The South China Sea Arbitration: Shedding light on sovereignty and international law – Niamh McCormack

This piece considers China’s actions in relation to the South China Sea arbitration commenced by the Philippines and how it provides insights into the role of state sovereignty for international dispute settlement. 

As far back as the Alabama claims of the United States of America against Great Britain arbitration in 1872, the international community has committed itself to the rule of international law and the peaceful settlement of disputes. The South China Sea Arbitration and subsequent events provide an opportunity to reflect on the nature and practical outcomes of international dispute settlement.

An overview of the recent developments in the South China Sea can be found in Julia Weston’s previous post on the ILA Reporter. This current piece examines the South China Sea arbitration between the Philippines and China, focusing on the contested jurisdiction and validity of the tribunal, and what the case demonstrates on the implications of non-participation by a party and the role of sovereignty in international dispute settlement.

On 19 February 2013, China presented a note verbale to the Department of Foreign Affairs of the Republic of the Philippines, rejecting the arbitration initiated by the Philippines pursuant to Articles 286 and 287 of the United Nations Convention on the Law of the Sea (‘UNCLOS’, or ‘the Convention’) and confirming its non-participation. This marked one of the most significant events in China’s history of engaging in international law, ultimately resulting in an award being made against it on two occasions: first on issues of jurisdiction and admissibility in October 2015, and on merit in July 2016. The dispute concerned maritime entitlements in the South China Sea, the 2016 Award found China must cease its activities in the maritime zone and abandon its ‘nine-dash line’ policy. In the years since, this Award has had little effect on China’s practice and has not mitigated tensions in the region. The below discussion reflects on the role of international dispute settlement, before turning to the shortcomings of that system in light of China’s position.

I turn first to the basic tenets of international dispute settlement to provide context to the procedural issues. The means for the settlement of international disputes may be categorised into two groups: (i) diplomatic means, such as negotiation, where parties may accept or reject a proposal as they see fit and; (ii) legal means, such as arbitration and judicial settlement, where the outcome reached is binding upon the parties. While judicial settlement requires reference of a dispute to an international court or tribunal, arbitration mechanisms are devised by the parties themselves. 

States may only refer disputes to an international legal dispute resolution mechanism where both parties have given consent to that mechanism, normally through an international treaty. Even in instances of ‘compulsory jurisdiction’, such as Article 36(2) of the International Court of Justice (‘ICJ’) Statute, the state party has total agency on whether it recognises  this jurisdiction and is free to qualify its consent to jurisdiction. 

In the case of the South China Sea arbitration, China contested that it had not consented to the arbitration and therefore the tribunal did not have jurisdiction over the dispute. Unlike the compromissory clause of the ICJ, consent to the dispute settlement regime outlined in Part XV of UNCLOS cannot be qualified by state parties. In other words, a state may either accept the conditions of the Convention as a whole or choose not to be party to it. While it may be argued that this regime limits the sovereignty of a state in choosing a means of dispute settlement, and the phrase ‘compulsory jurisdiction’ seems to reinforce this, this form of jurisdiction is founded on the consent of the state. By voluntarily becoming party to the Convention, the state is exercising sovereignty in its acceptance of the jurisdiction of the mechanisms provided for, without a second consent at the institution of proceedings being required.   

In the South China Sea arbitration, the institution of proceedings was founded in the Annex VII of UNCLOS. Rejecting the tribunal’s jurisdiction over the dispute, China held its position that it does not accept the arbitration initiated by the Philippines. However, under Article 9 of Annex VII non-participation does not preclude the conduct of arbitral proceedings and does not alter the binding effect of the award. This is a settled principle of international law, recognised  in Case Concerning Military and Paramilitary Activities In and Against Nicaragua (Nicaragua v United States) at p 14 where the ICJ found that the binding nature of an earlier arbitral award between the parties was not affected by the United States not participating in the merit-stage of the proceedings. 

It is not uncommon for a state to challenge the jurisdiction of an arbitration tribunal. In the Southern Bluefïn Tuna Case between Australia and Japan and between New Zealand and Japan (Award on Jurisdiction and Admissibility), Japan also disputed the grounds for jurisdiction. The Tribunal held that Australia and New Zealand had not exhausted alternative means for dispute settlement, as required by Article 281. In contrast, the tribunal for the South China Sea dispute took a broader approach to finding jurisdiction, deciding that it was competent to adjudicate on the merits of the dispute despite China’s contention that the parties had agreed to settle any dispute by negotiation. In justifying its decision, the Tribunal noted that the agreements referred to by China were of a political nature and were not intended to be “legally binding with respect to dispute resolution”, referring to the distinction between legal and political methods. By drawing on this, the Tribunal emphasises the purpose of arbitration: to find a legally binding resolution to an international dispute. 

In this vein, the primary argument of China was that the tribunal did not have jurisdiction over the case; that China’s non-participation in the arbitration is rooted in the principle of sovereignty in international law which allows for a state to choose its own means of dispute settlement, as recognised in Article 2(3) of the United Nations Charter, and the tribunal did not have jurisdiction over the case as the parties had not exhausted other means. The Tribunal’s interpretation of Article 281 in this case dismisses China’s claim by pointing out the distinction between legal and diplomatic means, and by implication rests its jurisdiction on this point. 

The position of China demonstrates that the distinction between diplomatic and legal means of dispute settlement is practically redundant without the cooperation of state parties; a state can reject a legally sound settlement finalised by legal means. Where a state does not recognise the validity of an award, the binding effect of that award is reduced, to the extent that it does not result in effective reparations for the aggrieved party. In the context of the South China Sea dispute, this would encompass a change in practice. However, since the award was published, China has continued its ‘nine-dash line’ practice in the South China Sea, contributing to rising tensions in the region. While the theoretical rule of law remains unchanged, the South China Sea arbitration provides an opportunity to reflect on the administration of international law, a reflection which becomes increasingly important in a time where pockets of tensions are rising globally. 

Niamh McCormack is a pre-PhD candidate at Leiden University School of Law and holds a research assistant position at the Grotius Centre for International Legal Studies. Her research focuses on international dispute settlement, the law of treaties, and the role of international human rights treaty bodies in the realisation of human rights.  Niamh is an alumnus of University College Dublin (BCL, 2017) and Leiden University (LLM, 2020).

Suggested citation: Niamh McCormack, ‘The South China Sea Arbitration: Shedding light on sovereignty and international law’ on ILA Reporter (1 February 2021) <http://ilareporter.org.au/2021/02/the-south-china-sea-arbitration-shedding-light-on-sovereignty-and-international-law-niamh-mccormack/>