The Philippines v China Award in July 2016 of the Annex VII Arbitral Panel established under the auspices of the Permanent Court of Arbitration will stand as one of the most significant decisions of the law of the sea.
The Award determined claims by the Philippines challenging China’s assertion of so-called ‘historic title’, the characterisation of various land features, and the legitimacy of actions taken by China in the disputed areas.
The claims of the Philippines were overwhelmingly accepted by the Tribunal.
The central findings were that:
(i) China had no entitlement to the waters, or resources of the sea or sea-bed, in the South China Sea based on any historic claim of use, and China’s claims fell to be determined by the rules of the United Nations Convention on the Law of the Sea (UNCLOS);
(ii) none of the land features claimed by China had the characteristics of an island for the purposes of Article 121 of UNCLOS, and hence none were capable of generating an exclusive economic zone;
(iii) many of the land features claimed by China were low tide elevations (i.e. features that are submerged at high tide) and are therefore incapable of generating a 12 nautical mile territorial sea;
(iv) many of the land features claimed by China were within the exclusive economic zone of the Philippines; and
(v) as a result, many of the actions taken by China in the disputed areas by way of construction of artificial structures and interference with fishing rights amounted to unlawful interference with the rights of the Philippines for the purposes of UNCLOS.
Many of the rulings could be described as predictable, in the sense that they are based upon a textual analysis of the relevant provisions of UNCLOS. Because the decision is legally sound, and defensible, China seems to be responding only by way of attacking the perceived legitimacy of the Tribunal, and has not to date addressed the merits of the Award.
This note will consider the jurisdiction and legitimacy of the Tribunal and the Award, and the key legal rulings contained within it.
The disputes in the South China Sea encompass a number of overlapping claims, some of which do not directly involve China (for example, each of China, Vietnam, Taiwan, the Philippines, Malaysia and Brunei lay claim to parts of the Spratly Island chain, and each claims extensive exclusive economic zones from islands in that chain, with those claimed maritime zones overlapping and intersecting). The Award therefore has significance well beyond China and the Philippines.
Because of the principled and detailed manner in which the Tribunal approached its task, the Award will also stand as an authoritative statement of legal doctrine in the previously uncharted areas of UNCLOS to which it is addressed.
Jurisdiction and Legitimacy
The arbitration was established in January 2013 pursuant to Articles 286 and 287 of UNCLOS which permit the compulsory arbitration of disputes concerning the interpretation, or application of UNCLOS.
The composition of the Tribunal cannot be the subject of serious criticism. Judge Wolfrum was appointed by the Philippines. The remaining members (Judge Pawlak, Judge Cot, Professor Soons, and Judge Mensah), are each rightly considered a world expert in the law of the sea and UNCLOS and were appointed by the President of the International Tribunal for the Law of the Sea.
China has reacted to the Award with a series of public statements which challenge the legitimacy of the Award and the Arbitration process. By way of example, the Chinese Ambassador to the United Kingdom stated on 23 July 2016 that the process was “a political farce under the cloak of law”. In China’s view, the tribunal lacked jurisdiction because its subject matter related to territorial sovereignty and maritime delimitation which were either beyond the scope of UNCLOS or the subject of the reservation made by China under Article 297 of UNCLOS. Further challenges to the legitimacy of the Award were said by the Ambassador to include that the Tribunal “turned a blind eye” to China’s sovereign rights which had been inherited from past generations, and the failure of the Tribunal to include an arbitrator from Asia or with knowledge of Asian history and culture.
The Ambassador concluded that the Award had intensified rather than resolved the dispute because it disregarded agreements between China and the Philippines to address any controversies by means of negotiation and consultation. It was said to follow that China would be upholding the authority and dignity of international law by not accepting or recognising the ruling.
China declined to participate in the process of arbitration at any level. China addressed a Note dated August 1, 2013 to the Permanent Court of Arbitration in which it stated its position that “it does not accept the arbitration initiated by the Philippines.” A further Note dated 7 December 2014 reiterated that position, and further objections to jurisdiction were received in February 2015 and May 2016.
