Journal of International Dispute Settlement, 2017, 8, 388–401

doi: 10.1093/jnlids/idw027
Advance Access Publication Date: 4 January 2017
Current Developments

The South China Sea Arbitration and the

Finality of ‘Final’ Awards
Stefan Talmon*

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ABSTRACT
On 12 July 2016, the arbitral tribunal constituted under Annex VII of the United
Nations (UN) Convention on the Law of the Sea (UNCLOS) issued its award in the
South China Sea Arbitration between the Philippines and China. According to Article
11 of Annex VII, the award of the arbitral tribunal shall be ‘final’. The provision reiter-
ates the general statement in Article 296(1) UNCLOS that any decision rendered by a
court or tribunal having jurisdiction under part XV, section 2, of UNCLOS shall be
‘final’. In its award, the tribunal decided a number of general questions of the law of
the sea, including the meaning of the term ‘rocks’ in and the relationship between
UNCLOS and customary international law. This article examines what ‘finality’ of an
arbitral award means with regard to decisions on such general questions of law or, in
other words, in what way such decisions can be considered ‘final’.

1. INTRODUCTION
1. On 12 July 2016, the arbitral tribunal constituted under Annex VII of the United
Nations (UN) Convention on the Law of the Sea (UNCLOS or the Convention) In
the Matter of the South China Sea Arbitration between the Republic of the Philippines
and the People’s Republic of China (the South China Sea Arbitration or, in short,
SCS Arbitration) issued its final Award.1 The arbitration concerned disputes between
the parties over maritime entitlements in the South China Sea. These disputes
included the status of certain maritime features in the South China Sea, the maritime
entitlements such features are capable of generating, and the lawfulness of certain ac-
tions by the People’s Republic of China (China or PRC) in the South China Sea
that were alleged by the Philippines to violate the Convention.2

* Institute for Public International Law, University of Bonn; St. Anne’s College; 20 Essex Street Chambers.
Email: talmon@jura.uni-bonn.de.
1 The Award of 12 July 2016, the Award on Jurisdiction of Admissibility of 29 October 2015, and all other
case documents are available on a website maintained by the Permanent Court of Arbitration (PCA) that
acted as registry in the proceedings <http://www.pcacases.com/web/view/7> accessed 6 December
2016.
2 On the SCS Arbitration, see, e.g. Bing Bing Jia and Stefan Talmon (eds), The South China Sea Arbitration:
A Chinese Perspective (Hart Publishing 2014); Shunmugam Jayakumar, Tommy Koh and Robert Beckman
(eds), The South China Sea Disputes and Law of the Sea (Edward Elgar Publishing 2014); Shicun Wu and
Keyuan Zou (eds), Arbitration Concerning the South China Sea: Philippines versus China (Routledge 2016).

C The Author 2017. Published by Oxford University Press. This is an Open Access article distributed under the terms of the
V
Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted reuse,
distribution, and reproduction in any medium, provided the original work is properly cited.

 388
 The South China Sea Arbitration  389

2. According to Article 11 of Annex VII, the award of the arbitral tribunal shall be
‘final’. The provision reiterates the general statement in Article 296(1) UNCLOS3
that any decision rendered by a court or tribunal having compulsory jurisdiction
under part XV, section 2, of UNCLOS shall be ‘final’. The arbitral tribunal repeatedly
referred to these provisions in its Award,4 and several States in their initial statements
on the award laid emphasis, inter alia, on its ‘final’ character.5
3. The tribunal in the South China Sea Arbitration, which had established its seat
in The Hague6 had to decide a number of general questions of international law. For

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example, the tribunal had to interpret treaty provisions such as Article 121(3) defin-
ing the terms ‘rocks’, ‘human habitation’ and ‘economic life of their own’; Article
281(1) requiring that recourse to further dispute settlement procedures under the
Convention had not been excluded by agreement between the parties; and Article
298(1) excluding from the tribunal’s jurisdiction disputes involving ‘historic titles’ as
well as disputes concerning ‘military activities’ and ‘law enforcement activities’. The
tribunal had to decide whether the concept of ‘historic rights’ or ‘historic titles’ could
exist side by side with the Convention; whether a dispute concerning the relationship
between the Convention and rules of customary international law constituted a dis-
pute concerning the interpretation or application of the Convention in terms of
Article 288(1); whether low-tide elevations could be appropriated; and whether
there could be traditional fishing rights in a State’s territorial sea.
4. According to the Latin proverb ‘Roma locuta, causa finita est’ once Rome, or
more precisely the Pope, has spoken the matter is finished. Can this maxim be applied
to the South China Sea Arbitration, i.e. can it be said once The Hague has spoken
these questions have been settled once and for all? This short article examines what
‘finality’ of an arbitral award means with regard to decisions on such general questions
of law or, in other words, in what way such decisions can be considered ‘final’.

2 . M EA N I NG OF F I NA L IT Y O F A R B IT R A L A WA R D S
5. Article 11 of Annex VII provides little guidance as to the meaning of the term
‘final’. The wording of the provision that the ‘award shall be final and without appeal’
shows, however, that finality does not preclude an appeal to another arbitral tribunal
or to an international or domestic court; otherwise, the express exclusion of an ap-
peals process would be superfluous.7 The provision that the award is final also does

