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Background Briefing: South China Sea: Philippines Takes Case to UN - 1 Carlyle A. Thayer January 23, 2013

[client name deleted] Q1. The Philippines announced today that it is taking the South China Sea issue to an UNCLOS tribunal (see story below). Does this change anything? Will China just refuse to participate, and in those circumstances, the tribunal would be fairly meaningless? Philippines sends China to UN arbitral tribunal English.news.cn 16:32:51 2013-01-22

MANILA, Jan. 22 (Xinhua) -- The Philippine Department of Foreign Affairs (DFA) announced Tuesday that the country had brought the South China issue to the Arbitral Tribunal under the United Nations Convention on the Law of the Sea (UNCLOS). Philippine Foreign Secretary Del Rosario said at a press conference on Tuesday that the DFA handed a note verbale to Chinese ambassador Ma Keqing Tuesday afternoon. ANSWER: China opted out of arbitral clauses of UNCLOS when it ratified the convention. Nonetheless, the Arbitral Tribunal can take on a submission by the Philippines and issue an award. If this award supported the Philippines, it would be on better legal and moral grounds than China. By taking this action the Philippines is defying China whose deputy foreign minister, Fu Yuing, told Secretary del Rosario not to internationalize their dispute by (a) going to the UN (b) raising it with third parties including allies [read the US] and (c) not to hold high-profile public press conferences. Q2. China is not covered by the mandatory dispute resolution mechanisms of ITLOS? ANSWER: Yes in a declaration made on August 25, 2006, after ratification, China declared that it “does not accept any of the procedures provided for in Section 2 of Part XV of the Convention with respect to all the categories of disputes referred to in paragraph 1 (a) (b) and (c) of Article 298 of the Convention.”

2 Part XV, Article 297 (invoked by the Philippines) includes four choices for arbitration: International Tribunal for the Law of the Sea; International Court of Justice; an arbitral tribunal; and a special arbitral tribunal. Article 298 includes (a) delimitation of territorial sea, (b) delimitation of EEZ and (c) delimitation of the continental shelf. Q3. Are there no practical consequences if China were to ignore an advisory opinion? ANSWER: Yes. But China’s 9 dash line claim would be undermined. From my reading of UNCLOS any signatory has the right to ask for a ruling on the interpretation of UNCLOS to an arbitral tribunal provided it has notified the other party(ies) to the dispute. The Philippines, after notifying China, can lodge an application for an arbitral tribunal. China is required to respond. The Tribunal is composed of 5 persons, one nominated by each party and the other three by mutual agreement. The Arbitral Tribunal has the power to determine whether it has jurisdiction over the matters brought before it. If these conditions are met “the award shall be final… it shall be complied with by the parties to the dispute” (Annex VII, Article 11). But China cannot be compelled to participate in arbitral proceedings because of its Declaration of August 25, 2006.

Suggested citation: Carlyle A. Thayer, “South China Sea: Philippines Takes Case to UN - 1,” Thayer Consultancy Background Brief, January 23, 2013.

Thayer Consultancy
ABN # 65 648 097 123

Background Briefing: South China Sea: Philippines Takes Case to UN - 2 Carlyle A. Thayer January 23, 2013

[client name deleted] Foreign Secretary of Philippines announced the Philippines will unilaterally bring its Scarborough Shoal dispute wit China to the International Tribunal on the Law of the Sea (ITLOS) in spite of Beijing’s rejection. Some cast doubt that ITLOS has no power in solving the dispute in the case that one of the parties in the dispute disapproves. So, what's behind the move of Philippines and how could it affect the situation of South China Sea dispute? What is your assessment? ANSWER: China opted out of the binding dispute settlement mechanism clauses of UNCLOS just after it ratified the convention. Nonetheless, the UNCLOS arbitral tribunal can take on a submission by the Philippines and issue an award. If this supported the Philippines, the Philippines would be on better legal and moral grounds than China. By taking this current action the Philippines is defying China whose deputy foreign minister, Fu Ying, told Secretary del Rosario not to internationalize their dispute by (1) going to the UN, (2) raising it with third parties including allies [read the US], and (3) not to hold high-profile public press conferences. In other words, the Philippines has opened a legal front against Chinese wishes. China’s demand that the South China Sea not be internationalized is now dead in the water.

Suggested citation: Carlyle A. Thayer, “South China Sea: Philippines Takes Case to UN - 2,” Thayer Consultancy Background Brief, January 23, 2013.

