Elpidio V. Peria
1 November 2015

The Permanent Court of Arbitration (PCA) in the Hague, the Netherlands recently issued a 159 page ruling that it has the authority or jurisdiction to resolve the case filed by the Philippines against China back in 2013. What this only means is that the case will not be thrown out and the Tribunal only ruled on procedural issues raised by China informally, i.e., not by making any formal submissions before the Tribunal but through a Position Paper that it released publicly. From the entire ruling, we quote the Decision found in part IX and page 149 of the Award, here’s our attempt to clarify and explain how the Tribunal ruled on the claims and assertions of the Philippines and China :

1) FINDS that the Tribunal was properly constituted in accordance with Annex VII to the Convention

This is one of the preliminary matters resolved by the Tribunal and in par. 106 of the Award, the reasons for this is that as both Philippines and China are parties to the United Nations Convention on the Law of the Sea or UNCLOS, the Philippines having ratified it on 8 May 1984 and China on 7 June 1996, they are bound by the dispute settlement procedure provided in Part XV of the Convention in respect of any dispute between them concerning the interpretation or application of the Convention.

As stated by the Tribunal in par. 109 of the Award, which was how the decision was called, the Tribunal found both Parties to have accepted arbitration in accordance with Annex VII to the Convention, that the dispute was correctly submitted to arbitration before a tribunal constituted under Annex VII of the Convention and noted that the PCA’s constitution was in accordance with the Convention and its Annex VII.

2) FINDS that China’s non-appearance in these proceedings does not deprive the Tribunal of its jurisdiction

This is the usual tactic of shysters, who avoid court proceedings thinking that their non-presence will result in the case not moving against them. The Tribunal found in para. 112 of the Award that China has not particpated in any stage of the arbitration, did not participate in the constitution of the Tribunal, did not submit a Counter-Memorial in response to the Philipppines’ Memorial, did not attend the hearing on jurisdiction in July 2015, has not advanced any of the funds requested by the Tribunal toward the costs of arbitration (in fact in para. 98, it is there stated that the Philippines paid China’s share of the deposit for the costs of the arbitration – perhaps the Philippine media, for the sake of transparency, may legitimately ask this question from either DFA or Malacanang) , China also rejected and returned correspondence from the Tribunal sent by the Registry (the Tribuna’s clerk and/or process-server), explaining on each occasion “its position that it does not accept the arbitration initiated by the Philippines.”

The Tribunal used Article 9 of the Convention which states that non-participation by one of the Parties to a dispute does not constitute a bar to the proceedings.

3) FINDS that the Philippines’ act of initiating this arbitration did not constitute an abuse of process

The Tribunal noted in para. 126 that the mere act of unilaterally initiating an arbitration under Part XV in itself cannot constitute an abuse of rights, citing the case of Barbados v. Trinidad and Tobago :

The unilateral initiation of the arbitration procedure cannot by itself be regarded as an abuse of right contrary to article 300 of the UNCLOS, or an abuse of right contrary to general international law. Article 286 confers a unilateral right, and its exercise unilaterally and without discussion or agreement with the other Party is a straightforward exercise of the right conferred by the treaty, in the manner there envisaged…

There are actually two other provisions of the Convention (art. 300 and art. 294[1]) noted by the Tribunal that deals with abuse of right, and given China’s non-participation and non-submission of a pleading, China did not refer to or seek to apply those provisions, thus the Tribunal was not compelled determine whether those provisions applied in this case.

4) FINDS that there is no indispensable third party whose absence deprives the Tribunal of jurisdiction

The third party here actually referred to by the Tribunal is Vietnam, whether its absence in the case will deprive the Tribunal of jurisdiction, to this question, the Tribunal said in para. 180 : “the determination of the nature of and entitlements generated by the maritime features in the South China Sea does not require a decision on issues of territorial sovereignty. The legal rights of Vietnam therefore do not need to be determined as a prerequisite to the determination of the merits of the case.” In addition, citing jurisprudence, the Tribunal said that the Philippines has not raised any unlawful conduct by Vietnam and other third states.

5) FINDS that the 2002 China-ASEAN Declaration on Conduct of the Parties in the South China Sea, the joint statements of the Parties referred to in paras. 231 to 232 of this Award, the Treaty of Amity and Cooperation in Southeast Asia and the Convention on Biological Diversity, do not preclude, under Articles 281 or 282 of the Convention, recourse to the compulsory dispute settlement procedures available under section 2 of part XV of the Convention.

The Tribunal looked at various international documents, bilateral and multilateral, which was interpreted not to stop the Tribunal from taking on the arbitration case, more specifically:

a) On the 2002 China-ASEAN Declaration on Conduct of the Parties in the South China Sea, the Tribunal noted in para. 217 that such instrument was not intended to be a legally binding agreement with respect to dispute resolution, but more of an aspirational political document; in para. 218, it also noted the subsequent conduct of the Parties confirmed that the document is not a binding document, and even before the arbitration commenced, the Tribunal observed that even China’s officials described such Declaration as a “political” document; it also found that the Declaration does not exclude any further procedure;

b) On the various joint statements of China and Philippines dating from 1995 to 2011, the Tribunal dealt with these documents the same way it looked at the Declaration, that they are merely aspirational, in para. 243, the Tribunal noted that the statements referenced the aspiration of the Parties to conclude a code of conduct for settlement of disputes in the region at a later date. In para. 244, the Tribunal did not accept the argument of China that the bilateral statements mutually reinforced each other so as to render them legally binding. It further stated without qualification that : “repetition of aspirational political statements across multiple documents does not per se transform them into a legally binding agreement.”