3 UN Convention on the Law of the Sea, done at Montego Bay on 10 December 1982, entry into force on
16 November 1994, 1834 UNTS 397. Unless otherwise stated article references are to the arts of the
UNCLOS.
4 See SCS Arbitration, Award of 12 July 2016, paras 118 fn 32, 165, 1172 and 1180.
5 See Decision in the Philippines-China Arbitration, Press Statement by John Kirby, Assistant Secretary and
Department Spokesperson, Bureau of Public Affairs, Washington DC, 12 July 2016 <http://www.state.
gov/> accessed 6 December 2016; Australia supports peaceful dispute resolution in the South China Sea,
12 July 2016 <http://dfta.gov.au/> accessed 6 December 2016; Arbitration between the Republic of the
Philippines and the People’s Republic of China regarding the South China Sea, Final Award by the
Arbitral Tribunal, Statement by [Japanese] Foreign Minister Fumio Kishida, 12 July 2016 <http://www.
mofa.go.jp/> accessed 6 December 2016.
6 See SCS Arbitration, Award on Jurisdiction and Admissibility of 29 October 2015, paras 33, 34.
7 On the different meaning of ‘finality’ in the context of commercial arbitration, see David D Caron and Lee M
Caplan, The UNCITRAL Arbitration Rules: A Commentary (2nd edn, OUP 2013) 738–39 (emphasis added).
390  Journal of International Dispute Settlement

not exclude the arbitral tribunal itself from correcting its award, from interpreting its
award in case of controversy between the parties as regards the interpretation or
manner of implementation of the award,8 or from revising the award in special cir-
cumstances when new facts of decisive importance have been discovered.9
6. The Rules of Procedure of the arbitral tribunal in the South China Sea
Arbitration distinguish between the ‘final award’ and ‘interim, interlocutory or partial
awards’.10 In this context, the term ‘final award’ refers to the closing award or the last
award in time, if more than one award is rendered by the tribunal. It is in this sense

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that the PCA that acted as registry for the tribunal used the term in its press release
when it announced that ‘The Tribunal Sets Date for Issuance of Final Award’.11
7. The finality of an arbitral award is closely linked to the principle of res judi-
cata.12 Once a valid award has been rendered it has the status of res judicata between
the parties.13 The International Court of Justice (ICJ) stated: ‘That principle signifies
that the decisions of the Court are not only binding on the parties, but are final, in
the sense that they cannot be reopened by the parties as regards the issues that have
been determined, save by procedures, of an exceptional nature, specially laid down
for that purpose’.14 Three elements for the identification of the res judicata have
been identified: persona, petitum and causa petendi.15 If these three elements—the
parties, the claims and the grounds—are identical, the matter cannot be brought
again to an arbitral tribunal or international court. Finality of the award thus means
that the issues adjudicated by the tribunal in the South China Sea Arbitration, as a
rule, cannot be reopened by the Philippines and the PRC either before the present
or any other arbitral tribunal or international court.

3 . L A C K OF F IN A L IT Y O F JU D IC I A L P RO NO UN C EM EN TS O N
I N T E R N A T I O N A L LA W
8. While the tribunal’s award in the South China Sea Arbitration is final in a proced-
ural sense (procedural finality), it is not necessarily final with regard to the substan-
tive issues involved (substantive finality). In other words, a ‘final award’ is the last
award rendered on the issues in dispute between the parties; it is not necessarily the
last word on the legal questions at issue. An arbitral award, as any decision by an

8 See UNCLOS, Annex VII, art 12.

9 See Effect of Awards of Compensation Made by the UN Administrative Tribunal, Advisory Opinion, ICJ
Reports 1954, 47, 55. See also, generally, Chester Brown, ‘The Inherent Powers of International Courts and
Tribunals’ (2005) 76 British Year Book of International Law 195, 218–21; Shabtai Rosenne, Interpretation,
Revision and Other Recourse from International Judgments and Awards (Martinus Nijhoff 2007) 5–6.
10 South China Sea Arbitration, Rules of Procedure, 27 August 2013, art 26 (3).
11 PCA, Press Release, The Arbitration between the Republic of the Philippines and the People’s Republic
of China, 29 June 2016.
12 See Ivan Cisar and Slavomır Halla, ‘The Finality of Arbitral Awards in the Public International Law’
(2012) GRANT Journal <http://www.grantjournal.com/issue/0101/PDF/0101cisar.pdf> accessed 6
December 2016.
13 John Collier and Vaughan Lowe, The Settlement of Disputes in International Law: Institutions and
Procedures (OUP 1999) 261.
14 Application of the Convention on the Prevention and Punishment of the Crime of Genocide (Bosnia and
Herzegovina v Serbia and Montenegro), Judgment, ICJ Reports 2007, 43, 90, para 115 (emphasis added).
15 See Interpretation of Judgments Nos 7 and 8 (The Chorzow Factory), Judgment of 16 December 1927, PCIJ
Series A, No 13, at 23 (Diss Op Anzilotti).
 The South China Sea Arbitration  391

international court or tribunal, does not cast international law in stone. Unlike most
domestic legal systems international law does not know of a hierarchically organized
judiciary with a single highest court at the apex. On the contrary, even the decisions
of the ICJ have no binding force except between the parties and in respect of the par-
ticular case at hand.16 The object of this provision is ‘to prevent legal principles ac-
cepted by the Court in a particular case from being binding also upon other States in
other disputes’.17 In RREEF Infrastructure v Spain, an arbitral tribunal constituted
under the rules of the International Centre for Settlement of Investment Disputes

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(ICSID) expressly noted that it did not regard ‘itself as bound by previous awards or
decisions rendered by other tribunals on similar arguments’.18 It is thus by no means
certain that another arbitral tribunal constituted under Annex VII of the UNCLOS
in a case brought, for example, by Vietnam against China concerning their disputes
in the area of the Paracel (Xisha) Islands would apply the same broad definition of
the term ‘rocks’ in Article 121(3) as the tribunal in the South China Sea Arbitration.
9. There are numerous examples of pronouncements on the existence, content or
interpretation of rules of international law by international courts and tribunals that
have not stood the test of time. Two of the most well-known examples of decisions
that have not proved to be the final word on a legal question are from the jurispru-
dence of the ICJ whose judgments according to Article 60 of its Statute are ‘final’;
and the same may be said of its advisory opinions.19
10. First, in the Namibia advisory opinion the ICJ ruled in June 1971 that decisions
of the UN Security Council adopted outside of chapter VII of the UN Charter could
be binding under Article 25 of the Charter.20 When the UN Security Council met in
October 1971 to debate the advisory opinion, several members of the Security Council
took direct issue with the ICJ’s finding that decisions adopted outside of chapter VII
could be binding. France stated that for Security Council decisions to be binding ‘their
very text . . . must show clearly . . . that they fall within the framework of Chapter VII
of the Charter and have been adopted as a result of the establishment of threats to the
peace, as required by Article 39’.21 The representative of the UK declared that to his
delegation the part of the advisory opinion dealing with the binding force of Security
Council resolutions seemed ‘to be open to the most serious legal objection’. He con-
tinued: ‘as a matter of law, my Government considers that the Security Council can
take decisions generally binding on Member States only when the Security Council
has made a determination under Article 39 that a threat to the peace, breach of the
peace or act of aggression exists. Only in these circumstances are the decisions binding