As the Award describes at , “[T]hroughout the proceedings, the Chinese Embassy has returned the communications and reiterated that “it will neither accept nor participate in the arbitration unilaterally initiated by the Philippines.”
UNCLOS clearly establishes that a Tribunal established pursuant to Articles 286 and 287 has jurisdiction to proceed ex parte. Any resulting award would be binding between the parties pursuant to Article 296 of UNCLOS, as well as Article 9 of Annex VII, which provides:
“If one of the parties to the dispute does not appear before the arbitral tribunal or fails to defend its case, the other party may request the tribunal to continue the proceedings and to make its award. Absence of a party or failure of a party to defend its case shall not constitute a bar to the proceedings. Before making its award, the arbitral tribunal must satisfy itself not only that it has jurisdiction over the dispute but also that the claim is well founded in fact and law.”
The question of jurisdiction is critical, because China made a reservation under Article 298, dated August 25, 2006, providing that:
“[t]he Government of the People’s Republic of China 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.”
That reservation therefore extends to “disputes relating to sea boundary delimitations and historical titles.”
The Philippines claim was carefully framed to attempt to avoid the reservation made by China to questions of “maritime delimitation”. It did not directly seek any delimitation of any disputed area. Rather the focus of the claim was upon the characterization of the identified features as rocks or submerged features, and upon the legitimacy of the so-called ‘nine dash line’ as a claimed basis for the exercise of sovereignty.
The Tribunal rendered its preliminary Award on jurisdiction and admissibility on 29 October 2015.
In the 2015 Award on jurisdiction, the Tribunal held that both the Philippines and China were parties to UNCLOS and bound by its provisions on settling disputes. The Tribunal held that China’s decision not to participate did not deprive the tribunal of jurisdiction.
It held that the dispute concerned the interpretation or application of UNCLOS and not questions of maritime delimitation or territorial sovereignty. The Tribunal noted that there was a dispute between the Parties which related to sovereignty, but held that the matters submitted to arbitration by the Philippines did not concern sovereignty.
Bilateral agreements did not preclude the Philippines from seeking to resolve the dispute through UNCLOS. In particular, the 2002 China–ASEAN Declaration on the Conduct of Parties in the South China Sea, an agreement to resolve disputes relating to the South China Sea exclusively through negotiation, was a political agreement not intended to be legally binding. UNCLOS by contrast prioritized dispute resolution through any means agreed between the parties.
Significantly in its 2015 Award on jurisdiction, the Tribunal concluded at  that “a dispute concerning whether a State possesses an entitlement to a maritime zone is a distinct matter from the delimitation of maritime zones in an area in which they overlap”. It was therefore able to determine that the reservation lodged by China under Article 298 was inapplicable.
The Tribunal concluded that it had clear jurisdiction with respect to the matters raised in seven Philippines submissions and it reserved the question of its jurisdiction with respect to the seven remaining submissions for consideration during the merits phase.
The Merits Phase
The Tribunal rendered its Award addressing the merits on 12 July 2016.
Although China did not participate in either the jurisdictional phase or the merits phase, the Tribunal went to great lengths to consider, and debate, all publicly available statements of the Chinese position in relation to the merits issues. It also ensured that China was kept advised of the proceedings by delivering daily transcripts and other material to the Chinese Embassy in The Netherlands. The Tribunal sought to communicate with China and receive the benefit of China’s views on particular issues (for example, by seeking a copy of an environmental study conducted by China ).
On 3 June 2016, a statement was provided by China to the Tribunal which purported to put in issue the characterisation of the “Nansha Islands” as uninhabitable.
As the Tribunal notes at , “concerns about the Philippines “having to guess what China’s arguments might be” were to some extent alleviated, at least with respect to jurisdiction, by China’s decision to make public its Position Paper in December 2014. The Position Paper was followed by two letters from the former Chinese Ambassador, addressed to the members of the Tribunal, and four more-recent letters from the current Chinese Ambassador.