Thayer Consultancy
ABN # 65 648 097 123

Background Briefing: South China Sea: Philippines Takes Case to UN - 3 Carlyle A. Thayer January 23, 2013

[client name deleted] Q1. What is your analysis of the Philippines' legal action against China? ANSWER: The Philippines is pursuing a three-track approach to its territorial disputes with China in the South China Sea (West Philippine Sea) – diplomatic, political and legal. The Philippines is making four claims. First, that China’s 9-dash line is illegal under international law. Second, China has occupied and built structures on submerged banks, reefs and low tide elevations in the South China Sea and illegally claims that these are “islands” under international law. Third, China has illegally interfered with the Philippines’ exercise of sovereign jurisdiction within its legal maritime zones. Fourth, the Philippines is seeking a judgment in international law on matters that China has not excluded from consideration. In 2006, China issued a declaration exempting itself from compulsory arbitration by UNCLOS. Q2. Why would Manila choose to challenge Beijing that way? ANSWER: The Philippines first raised territorial disputes with China in 1995. The Philippines now claims it has “exhausted almost all political and diplomatic avenues for a peaceful negotiated settlement of its maritime dispute with China.” If the Philippines took no action, it would appear to be acquiescing to the enforcement of Chinese jurisdiction by its civilian surveillance ships. China has annexed Scarborough Shoal by maintaining a continuous deployment of surveillance ships there and erecting a barrier across the mouth of the shoal. Chinese fishermen continue to fish illegally in Philippines’ waters. Q3. Will the Philippines be able to take China to court? ANSWER: UNCLOS makes provision for four dispute settlement mechanisms: the International Tribunal for the Law of the Sea, the International Court of Justice, Arbitral Tribunal and Special Arbitral Tribunal. The Philippines is following the procedures set out under UNCLOS. It has notified China and the UN Secretary General that is it lodging a claim with the Arbitral Tribunal. China has the right to respond or not. Q4. How much chance does the Philippines have? ANSWER: When states signed UNCLOS they agreed to compulsory dispute settlement. First, states were required to settle the dispute bilaterally. If no

2 agreement was reached, a state could unilaterally take its case to a court or a tribunal which has jurisdiction over the matter in dispute. When a state signed UNCLOS it was given the opportunity to indicate which method of dispute settlement it preferred – arbitration by a tribunal or adjudication by a court. In the case that the Philippines is making, the matter will be brought before the Arbitral Tribunal because neither China nor the Philippines have designated their preferred dispute settlement mechanism. It is likely that in the first instance the Arbitral Tribunal will determine if it has jurisdiction, that is, whether the claim made by the Philippines involves an interpretation or application of UNCLOS. An Arbitral Tribunal can determine whether a feature is an island, rock or low tide elevation under international law. More importantly, the Arbitral Tribunal can determine whether China has illegally interfered with the Philippines’ sovereignty and sovereign jurisdiction in its EEZ. The Tribunal will base its decision on international law including UNCLOS. Under arbitration the Tribunal’s decisions are binding on all parties. On August 25, 2006 China issued a statement that it does not accept the compulsory dispute settlement procedures of any of the four mechanisms in matters related to the delimitation of the territorial sea, exclusive economic zone and continental shelf. The Philippines is arguing that its case involves matters that are separate and involve an interpretation of international law under UNCLOS. Q5. Is it possible that the ITLOS will rule in favour of the Philippines? ANSWER: ITLOS will not be directly involved in hearing the case brought by the Philippines. China has already opted out of binding dispute settlement. The Arbitral Tribunal could rule in favour of the Philippines by reaffirming that its baseline, territorial sea, contiguous, EEZ and continental shelf conform to international law. This would undermine China’s claims based on its 9-dash line map. Q6. What can Vietnam learn from the Philippines' action? ANSWER: The Philippines has carefully chosen highly specific legal aspects of its dispute with China to take the case to the UN. Any decision by an Arbitral Tribunal that undermined China’s 9-dash line claim would benefit Vietnam. Vietnamese lawyers could follow the precedent set by the Philippines. Vietnam may find that a decision in favour of the Philippines may have implications for Vietnam. Vietnam, for example, could not claim that structures which it has built on low tide elevations are rocks and islands under international law. And Vietnam might have to review its baselines in the southeast to ensure that they conform to international law.

Suggested citation: Carlyle A. Thayer, “South China Sea: Philippines Takes Case to UN - 3,” Thayer Consultancy Background Brief, January 23, 2013.