16 See Statute of the ICJ, art 59.

17 The Chorzow Factory Judgment (n 15) 21; Certain German Interests in Polish Upper Silesia (Merits),
Judgment of 25 May 1926, PCIJ Series A, No 7, at 19.
18 RREEF Infrastructure (GP) Limited and RREEF Pan-European Infrastructure Two Lux S a r l v Kingdom of
Spain (ICSID Case No ARB/13/30), Decision on Jurisdiction, 6 June 2016, para 89.
19 See F Blaine Sloan, ‘Advisory Jurisdiction of the International Court of Justice’ (1950) 38 California Law
Review 830, 852–53.
20 Legal Consequences for States of the Continued Presence of South Africa in Namibia (South West Africa) not-
withstanding Security Council Resolution 276 (1970), Advisory Opinion, ICJ Reports 1971, 16, 52–54,
paras 111–16.
21 Security Council Official Records, 26th year, 1588th meeting, 5 October 1971, UN Doc S/PV 1588, 2–3,
para 18.
392  Journal of International Dispute Settlement

under Article 25’.22 This view was also shared by Italy, a non-permanent member of
the Council at the time.23 In practice, since the 1970s the Security Council has not
relied on the view expressed in the advisory opinion but has acted under chapter VII,
either explicitly or implicitly, whenever it wanted to signal to the Member States that a
decision is to be understood as being binding.24 The ICJ’s ruling was without any prac-
tical effect and thus could in no way be considered the final word on the question of
the binding force of Security Council decisions.
11. Secondly, in its judgment in the Nicaragua case in 1986, the ICJ decided that for

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the acts of non-State actors to be attributed to a State the State must exercise ‘effective
control’ over the specific acts of the non-State actor which are to be attributed.25 This
ruling was not followed by other international courts. The International Criminal
Tribunal for the Former Yugoslavia (ICTY) ruled in 1999 in the Tadic case that for the
acts of non-State actors to be attributed to a State the test was one of ‘overall control’
over the actor rather than the specific acts.26 The European Court of Human Rights
(ECtHR) in its judgment in Loizidou v Turkey in 1996 went one step further and attrib-
uted the acts of a non-State actor to a State on the basis of the State’s ‘effective overall
control’ over the territory in which the non-State actor operated.27 In practice, interna-
tional courts and tribunals have applied three different control tests when attributing the
acts of non-State actors to a State. The ICJ’s decision in 1986 was thus by no means the
final word on that question, and neither was the decision of any of the other courts.28
12. The area of international adjudication where the lack of substantive finality of
arbitral awards is most obvious is international investment arbitration. As tribunals
are not bound by each other’s decisions investment arbitration tribunals have
reached diametrically opposed views on exactly the same legal issues. One of the
most prominent examples is the cases of CMS v Argentina and LG&E v Argentina
where two ICSID arbitral tribunals came to exactly opposite conclusions with regard
to the defence of necessity in general international law on the basis of essentially the
same facts. While the CMS tribunal found that ‘the requirements of necessity under
customary international law have not been fully met so as to preclude the wrongful-
ness of the acts’ of the Argentine Government,29 the LG&E tribunal, less than

22 Security Council Official Records, 26th year, 1589th meeting, 6 October 1971, UN Doc S/PV 1589, 5,
para 51. See also ibid 6, paras 52–53.
23 ibid 11, para 116.
24 See Loraine Sievers and Sam Daws, The Procedure of the UN Security Council (4th edn, OUP 2014) 389;
Benedetto Conforti and Carlo Focarelli, The Law and Practice of the United Nations (4th edn, Martinus
Nijhoff 2010) 409.
25 Military and Paramilitary Activities in und against Nicaragua (Nicaragua v United States of America), Merits,
Judgment, ICJ Reports 1986, 14, 65, para 115. See also Application of the Convention on the Prevention and
Punishment of the Crime of Genocide (Bosnia and Herzegovina v Serbia and Montenegro), Judgment, ICJ
Reports 2007, 43, 208, para 399.
26 Prosecutor v Tadic, Case No IT-94-1-A (1999) 38 International Legal Materials 1518, 1541, paras 120ff;
1546, para 145.
27 Loizidou v Turkey (Merits), Application No 15318/89, Judgment of 18 December 1996, ECHR Reports
1996-IV, 2216, 2235–36, para 56.
28 See, generally, Stefan Talmon, ‘The Responsibility of Outside Powers for Acts of Secessionist Entities’
(2009) 58 International and Comparative Law Quarterly 493.
29 CMS Gas Transmission Company v Argentine Republic, ICSID Case No ARB/01/8, Award of 12 May
2005, para 331.
 The South China Sea Arbitration  393

17 months later, recognized the ‘satisfaction of the state of necessity standard as it

exists in international law’.30
13. Similarly, in the Maffezini case, an ICSID arbitral tribunal stated in 2000 that
the most-favoured-nation (MFN) clause in a bilateral investment treaty (BIT) ‘em-
braces the dispute settlement provisions’ in another BIT unless public policy consid-
erations prevent the application of these provisions.31 Five years later, in the Plama
case, another ICSID arbitral tribunal stated a ‘different principle’, namely that ‘an
MFN provision in a basic treaty does not incorporate by reference dispute settlement

