The Rule of Law and the Path to a Just and Lasting Peace in the South China Sea

The Rule of Law and the Path to a Just and Lasting Peacein the South China Sea
Paul S. Reichler
Partner, Foley Hoag LLP

Abstract
This article, by the lead counsel for the Philippines in the arbitration it brought against
China under the United Nations Convention for the Law of the Sea, which resulted, in
July 2016, in a unanimous award in favor of the Philippines on all key issues, sets forth theauthorʼs views on the critical findings by the arbitral tribunal, the impact of the award on
the parties to the dispute and on the rule of law generally, and how the award can lead to apeaceful and equitable solution for China and its neighbors rimming the South China Sea,
as well as a strengthening of the rules-based international order.

In this discussion of the South China Sea arbitration, in which I was privileged to serve as
lead counsel for the Philippines, I will first summarize the key findings in the case. Then I
will address its impact on the rule of law and the stability of the international legal system.
And finally, I will offer my thoughts on how the arbitral award can serve as the basis for anequitable and lasting solution to the conflict between China and its neighbors in the South China
Sea, as well as a strengthening of the rules-based international order as a whole.
The Philippines brought the case in January 2013 for two paramount reasons: First, China wasinsisting on exclusive jurisdiction over nearly all the waters and seabed of the South China Sea,
within a so-called “nine-dash line” and the exclusive right to all of the natural resources withinthat line. Chinaʼs claim extended more than 650 miles from its coast and within 50 miles of thePhilippinesʼ coast, and that is well beyond the 200-mile exclusive economic zone and continental
shelf, to which China is entitled under the Law of the Sea Convention and it is well within thePhilippines 200-mile entitlements. China depicted its nine-dash line claim in a map that it sent to
the United Nations in 2009.
Based on its nine-dash line claim, Chinese law enforcement and naval vessels prevented
Philippine fishermen from fishing in the waters encompassed by the nine-dash line and prevented
Philippine licensees from exploring for oil and gas within the perimeter of the nine-dash line,
while permitting Chinese nationals to carry out these activities.
The second principal cause of the Philippinesʼ resort to arbitration was Chinaʼs claimed
sovereignty over all of the Spratly Islands, in the southern part of the South China Sea. The
Spratly Islands consist of dozens of ver y tiny insular features, only a small number of which
are above water at high tide and most of which are also claimed by the Philippines, Vietnam, or
Malaysia. China occupied and built or started to build military facilities on top of seven of thesefeatures. Chinaʼs construction caused great environmental harm to these reefs and islands, whichwere previously some of the most pristine in the world. The Philippines claimed that Chinaʼs
activities destroyed the surrounding marine environment including important fish breeding andfeeding areas.
The Philippines had tried to address all of these issues with China by diplomacy over a
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number of years, but China was inflexible. It demanded that the Philippines accept Chinaʼs
exclusive rights over all of the resources of the sea and seabed within the nine-dash line as well
as Chinese sovereignty over all of the islands and other maritime features of the South China Sea.
This would have amounted to a renunciation of the Philippinesʼ rights under the Law of the Sea
Convention. With diplomacy frustrated and military action out of the question, legal recourse
became the only viable option for the Philippines.
But there were big challenges to bringing the case. First, an arbitral tribunal establishedunder the Law of the Sea Convention has no jurisdiction over questions of land sovereignty, andfor that reason the Philippines could not challenge Chinaʼs assertion of sovereignty over the
Spratly Islands or Scarborough Shoal, which represented a significant part of the conflict.
Second, the Philippines could not ask a tribunal to delimit a maritime boundary with China
because China had exercised its right under Article 298 of the Convention to exclude itself fromcompulsory arbitral jurisdiction in regard to sea boundary delimitation.
The solution for the Philippines, after much thought, analysis and internal debate, was to bringa case about maritime entitlements rather than about sovereignty over islands, or delimitationof boundaries. Maritime entitlements, that is, the entitlements to the sea and seabed generated
by coastal land territory -- including a 12-mile territorial sea and 200-mile exclusive economic
zone and continental shelf -- are specifically provided for in the Convention; and thus, unlike
sovereignty over coasts and islands, they do fall within the jurisdiction of an arbitral tribunal
established under the Convention.
