PCA Case Nº 2013-19

IN THE MATTER OF THE SOUTH CHINA SEA ARBITRATION

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AN ARBITRAL TRIBUNAL CONSTITUTED UNDER ANNEX VII TO THE

1982 UNITED NATIONS CONVENTION ON THE LAW OF THE SEA

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THE REPUBLIC OF THE PHILIPPINES

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THE PEOPLE’S REPUBLIC OF CHINA

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AWARD

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Arbitral Tribunal:

Judge Thomas A. Mensah (Presiding Arbitrator)

Judge Jean-Pierre Cot

Judge Stanislaw Pawlak

Professor Alfred H.A. Soons

Judge Rüdiger Wolfrum

Registry:

Permanent Court of Arbitration

12 July 2016

INTRODUCTION

1. The Parties to this arbitration are the Republic of the Philippines (the “Philippines”) and the People’s Republic of China (“China”) (together, the “Parties”).

2. This arbitration concerns disputes between the Parties regarding the legal basis of maritime rights and entitlements in the South China Sea, the status of certain geographic features in the South China Sea, and the lawfulness of certain actions taken by China in the South China Sea.

3. The South China Sea is a semi-enclosed sea in the western Pacific Ocean, spanning an area of almost 3.5 million square kilometres, and is depicted in Map 1 on page 9 The South China Sea lies to the south of China; to the west of the Philippines; to the east of Viet Nam; and to the north of Malaysia, Brunei, Singapore, and Indonesia. The South China Sea is a crucial shipping lane, a rich fishing ground, home to a highly biodiverse coral reef ecosystem, and believed to hold substantial oil and gas resources. The southern portion of the South China Sea is also the location of the Spratly Islands, a constellation of small islands and coral reefs, existing just above or below water, that comprise the peaks of undersea mountains rising from the deep ocean floor. Long known principally as a hazard to navigation and identified on nautical charts as the “dangerous ground”, the Spratly Islands are the site of longstanding territorial disputes among some of the littoral States of the South China Sea.

Convention was adopted as a “constitution for the oceans,” in order to “settle all issues relating to the law of the sea,” and has been ratified by 168 parties. The Convention addresses a wide range of issues and includes as an integral part a system for the peaceful settlement of disputes. This system is set out in Part XV of the Convention, which provides for a variety of dispute settlement procedures, including compulsory arbitration in accordance with a procedure contained in Annex VII to the Convention. It was pursuant to Part XV of, and Annex VII to, the Convention that the Philippines commenced this arbitration against China on 22 January 2013.

5. The Convention, however, does not address the sovereignty of States over land territory. Accordingly, this Tribunal has not been asked to, and does not purport to, make any ruling as to which State enjoys sovereignty over any land territory in the South China Sea, in particular with respect to the disputes concerning sovereignty over the Spratly Islands or Scarborough Shoal.

None of the Tribunal’s decisions in this Award are dependent on a finding of sovereignty, nor should anything in this Award be understood to imply a view with respect to questions of land sovereignty.

6. Similarly, although the Convention does contain provisions concerning the delimitation of maritime boundaries, China made a declaration in 2006 to exclude maritime boundary delimitation from its acceptance of compulsory dispute settlement, something the Convention expressly permits for maritime boundaries and certain other matters. Accordingly, the Tribunal has not been asked to, and does not purport to, delimit any maritime boundary between the Parties or involving any other State bordering on the South China Sea. To the extent that certain of the Philippines’ claims relate to events at particular locations in the South China Sea, the Tribunal will address them only insofar as the two Parties’ respective rights and obligations are not dependent on any maritime boundary or where no delimitation of a boundary would be necessary because the application of the Convention would not lead to any overlap of the two

Parties’ respective entitlements.

7. The disputes that the Philippines has placed before the Tribunal fall broadly within four categories. First, the Philippines has asked the Tribunal to resolve a dispute between the Parties concerning the source of maritime rights and entitlements in the South China Sea. Specifically, the Philippines seeks a declaration from the Tribunal that China’s rights and entitlements in the South China Sea must be based on the Convention and not on any claim to historic rights. In this respect, the Philippines seeks a declaration that China’s claim to rights within the

‘nine-dash line’ marked on Chinese maps are without lawful effect to the extent that they exceed the entitlements that China would be permitted by the Convention.

8. Second, the Philippines has asked the Tribunal to resolve a dispute between the Parties concerning the entitlements to maritime zones that would be generated under the Convention by Scarborough Shoal and certain maritime features in the Spratly Islands that are claimed by both the Philippines and China. The Convention provides that submerged banks and low-tide elevations are incapable on their own of generating any entitlements to maritime areas and that

“[r]ocks which cannot sustain human habitation or economic life of their own” do not generate an entitlement to an exclusive economic zone of 200 nautical miles or to a continental shelf. The Philippines seeks a declaration that all of the features claimed by China in the Spratly Islands, as well as Scarborough Shoal, fall within one or the other of these categories and that none of these features generates an entitlement to an exclusive economic zone or to a continental shelf.

9. Third, the Philippines has asked the Tribunal to resolve a series of disputes between the Parties concerning the lawfulness of China’s actions in the South China Sea. The Philippines seeks declarations that China has violated the Convention by:

10. Fourth, the Philippines has asked the Tribunal to find that China has aggravated and extended the disputes between the Parties during the course of this arbitration by restricting access to a detachment of Philippine marines stationed at Second Thomas Shoal and by engaging in the large-scale construction of artificial islands and land reclamation at seven reefs in the Spratly Islands.