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provisions in whole or in part set forth in another treaty, unless the MFN provision
in the basic treaty leaves no doubt that the Contracting Parties intended to incorpor-
ate them’.32 The decision in Maffezini was thus by no means the final pronounce-
ment on the question of the applicability of MFN clauses to dispute settlement
provisions in BITs.33

4 . CAL LI N G I NT O QU E ST IO N T HE S UB S TANT IV E F IN ALI TY OF

ARBITRAL AWARDS
14. The structure of the international legal system and the fact that any decision ren-
dered by an arbitral tribunal having compulsory jurisdiction under part XV, section 2
of the UNCLOS ‘shall have no binding force except between the parties and in re-
spect of [the] particular dispute’34 means that there are a number of ways in which
the substantive finality of the arbitral award in the South China Sea Arbitration can be
called into question.
15. First, judicial or arbitral pronouncements can be reversed by way of interna-
tional legislation, either by the conclusion of an international treaty or by the cre-
ation of a rule of customary international law, which contradicts the finding of an
international court or tribunal. One of the best examples is the ruling of the
Permanent Court of International Justice (PCIJ) in the Lotus case in 1927. The
judgement held that in a collision of two ships on the high seas criminal proceedings
were not exclusively within the jurisdiction of the flag State or the ship causing the
collision, but that criminal jurisdiction could also be exercised by the flag State of the
ship that was damaged in the collision. This allowed Turkey to prosecute the officer
of the French mail steamer ‘Lotus’, which had collided with the Turkish collier ‘Boz-
Kourt’.35 The law on that matter, however, was not ‘final’ for long. The PCIJ’s judg-
ment was criticized because criminal proceedings before foreign courts in the event
of a collision on the high seas were considered an intolerable interference with inter-
national navigation. As a consequence, in 1952, a Convention was concluded which

30 LG&E Energy Corp v Argentine Republic, ICSID Case No ARB/02/1, Decision on Liability of 3 October
2006, para 245.
31 Emilio Agustın Maffezini v Spain, ICSID Case No ARB/97/7, Decision on Jurisdiction of 25 January
2000, para 64.
32 Plama Consortium Limited v Bulgaria, ICSID Case No ARB/03/24, Decision on Jurisdiction of 8
February 2005, para 223.
33 On the problem in general, see Frank Spoorenberg and Jorge E Vi~ nuales, ‘Conflicting Decisions in
International Arbitration’ (2009) 8 The Law and Practice of International Courts and Tribunals 91.
34 UNCLOS, art 296(2). See also UNCLOS, Annex VI, art 33(2). There is no comparable provision in
Annex VII.
35 The Case of the SS ‘Lotus’, Judgment of 7 September 1927, PCIJ Series A, No 10, at 30.
394  Journal of International Dispute Settlement

reversed the PCIJ’s finding by providing for the exclusive penal jurisdiction of the
flag State of the ship causing the collision and the State of which the person causing
the collision is a national.36 The provision on the exclusive penal jurisdiction in the
event of collisions on the high seas found its way into the Geneva Convention on
the High Seas37 and into UNCLOS,38 and today may be considered part of custom-
ary international law.39
16. Secondly, judicial and arbitral pronouncements can be reversed through con-
trary State practice. When interpreting a treaty an international court or tribunal

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takes into account ‘any subsequent practice in the application of the treaty which
establishes the agreement of the parties regarding its interpretation’.40 For example,
the contrary practice of the Member States of the UN Security Council since the
1970s with regard to the binding force of the Council’s decisions has turned the pro-
nouncement of the ICJ in the Namibia advisory opinion on this question into a dead
letter.41 Any court or tribunal that has to decide this question today will have to take
account of this practice when interpreting Article 25 of the UN Charter, which will
probably lead it to arrive at a different finding from that of the ICJ in the Namibia
case.
17. Another example of subsequent practice reversing the decision of an interna-
tional court is provided by the jurisprudence of the ECtHR. In 1989, the Court ruled
in the Soering case that the death penalty could not be considered as an ‘inhuman
and degrading treatment or punishment’ within the meaning of Article 3 of the
European Convention on Human Rights (ECHR)42 and therefore was not pro-
hibited per se.43 Fourteen years later, in its first O
€ calan judgment, the ECtHR (First
Section) stated that in assessing whether a given treatment or punishment was to be
regarded as inhuman or degrading for the purposes of Article 3, it could not but be
influenced by the developments and commonly accepted standards in the penal pol-
icy of the Member States of the Council of Europe in this field.44 Against this back-
ground it could be argued that the implementation of the death penalty may be
regarded as inhuman and degrading treatment contrary to Article 3.45 However, it

36 International Convention for the unification of certain rules relating to penal jurisdiction in matters of
collision or other incidents of navigation, signed at Brussels on 10 May 1952, entered into force on 20
November 1955, 439 UNTS 234, arts 1–3.
37 Convention on the High Seas, done at Geneva, 29 April 1958, entry into force on 30 September 1962,
450 UNTS 82, art 11.
38 UNCLOS, art 97.
39 See David Anderson, Modern Law of the Sea: Selected Essays (Martinus Nijhoff 2008) 268, n 4.
40 Vienna Convention on the Law of Treaties (VCLT), done on 22 May 1969, entry into force on 27
January 1980, 1155 UNTS 331, art 31(3)(b).
41 See above para 10.
42 Convention for the Protection of Human Rights and Fundamental Freedoms, done at Rome on 4
November 1950, entry into force on 3 September 1953, art 3: ‘No one shall be subjected to torture or to
inhuman or degrading treatment or punishment’. The consolidated text of the ECHR, which was
amended several times can be found in Stefan Talmon, Essential Texts in International Law (Edward Elgar
2016) 410–24.
43 Soering v United Kingdom, Application No 14038/88, Judgment of 7 July 1989, paras 101–03.
€ calan v Turkey, Application No 46221/99, Judgment of 12 March 2003, para 194.
44 O
€ calan v Turkey [GC], Application No 46221/99, Judgment of 12 May 2005,
45 ibid, para 198. But see also O
para 165.
 The South China Sea Arbitration  395