Also, and this proved to be a critical point, maritime entitlements can be determined without
the need for engaging in the delimitation of boundaries. In fact, Law of the Sea tribunals must
determine the entitlements of the parties to a dispute prior to and separately from delimiting aboundary, because it is only when two Statesʼ entitlements overlap that a boundary needs to becreated. And this can be illustrated by example. When you have State A and State B separated
by a body of water that is greater than 400 miles, their respective 200 mile entitlements to an
exclusive economic zone and continental shelf will not overlap. Each will enjoy the exclusive
right to exploit the living and non-living resources in its own 200 mile zone. There is no need for adelimitation of a common boundary. By contrast, where States A and B are separated by less than
400 miles, their 200 mile zones will overlap, and a boundary will have to be drawn to separate
their respective zones.
In the South China Sea, with the exception of a small area to the northwest of the Philippinesʼ
northernmost islands (and southeast of Chinaʼs southern coast), the Philippines and China areseparated by more than 400 miles. Accordingly, except for that small area their 200 mile maritime
entitlements do not overlap, and there is no cause for boundary delimitation.
Accordingly, the Philippines believed that by asserting claims to establish its own maritime
entitlements and challenge those claimed by China based on the nine-dash line, it would
overcome Chinaʼs anticipated jurisdictional challenges. And this proved to be correct. Although
China did not formally appear in the arbitral proceedings, it submitted to the tribunal a written
pleading setting forth its jurisdictional objections. The tribunal accepted Chinaʼs written pleading
and considered it as Chinaʼs jurisdictional objections. Chinaʼs main arguments were that thetribunal lacked jurisdiction over matters of land sovereignty and boundary delimitation, but thetribunal was able to reject these arguments, unanimously, because the Philippines had been
careful not to raise issues of land sovereignty or boundary delimitation, but had presented its caseentirely as one regarding maritime entitlements.
On the merits, the Philippines claimed exclusive entitlements extending out to 200 miles fromits coasts in all of the areas that were beyond 200 miles from Chinaʼs coasts. This included theexclusive right to the resources of the sea and the seabed, meaning all of the fish, and the oil andgas beneath the seabed, in those areas.
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The Philippines accepted that, as a par ty to the Convention, China enjoyed all of theentitlements guaranteed to it by the Convention, but that these did not extend beyond 200 miles
from its coasts; therefore, any Chinese claim beyond 200 miles was a violation of the Convention
and of the Philippinesʼ rights thereunder. The arbitral tribunal unanimously agreed with this
proposition.
In reaching this decision, the tribunal carefully considered Chinaʼs claim to the waters andseabed encompassed by the nine-dash line, based on Chinaʼs alleged historic rights beyond
those enumerated in the Convention. The tribunal found that Chinaʼs claim was unlawful on two
grounds: first, it determined that when States became parties to the Law of the Sea Convention,
they necessarily abandoned all claims to rights in the sea whether based on history or otherwisethat were contradictor y with the provisions of the Convention and, further, that they wereexpressly required by the Convention to withdraw all contradictory claims. Chinaʼs claims toareas of sea and seabed beyond 200 miles from its coasts were plainly contradictor y to theexpress terms of the Convention and therefore they were found to be unlawful.
Second, the tribunal found that even under preconvention international law, Chinaʼs historicrights claims were invalid. Under customary international law, a claim of historic rights may be
lawful only if a State has in fact exercised authority over the maritime area in question: under aclaim of right, continuously over a long period of time, and with the acquiescence of neighboring
States. Chinaʼs historic rights claim in the South China Sea satisfied none of these well-establishedcriteria. The evidence showed that China had never exercised authority over any maritime areas
beyond those very close to its mainland coast, let alone continuously for a long period of time,
and that no other State had ever acquiesced to Chinaʼs authority in these areas.
China claimed entitlements not only from its mainland coast, but also from the Spratly Islands
based on its alleged sovereignty over them. Consequently, another important issue in the casewas whether these features were capable of generating maritime entitlements; and if so, to what
extent.
This matter turned on the meaning of Article 121 of the Convention. The article provides
that islands generate the same maritime entitlements as mainland coasts including an exclusive
economic zone and continental shelf. However, there is an important exception in paragraph 3 ofthat article for islands that are considered uninhabitable, specifically features that are incapableof sustaining human habitation or economic life of their own. Those islands have a maritime
entitlement only to a 12-mile territorial sea. For that reason, the Philippines argued and presented
voluminous evidence that none of the Spratly Islands was habitable in its natural state and thatnone of the features therefore generated entitlements beyond 12 miles. This was the first casein which any international court or tribunal was required to interpret article 121, paragraph 3 ordetermine whether and on what basis an island should be deemed incapable of sustaining humanhabitation or economic life.
