On 12 July 2016, a five-member arbitral tribunal (‘Tribunal’) handed down a historic final award in Republic of the Philippines v People’s Republic of China, an arbitration instituted by the Philippines under the United Nations Convention on the Law of the Sea (‘Convention’). The unanimous award found substantially in favour of the Philippines’ claims and will set a strong precedent for the resolution of remaining disputes in the South China Sea.
The Philippines instituted the arbitration in 2013 under the compulsory dispute resolution provisions in Part XV of the Convention, by citing a lack of progress in diplomatic negotiations with China. The arbitration followed heightened tensions between the countries in 2012 regarding the disputed Scarborough Shoal, which sits amid rich fishing grounds and over which both states claim possession. Since the commencement of the arbitration, China has stepped up its extensive land reclamation and construction activities in the Spratly Islands, which are also the subject of the states’ dispute.
A summary of the Philippines’ claims is set out in my previous article. They include two key challenges. Firstly, the Philippines challenged the validity of China’s ‘nine-dash line’, which China claims to delimit its maritime entitlements in the South China Sea. This appears on Chinese maps and overlaps with areas of the sea claimed by the Philippines and other Southeast Asian states. Secondly, it challenged China’s claims of rights over waters in the South China Sea, which revolves around several very small islands, shoals and reefs located in the Spratly Islands and Scarborough Shoal. Both the Spratly Islands and the Scarborough Shoal are located within 200 nautical miles of the Philippines’ exclusive economic zone (‘EEZ’).
The Tribunal delivered a resounding victory to the Philippines with the following key findings:
- 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 the Convention or any other source of international law (278).
- None of the disputed maritime features in the Spratly Islands or the Scarborough Shoal are classified as islands under the Convention and, as such, do not generate entitlements to a 200 nautical mile EEZ or a continental shelf. Accordingly, there is no possible legal entitlement by China to maritime zones beyond 12 nautical miles in the Spratly Islands. In addition, Mischief Reef, where China is in the advanced stages of constructing military facilities, together with a number of other features in the Spratly Islands, were found to be ‘low tide elevations’, which means that they are not capable of appropriation by China and generate no maritime entitlements. As such, they form part of the EEZ and continental shelf of the Philippines.
- Having found that Mischief Reef and certain other features in the Spratly Islands were low-tide elevations that form part of the EEZ and continental shelf of the Philippines, and are not overlapped by any possible entitlement of China, the Tribunal concluded that the Convention could allocate sovereign rights to the Philippines in relation to certain maritime areas in its EEZ. On this basis, the Tribunal found that the following actions of China in particular areas within the Philippines’ EEZ were unlawful: (a) interfering with the Philippines’ petroleum exploration and fishing activities; (b) failing to prevent Chinese fisherman from fishing in the EEZ; and (c) constructing installations and artificial islands on Mischief Reef without the Philippines’ authorisation. The Tribunal found that China’s actions breached the Convention by violating the Philippines’ sovereign rights with respect to its continental shelf and the living resources of its EEZ.
- China’s large-scale land reclamation activities and its construction of artificial islands in the Spratly Islands caused severe harm to the coral reef environment in violation of its obligation under the Convention to preserve and protect fragile ecosystems and the habitat of endangered and depleted species.
- China, through its actions, had violated Article 300 of the Convention, which requires parties to fulfil in good faith its obligations under the Convention, together with its other obligations under the Convention to refrain from aggravating or extending the parties’ disputes during the settlement process. In particular, the Tribunal noted that China had permanently destroyed evidence of the features’ natural condition, built a large artificial island on Mischief Reef, and caused permanent, irreparable harm to the reef ecosystems.
The findings in paragraph 1) and 2) above, being the most significant, are discussed in more detail below.
China’s nine-dash line and its claimed historic rights in the South China Sea
The jurisdiction question
The Tribunal first addressed whether it had jurisdiction to determine the dispute and, in particular whether the ‘opt-out’ declaration to compulsory jurisdiction for ‘historic bays or titles’, made by China under Article 298(a)(i) of the Convention, excluded such jurisdiction. This involved consideration as to whether China’s maritime claims amount to ‘historical title’.