was not necessary for the Court to reach a firm conclusion on this question. Seven
years later in the case of Al-Saadoon and Mufhdi, the Court found on the basis of de-
velopments in treaty law and ‘consistent State practice in observing the moratorium
on capital punishment’ that the words inhuman or degrading treatment or punish-
ment in Article 3 included the death penalty.46 Thus, within a period of less than
21 years the ‘final’ judgment in the Soering case had been turned on its head.47
18. Thirdly, judicial and arbitral pronouncements on the interpretation or applica-
tion of a treaty provision can be reversed through subsequent agreements between

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the parties regarding the interpretation or the application of its provisions.48 For ex-
ample, the North American Free Trade Agreement (NAFTA) between Canada,
Mexico and the United States provides a special institutional mechanism for such in-
terpretative agreements.49 The Free Trade Commission (FTC), comprising cabinet-
level representatives of the parties or their designees, can adopt interpretations of the
treaty that are binding on NAFTA chapter 11 arbitral tribunals.50 On 31 July 2001,
the FTC adopted a Note of Interpretation which provided with regard to the min-
imum standard of treatment in Article 1105(1) NAFTA that the provision ‘pre-
scribes the customary international law minimum standard of treatment of aliens as
the minimum standard of treatment to be afforded to investments of investors of an-
other Party’ and that the ‘concepts of “fair and equitable treatment” and “full protec-
tion and security” [specifically mentioned in the provision] do not require treatment
in addition to or beyond that which is required by the customary international law
minimum standard of treatment of aliens’.51 This note was prompted by several arbi-
tral awards that had adopted a rather expansive reading of Article 1105(1) NAFTA
and, in particular, the April 2001 partial award in Pope & Talbot where the tribunal
had held that fair and equitable treatment was a self-standing right in addition to the
international minimum standard.52 Subsequent tribunals have accepted the FTC’s in-
terpretation as binding and have decided accordingly.53
19. Fourthly, the finality of judicial and arbitral pronouncements can be called
into question by other international courts and tribunals or by domestic courts
adopting a different view on a certain legal question. For example, according to
Article 281(1), if States have agreed to settle their disputes by peaceful means of
their own choice recourse to the compulsory dispute settlement procedures under

46 Al-Saadoon and Mufhdi v United Kingdom, Application No 61498/08, Judgment of 2 March 2010, para
120.
47 On the finality of judgments of the ECtHR, see ECHR, arts 42, 44, 46.
48 See VCLT (n 40), art 31(3)(a).
49 North Atlantic Free Trade Agreement, done at Washington on 8 and 17 December 1992, at Ottawa on
11 and 17 December 1992, and at Mexico City on 14 and 17 December 1992, entry into force on 1
January 1994 (1993) 32 International Legal Materials 297. For examples of other institutional interpret-
ation mechanisms, see Gabrielle Kaufmann-Kohler, ‘Interpretative Powers of the Free Trade Commission
and the Rule of Law’ in Frédéric Bachand and Emmanuel Gaillard (eds), Fifteen Years of NAFTA Chapter
11 Arbitration (JurisNet 2011) 175–94, 176–80.
50 NAFTA, art 1131(2).
51 NAFTA Free Trade Commission, Notes of Interpretation of Certain Chapter 11 Provisions, 31 July
2001, reproduced in Bachand and Gaillard (n 49), Annex 2, 293.
52 Pope & Talbot, Inc v Canada, Award on the Merits of Phase 2, 10 April 2001, paras 110, 111.
53 See Kaufmann-Kohler (n 49) 183–85; Rudolf Dolzer and Christoph Schreuer, Principles of International
Investment Law (2nd edn, OUP 2012) 32.
396  Journal of International Dispute Settlement

part XV of the UNCLOS entailing binding decisions is only possible if no settlement

has been reached by such means and the parties have not agreed to ‘exclude any further
procedure’. In the Southern Bluefin Tuna case between Australia and Japan and between
New Zealand and Japan, the first arbitral tribunal constituted under Annex VII of the
UNCLOS held that such exclusion could be established implicitly by way of interpret-
ation, which it found to be the case with regard to Article 16 of the Convention for the
Conservation of Southern Bluefin Tuna and, consequently, declined jurisdiction.54 On
the other hand, the Annex VII arbitral tribunal in the South China Sea Arbitration in its

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Award on Jurisdiction and Admissibility ruled that Article 281(1) requires a clear state-
ment of exclusion of further procedures and, as there was no ‘express exclusion’ of re-
course to further dispute settlement procedures in the 2002 China–ASEAN
(Association of Southeast Asian Nations) Declaration on the Conduct of Parties in the
South China Sea, assumed jurisdiction.55 The ruling of the Annex VII arbitral tribunal
in the Southern Bluefin Tuna case was thus by no means ‘final’ on the interpretation of
Article 281(1) and there is no guarantee that the interpretation given to the provision
by the tribunal in the South China Sea Arbitration will be the final word on this matter,
especially as the view expressed in Southern Bluefin Tuna is not without its merits.56
20. Another example of a ‘final’ decision of an international court being called
into question by a domestic court is the judgment of the Italian Constitutional Court
on matters of State immunity. In February 2012, the ICJ ruled in the Jurisdictional
Immunities of the State case that had been brought by Germany against Italy that
States enjoy immunity under customary international law for the acts of their armed
forces even if these acts constitute grave human rights violations amounting to war
crimes or crimes against humanity.57 This did not prevent the Italian Constitutional
Court from ruling only two years later that States, including Germany, do not enjoy
immunity in Italy in cases of war crimes and crimes against humanity.58 So much for
the substantive finality of the judicial pronouncements of the ICJ.