The tribunal delivered as part of its award an extensive analysis of the articleʼs text andthe manner in which it is to be applied. And it came to the conclusion, again unanimously, thatnone of the islands in question was habitable in its natural state and that none of them therefore
generated entitlements beyond 12 miles. The result was that, except for the area northwest of
the Philippinesʼ coast where the entitlements generated by the Philippinesʼ and Chinaʼs mainland
coast overlap slightly, and the 12-mile zones of some of the small islands claimed by China, thePhilippinesʼ exclusive economic zone and continental shelf are not overlapped by any entitlementsthat China may lawfully claim. On this basis, the tribunal ruled that it was unlawful for China todeprive the Philippines of the exclusive enjoyment of these areas of sea and seabed including theliving and nonliving resources located there.
In regard to the impact of China ʼ s island-building and other activities on the marine
environment, the tribunal retained its own independent experts to assess the harm caused
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Paul S. Reichlerby these activities. The arbitrators found that the harm caused by China was devastating andirreparable, as the Philippines had claimed.
Thus, the Philippines prevailed on all its central claims; but as many have asked, “what does
this mean if China does not comply with the award?” This is a legitimate question and one thatreaches beyond China in this particular case, and it brings me to the second part of my analysis.
Put more broadly, the question might be phrased, what does it mean for the law of the sea
and for the rule of law in general if States, especially great powers, refuse to comply with theirlegally-binding obligations under treaties to which they voluntarily became parties or with their
obligations under judicial judgments or arbitral awards rendered by duly constituted and fullycompetent international courts or arbitral tribunals?
My first observation is that given the nature of the case, it would be extremely detrimental
to the international legal order if China were to defy the arbitral award and if its defiance were
to be accepted by the international community, and especially by the more than 160 States thatare parties to the Law of the Sea Convention. This is a very special Convention. It was envisioned
by its framers, including China (which played a large part in its adoption), as a constitution for
the worldʼs oceans and seas, regulating virtually every activity, from navigation to environmental
protection, to boundaries, to maritime zones, to rights to resources, to undersea cables, todeep seabed mining, and more. It has been one of the most successful treaties in the history ofinternational law. It enjoys near-universal acceptance and it has kept peace and order on the seas
and facilitated the orderly and equitable exploitation of resources for more than a generation.
Chinaʼs statements and actions in defiance of the arbitral award could threaten the viability of
the Convention. If China can disregard the Conventionʼs most fundamental principles, then so canother States. This should not be acceptable to the international community and it should also be
worrisome for China. China itself has much to lose from the unraveling or weakening of the Lawof the Sea Convention. It has extensive rights in the South China Sea under the Convention that
it would certainly not want to be challenged by other States. It might one day find these rights
threatened by another great power with interests or naval forces in the South China Sea. In suchcase, the Law of the Sea Convention would protect China against the violation of its own rights
unless the Convention has been weakened by Chinaʼs actions.
The United Nations Charter gives a special role to certain of the worldʼs most powerful States,
including China. It makes them permanent members of the Security Council and it gives themveto power over council resolutions. But it does not exempt them from the rules set forth in
the Charter or any other rules of international law; nor do United Nations conventions or othermultilateral treaties make exceptions to their rules for the great powers. The same fundamental
legal rules and principles reflected in international agreements like the Law of the Sea Convention
or adopted by custom apply to all States, and it could not be otherwise. The majority of States
simply would not accept being bound by rules that exempted other States solely on the basis of
their size or power. They simply would not accept a system in which they are required to comply
with the binding orders of competent international tribunals – but other States, even great
powers, are not.
The great powers do set an example, however, and this can be either positive or negative.
If they refuse to honor their legal obligations, then so will other States. And soon enough,international adjudication will be a hollow exercise. In 2012, when Columbia defiantly told theInternational Court of Justice that it would not comply with the Courtʼs judgment delimiting its
maritime boundary with Nicaragua, it cited the United Statesʼ rejection of a judgment in an earlier
case brought by Nicaragua in the 1980s. China, too, cited the United States ʼ rejection of the
Nicaragua judgment in support of its attempt to dismiss the arbitral award in the Philippines case.
Fortunately, these acts of defiance of international courts and tribunals are, at least so far,rare exceptions. The vast majority of States in the vast majority of cases comply with judicial
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judgments and arbitral awards, even in cases where they consider themselves to have lost. The
United States, despite the Nicaragua case, has a decent record of compliance with international
judgments and awards overall. And so too does China, at least in the context of World Trade
Organization panel rulings. There, China has generally complied with rulings that have gone
against it.