Thayer Consultancy
ABN # 65 648 097 123

Background Briefing: South China Sea: Philippines Takes Case to UN - 4 Carlyle A. Thayer January 23, 2013

[client name deleted] The Philippines has asked the tribunal of the UN Convention on the Law of the Sea to order a halt to China's activities that the Philippines says violates its sovereignty and declare that Beijing's claims are invalid. "The Philippines has exhausted almost all political and diplomatic avenues for a peaceful negotiated settlement of its maritime dispute with China," Foreign Affairs Secretary Albert del Rosario said. "To this day, a solution is still elusive. We hope that the arbitral proceedings shall bring this dispute to a durable solution." What is your assessment of the following issues: 1. Should Vietnam follow the Philippines’ footsteps in a bid to settle its own maritime dispute with China? ANSWER: Vietnam should wait for the outcome of the Philippines' move. Vietnam should first gauge China's reaction. Vietnam should see if the UNCLOS Arbitral Tribunal takes up the matter. The Philippines calculates it could take up to four years for a decision (award). Finally, Vietnam should wait and see what the final decision is. The Philippines's approach is to get a ruling on international law on specific matters. They may have relevance for Vietnam's claims in the East Sea but not to the Paracel Islands where sovereignty is at stake. UNCLOS only rules on disputes involving maritime jurisdiction not sovereignty. 2. How can the UN tribunal be of help to the Philippines, given that while all its decisions are binding on countries concerned, it has no power to enforce them? ANSWER: If the UNCLOS Arbitral Tribunal took up the case - which it can do with or without China's participation - and ruled favourably for the Philippines, this would undermine the legal basis of China's claim to "indisputable sovereignty" over the entire South China Sea. A legal decision of this nature would carry enormous normative and moral weight with the international community. It would provide legal grounds for any action the Philippines felt necessary to defend its sovereignty. 3. Do you think that the China will bite the bait, given that it has been consistent with its position that territorial disputes ought to be solved bilaterally?

2 ANSWER: The crux of the matter is that the Philippines claims it has virtually exhausted political and diplomatic discussions with China over seventeen years, from when China occupied Mischief Reef to July of 2012 when the last bilateral discussions were held. Just prior to this action, the Philippines invited China to join with it to settle this matter through international arbitration. China declined. China now has thirty days to respond and name its representative to the Tribunal. If it does not respond the chairman of the International Tribunal on the Law of the Sea has the authority to appoint four of the five members of the Tribunal. The Philippines has already submitted its nominee. Settling a dispute bilaterally does not preclude the two parties agreeing to either adjudication through a court (International Court of Justice for example) or arbitration (through an arbitral tribunal). 4. What is the Philippines really up to by taking this move? ANSWER: The Philippines is faced by at least two major dilemmas if it did not take action. First, China has virtually annexed Scarborough Shoal and other features in the South China Sea lying within the Philippines 200 nautical mile Exclusive Economic Zone and continental shelf. China has announced it will maintain a permanent deployment of civilian surveillance ships at Scarborough Shoal. China has put a barrier across the entrance to the shoal and prevents Filipino fishermen from entering. China regularly chases Filipino vessels away from the maritime zones around the features that it currently occupies (Mischief Reef, McKennan Reef, Gaven Reef, Subi Reef). No action by the Philippines would mean that China's presence would become permanent. China would also be free to occupy and build on other features in the area. Second, because progress on the ASEAN Code of Conduct has stalled there would be no restraints on China. If the Philippines continued bilateral discussions with China, China could continue to act badly. Weak powers have little in their armoury to stand up to big powers. The Philippines is using international law as one means to defy China. The Philippines has thrown down the gauntlet to China and other detractors, such as Cambodia, by moving to resolve a territorial dispute peacefully in accord with international law and UNCLOS in particular. If China refuses to participate in the arbitral process it will appear to be the party holding back a peaceful settlement. Make no mistake, the Philippines has mounted a major and sophisticated legal assault on China's claim to "historic rights" and "indisputable sovereignty." The Philippines is seeking a reaffirmation that under UNCLOS it is entitled to a territorial sea, contiguous zone, exclusive economic zone and continental shelf and that China's nine-dash line is unlawful. The Philippines is also seeking a judgment that the features that China has occupied and built on cannot claim the legal status of a rock or island entitled to a maritime zone. The Philippines argues that these features are either a natural part of its continental shelf or are low-tide elevations. These features therefore cannot be occupied and legally claimed by China or other states. The Philippines requests that the Arbitral Tribunal demand that China withdraw. Suggested citation: Carlyle A. Thayer, “South China Sea: Philippines Takes Case to UN - 4,” Thayer Consultancy Background Brief, January 23, 2013.