The word ‘title’ was found to denote complete ownership or sovereignty, which extends only to a state’s 12 nautical mile territorial sea. The Tribunal found that, while China’s conduct demonstrated its claim to historic rights to the living and non-living resources in the waters of the South China Sea within the nine-dash line, it did not claim that those waters constituted China’s territorial sea, other than any territorial sea generated by any islands it possessed. That is, China, on the basis of its actions, did not claim historical title to such waters.
Therefore, the Tribunal concluded that exclusion for ‘historic bays or titles’ did not apply to the dispute and, as such, it had jurisdiction to consider the Philippines’ submissions on the nine-dash line.
Lawfulness of the nine-dash line
The Tribunal considered the merits of the Philippines’ claims on China’s nine-dash line by addressing two key questions:
1. Firstly, does the Convention enable the preservation of rights to living and non-living resources that were established prior to the Convention’s entry into force and that are at variance with the Convention provisions?
The Tribunal found that the text of the Convention comprehensively addresses the rights of States within the areas of the exclusive economic some and continental shelf and leaves no space for an assertion of historic rights. The Tribunal found that this was reinforced by the records for negotiation of the Convention, during which the importance of adopting a comprehensive instrument was manifest and states including China advocated for secure rights of developing states over their respective EEZs and continental shelves.
The Tribunal concluded that, upon China’s accession to the Convention and its entry into force, any historic rights that China may have had to the resources within the nine-dash line were, as a matter of law, superseded by the limits of the maritime zones provided for under the Convention.
Thus, the Tribunal concluded that for the dispute between the Philippines and China, China’s claims to historic or other rights or jurisdiction in the maritime areas of the South China Sea encompassed by the nine-dash line are contrary to the Convention and without lawful effect to the extent that they exceed the geographic and substantive limits of China’s maritime entitlements under the Convention.
2. Secondly, prior the Convention’s entry into force, did China have historic rights and jurisdiction over resources in the waters of the South China Sea beyond the limits of the territorial sea of its islands?
The Tribunal’s conclusion on the first question meant that it was not necessary to address the second question for the purposes of settling the dispute. Nonetheless, the Tribunal considered it important to identify the extent of any such historic rights held by China in the South China Sea in order to demonstrate that, in ratifying the Convention, China has relinquished far less in terms of its claim to historic rights than the conclusion might to the first question may suggest.
The Tribunal found that, in order to establish the exclusive historic rights within the nine-dash-line which China appears to claim now, it would have to demonstrate that China had exclusively engaged in activities that deviate from what was permitted under the freedom of the high seas, and that other States acquiesced in the exercise of such a right. In practice, China would have to provide evidence that it had historically sought to prohibit or restrict the exploitation of the resources by the nationals of other States and that those States had not objected to such restrictions. The Tribunal found that it could not identify evidence of such conduct; while Chinese fisherman had historically made use of the islands in the South China Sea, there was no evidence China had historically exercised exclusive control over the waters or their resources.
Hence, the Tribunal concluded that China’s ratification of the Convention did not extinguish any historic rights in the waters of the South China Sea.
Status of features relied upon by China to assert its maritime claims in the South China Sea
The Tribunal next assessed the status of certain maritime features in the South China Sea and the entitlements to maritime zones that they are capable of generating.
In broad terms, maritime features can be divided into the following three categories under the Convention.
- An island is a naturally formed area of land that is above the water at high tide (article 121(1) of the Convention. An island is the most useful to states because it is capable of generating is own 200 nautical mile EEZ and continental shelf, as well as a 12 nautical mile territorial sea.
- A rock is a naturally formed area of land, which sit above water at high tide, and ‘which cannot sustain human habitation or economic life of their own’ (article 121(3)). A rock can generate only a 12 nautical mile territorial sea.
- A low-tide elevation is submerged at high tide in its natural condition. Low tide elevations generate no maritime zones and have no legal status (article 13). In addition, a state cannot claim sovereignty over a low tide elevation that is outside its territorial sea.
In noting that many of the features in the Spratly islands had been subjected to substantial human modification by China, the Tribunal observed that the term ‘naturally formed’ in the definition of both a low-tide elevation and an island in the Convention indicates that the legal status of a feature is evaluated on the basis of its natural condition. It found that human modification cannot change the seabed into a low-tide elevation, or a low-tide elevation into an island under the Convention, regardless of the scale of the installation or construction activities.