In light of the extraordinary steps taken by the Tribunal to inform itself wherever possible of the position held by China in relation to the matters in dispute, it is difficult to argue with the Tribunals conclusions at  that:
“In line with its duties under Annex VII to the Convention, in the circumstances of China’s non-participation, the Tribunal has taken steps to ensure procedural fairness to both Parties without compromising the efficiency of the proceedings.”
The task of the Tribunal in this regard was made more difficult because China seems reluctant to articulate the precise legal basis for its claims in any forum. What is known is that it asserts historical title to certain island features, and it also asserts some unstated form of title to waters within a line on a map (the ‘nine-dash line’).
The nine-dash line
The Philippines by its submissions 1 and 2 requested the Tribunal to declare that China is entitled only to those rights which are provided for by UNCLOS. It asked the Tribunal to declare that the rights established by UNCLOS were exclusive of any claimed historic rights. The arguments of the Philippines are summarized at  as follows:
“First, the Philippines submits that international law did not historically permit the type of expansive claim advanced by China’s ‘nine-dash line’ and that, even if China did possess historic rights in the South China Sea, any such rights were extinguished by the adoption of the Convention. Second, the Philippines argues that, on the basis of the historical record of China’s activities in the South China Sea, China cannot meet the criteria for having established historic rights within the ‘nine-dash line’.”
This claim squarely put in issue China’s nebulous claim to the nine-dash line which appears on certain Chinese maps.
The line originally consisted of eleven dashes, and was apparently first published by the Kuomintang Government of the PRC in 1948 (for a discussion of the history of the nine-dash line, see Award ).
The line was revised either in 1949 or 1953 by removing two dashes and therefore became known as the nine dash line.
In 2014 China added a tenth dash near Taiwan.
As the Tribunal noted at  the Chinese position in relation to the nine-dash line is ambiguous. China has never expressly defined what it considered to be the rights generated by the historic claim based upon the nine-dash line. It certainly does not meet modern standards of geographic precision. It appears to be a representation of a hand-drawn line that simply seeks to enclose most of the South China Sea.
In May 2009, China responded to Vietnamese and Malaysian submissions to the Commission on the Limits of the Continental Shelf. It did so in Notes Verbale. Each Note stated:
“China has indisputable sovereignty over the islands in the South China Sea and the adjacent waters, and enjoys sovereign rights and jurisdiction over the relevant waters as well as the seabed and subsoil thereof (see attached map). The above position is consistently held by the Chinese Government, and is widely known by the international community.”
Attached to the Notes Verbale was a map which included the nine-dash line.
Possibly the most considered defence by China of the nine-dash line was the statement made by the Director-General of the Department of Treaty and Law at the Chinese Ministry of Foreign Affairs in May 2016 (recorded at Award ). There, the Director-General said:
“The “nine-dash line” . . . is called by China the dotted line. I want to stress that China’s sovereignty and relevant rights in the South China Sea were formed throughout the long course of history and have been maintained by the Chinese Government consistently. Early in 1948, the dotted line was mapped on China’s official map. It was a confirmation of China’s rights in the South China Sea formed throughout the history, instead of creation of new claims. For a long time, no State questioned the legitimacy of the dotted line and it also appeared on the official maps of many States. In recent years, some States started to attack on China’s dotted line. The real motive is to intentionally confuse territorial disputes with disputes over maritime delimitation, deny China’s sovereignty over the South China Sea Islands and their adjacent waters, and cover up their illegal invasion and occupation of part of the maritime features of China’s Nansha Islands. In the Arbitration, the Philippines requested the Arbitral Tribunal to decide whether maritime entitlements claimed by China in the South China Sea exceeded the limits of the UNCLOS . . . . [T]o answer this question, we need to decide China’s territorial sovereignty first. In accordance with international law, territorial sovereignty is the basis of maritime rights. Without first determining China’s territorial sovereignty over the maritime f[ea]tures in the South China Sea, it would not be possible to determine maritime entitlements China may claim in it pursuant to the UNCLOS, let alone determine whether China’s maritime claims in the South China Sea have exceeded the extent allowed under the UNCLOS. On the other hand, we have to note that the dotted line came into existence much earlier than the UNCLOS, which does not cover all aspects of the law of the sea. No matter from which lens we look at this, the Tribunal does not have jurisdiction over China’s dotted line. As to negotiations, China has reiterated its hope that the relevant parties should resolve the disputes through consultation and negotiation based on historical facts and international law. The door of negotiation remains open.”
