An objective analysis of the Award

On 12 July 2016, a comprehensive ruling was passed by the Permanent Court of Arbitration (PCA) providing a solution of all the disputes in the South China Sea (SCS). As it approaches its 10th anniversary, it is pertinent to revisit the most consequential legal decisions pertaining to the SCS.

The genesis of the case can be traced since 2012, when China forcibly occupied Scarborough Shoal after a short confrontation with the Philippines. Geographically, Scarborough Shoal lies approximately 124 nautical miles from Zambales Province on the Philippine island of Luzon, well within the Philippines’ 200-nautical-mile Exclusive Economic Zone (EEZ). In contrast, the nearest Chinese landmass, Hainan Island, is about 470 nautical miles away. These geographical realities have long strengthened the Philippines’ claim. 

The Philippine govt. also claims it on the basis of the Treaty of Washington 1900, under which Spain ceded to the US the Scarborough Shoal, the Spratly Islands, and the remainder of Tawi-Tawi as part of the Philippine territory.  

The dispute has evolved over several decades. In 1935, both China and the Philippines asserted claims over Scarborough Shoal. While the Philippines reaffirmed its territorial claims under the 1900 Washington Treaty, China published official maps depicting the shoal as part of Chinese territory. Subsequently, China’s 1947 China Handbook acknowledged that the Spratly Islands were contested among China, the Philippines, and French Indochina. The Philippines conducted an oceanographic survey of the shoal in 1957, and in 1965 raised its national flag there, reinforcing its claim. 

Tensions intensified in 1995 when China occupied Mischief Reef, located within the Philippine EEZ. However, until 2012, fishermen from both countries continued to operate around Scarborough Shoal while their respective governments maintained competing sovereignty claims.  

In the first decade of this century, both sides expanded maritime patrols to protect fisheries and enforce resource management in the SCS. This led to more frequent encounters around the shoal. In 2012, China established its effective control over the access to Scarborough Shoal preventing fishing by the Filipino fishermen in this region. 

China considers that the region around the shoal forms a critical part of its coveted “strategic triangle” in SCS alongside the Paracel and Spratly Island chains. China repeatedly deployed temporary floating and electronic structures inside the shoal’s lagoon. 

Disappointed by what it perceived as inadequate support from the US under their Mutual Defense Treaty, the Philippines initiated arbitration proceedings against China in January 2013 under UNCLOS. Manila challenged China’s expansive claims within the “nine-dash” line, arguing that they were inconsistent with the Convention. The PCA delivered its Ruling in July 2016. 

Five aspects of the Ruling are important. 

First, the PCA Ruling categorically rejected Beijing’s claims to historic rights within the “nine-dash” line in the SCS. It held that UNCLOS comprehensively governs maritime rights and that any historic rights claimed by China beyond the limits permitted under the Convention had no legal basis where they were incompatible with UNCLOS. 

Second, it clarified the definition of the “islands”. It found that none of the Spratlys- including Itu Aba, Thitu, Spratly Islands, Northeast Cay, and Southwest Cay- are legally islands because they cannot sustain a stable community or independent economic life. As such, they are entitled only to 12-nautical mile territorial seas under UNCLOS, to which China and the Philippines are signatories. The Court also agreed with the Philippines that Johnson Reef, Cuarteron Reef, and Fiery Cross Reef are rocks. Hughes Reef and Mischief Reef were found to be below water at high-tide, generating no maritime entitlements. The Tribunal also ruled that Second Thomas Shoal and Reed Bank are submerged and belonged to the Philippines’ continental shelf thereby denying any right to China there as well.

Third, significantly the Tribunal also ruled against the Chinese ‘land-reclamation activity’ stating that this had caused ‘severe harm to the coral reef environment’. This imposed a stricture on China over its land reclamation activity. 

Fourth, the Tribunal confirmed that China violated Philippines’ rights in seizing Scarborough Shoal, the 2012 incident that drove Manila to file a suit. 

Fifth, it pointed out that China had breached the Philippines’ sovereign rights by exploring for oil and gas near the Reed Bank. While Vietnam did no go to the PCA on the issue of placement of oil rig in its EEZ, by implication it is clear that in that case too China had breached the Vietnamese sovereign rights.  

Thus, the Tribunal went beyond the Scarborough issue and gave a comprehensive verdict covering various issues like islands, reefs, territorial waters, continental shelf, and EEZ etc. It authoritatively clarified the application of UNCLOS in the SCS, invalidated excessive maritime claims based on the nine-dash line, strengthened the legal rights of coastal states, and reinforced the principle that maritime disputes must be resolved according to international law rather than unilateral assertions of power.  

China rejected the Ruling in its entirety. Beijing declared the decision “null and void,” arguing that the Tribunal lacked jurisdiction and that the proceedings had been conducted without China’s consent. It also questioned the impartiality of the five-member Tribunal, alleging that four of the arbitrators were influenced by Japan. These false allegations were aimed to justify its rejection of the Ruling. Beijing also launched a large-scale cyber-attack on the networks of the Philippines and Vietnam to coerce them to accept its view.      

Such a criticism from a country that was signatory to UNCLOS and belonged to five permanent members of the UN was infelicitous. The Chinese action is in contrast to India’s decision to accept the PCA Ruling that went in favour of Bangladesh, reflecting India’s commitment to peaceful settlement under international law.  On the eve of the verdict, the then US Assistant Secretary of Defense for East Asia Abraham Denmark called on China to follow India’s example. 

While Beijing’s refusal to accept the verdict has placed China in a poor light for pursuing its hegemonic policy, the Ruling continues to serve as an important legal and diplomatic reference point for regional states and the wider international community, underscoring that the SCS should remain a shared maritime space governed by established international law rather than unilateral illegal claim.

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