The Tribunal’s key findings on the features the subject of the dispute are summarised below.
Mischief Reef and Second Thomas Shoal
Mischief Reef and Second Thomas Shoal are located within the Spratly Islands and have been the subject of confrontations between the Philippines and China. At present, China has engaged in significant land reclamation and construction activities on Mischief Reef, whilst the Philippines maintains a small navy presence on Second Thomas Shoal.
Significantly, the Tribunal found that Mischief Reef and Second Thomas Shoal are low tide elevations, which meant that they are neither capable of being possessed, nor capable of generating any maritime zones on their own. Consequently, the Tribunal concluded that they are simply maritime features within 200 nautical miles of the Philippines’ EEZ and located in an area do not overlap with entitlements generated by any maritime feature that is claimed by China. Accordingly, for the dispute between the Philippines and China, the Tribunal concluded that Mischief Reef and Second Thomas Shoal form part of the EEZ and continental shelf of the Philippines.
The upshot of this finding is that there is a constructed Chinese military facility on Mischief Reef in the Philippines’ EEZ that is in violation of the Philippines’ sovereign rights. This puts the parties in a difficult position, as Mischief Reef cannot return to its natural condition nor is it likely to be handed over by China.
The Tribunal also found that a number of other reefs forming part of the Spratly Islands were also correctly characterised as low tide elevations within the EEZ of the Philippines, including Subi Reef, Hughes Reef and Gaven Reef (South). For this reason, these features are also incapable of possession by China and do not generate any maritime zones of their own.
The status of other features as rocks/islands
Article 121(3) provides that ‘rocks which cannot sustain human habitation or economic life of their own shall have no exclusive economic zone or continental shelf’. The Tribunal reached the following conclusions as to the interpretation of this clause, by setting a high standard for demonstrating that a feature is an island:
- Whether a feature has the natural capacity to ‘sustain human habitation or economic life’ must be considered in the absence of any external additions or modifications intended to increase that capacity.
- As to the term ‘human habitation’, ‘the critical factor is the non-transient character of the inhabitation’. Furthermore, the Tribunal referred to a ‘stable community of people’.
- As to the term ‘economic life of their own’, the economic life must be orientated around the feature itself and, as such, not solely dependent on the surrounding waters or external resources. In addition, extractive economic activities to harvest the feature’s natural resources for the benefit of a population that does not inhabit the feature are insufficient.
The Tribunal found that the current presence of military or other governmental personnel on many of the Spratly Islands was dependent on outside support and not reflective of those features’ capacity to sustain human habitation. It also found that historical temporary use of these features by small groups of fisherman and labourers engaged in mining and fishing did not resemble a ‘stable community’. In addition, it found that all of the economic activity in the Islands had been essentially extractive, such as mining for guano.
For the above reasons, the Tribunal concluded that Scarborough Shoal, together with all of the other features in the Spratly Islands that were not low-tide elevations, such as Johnson Reef, Cuarteron Reef, Fiery Cross Reef, were ‘rocks’ that had no EEZ or continental shelf pursuant to Article 121(3) of the Convention.
The award is the first significant international law decision on maritime disputes in the South China Sea. By declaring that the nine-dash line, the primary basis of China’s claims to date, has no legal basis, it has considerably changed the nature of and discourse around maritime disputes in the South China Sea. Moreover, while the features in the South China Sea will not change possession and the artificial islands will not return to their natural state as submerged reefs, there is now legal precedent for understanding such features.
Consistent with its position throughout the arbitration, China’s Foreign Ministry has stated that the award ‘is null and void and has no binding force’ which ‘China neither accepts nor recognises’. Accordingly, it appears that China will continue its activities in the South China Sea in the same manner as before. Given that there is no avenue by which the award can be enforced, it is up to the parties to return to the negotiating table. However, given China’s reaction to the award and the Philippines’ limited ability to make concessions that would not involve retreating from the award’s findings, the future scope for bilateral negotiations appears to be minimal.
Lea Christopher is a lawyer at Clayton Utz in Canberra. The views expressed in this article are solely her own.