5. CONCLUSION
21. Arbitral awards are not a source of international law; at best, they are a subsidiary
means for the determination of the rules of international law.59 There is no formal
system of precedent in international law. Judicial and arbitral decisions are thus not
binding on other parties in future cases, even before the same court or tribunal.60 No
other court or tribunal, be it the ICJ, the International Tribunal for the Law of the
Sea (ITLOS), or another Annex VII arbitral tribunal, is bound to follow the arbitral

54 Southern Bluefı̈n Tuna (New Zealand v Japan, Australia v Japan), Award on Jurisdiction and Admissibility
of 4 August 2000, XXIII Reports of International Arbitral Awards 1–57, 43–44, paras 56–59.
55 SCS Arbitration, Award on Jurisdiction and Admissibility, 29 October 2015, paras 223–25.
56 See, e.g. Natalie Klein, Dispute Settlement in the UN Convention on the Law of the Sea (CUP 2005) 35–43,
66.
57 Jurisdictional Immunities of the State (Germany v Italy: Greece intervening), Judgment of 3 February 2012,
ICJ Reports 2012, 99, 139, para 91; 142, para 97.
58 Italian Constitutional Court, Judgment No 238–2014 of 22 October 2014 (2015) 54 International Legal
Materials 474, paras 3.2, 3.4, 3.5, 4.1, 5.1.
59 cf Statute of the ICJ, art 38(1)(d).
60 See, generally, Gilbert Guillaume, ‘The Use of Precedent by International Judges and Arbitrators’ (2011)
2 Journal of International Dispute Settlement 5.
 The South China Sea Arbitration  397

tribunal in the South China Sea Arbitration in its interpretation and application of the
UNCLOS. While arbitral awards, depending on the standing, expertise and experience
of the arbitrators, may be persuasive or even authoritative they are by no means con-
clusive statements of the law. While permanent international courts and tribunals like
the ICJ or the ITLOS frequently refer to their own case-law to ensure ‘consistency
with [their] own past case law in order to provide predictability’,61 ad hoc arbitral tribu-
nals are much less inclined to follow decisions by other arbitral tribunals composed of
different arbitrators.62 For example, the arbitral tribunal in the South China Sea

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Arbitration was not persuaded by the interpretation given to Article 281(1) by the tri-
bunal in the Southern Bluefin Tuna case.63 It also concluded that low-tide elevations
could not be appropriated, although the coastal State had sovereignty over low-tide ele-
vations which are situated within its territorial sea, since it had sovereignty over the ter-
ritorial sea itself.64 The tribunal reached this conclusion despite the fact that the
arbitral tribunal in the Eritrea v Yemen arbitration had made no distinction with regard
to the location of low-tide elevations when it found that ‘the islands, islets, rocks and
low-tide elevations’ of certain island groups were ‘subject to the territorial sovereignty’
of Eritrea and Yemen, respectively.65 There is no guarantee that in future cases other
arbitral tribunals will follow the decision in the South China Sea Arbitration any more
than that tribunal did with regard to other arbitral awards.
22. The interpretation given by the tribunal in the South China Sea Arbitration to
Article 121(3) and, in particular, to the terms ‘rocks’, ‘human habitation’ and ‘eco-
nomic life of their own’,66 is not in line with the jurisprudence of other international
courts and tribunals or with the decisions of domestic courts. For example, the
Norwegian Supreme Court ruled that with 13.2 km2 the size of Abeløya (Abel
Island) ‘alone is sufficient to rule out that it is a “rock” according to the exemption in
Article 121 paragraph 3’ and that ‘State practice seems to support this reading’.67
The US District Court for the District of Guam in 2008 rejected the argument that
in order to meet the requirement of ‘human habitation’ in Article 121(3) the habita-
tion must ‘exist for its own sake, as part of an ongoing community that sustains itself
and continues through generations’ and found that the uninhabited Howland and
Baker Islands were islands in terms of Article 121(1) and (2).68 ITLOS considered

61 See Legality of Use of Force (Serbia and Montenegro v Portugal), Preliminary Objections, Judgment, ICJ
Reports 2004, 1160, 1208, para 3 (joint declaration of Vice-President Ranjeva, Judges Guillaume,
Higgins, Kooijmans, Al Khasawneh, Buergenthal and Elaraby).
62 See Guillaume (n 60) 14.
63 See above para 19.
64 SCS Arbitration, Award of 12 July 2016, para 309.
65 Award of the Arbitral Tribunal in the first stage of the proceedings between Eritrea and Yemen
(Territorial Sovereignty and Scope of Dispute), Decision of 9 October 1998, XXII Reports of
International Arbitral Awards 209, 330, para 527. See also Maritime Delimitation and Territorial Questions
between Qatar and Bahrain (Qatar v Bahrain), Merits, ICJ Reports 2001, 40, 124, para 7 (Sep. Op. Oda),
stating that ‘the question of whether sovereignty over an islet or low-tide elevation may be acquired
through appropriation by a State . . . remain open matters’.
66 SCS Arbitration, Award of 12 July 2016, paras 539–51
67 Norway, Supreme Court, Public Prosecutor v Haraldsson and Others, Judgment of 7 May 1996, 140 ILR
559, 564.
68 United States, District Court for the District of Guam, United States v Marshalls, Decision of 8 May 2008,
2008 US Dist LEXIS 38627, 11.
398  Journal of International Dispute Settlement

the uninhabited 368-km2 large Australian Heard Island in the Southern Ocean to be
an island despite the fact that much of its surface is covered with snow and ice mak-
ing it virtually uninhabitable.69 Both the Conciliation Commission on the
Continental Shelf Area between Iceland and Jan Mayen and the ICJ treated Jan
Mayen, which has an area of about 373 km2, as an island generating exclusive
Economic zone (EEZ) and continental shelf rights, despite noting that ‘Jan Mayen
has no settled population, as only 25 persons temporarily inhabit the island for pur-
poses of their employment’ at meteorological or defence-related stations and that