Taiwan maintains a parallel claim to the waters within the 9 dash line. However, unlike China which has never fully articulated the extent of its claim, nor the legal basis of it, in a recent exhibition in Taipei, Taiwan put on display some of their archives from 1949. Taiwan’s President stated at the opening of the exhibition that the Nationalist Party in 1947 (before it fled the communist advance) had claimed only the islands and surrounding 3 to 12 nautical miles of their adjacent waters within the 9 dash line.
This is significant, because it means the line could potentially be interpreted as compatible with current international law. Under the UN Convention on the Law of the Sea (UNCLOS), “the land dominates the sea”. Land features are entitled to 12 miles of territorial waters; habitable islands have an additional 200 miles of “exclusive economic zone”
As the Tribunal noted at , “[M]uch of the area encompassed by the ‘nine-dash line’, however, would also fall within a claim to an exclusive economic zone or continental shelf drawn from the various features of the Spratly Islands.”
The Tribunal concluded that there was no legal basis for China to claim historic rights to resources within the sea areas falling within its asserted ‘nine-dash line’. Chinese navigators and fishermen had historically used islands in the South China Sea. However, there was no evidence that China had historically exercised exclusive control over the waters or their resources. Additionally, China had consistently stated that it respected rights of navigation and overflight within the area enclosed by the nine-dash line.
As the Tribunal noted at , rights of overflight and free navigation are inconsistent with the assertion of a territorial sea. It therefore followed that whatever China’s claim, it could not be a claim to waters the equivalent of a territorial sea or internal waters. The Tribunal therefore characterized (at  China’s claim to be one to the living and non-living resources of the water and sea-bed within the nine-dash line, but not to be a claim equivalent to that of a territorial sea (other than where the waters were within 12 nautical miles of a land feature claimed by China).
The Tribunal considered the effect of Article 311 of UNCLOS which provides in part that:
“This Convention shall not alter the rights and obligations of States Parties which arise from other agreements compatible with this Convention and which do not affect the enjoyment by other States Parties of their rights or the performance of their obligations under this Convention.”
The impeccable reasoning of the Tribunal in this regard is set out at :
“In the case of the Convention, the application of these rules leads to four propositions: (a) Where the Convention expressly permits or preserves other international agreements, Article 311(5) provides that such agreements shall remain unaffected. The Tribunal considers that this provision applies equally where historic rights, which may not strictly take the form of an agreement, are expressly permitted or preserved, such as in Articles 10 and 15, which expressly refer to historic bays and historic titles. (b) Where the Convention does not expressly permit or preserve a prior agreement, rule of customary international law, or historic right, such prior norms will not be incompatible with the Convention where their operation does not conflict with any provision of the Convention or to the extent that interpretation indicates that the Convention intended the prior agreements, rules, or rights to continue in operation. (c) Where rights and obligations arising independently of the Convention are not incompatible with its provisions, Article 311(2) provides that their operation will remain unaltered. (d) Where independent rights and obligations have arisen prior to the entry into force of the Convention and are incompatible with its provisions, the principles set out in Article 30(3) of the Vienna Convention and Article 293 of the Convention provide that the Convention will prevail over the earlier, incompatible rights or obligations.”
The Tribunal concluded at  that UNCLOS did not expressly permit the continued existence of historic rights to living and non-living resources of an exclusive economic zone, the high seas, or a continental shelf.
