On 29 October 2015, an Arbitral Tribunal (Tribunal) issued its award on the questions of jurisdiction and admissibility in the arbitration between the Republic of Philippines and the People’s Republic of China concerning the South China Sea.  In brief, the Tribunal found that it had jurisdiction to decide seven of the Philippines’ 15 substantive claims.  As to the Philippines’ remaining claims, the Tribunal decided that the question of its jurisdiction needed to be deferred for further consideration in conjunction with its hearing of the merits of the claims.

The Philippines’ substantive claims were summarised in my previous article of 22 July 2015. To recap, its 15 claims can be broadly distilled as follows:

  1. China’s maritime entitlements or ‘historic rights’ over the waters, seabed and subsoil in the South China Sea do not extend beyond the limits of its entitlements under the United Nations Convention on the Law of the Sea (UNCLOS). The corollary is that China’s nine-dash line, insofar as it purports to define the limits of China’s ‘historic rights’ in the South China Sea, is not supported by UNCLOS or another source of international law;
  2. The various features relied upon by China to assert its maritime claims in the South China Sea are not islands (as China claims) but are properly characterised as either ‘rocks’ or ‘low tide elevations’ or are permanently submerged.  China’s construction activities on particular maritime features cannot change their nature in law. This claim is critical to the arbitration because, under UNCLOS, the characterisation of these features determines the maritime entitlements they are capable of generating for a state (namely, an exclusive economic zone (EEZ) and/or continental shelf);
  3. China’s construction and occupation activities in relation to particular maritime features in the South China Sea constitute attempted appropriation of such features in violation of UNCLOS. Further, these activities, as well as China’s fishing and law enforcement activities, have interfered with the Philippines’ ability to freely navigate in its EEZ and the exercise of its sovereign rights in relation to the resources falling within its EEZ and continental shelf; and
  4. China has violated UNCLOS by engaging in fishing and construction activities that damage the marine environment in the South China Sea.

In summary, the Tribunal determined that it has jurisdiction over the second and fourth categories of claims (deferring consideration of the remaining first and third categories). In so finding, the Tribunal addressed each of the following issues in relation to the question of jurisdiction.

Did the Philippines’ claims raise a dispute concerning the interpretation and application of UNCLOS?

According to China’s Position Paper, the dispute could be characterised in two ways, both of which excluded the Tribunal’s jurisdiction. First, China characterised the dispute as concerning territorial sovereignty-related questions over features in the South China Sea. On that basis, China contended that the dispute did not concern the ‘interpretation and application of UNCLOS’, being the threshold requirement for the Tribunal’s jurisdiction under article 288 of UNCLOS.

The Tribunal rejected this characterisation, finding that, while a dispute between the parties did exist concerning land sovereignty over certain features, the Philippines’ claims did not require the Tribunal to make determinations on questions of sovereignty. The Tribunal found that each of the Philippines’ claims concerned the interpretation and application of UNCLOS.

Secondly, China contended that the dispute was properly characterised as relating to maritime boundary delimitation which, for the reasons given below, was excluded from the Tribunal’s jurisdiction by an exclusionary provision in the UNCLOS that China had activated in 2006.

In rejecting this contention, the Tribunal distinguished between a dispute concerning the existence of an entitlement to maritime zones (the present matter), and a dispute concerning the delimitation of those zones where parties’ entitlements overlap. The Tribunal also emphasised that, while it would determine the nature of particular maritime features in dispute, insofar as this resulted in overlapping entitlements between the parties the Tribunal’s determination would not go so far as to delimit boundaries.

Did any of the claims fall within the exceptions to jurisdiction in Part XV of UNCLOS?

As noted above, in 2006 China opted out of the Tribunal’s jurisdiction over particular categories of disputes, including those concerning:

  1. sea boundary delimitations;
  2. historic bays and titles;
  3. law enforcement activities; and
  4. military activities.

This action was taken in accordance with article 298 of UNCLOS, which entitles a party to opt out of compulsory dispute settlement procedures for specific types of disputes when signing or ratifying UNCLOS.