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‘Norwegian fishing interests in the waters surrounding Jan Mayen are however the
interests of mainland Norway, not of Jan Mayen as such, where there are no fish-
ermen’.70 The Conciliation Commission expressly stated that ‘Jan Mayen must be
considered as an island. Paragraphs 1 and 2 of Article 121 are thus applicable to it’.71
If the standards developed by the tribunal in the South China Sea Arbitration were
applied to all these islands, none would qualify as a proper island generating full
maritime entitlements. It thus remains to be seen what effect, if any, the decision in
the South China Sea Arbitration will have on future cases concerning the interpret-
ation and application of Article 121(3) before other international courts and tribu-
nals, or before domestic courts. Considering the serious flaws in the tribunal’s
interpretation of Article 121(3),72 it may be predicted that the tribunal’s decision on
this provision will be ephemeral rather than final.
23. The substantive finality, for example, of the tribunal’s interpretation of Article
121(3) will also depend on the reaction to the arbitral award by other States. If
States continue to treat certain land features as proper ‘islands’, which according to
the tribunal’s exacting standard would only qualify as ‘rocks which cannot sustain
human habitation or economic life of their own’, and continue to claim EEZs and
continental shelves from these features, this practice will have an impact on the fu-
ture interpretation of Article 121(3). Numerous States have made relatively small,
uninhabited barren islands in remote locations the subject of claims to an EEZ and
an (outer) continental shelf. For example, France has established EEZs around is-
lands in French Polynesia, French Southern Ocean islands (Kerguelen Islands,
Crozet Islands), Clipperton Island and Amsterdam Island; Australia claims an EEZ
and outer continental shelf around Heard Island and McDonald islands; Fiji has es-
tablished an EEZ around Ceva-i-Ra; Kiribati has claimed an EEZ measured in part
from McKean Island; Mexico has established an EEZ around Clarion and Roca
Portida islets in the Pacific; Venezuela has established an EEZ around Aves Island;
Norway claims an EEZ and outer continental shelf from Bouvet Island; Portugal
claims an EEZ from Ilhas Selvagens; the United States has established an EEZ

69 See Volga (Russian Federation v Australia), Prompt Release, Judgment, ITLOS Reports 2002, 10, 44, para
6 (Decl. Vukas).
70 Maritime Delimitation in the Area between Greenland and Jan Mayen (Denmark v Norway), Judgment, ICJ
Reports 1993, 38, 73, para 79. See also Conciliation Commission on the Continental Shelf Area between
Iceland and Jan Mayen, Report and Recommendations to the Governments of Iceland and Norway, May
1981 (1981) 20 International Legal Materials 797, 801–03.
71 Conciliation Commission on the Continental Shelf Area between Iceland and Mayen (n 70) 803–04.
72 See Stefan Talmon, ‘Article 121’ in Alexander Proelss (ed), United Nations Convention on the Law of the
Sea: A Commentary (Beck, Hart, Nomos 2017) MN 27–52.
 The South China Sea Arbitration  399

around Maro Reef in the Northwest Hawaiian Islands, Palmyra Atoll, Kingman Reef,
Howland and Baker Islands. It seems highly unlikely that these States will revise their
legal position in light of the tribunal’s award in the South China Sea Arbitration and
treat these ‘islands’ in future as mere ‘rocks’ without an EEZ and continental shelf.
24. The award in the South China Sea Arbitration did not receive the rousing en-
dorsement some had hoped for. For example, the 28-member European Union
(EU) only ‘acknowledged’ the Award73 because some Member States with their own
maritime disputes were worried about setting a precedent by coming out too

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strongly in favour of the Award.74 Other States, like India75 and Malaysia,76 simply
‘noted’ the Award. No State expressly endorsed the substance of the Award. Even
the United States stated that they were ‘studying the decision and have no comment
on the merits of the case’.77 Perhaps not surprisingly the authorities on Taiwan who
administer Itu Aba (Taiping), the largest island in the South China Sea, which the
tribunal found to be a mere ‘rock’, immediately rejected the tribunal’s award as ‘un-
acceptable’ and continued to claim that Itu Aba, ‘with an area of 0.51 square kilo-
metres, can sustain human habitation and an economic life of its own, and meets the
criteria of an island as defined in Article 121 of UNCLOS’ and generates ‘territorial
waters, a contiguous zone, an exclusive economic zone, and a continental shelf in ac-
cordance with UNCLOS’.78
25. It is of interest to note that the arbitral tribunal in the South China Sea
Arbitration extensively quoted China’s position that ‘the [Japanese] rock of Oki-no-
Tori, on its natural conditions, obviously cannot sustain human habitation or eco-
nomic life of its own’ and therefore under Article 121(3), the rock of Oki-no-Tori
‘shall have no exclusive economic zone or continental shelf’.79 The tribunal implicitly
used Oki-no-Tori Shima as an example of a land feature that definitely does not qual-
ify as a proper ‘island’ generating maritime entitlements. Japan also immediately dis-
tanced itself from the tribunal’s findings on islands. Asked about the ruling’s
implications for the legal status of Japan’s Oki-no-Tori Shima Island, ‘which consists
of two eroding protrusions no larger than king-size beds’,80Japanese Foreign
Minister Fumio Kishida denied that the award was applicable to Oki-no-Tori Shima