There are important reasons why States on the whole generally comply even with unfavorable
judicial or arbitral outcomes. First, there is an advantage in finally resolving a dispute withanother State. Even if the resolution is less than fully desirable, the alternatives -- prolongationof the conflict, tension, instability in the bilateral relationship and the imminent or eventual
possibility of armed conflict -- are often worse.
Second, neighboring States can never move out of the neighborhood. Geographical proximity
among States is permanent. Disputes between neighbors are inevitable. If State A doesnʼt comply
with the judgment or award resolving todayʼs dispute, how can it expect its neighbor, State B, tocomply with one in tomorrowʼs dispute? By refusing to comply, State A will have removed judicial
or arbitral recourse from the list of possible means of resolving a future dispute that cannot be
resolved diplomatically. What alternative does that leave it?
Third, there is the value of stature, prestige, and reputation, which translates into influenceon the international level. States enhance their stature and with it their influence when they
demonstrate that they are law-abiding, including by complying with international judgments andawards. For this reason, States inevitably seek to justify their actions on the basis of internationallaw. We see this in all kinds of situations, even where the reliance on international law seems
misplaced. China itself argued to the world that its nine-dash line claim was based on internationallaw, namely its alleged historic rights.
My point here is not that States correctly invoke international law to justify their policies
and actions, simply that they feel the need to invoke it as justification. And that is because
they consider it important to their own self-interest to be seen by their neighbors and by theinternational community as a whole as law-abiding and respectful of the rights of other States.
Finally, I believe that the majority of States understand that the alternative to a rules-based
international order is chaos. Respect for the rule of law not only ser ves ethical and moral
interests, including justice and fairness, but practical ones. It fosters predictability, stability,
security, and peace in international relations. These are goals shared by most States most of thetime.
Two recent examples illustrate the point. The case of Bangladesh against India was brought
under the same provisions of the Law of the Sea Convention as the Philippines ʼ case against
China. The arbitral award was widely viewed as more favorable to Bangladesh, and the arbitrator
appointed by India issued a strong dissenting opinion. Nevertheless, India quickly announced that
it would respect and comply with the award, and it has done so. The second example is Japanʼs
acceptance of the judgment of the International Court of Justice in the whaling case despite its
understandable disappointment with the result.
There can be no greater proof of a Stateʼs commitment to the rule of law than its compliancewith judgments and awards that displease it. There is also no better way to strengthen theinternational legal order generally. When States like Japan and India set positive examples likethese, other States are encouraged to follow. In fact, great powers may have the greatest interestin preserving the existing international order and their own privileged levels of influence underit. Maintaining and strengthening that order requires them to accept the consequences on thoseoccasions when its rules are applied against them. No great power can reasonably expect to win
its case automatically every time. There will be times when its behavior is found to be unlawful,
but that may present as much of an opportunity for strengthening the legal order as a challenge
to it.
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There might be no better way to promote the rule of law than for a great power like the UnitedStates or China to accept and comply with an adverse judicial judgment or arbitral award. In
fact, they have done so at least from time to time because they understand that there is no viable
alternative to a rules-based system that will protect over the long-term their interests in a moreorderly and secure world.
We may have an imperfect international legal order, but it is far better than having no rulesbased system at all. The great powers may be powerful enough to get away with defying court
orders and arbitral awards from time to time, but this is not a sufficient reason to legitimize such
behavior by granting them exemptions from the rules, or adopting a policy of not seeking to holdthem accountable for their unlawful acts. To the contrary, it is preferable to have a legal systemthat occasionally proves too weak to contain the lawless excesses of the most powerful States,
rather than an even weaker system that, in formal recognition of its weakness, tolerates suchexcesses and avoids treating them as unlawful, or, worse yet, have no system at all.
In my opinion, the response to the imperfections of the international legal order should be
to continue working to make the system better and stronger, and the rules more universallyenforceable. There is, to be sure, a long way to go, but since the end of World War II great
progress has been made, and there is no reason to give up the effort to make all States, including
the most powerful, accept legal accountability for their breaches of the applicable rules.
In addition to these systemic considerations, there are particular reasons why, in regard to
the South China Sea, China, with the passage of time, the dilution of passions, and the soberminded reflection of an enlightened leadership, might come to see the award in the Philippines
case as more of an opportunity for gain than as a defeat. And these bring me to the final part of
my discussion: how the award may serve as a basis for peaceful and permanent resolution of theconflict.