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ABN # 65 648 097 123

Background Briefing: South China Sea: Philippines Takes Case to UN - 5 Carlyle A. Thayer January 23, 2013

[client name deleted] Could you provide a brief assessment/analysis of Manila's decision to bring China and the South China Sea dispute to court? ANSWER: It has a been a long-standing ASEAN position on the South China Sea that territorial disputes should be settled directly by the countries concerned, peacefully and in accordance with international law including the United Nations Convention on Law of the Sea (UNCLOS). UNCLOS also enjoins its signatories to settle their disputes peacefully. It makes provision for compulsory binding dispute settlement under certain circumstances when a dispute cannot be settled by the parties directly concerned. Foreign Secretary Del Rosario, in announcing the Philippines' decision to seek as award by an Arbitral Tribunal under UNCLOS, declared that the Philippines has virtually exhausted the political and diplomatic avenues open to it. He pointed to seventeen years of fruitless discussions with China dating from 1995 when China first occupied Mischief Reef. By taking its territorial dispute to the UN Manila is defying Beijing's injunction not to internationalize the dispute. The Philippines has adopted a well-crafted legal strategy that carries a certain amount of risk. The Philippines is not attempting to resolve the matter of sovereignty, that is, which country owns what feature in the South China Sea. Rather the Philippines is seeking a legal award on the interpretation and application of UNCLOS. The Philippines seeks a determination that it is legally entitled to a maritime zone drawn from its baseline comprising a territorial sea, contiguous zone, Exclusive Economic Zone and continental shelf. The Philippines is also seeking a ruling that China's claim to the South China Sea based on its nine dash line u-shaped map is unlawful. Further, the Philippines is seeking a legal determination that low-tide elevations, features that are under water at high tide, on which China has constructed buildings and other facilities, cannot be classified as rocks or islands and generate a claim to a maritime zone. The Philippines argues that many of these low-tide elevations form part of its continental shelf and cannot be legally occupied by another state. The Philippines wants the Arbitral Tribunal to order China to withdraw. The Philippines claims that its sovereign rights have been unlawfully infringed upon by China. The Philippines accuses China of claiming an expanded maritime zone around its

2 occupied features well beyond what international law permits if the submerged features were in fact rocks or islands. The Philippines argues that China has illegally interfered with freedom of navigation by Philippines' vessels in waters around these low-tide elevations. Finally, the Philippines argues that the legal matters it is raising are separate from those areas where China has claimed exemption in a separate statement issued in 2006 after it ratified UNCLOS. In tabling its Notification and Statement of Claim on the West Philippine Sea, the Philippines duly notified China of the action it was taking. China has thirty days to respond. Whether or not China responds it appears that an Arbitral Tribunal is likely to be formed. An Arbitral Tribunal consists of five members including its president. All signatories to UNCLOS are entitled to nominate four persons to be available for service on an arbitral panel. Under UNCLOS, the Philippines and China are entitled to nominate one person each. The other three members, including the president, are to be jointly agreed between China and the Philippines. The Philippines nominated its candidate in its submission to the UN. If China declines to nominate, the head of the International Tribunal on the Law of the Sea is empowered to make suitable nominations to fill the vacancies. The first duty of the Arbitral Tribunal will be to determine if the Philippines' claim has legal merit or is an abuse of international law. The Tribunal will also have to determine whether it has jurisdiction over the matters raised in the Philippines' submission. If the Tribunal decides the Philippines has a valid legal claim and that the Tribunal has jurisdiction, it can proceed to hear the case even without China's participation. Its findings are binding on all parties. The actions by the Philippines contain risks. The Arbitral Tribunal could defer action and urge the Philippines and China to resume negotiations. The Tribunal could dismiss the Philippines claims as an abuse of international law and that it has no jurisdiction in the matter, both seem unlikely. The Philippines has calculated that it would take up to four years for a final decision to be reached. But whenever a decision is reached there is no enforcement provision in UNCLOS to make the parties comply. The Philippines likely has taken this step because of two reasons. First, China has to all intents and purposes annexed Scarborough Shoal. Its civilian paramilitary ships are now on permanent deployment. The shoal is roped off and Filipino fishermen and coast guard vessels have been denied entry. Second, progress on a code of conduct has stalled and without such a code China will be unconstrained in its actions. Philippine inaction would have meant permanent Chinese occupation and settlement on rocks and submerged features falling within its maritime zone and a loss of sovereignty. The Philippines' action is a bold challenge to China's declaration of indisputable sovereignty over the South China Sea. The appeal to the UNCLOS Arbitral Tribunal, if decided in favour of the Philippines, would undermine China's current claim. This would likely embolden Vietnam and Malaysia to mount similar legal challenges to China.