Considering each of the claims in turn, the Tribunal found that none of the exceptions to jurisdiction applied to the Philippines’ second and fourth category of claims. Consequently, it had jurisdiction to determine those claims.

As to the first and third categories, the Tribunal noted that the applicability of the above exceptions depended on merits of the claims and, as such, the possible jurisdictional objections did not possess an exclusively preliminary character. For that reason, the Tribunal reserved a decision on jurisdiction for consideration in conjunction with its determination of the merits of the claims. The Tribunal’s key considerations can be broadly summarised as follows:

  1. The Tribunal’s jurisdiction over the first category of claims (ie, the effect of any historic rights claimed by China) is dependent on whether the claims are caught by the exclusion for ‘historic bays and titles’ in article 298 of UNCLOS. This requires a determination as to the nature and effect of China’s claimed historic rights and their interaction with UNCLOS (ie, a merits determination);
  2. The Tribunal’s jurisdiction over the third category of claims (ie, concerning China’s various construction/interference activities) is dependent on the status of certain maritime features claimed by China and whether any such features generate maritime entitlements for China. Insofar as they generate entitlements for China and result in overlapping entitlements to maritime zones between the parties, the exclusion from ‘sea boundary delimitations’ in article 298 would prevent the Tribunal from addressing some of the Philippines’ claims. That is, such claims would first require a delimitation of the overlapping zones, which the Tribunal is not empowered to do; and
  3. The specifics of China’s activities in particular areas and whether they are military in nature (and therefore fall within the exclusion in article 298) are best assessed in conjunction with the merits.

Were the preconditions to the Tribunal’s jurisdiction met?

Relying on articles 281 and 282 of UNCLOS, China contended that state parties had agreed on a peaceful dispute resolution mechanism of their own choice, precluding recourse to the compulsory dispute settlement procedures under UNCLOS. The articles essentially prevent a state from resorting to the compulsory procedures in the event that they have already agreed on another means of dispute resolution.  In this regard, China pointed to a series of joint statements by state parties starting in the mid-1990s that referred to the resolution of their dispute by negotiation, as well as the Treaty of Amity and Cooperation in South East Asia.

Having regard to these statements and instrument, the Tribunal concluded that they did not prevent the Philippines from resorting to arbitration under the compulsory dispute resolution provisions.

The Tribunal also found that the Philippines had satisfied the precondition for resorting to arbitration, namely, that the parties had an ‘exchange of views’ regarding settlement of the dispute (article 283). In so finding, the Tribunal relied upon diplomatic communications by the Philippines to affected parties in which it proposed multilateral negotiations to resolve the dispute. China insisted on bilateral talks only and the parties ultimately failed to identify a mutually agreeable mode of settlement.

The Tribunal also noted that it was not deprived of jurisdiction by either China’s non-participation in the arbitration to date or the absence of other states with claims to features in the South China Sea (such as Vietnam).

Next steps

The dispute will now proceed to a substantive hearing to enable the Tribunal to determine the merits of the Philippines’ claims alongside the outstanding jurisdictional questions.

However, China has reiterated its position of non-acceptance of (and non-participation in) the arbitration. Its Vice Foreign Minister recently claimed that the outcome of the arbitration ‘will not impact China’s sovereignty, rights or jurisdiction over the South China Sea under historical facts and international law’. Without any power to enforce its rulings, the Tribunal could end up being entirely ignored by China insofar as the outcome is not in its favour.  The proceeding could even prompt China to withdraw from UNCLOS altogether.

While the Philippines has acknowledged this risk, it hopes that an outcome unfavourable to China will encourage other states to defend their respective claims in the region and will result in sufficient diplomatic pressure to dissuade China from further construction activities in the South China Sea. In the meantime, the US has presented its most significant challenge yet to China’s claims in the South China Sea, sending a guided missile destroyer into waters within 12 nautical miles of one of the reefs in dispute days before the Tribunal published its award.

Lea Christopher is a lawyer at Clayton Utz in Canberra. The views expressed in this article are solely her own.