise its long-held policy and positions in the South China Sea disputes. Of course, it may take some time for China to do so—just as in a domestic context, if an analogy were to be drawn, legislative amendments are not something that can happen overnight. The optimistic view of possible change in China’s behavior and conduct in the South China Sea is gaining more traction given the fact that China has been very careful not to take new provocative and escalatory acts on the ground.

That said, the Award is alleged to serve no more than a Pyrrhic victory for the Philippines given the lack of an enforcement mechanism. Such a realist view has long been discarded by generations of international lawyers. In the particular case of the South China Sea arbitration, that view misunderstands the significance of UNCLOS which, famously dubbed “a Constitution for the Oceans,” defines comprehensively the rights and obligations of states in different areas of the sea. Given the fact that activities at sea, in the nature of things, necessarily impinge upon each other, it is essential for every state to act within the bounds drawn by UNCLOS should the order in the oceans be preserved.

The final Award by the Tribunal authoritatively declares the limits of rights and obligations that China and the Philippines enjoy under UNCLOS, thus becoming an objective yardstick by which activities of these two parties, or for that matter of all states, in the South China Sea will be gauged. As such, the Award not only is technically binding upon the Philippines and China but also has practically erga omnes effect—it is recognized by virtually all states. In this regard, it is notable that the finality and binding nature of the Award has not been impugned by any country, except China. No country, regardless of how big or powerful it is, can undo this fact.

At the end of the day, it will be in the interest of China as well as other states that international obligations are honored. China’s compliance vel non with the award will be a litmus test of its avowed commitment to upholding international law, including UNCLOS, and to maintaining peace and stability in international relations. Compliance will help ensure a predictable and stable legal order in the South China Sea, which boasts important natural resources for the development of the coastal states and facilitates the movement of over 50 percent of the world’s merchant fleet tonnage.

Prospects for Future Cooperation

The Tribunal, somewhat modestly, stated that “the purpose of dispute resolution proceedings is to clarify the Parties’ respective rights and obligations and thereby to facilitate their future relations.” But the Award, as has been demonstrated, transcends the ambit of the bilateral disputes between the Philippines and China and has significant implications for future prospect of the region.

Indeed, by rendering unambiguous answers to various thorny questions, the Tribunal has, in no small measure, untangled the South China Sea disputes. A new legal landscape in the South China Sea has emerged with much greater clarity in terms of the maximum extent of the coastal states’ maritime entitlements. In the wake of the arbitration, the maritime zones of the Spratly Islands, which are disputed by virtue of the unsettled sovereignty question, are limited to the territorial seas of the high tide features. It follows that the coastal states now confidently enjoy full exclusive economic zones and continental shelves in the relevant parts of the South China Sea as established under UNCLOS.

Beyond the limits of the coastal states’ national jurisdiction will be the high seas where every state enjoys certain freedoms as provided under UNCLOS. The question of whether the seabed in the center of the South China Sea will become part of the area subject to the regime of common heritage of mankind will depend on the future submissions by the coastal states regarding their respective extended continental shelves.

The upshot is particularly important to determine the nature and scope of permissible activities in the South China Sea that states can engage in under UNCLOS as well as to inform future cooperation in the region. In the immediate future, the Award will shed light on the implementation of the Declaration on the Conduct of Parties in the South China Sea and the negotiations of a future Code of Conduct by ASEAN and China. In the longer run, with more clearly defined extent of their respective maritime rights and interests in the South China Sea, the coastal states should embark upon other cooperative endeavors, which may involve states outside the region and international organizations, in order to address the closely integrated issues in this semi-enclosed sea as mandated under UNCLOS.

With that, one cannot but accept the influence that the Tribunal has had on the future development of the South China Sea. It is now up to states to recognize this and implement the Award in good faith.

Nguyen Ba Son, PhD, is a lawyer based in Ho Chi Minh City, Vietnam, practicing public international law and international commercial law. He thanks his colleagues and friends for their help and assistance in writing this article. The views expressed here are his own and do not necessarily reflect the positions of any institution he was or has been associated with.

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