First, China may come to appreciate that its core interests in the South China Sea have notbeen affected by the award. Chinaʼs claim of sovereignty over all the islands, which it apparently
considers vital to its strategic interests, is unaffected by the award because the tribunal did nothave jurisdiction to address questions of sovereignty over islands. Accordingly, China can comply
with the award without relinquishing either its sovereignty claim in general or its control overthe small islands and rocks it currently occupies. Likewise, the award does not diminish Chinaʼs
freedom of navigation or overflight, or its ability to conduct naval exercises or other militaryactivities in the South China Sea.
Under the award, the Philippines is obligated to respect Chinaʼs freedom of navigation andoverflight within the Philippinesʼ own exclusive economic zone. Chinaʼs freedoms of navigationand overflight, including for its naval and air-forces, are therefore fully protected.
What have been affected by the award, principally, are access to resources and protectionof the marine environment. China may no longer lawfully claim for itself exclusive entitlement
to the resources within the nine-dash line, but must respect the exclusive economic zone andcontinental shelf of the Philippines and, by implication, those of the other coastal States in theregion. China also may not lawfully continue to destroy environmentally-sensitive coral reefs andtheir ecosystems for the purpose of building and expanding artificial islands.
But these should not be difficult consequences for China to accept. Until now, China andits neighbors along the South China Sea have been engaged in a competition for resources,
especially fish and hydrocarbons. Chinaʼs claim of exclusive entitlement to these resources
based on the nine-dash line was explicitly rejected by all of the other coastal states even before
the arbitration. China had to resort to shows of force on various occasions against vessels andnationals of the Philippines, Indonesia and Vietnam to enforce its claims. The risks of open
conflict were growing. The award provides an equitable basis for a peaceful solution of thisconflict. To be sure, it reinforces the positions of the Philippines, Indonesia and Vietnam among
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others on the unlawfulness of Chinaʼs nine-dash line claim and it encourages them to continue
to assert their rights as against China within their own 200-mile exclusive economic zones andcontinental shelves. But at the same time, the award provides a path for China to negotiate its way
out of a dangerous impasse of its own making and avoid a prolonged and destabilizing conflict not
only with the Philippines, but with Vietnam, Indonesia, and others.
This certainly raises the benefit for China in ultimately finding an accommodation with its
largest Southeast Asian neighbors, all of which have rejected Chinaʼs nine-dash line claims andare unlikely ever to accept them. And such an accommodation should be possible. First, on issues
like protecting the marine environment, China and its neighbors would appear to have common
interests. All of the relevant States have strong interests in promoting the sustainability of fishstocks, which are an important source of nutrition for all of the local populations. On other issues,
compromise should also be possible. Unlike sovereignty over land or islands, natural resources
and access to them, whether fish or hydrocarbons, are more easily divisible. By recognizing thatits neighbors too have rights as set forth in the Convention and reaffirmed in the arbitral award,
China would be able to free itself to negotiate equitable sharing arrangements in regard to fish
catches and oil and gas development.
China can thus become an indispensable partner to its neighbors in these activities. It is
the only coastal State along the South China Sea with the financial and technological capacity
to facilitate exploitation of hydrocarbons without participation from western or other extraregional players. Good faith negotiations based on respect for the legal rights of all coastal States,
including Chinaʼs own, could produce a settlement favorable to every one of them.
For these reasons, I believe the arbitral award offers China as well as the Philippines and theother coastal States along the South China Sea the best path toward a secure, just, and lastingarrangement for the peaceful and equitable enjoyment of the sea and its resources. And this is
why I believe there is reason to hope that China, in its wisdom, will ultimately come to the sameconclusion and find an honorable way to reach a reasonable accommodation with its neighboring
States based on its recognition of their and Chinaʼs own fundamental rights under the Law of the
Sea Convention as spelled out in the arbitral award.
Such an agreement, in my view would serve the interests of China, the Philippines, the othercoastal States in the region, and the international community as a whole. It would strengthen
the Law of the Sea Convention and the international legal order generally. For this to happen, it
requires mainly for China to come to the enlightened conclusion that its long-term interests, likethose of most other States, are best served by respecting, promoting, and strengthening the ruleof law and recognizing the legal rights of all States, and by working with neighboring States inpartnership for the sustainable and equitable enjoyment of the South China Sea and its resources.
This is an outcome that an enlightened Chinese leadership may come to see as a win-win
situation for both China and its neighbors, and one that the international community would be
wise to encourage.

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