c) On the Treaty of Amity and Cooperation in Southeast Asia, while the Tribunal said in para. 265 that it is a legally binding agreement, it contained an array of options for peaceful dispute settlement including by means of negotiation, mediation, conciliation and use of the good offices of a High Council composed of ministerial representatives. It also said that the Treaty does not prescribe a particular form of dispute settlement and certainly does not exclude recourse to compulsory dispute settlement procedures

d) On the Convention on Biological Diversity, the Tribunal noted in para. 285 that it agreed with the Philippine position that “a dispute under UNCLOS does not become a dispute under the CBD merely because there is some overlap between the two parallel regimes remain parallel regimes”; the two Conventions, the UNCLOS and the CBD, the Tribunal observed, are “parallel environmental regimes that overlap in a discrete area”, the UNCLOS “address the protection of the marine environment” while the CBD “aims to protect biodiversity in general.”; it also said in para. 286 that article 27 of the CBD “does not expressly exclude recourse to dispute settlement procedures under section 2 of Part XV of the Convention.

6) FINDS that the Tribunal has jurisdiction to consider the Philippines’ Submissions No. 3, 4, 6, 7, 10, 11 and 13, and subject to the conditions noted in para. 400, 401, 403, 404, 407, 408 and 410 of this Award

The Tribunal ruled on the following submissions positively, viz.:

a) On submission no. 3 ( concerning the status of Scarborough Shoal as an “island” or “rock” within the meaning of art. 121 of the Convention);

b) On submission no. 4 (concerning the status of Mischief Reef, Second Thomas Shoal, and Subi Reef as “low-tide elevations” within the meaning of article 13 of the Convention);

c) Submission no. 6 (concerning the status of Gaven Reef and McKennan Reef (including Hughes Reef) as “low tide elevations” within the meaning of Article 13 of the Convention

d) Submission no. 7 (concerning the status of Johnson Reef, Cuarteron Reef and Fiery Cross Reef as “islands” or “rocks” within the meaning of article 121 of the Convention

e) Submission no. 10 (concerning China’s actions that allegedly interfere with the traditional fishing activities of Philippine nationals at Scarborough Shoal, as these activities occur within the 12 nautical mile territorial sea that would be generated by the Shoal irrespective of whether the feature were considered to be a rock or island pursuant to art. 121 of the Convention)

f) Submission no. 11 (concerning the protection and preservation of the marine environment at Scarborough Shoal and Second Thomas Shoal and the application of articles 192 and 194 of the Convention, which is not a dispute concerning sovereignty or maritime boundary delimitation)

g) Submission no. 13 (concerning the operation of China’s law enforcement activities in the vicinity of Scarborough Shoal and the application of articles 21, 24 and 94 of the Convention, which is not a dispute concerning sovereignty or maritime boundary delimitation)

7) FINDS that a determination of whether the Tribunal has jurisdiction to consider the Philippines’ Submissions no. 1, 2, 5, 8, 9, 12 and 14 would involve consideration of issues that do not possess an exclusive preliminary character and accordingly reserves consideration of its jurisdiction to rule on Submissions No. 1, 2, 5, 8, 9, 12 and 14, to the merits phase

a) Submission no. 1 (concerning the source of maritime entitlements in the South China Sea and the role of the Convention) – The Tribunal here said this will require a consideration of the effect of any historic rights claimed by China to maritime entitlements in the South China Sea and the interaction of such rights with the provisions of the Convention, which will require an interpreation and application of the Convention, particularly its Art. 298, whether it will cover such historic rights;

b) Submission no. 2 (is a direct request by the Philippines to the Tribunal to determine the legal validity of any claim by China to historic rights in the South China Sea)

c) Submission no. 5 (concerns the sources of maritime entitlements in the South China Sea and whether a situation of overlapping entitlements to an exclusive economic zone or to a continental shelf exists in the area of Mischief Reef and Second Thomas Shoal)

d) Submission no. 8 (concerns China’s actions that allegedly interfere with the Philippines’ petroleum exploration, seismic surveys, and fishing in what the Philippines claims as its exclusive economic zone)

e) Submission no. 9 (concerns China’s fishing activities in what the Philippines claims as its exclusive economic zone)

f) Submission no. 12 (concerns China’s activities on Mischief Reef and their effects on the marine environment)

g) Submission no. 14 (concerns China’s activities in and around Second Thomas Shoal and China’s interaction with the Philippine military forces stationed on the Shoal)

8) DIRECTS the Philippines to clarify the content and narrow the scope of its Submission 15 and reserves consideration of its jurisdiction over Submission no. 15 to the merits phase

This submission requests a declaration that “China shall desist from further unlawful claims and activities”. It is not clear from the Tribunal’s point of view which claims and activities can potentially relate to this Submission and asks the Philippines to clarify and narrow the content of this Submission. This will help the Tribunal decide whether it has jurisdiction to make a ruling on such submission.

The substantive discussion of all the Philippines’s submissions and China’s counter-arguments thereon will all be taken up in the so-called merits phase of the case, which will have to come later, perhaps in 2016. We will await such ruling.


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