Tribunalholdshearingon

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LeaChristopher
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22/07/2015
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Introduction
From 7 to 13 July 2015, the Arbitral Tribunal held the first hearing in
the arbitration between the Republic of Philippines and the Peoples
Republic of China in connection with their dispute in the South China
Sea.
The arbitration was submitted by the Philippines on 22 January 2013,
pursuant to the compulsory dispute settlement provisions under part
XV of the United Nations Convention on the Law of the Sea
(UNCLOS).
A five member ad hoc tribunal was constituted under annex VII of
UNCLOS and sat in the Peace Palace, the headquarters of the
Permanent Court of Arbitration, in the Hague. While the hearing was
not open to the public, the Tribunal permitted the governments of
certain states (Indonesia, Vietnam, Japan, Thailand and Malaysia) to
send small delegations as observers.
The arbitration concerns disputes between the Philippines and China
in relation to their maritime entitlements in the South China Sea.
China has continued to reiterate its position of non-acceptance of
(and non-participation in) the arbitration, maintaining that it believes

in resolving disputes in the South China Sea via bilateral negotiations

and that the arbitration violates previous agreements between the two
states.
The Philippines has sought to challenge this position at the hearing,
submitting that they have pursued a course of bilateral and regional
diplomatic efforts to resolve its disputes with China for almost two
decades without success. The Philippines says that this has left no
recourse other than arbitration.
In its Statement of Claim, the Philippines relies on UNCLOS which, it
submits, defines and limits the entitlements of coastal states to a
territorial sea, exclusive economic zone (EEZ) and continental shelf
(and sets out states rights and obligations within those areas).
In particular, the Philippines relies on provisions that provide that a
states EEZ cannot extend beyond 200 nautical miles from its
mainland coast (or any island over which the state has sovereignty)
(article 57), and that its continental shelf extends to the same distance
(unless it can be established that the states continental margin
extends beyond that distance) (article 76).
According to the Philippines, China contravenes these provisions by
claiming, on the basis of its nine-dash line, historic rights to areas
that are beyond its 200M limit, including some areas that fall within
200M of the coasts of the Philippines main islands. While China is a
signatory to UNCLOS (which enabled the Philippines to commence
the compulsory arbitral proceedings), it claims that it does not
subscribe to some of its tenets.
However, the purpose of the first hearing was not to decide the
Philippines substantive claims, but to decide whether the Tribunal
has jurisdiction over these claims and whether they are admissible.
The Philippines substantive claims
At the hearing, the Philippines outlined the principal substantive
claims that it intends to pursue if the Tribunal decides the question of

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jurisdiction in its favour. They can be summarised as follows:

China is not entitled to exercise its alleged historic rights over the
waters, seabed and subsoil beyond the limits of its entitlements under
UNCLOS. Its nine-dash line, insofar as it purports to define the limits
of Chinas historic rights, is not supported by international law;
The various maritime features relied upon by China to assert its
maritime claims in the South China Sea are not islands (as China
claims) but are either rocks (within the meaning of article 121,
paragraph 3 of UNCLOS), low tide elevations or are permanently
submerged. While rocks generate an entitlement to a territorial sea of
12M (allowing China to exercise sovereignty over that area), they
cannot generate an entitlement to an EEZ or continental shelf beyond
that limit (and low tide elevations generate no entitlements). Chinas
significant construction activities on various maritime features
cannot change their nature in law;
China has breached UNCLOS by interfering with the Philippines
exercise of its sovereign rights and jurisdiction; and
Chinas fishing practices have damaged the marine environment in
the South China Sea, including within the Philippines EEZ, in breach
of UNCLOS. UNCLOS requires states parties to adopt measures to
protect the marine environment.
The jurisdictional question
Chinas position
In a position paper published in December 2014 (see also a summary
of the paper here), China contended that the Philippines claims are
beyond the scope of the Tribunals jurisdiction because they require
the Tribunal to make determinations on territorial sovereignty and
the delimitation of sea boundaries.
China made three interrelated claims in support of this contention.
First, it claimed that UNCLOS does not give the Tribunal jurisdiction
to address territorial sovereignty-related questions. According to
China, in order to decide any of the Philippines claims, the Tribunal
would be required to determine, directly or indirectly, the territorial
sovereignty over various maritime features in the South China Sea,
which is beyond the scope of UNCLOS.
Secondly, it claimed that in 2006, pursuant to article 298 of
UNCLOS, China opted out of compulsory arbitration on particular

categories of disputes, including those relating to sea boundary

delimitations. Article 298(1) provides that, when signing or ratifying
UNCLOS (or any time thereafter), a state may opt out of compulsory
arbitration with respect to particular categories of disputes, one of
which relates to sea boundary delimitations. Article 298(a)(i) then
provides that, when such a dispute arises and no agreement within a
reasonable period of time is reached in negotiations, the opted out
party must accept, at the request of the other party, submission of the
matter to conciliation.
The Philippines has not requested that the parties participate in
conciliation pursuant to article 298(a)(a) presumably because, as
discussed below, its position is that the dispute does not concern sea
boundary delimitations and therefore has not been opted out of by
China.
The Philippines position
At the hearing, the Philippines submitted that its claims do not
require the Tribunal to make determinations on the question of
territorial sovereignty or the delimitation of sea boundaries (its
statement is available here).