73 Declaration by the High Representative on behalf of the EU on the Award rendered in the Arbitration be-
tween the Republic of the Philippines and the People’s Republic of China, Press Release 442/16, 15 July
2016 <http://www.consilium.europa.eu/> accessed 6 December 2016.
74 See EU’s statement on South China Sea reflects divisions, 15 July 2016 <http://www.reuters.com/>
accessed 6 December 2016.
75 Statement on Award of Arbitral Tribunal on South China Sea under Annexure VII of UNCLOS, 12 July
2016 <http://www.mea.gov.in/> accessed 6 December 2016.
76 Press Release Following the Decision of the Arbitral Tribunal on the South China Sea Issue, Statement
by Malaysia, 13 July 2016 <http://www.kln.gov.my/> accessed 6 December 2016.
77 Decision in the Philippines-China Arbitration (n 5).
78 Ministry of Foreign Affairs, Republic of China (Taiwan), ROC position on the South China Sea
Arbitration, 12 July 2016 <http://www.mofa.gov.tw.> accessed 6 December 2016; Leigislative Yuan
issues statement on South China Sea award, 18 July 2016 <http://www.taiwantoday.tw/> accessed 6
December 2016; Interior minister visits Taiping Island, reasserts ROC sovereignty, 17 August 2016
<http://www.taiwantoday.tw/> accessed 6 December 2016.
79 SCS Arbitration, Award of 12 July 2016, para 457. See also ibid, paras 419, 439, 451–56.
80 See Jon Van Dyke, ‘Speck in the Ocean Meets Law of the Sea’, Letter to the Editor, New York:The New
York Times (21 January 1988) A26.
400  Journal of International Dispute Settlement

Island or that it established any criteria to determine what constitutes an island. He

stated:

To begin with, I do not believe there is a specific definition of what constitutes

rocks. I believe there are various provisions, including UNCLOS Article 121,
paragraph 3, but even in those provisions there is no definition of rocks. I do
not think there is any definite interpretation of what constitutes rocks.
And in any event, this arbitration award is not an award that relates to the legal

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status of Oki-no-Tori-Shima Island or other islands. Based on UNCLOS this
arbitral award is only legally binding on China and the Philippines, which are
the parties to this case. And the Government of Japan’s position is that Oki-
no-Tori Shima Island is an island that meets the criteria under UNCLOS.
. . . I do not believe that the award presented any criteria. . .. The only provision
in UNCLOS Article 121, paragraph 3 is that rocks which cannot sustain human
habitation or economic life of their own shall have no exclusive economic zone
(EEZ) or continental shelf. Japan believes Oki-no-Tori Shima Island is an island
that meets the criteria under UNCLOS.. . . Furthermore, Japan has established
its EEZ in the waters around the island. No objections to this practice of Japan
had been raised by any country. Accordingly, Japan believes that the entitlement
and the legal status of this island as an island have already been established.
I do not believe that there is an established interpretation of what constitutes
rocks. On the other hand, based on the reasons I just mentioned, Japan be-
lieves it has been established that Oki-no-Tori Shima Island is an island.81

The legal position of States is usually motivated not by the noble ideals of the
rule of law but by hardened self-interest. It is not difficult to predict that numerous
other States, including Australia, France, the UK and the United States, who would
equally lose large areas of EEZ and continental shelf if the ruling in the South China
Sea Arbitration were ever to be followed as a precedent for international law will
adopt a position similar to that of Japan.
26. While some of the reactions to the arbitral tribunal’s award in the South China
Sea Arbitration will be automatic, China and other States may also take active steps
to limit the effects of the award. State parties to a treaty can effectively overrule the
interpretation of a treaty provision by an international court or tribunal by conclud-
ing a subsequent agreement regarding the interpretation of the treaty or the applica-
tion of its provisions.82 Such an interpretative agreement may take many different
forms, including unwritten consensus.83 Possible fora for the conclusion of such an
agreement could be the Meeting of States Parties to the UNCLOS or the UN
General Assembly.84 China tried previously to bring the interpretation of Article

81 Japan, Ministry of Foreign Affairs, Press Conference by Foreign Minister Fumio Kishida, Friday, 15 July
2016, 10:48 am < http://www.mofa.go.jp/> accessed 6 December 2016.
82 See VCLT (n 40), art 31(3)(a).
83 See Mark Villiger, Commentary on the 1969 Vienna Convention on the Law of Treaties (Brill 2009), art 31,
MN 18.
84 There is, however, a divergence of views on whether the Meeting of States Parties is competent to discuss
substantive questions relating to the interpretation and implementation of the Convention or whether its
 The South China Sea Arbitration  401

121(3) before the Meeting of States Parties—without much success.85 However,

even if some aspects of the arbitral award in the South China Sea Arbitration would
be discussed by the Meeting of States Parties or the UN General Assembly, it seems
highly unlikely that a common understanding on the interpretation of Article 121
could be achieved; especially because such an agreement would require the consent
of all 168 parties to the UNCLOS, including the Philippines.86 While China may not
be able to achieve an agreement overruling the tribunal’s interpretation of Article
121, it may encourage other States to maintain or adopt a legal position contradict-

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ing the tribunal’s finding. Such contrary State practice may sound a note of caution
to other courts and tribunals not to ascribe any precedential value to the award of
the tribunal in the South China Sea Arbitration when interpreting or applying Article
121 in the future.
27. Thus, while the award of 12 July 2016 may be the final decision in the arbitra-
tion between the Philippines and China concerning their disputes in the South
China Sea, it is by no means the final word on the legal questions raised by these
disputes.

competence is limited to the consideration of financial and administrative matters relating to the ITLOS,
the International Seabed Authority and the Commission on the Limits of the Continental Shelf; see, e.g.
UNCLOS, Meeting of States Parties, Report of the twenty-second Meeting of States Parties, SPLOS/
251, 11 July 2012, 18, para 98.
85 See UNCLOS, Meeting of States Parties, Proposal for the inclusion of a supplementary item in the
agenda of the 19th Meeting of States Parties, SPLOS/196, 22 May 2009. See also ibid, Report of the
19th Meeting of States Parties, SPLOS/203, 24 July 2009, 3–4, paras 10–15.
86 For the number of parties to the UNCLOS as of 28 August 2016, see Multilateral Treaties Deposited
with the Secretary General, c XXI, No 6 <https://treaties.un.org/> accessed 6 December 2016.