Centrally, it concluded at  that UNCLOS was entirely clear in allocating such rights within an exclusive economic zone to the coastal state alone. The Tribunal expressly rejected (at ) China’s apparent claim that its rights within the nine-dash line were protected by UNCLOS.
The conclusion of the Tribunal was consistent with earlier decisions of international courts and tribunals which had considered the status of historic rights. Thus the Tribunal considered the reasoning of the Chamber of International Court of Justice in the Gulf of Maine Case (United States v Canada), in which the Court rejected the claim by the United States to historic fishing rights.
Historic rights are established by the continuous exercise of the claimed right by the State asserting the claim and acquiescence on the part of other affected States (discussed in the Award at )
As the Tribunal concluded at , even if China had been able to establish historic fishing rights, its acceptance of UNCLOS and the exclusive regimes within it precluded any further reliance upon those historic rights. As the Tribunal held at , a claim to historic title to land would give, at best, sovereignty over a disputed land mass, and associated maritime zones. It could not give rise to rights in the high seas.
Rocks v Islands
The Tribunal then considered the claims (No. 3-7) by the Philippines seeking to characterise various land masses within the South China Sea as low tide elevations, uninhabitable rocks, or islands.
The first threshold issue is whether the land features within the South China Sea are rocks, islands, or merely submerged features. One of the features of the arbitration was its receipt of, and reliance upon, the work of noted hydrographers and scientists, including Professor Clive Schofield, Professor Victor Prescott, Mr Robert van der Poll, and Mr Grant Boyes, who was retained by the Tribunal as an independent expert (see -).
The distinction is critical, because the characterisation of the land mass determines the nature and extent of maritime zones that project from it.
The claims required a detailed analysis of Article 121 of UNCLOS. That Article, which had not previously been the subject of any considered decision, provides:
Regime of islands
1. An island is a naturally formed area of land, surrounded by water, which is above water at high tide.
3. Rocks which cannot sustain human habitation or economic life of their own shall have no exclusive economic zone or continental shelf.
Also relevant is Article 13 which provides:
1. A low-tide elevation is a naturally formed area of land which is surrounded by and above water at low tide but submerged at high tide.
2. Where a low-tide elevation is wholly situated at a distance exceeding the breadth of the territorial sea from the mainland or an island, it has no territorial sea of its own.
The Philippines submissions were to the following effect:
• Mischief Reef, Second Thomas Shoal, Subi Reef, Gaven Reef and McKennan Reef are low tide elevations; and
• Scarborough Shoal, Johnson Reef, Fiery Cross Reef and Cuarteron Reef are high tide features but not islands.
Significantly, the Tribunal adopted the approach that it should disregard artificial constructions when characterising the various land masses in dispute. It reached this conclusion (at  – ) because each of the definitions of a low tide elevation and an island in UNCLOS incorporate the term “naturally formed”. That resulted in Tribunal disregarding the many significant artificial structures which are used to sustain limited habitation in the disputed areas.
Although the Tribunal accepted the evidence of the Schofield and Prescott report to the effect that tidal analysis in the South China Sea was not well understood, it concluded that there was sufficient evidence for it to determine whether or not particular features were above water at high tide.
The Tribunal concluded that:
• Scarborough Shoal, Cuarteron Reef, Fiery Cross Reef, Johnson Reef, Gaven Reef were high tide features, exposed at high tide;
• McKennan Reef, Hughes Reef, Subi Reef Mischief Reef and Second Thomas Shoal, are low tide features, submerged at high tide
It was then necessary to consider whether the high tide features were capable of being characterised as ‘islands’ for the purposes of UNCLOS. It was also necessary to consider the status of other nearby land features (Itu Aba, Thitu and West York).
The Tribunal held (at ) that the concept of “sustaining” human habitation required a provision of a proper standard of essentials for life over a period of time that was not transitory. Habitation required something more than a presence of a small number of persons who were maintained in the style of a garrison. The term “sustain human habitation” required that the feature be able to support and maintain, by providing food, drink and shelter, a settled population over a period of time (at ).
