SOUTH CHINA SEA

Tribunal Issues Landmark Ruling in South China Sea Arbitration

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

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

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

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

Summary of Key Claims and Holdings

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

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

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

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

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

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

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

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

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

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

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

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

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

Table of Philippine Claims and Tribunal Rulings*

Submission Jurisdictional
Philippines’ Claim Merits Ruling
Number Ruling

(Deferred to merits Yes: UNCLOS comprehensively

stage) allocates rights to maritime
China’s maritime entitlements in South China Sea may
1 areas
not exceed those established by UNCLOS
Jurisdiction
granted Philippines win

Yes: There is no legal basis for

China to claim historic rights to
(Deferred to merits
waters in the South China Sea
stage)
China’s “nine-dash line” claim is invalid to the extent it (so, to the extent that is what
2
exceeds the limits established by UNCLOS the nine-dash line means, it is
Jurisdiction
invalid)
granted

Philippines win

Yes: Scarborough Shoal is a rock

Jurisdiction that generates no EEZ
3 Scarborough Shoal generates no EEZ or continental shelf
granted
Philippines win
 Yes: Mischief Reef, Second
Mischief Reef, Second Thomas Shoal, and Subi Reef are all Thomas Shoal, and Subi Reef are
Jurisdiction
4 LTEs that do not generate territorial seas or EEZs, and are LTEs
granted
not subject to appropriation
Philippines win

Yes: Mischief Reef and Second

(Deferred to merits
Thomas Shoal are part of the
stage)
Mischief Reef and Second Thomas Shoal are part of the EEZ and continental shelf of the
5
Philippines’ EEZ and continental shelf Philippines
Jurisdiction
granted
Philippines win

No: Both Gaven and McKennan

Reef are above water at high
Gaven Reef and McKennan Reef (including Hughes Reef) tide; they are rocks that
Jurisdiction
6 are LTEs that generate no maritime entitlements, but may generate territorial seas but no
granted
be used to determine baselines to measure territorial sea EEZ or continental shelf

Philippines loss

Yes: Johnson Reef, Cuarterton

Reef, and Fiery Cross Reef are
Johnson Reef, Cuarterton Reef, and Fiery Cross Reef Jurisdiction rocks that generate no EEZ or
7
generate no entitlements to EEZ or continental shelf granted continental shelf

Philippines win

Yes: China has interfered with

(Deferred to merits
Philippine sovereign rights to
China has interfered with the Philippines’ exercise of stage)
shing and hydrocarbon
8 sovereign rights over living and non-living resources
exploration within its EEZ
within its EEZ and continental shelf Jurisdiction
granted
Philippines win

(Reserved to merits Yes: China failed to prevent

stage) Chinese shermen from shing
China has failed to prevent its nationals and vessels from
9 within the Philippine EEZ
exploiting the living resources in the Philippines’ EEZ
Jurisdiction
granted Philippines win

Yes: China violated the

China has prevented Philippine shermen from pursuing Philippines’ “traditional shing
Jurisdiction
10 their livelihoods through traditional shing activities rights” at Scarborough Shoal
granted
around Scarborough Shoal
Philippines win
 Yes: China engaged in
environmentally harmful
China has violated UNCLOS’s environmental protection shing/harvesting practices at
Jurisdiction
11 obligations at Scarborough Shoal and Second Thomas Scarborough Shoal and Second
granted
Shoal Thomas Shoal

Philippines win

Yes: Environmental protection

provisions were violated at
Mischief Reef; arti cial island
(Deferred to merits construction violated Philippine
China’s occupation and construction on Mischief Reef
stage) sovereign rights within its EEZ;
violate UNCLOS provisions on arti cial islands and
12 the “appropriation” claim is
environmental protection, and are unlawful acts of
Jurisdiction moot because Mischief Reef is
attempted appropriation
granted an LTE not capable of
appropriation

Philippines win

Yes: China violated UNCLOS and

China has violated UNCLOS by dangerously operating law other treaty provisions on
Jurisdiction
13 enforcement vessels creating serious risk of collision near maritime safety
granted
Scarborough Shoal
Philippines win

Yes: Although there is no

jurisdiction over disputes
involving military activities such
China has unlawfully aggravated and extended the dispute (Deferred to merits as the Second Thomas Shoal
by interfering with the Philippines’ rights of navigation stage) standoff, China has
near Scarborough Shoal, preventing the rotation and aggravated/extended the
14
resupply of Philippine personnel stationed at Second Jurisdiction disputes through recent large-
Thomas Shoal, and endangering the health of the granted in part, scale land reclamation and
personnel there denied in part arti cial island construction in
the Philippine EEZ

Philippines win

(Deferred to merits Quali ed yes: This claim simply

Going forward China shall respect the rights and freedoms stage) asks China to do what it is
15 of the Philippines under UNCLOS and comply with its required to do under UNCLOS;
duties under UNCLOS Jurisdiction therefore, no further statement
granted is necessary

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

Initial Takeaways

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

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

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

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

The objective capacity of the feature in its natural condition (i.e., “without external additions or modi cations” and without outside
support), to sustain, over an extended period of time, either
(a) a stable community of people for whom the feature constitutes a home and on which they can remain, or

(b) economic activity that is not

(i) dependent on outside resources, or

(ii) purely extractive in nature without the involvement of a local population.

Factors contributing to the natural capacity of a feature to do so “include the presence of water, food, and shelter in suf cient
quantities to enable a group of persons to live on the feature for an indeterminate period of time.”

In assessing these “capacity” factors, the Tribunal stated, “the most reliable evidence of the capacity of a feature will usually be the
historical use to which it has been put.” Applying that standard here, the Tribunal saw “no indication that anything fairly resembling
a stable human community has ever formed on the Spratly Islands. Rather, the islands have been a temporary refuge and base of
operations for shermen and a transient residence for labourers engaged in mining and shing.”

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

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

6. Where does this leave us? China’s position all along with respect to these proceedings can be summed up as “no acceptance, no
participation, no recognition, and no implementation.” The PRC Ministry of Foreign Affairs predictably wasted no time releasing a
statement declaring that “the award is null and void and has no binding force.” The Philippine Foreign Affairs Secretary welcomed the
decision, stating: “The Philippines strongly af rms its respect for this milestone decision as an important contribution to ongoing efforts in
addressing disputes in the South China Sea.” No surprises here, especially given that the Tribunal resolved virtually all the key issues in
favor of the Philippines. For its part, the U.S. State Department issued a measured statement remarking that “[t]he decision today by the
Tribunal in the Philippines-China arbitration is an important contribution to the shared goal of a peaceful resolution to disputes in the
South China Sea.”
As these statements suggest, the issuance of this Award by no means puts to rest the disputes or the tensions in the South China Sea. The
arbitration was never going to resolve issues of sovereignty over the islands and rocks in the South China Sea, because disputes over
territorial sovereignty are beyond the jurisdiction of an UNCLOS Tribunal. And since the Tribunal has no power to enforce its nominally
binding decision, questions now turn to what any form of “implementation” might look like and the effect this ruling will have on future
negotiations over territorial sovereignty.

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

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

Topics: South China Sea, China, Maritime, International Law

Tags: China, South China Sea, Philippines, Spratly Islands, Maritime, International Law, UN Convention on the Law of the Sea (UNCLOS), Philippines v. China, Permanent Court of
Arbitration

Robert Williams is a senior research scholar, lecturer, and executive director of the Paul Tsai China Center at Yale Law
School. He is also a nonresident senior fellow at the Brookings Institution.