3 Suggested citation: Carlyle A. Thayer, “South China Sea: Philippines Takes Case to UN - 5,” Thayer Consultancy Background Brief, January 23, 2013.

Thayer Consultancy
ABN # 65 648 097 123

Background Briefing: South China Sea: Philippines Takes Case to UN - 6 Carlyle A. Thayer January 23, 2013

[client name deleted] We request your assessment of the decision by the Philippines to seek a legal resolution of its territorial dispute with China. Also, how do you think the actions by the Philippines will affect its relations with China? ANSWER: The Philippines is calling China’s bluff. China repeatedly says it wants to resolve territorial disputes bilaterally yet it also claims it has “indisputable sovereignty” over the South China Sea. The Philippines Notification and Statement of Claim, lodged with the UN, challenges China on both accounts. First, the Philippines claims it has virtually exhausted diplomatic and political means to settle this issue with China. It points to seventeen years of fruitless discussions following China’s occupation of Mischief Reef in 1995 up to July 2012 when the last round of bilateral discussions with China were held. Second, the Philippines is challenging China’s claim to “indisputable sovereignty” on two fronts. On the first front, the Philippines is asking the UNCLOS Arbitral Tribunal to reaffirm that it has a right to draw baselines and thereby claim a territorial sea, contiguous zone, exclusive economic zone and continental shelf. At the same time the Philippines is asking the Arbitral Tribunal to declare China’s nine-dash line claim to the South China Sea, which cuts into the Philippines’s maritime zone, as unlawful. On the second front, the Philippines is challenging the legality of China’s occupation of features in the South China Sea and claiming sovereign jurisdiction over maritime zones in excess of what international law permits. The Philippines claims the features that China has occupied are largely low-tide elevations and a natural part of its continental shelf. The Philippines argues that no state can occupy and claim sovereignty over such features. The Philippines has also asked the Arbitral Tribunal to rule that Chinese-occupied features in the South China Sea are not islands and rocks in terms of international law and therefore are not entitled to a maritime zone. The Philippines has asked the Arbitral Tribunal to order China to withdraw from these features. China now has thirty days to respond to the Philippines’ claim. It can nominate its representative to the Arbitral Tribunal or it can absent itself from the case. If China opts out the Arbitral Tribunal can proceed on its own. Its members will be appointed by the chair of the International Tribunal on the Law of the Sea from a list of experts already nominated by signatories to UNCLOS. Each signatory can nominate four candidates. Decisions by the Arbitral Tribunal are binding on all parties, but there is

2 no enforcement mechanism. The Philippines estimates that it could take up to four years for a decision. The Philippines is openly defying China by internationalizing their territorial dispute. China has virtually annexed Scarborough Shoal by maintaining a permanent presence with its surveillance ships and by erecting a barrier to the shoal to prevent entry by Filipino fishermen and Philippines’ coast guard. China says its deployment will be permanent. Progress on ASEAN’s code of conduct with China has stalled. The Philippines has acted to prevent China from further encroachment on its sovereignty. It is a gamble because the Arbitral Tribunal must make two determinations before it hears the case. The first determination is that the Philippines claims is not an abuse of international law but has legal merits. Then the Arbitral Tribunal must determine that it has jurisdiction in this case. If the Arbitral Tribunal does go ahead and hears the case, it could well undermine China’s claim to “indisputable sovereignty” to the South China Sea. China is likely to react negatively to the Philippines initiative because it has legal implications for the other claimants to the South China Sea. China faces a dilemma on how to respond, should it engage legally and pursue a peaceful resolution of this dispute, or should China brazen it out and resort to intimidation.

Suggested citation: Carlyle A. Thayer, “South China Sea: Philippines Takes Case to UN - 6,” Thayer Consultancy Background Brief, January 23, 2013.

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