It emphasised that the Tribunal is really being asked to do the

following:
To clarify the nature of the disputed features in the South China Sea
(ie, whether they are rocks, islands or low-tide elevations) that are
relied upon by China to assert its claims, because the features
characterisations determine whether they can be appropriated by
China or can generate their own 200M EEZ; and
To examine the validity of Chinas nine-dash line based on its
historical rights.
According to the Philippines, the question to be determined by the
Tribunal on this issue, therefore, is whether UNCLOS allows a state to
claim maritime entitlements based on historic rights beyond those
provided for in UNCLOS.
Accordingly, a key issue in the dispute is whether it is possible for the
Tribunal to make determinations about the nature of particular
maritime features and their entitlements, without addressing who

actually exercises sovereignty over those features.

The Tribunal will also need to consider whether it can determine the
validity of the nine-dash line without addressing sovereignty over any
of the maritime features within the area delimited by the line.
On a higher level, the Philippines painted the case as being a test of
the utility and feasibility of UNCLOS compulsory dispute resolution
mechanisms. Emphasising Chinas aggressive and disconcerting
activities in the South China Sea, the Philippines contended that the
dispute resolution mechanisms give weaker states the opportunity to
challenge the powerful on an equal footing on the belief that law
triumphs over force. On this basis, according to the Philippines, a
finding that the Tribunal lacks jurisdiction to hear its claims would
render the UNCLOS dispute resolution mechanisms almost valueless
for small states parties vis a vis their more powerful neighbours.
Conclusion
Notwithstanding the Philippines contentions concerning the cases
significance to the international community, the jurisdictional
questions facing the Tribunal turn on the characterisation of the
Philippines substantive claims and, in particular, whether they
involve the determination of questions of territorial sovereignty.
The Philippines now has until 23 July 2015 to provide supplementary
written submissions in response to questions posed by the Tribunal at
the hearing. The Tribunal expects to determine the issue of
jurisdiction by the end of the year. If it decides that it does have
jurisdiction over the Philippines claims (and they are admissible), the
matter will proceed to a substantive hearing. However, China has
reiterated that it will not alter its position in the South China Sea and,
therefore, is unlikely to comply with any unfavourable ruling
ultimately made by the Tribunal.

TheTribunalsAward
a.PreliminaryMatters
In its Award, the Tribunal noted that both the Philippines and China are

parties to the Convention and that the provisions for the settlement of
disputes, including through arbitration, form an integral part of the
Convention. Although the Convention specifies certain limitations and
exceptions to the subject matter of the disputes that may be submitted
to compulsory settlement, it does not permit other reservations and a
State may not except itself generally from the Conventions mechanism
for the resolution of disputes.
The Tribunal also noted Chinas non-participation and held that this
fact does not deprive the Tribunal of Jurisdiction. Article 9 of Annex
VII to the Convention provides that:
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 in law.

Although China did not participate in the constitution of the Tribunal,

the Tribunal held that it had been properly constituted pursuant to the
provisions of Annex VII to the Convention. The Tribunal detailed the
steps it had taken to satisfy itself regarding its jurisdiction, including
through questions posed to the Philippines and through the Hearing on
Jurisdiction and Admissibility in July 2015. The Tribunal also recalled
the steps it had taken to safeguard the procedural rights of China,
including by ensuring that all communications and documents were
delivered to China and that China was accorded adequate notice and
opportunity to comment and by reiterating that it remains open to China
to participate in the proceedings at any stage. The Tribunal also recalled
the steps it had taken to ensure that the Philippines was not
disadvantaged by Chinas non-participation.
Finally, the Tribunal considered the argument set out in Chinas
Position Paper that the Philippines unilateral resort to arbitration
constituted an abuse of the dispute settlement provisions of the
Convention. The Tribunal noted that, although certain provisions of the
Convention address the abuse of rights and provide a preliminary
procedure to dismiss claims that are facially unfounded, it was more
appropriate to consider Chinas concerns about the Tribunals
jurisdiction as a preliminary objection. The Tribunal also noted that the

mere act of unilaterally initiating an arbitration cannot constitute an

abuse of the Convention.