Similarly, the Tribunal concluded (at ) that an economic life of its own required an economic life that was not dependent upon support from outside the feature in question.
The Tribunal concluded that none of the Spratly Islands land masses (whether individually, or if considered collectively as a unit) were islands capable of generating extended maritime zones. This was essentially because none were capable of sustaining human habitation or economic life of their own. It followed that no feature in the Spratly Islands was capable of generating an Exclusive Economic Zone or continental shelf (at ).
Having found that none of the land features were capable of sustaining an exclusive economic zone, the Tribunal went on to consider the claims of the Philippines seeking declaratory relief in relation to China’s actions in the disputed areas. This necessitated the Tribunal first considering the fifth submission of the Philippines, seeking a declaration that “Mischief Reef and Second Thomas Shoal are part of the exclusive economic zone and continental shelf of the Philippines.”
The Tribunal considered that it had jurisdiction to deal with the submission despite the Article 298 reservation made by China because it was not called upon to delimit overlapping or intersecting exclusive economic zones (because it had now found that none of the features claimed by China were capable of generating an exclusive economic zone) (e.g. at ). It therefore accepted (at ) the submissions of the Philippines that Mischief Reef and Second Thomas Shoal were within the Exclusive Economic Zone of the Philippines.
It followed that the Tribunal considered that it also had jurisdiction to deal with the claims for declaratory relief in relation to China’s activities within the Exclusive Economic Zone of the Philippines. Again, despite China’s non-participation, the Tribunal had close regard to all available public statements made by China in relation to the justifications for its actions (see, e.g. ).
The Tribunal found that China had violated the Philippines’ sovereign rights in its Exclusive Economic Zone. It reached this conclusion comfortably on the basis of the clear and well established rights of coastal states to the resources of the waters and sea-bed within an Exclusive Economic Zone (-). China had interfered with Philippine fishing and petroleum exploration, constructed artificial islands and failed to prevent Chinese fishermen from fishing in the zone. Furthermore, China had interfered with the traditional fishing rights enjoyed by Philippines fishermen at Scarborough Shoal.
China had also violated its obligation to preserve and protect fragile ecosystems and the habitat of depleted, threatened or endangered species. China’s large-scale land reclamation activities and construction of artificial islands at the Spratly Islands had severely harmed the coral reef environment. China had moreover failed to fulfil its duty to prevent Chinese fisherman from harvesting endangered sea turtles, coral and giant clams on a substantial scale.
Finally, China’s land reclamation activities and construction of artificial islands were incompatible with its obligations during dispute resolution proceedings.
In each of those cases, China’s actions went well beyond what was required to state its own understanding of its rights (which understanding the Tribunal found to be erroneous at law) and instead amounted to positive interference with the rights of another.
The Award is a significant decision on aspects of the international law of the sea which had not previously been considered by a competent court or tribunal. . In particular, the Tribunal considered the distinction between islands, which generate an exclusive economic zone of 200 nautical miles and a continental shelf, and “rocks” which cannot sustain human habitation or an economic life of their own and do not generate a comparable maritime entitlement. The Tribunal focused on the objective capacity of a feature in its natural condition to sustain either a stable community of people or an economic activity that was not dependent on outside resources or purely extractive in nature.
Resolution of the characterisation of land masses as rock or island is only the first step in the application of international law to the disputes. However it is of great significance. The work of the Tribunal is exhaustive and authoritative. Despite the public statements of China following the decision, it is a decision which is consistent with international law. It is, put simply, legitimate.
Whether or not China ultimately chooses to negotiate on the basis of acceptance that its claims are legally unfounded, it is very likely that the decision will influence the positions held by other claimant States in the region. The rights of coastal States now take on significantly increased prominence, and the finding that the island and reef features do not generate maritime zones may, curiously, decrease international tensions and the rush to reclaim land.
What seems clear is that international law as articulated by the Tribunal has a vital role to play, setting the framework within which diplomatic discussions are occurring, and also providing possible pathways to independent dispute settlement.