11. China has consistently rejected the Philippines’ recourse to arbitration and adhered to a position of neither accepting nor participating in these proceedings. It has articulated this position in public statements and in many diplomatic Notes Verbales, both to the Philippines and to the Permanent Court of Arbitration (the “PCA” or the “Registry”), which serves as the Registry in this arbitration. China’s Foreign Ministry has also highlighted in its statements, press briefings, and interviews that it considers non-participation in the arbitration to be its lawful right under the Convention.

12. The possibility of a party refraining from participating in dispute resolution proceedings is expressly addressed by the Convention, which provides in Article 9 of its Annex VII that the

“[a]bsence of a party or failure of a party to defend its case shall not constitute a bar to the proceedings.” The Tribunal has thus held that China’s non-participation does not prevent the arbitration from continuing. The Tribunal has also observed that China is still a Party to the arbitration and, pursuant to the terms of Article 296(1) of the Convention and Article 11 of

Annex VII, shall be bound by any award the Tribunal issues. The situation of a non-participating Party, however, imposes a special responsibility on the Tribunal. It cannot, in China’s absence, simply accept the Philippines’ claims or enter a default judgment. Rather, Article 9 requires the Tribunal, before making its award, to satisfy itself “not only that it has jurisdiction over the dispute but also that the claim is well founded in fact and law.”

13. Despite its decision not to appear formally at any point in these proceedings, China has taken steps to informally make clear its view that the Tribunal lacks jurisdiction to consider any of the

Philippines’ claims. On 7 December 2014, China’s Foreign Ministry published a “Position Paper of the Government of the People’s Republic of China on the Matter of Jurisdiction in the South China Sea Arbitration Initiated by the Republic of the Philippines” (“China’s Position

Paper”).²  In its Position Paper, China argued that the Tribunal lacks jurisdiction because

(a) “[t]he essence of the subject-matter of the arbitration is the territorial sovereignty over the relevant maritime features in the South China Sea”; (b) “China and the Philippines have agreed, through bilateral instruments and the Declaration on the Conduct of Parties in the South China Sea, to settle their relevant disputes through negotiations”; and (c) the disputes submitted by the Philippines “would constitute an integral part of maritime delimitation between the two countries.” The Chinese Ambassador to the Netherlands has also sent several communications to the individual members of the Tribunal, directly and via the Registry, to draw certain statements of Foreign Ministry officials and others to the attention of the arbitrators, while at the same time making clear that such communications should not be interpreted as China’s participation in the arbitral proceedings.

14. The Tribunal decided to treat the Position Paper and communications from China as equivalent to an objection to jurisdiction and to conduct a separate hearing and rule on its jurisdiction as a preliminary question, except insofar as an issue of jurisdiction “does not possess an exclusively preliminary character.” The Tribunal issued its Award on Jurisdiction and Admissibility (the “Award on Jurisdiction”) on 29 October 2015, addressing the objections to jurisdiction set out in China’s Position Paper, as well as other questions concerning the scope of the Tribunal’s jurisdiction. In its Award on Jurisdiction, the Tribunal reached conclusions with respect to seven of the Philippines’ fifteen Submissions while deferring decisions on seven other Submissions for further consideration in conjunction with the merits of the Philippines’ claims. The Tribunal also requested the Philippines to clarify one of its Submissions. Those questions regarding the scope of the Tribunal’s jurisdiction that were not decided in the Award on Jurisdiction have all been considered and are addressed in the course of this Award.

15. The Tribunal outlined in its Award on Jurisdiction the steps it took to satisfy itself of its jurisdiction, including treating China’s communications as a plea on jurisdiction, bifurcating the dispute to have a separate hearing and exchange of questions and answers on issues of jurisdiction and admissibility, probing the Philippines on jurisdictional questions beyond even those in China’s Position Paper, and in relation to the seven matters not decided in the Award on Jurisdiction, deferring for later consideration those jurisdictional issues so intertwined with the merits that they lacked an exclusively preliminary character. In the merits phase of the dispute, as set out in more detail elsewhere in this Award, the Tribunal has been particularly vigilant with respect to establishing whether the Philippines’ claims are well founded in fact and law. It has done so, for example, by retaining independent experts on technical matters raised by the Philippines’ pleadings; inviting comments from both Parties on materials that were not originally part of the record submitted to the Tribunal by the Philippines; and posing questions to the Philippines’ counsel and experts before, during, and after the hearing on the merits that was held in The Hague from 24 to 30 November 2015. While China did not attend the hearing, it was provided with daily transcripts and all documents submitted during the course of the hearing and was given an opportunity to comment thereon. In addition to a large delegation from the Philippines, representatives from Australia, the Republic of Indonesia, Japan, Malaysia, Singapore, the Kingdom of Thailand, and the Socialist Republic of Viet Nam attended the hearing as observers.

16. In this Award, the Tribunal addresses those matters of jurisdiction and admissibility that remained outstanding after the Award on Jurisdiction, as well as the merits of those of the Philippines’ claims for which the Tribunal has jurisdiction.

PROCEDURAL HISTORY

INITIATION OF THE ARBITRATION

28. By Notification and Statement of Claim dated 22 January 2013, the Philippines initiated arbitration proceedings against China pursuant to Articles 286 and 287 of the Convention and in accordance with Article 1 of Annex VII of the Convention. The Philippines stated that it seeks an Award that:

Convention and therefore invalid;

The Philippines stressed that it:

does not seek in this arbitration a determination of which Party enjoys sovereignty over the islands claimed by both of them. Nor does it request a delimitation of any maritime

11

The South China Sea Arbitration

Award of 12 July 2016

boundaries. The Philippines is conscious of China’s Declaration of 25 August 2006 under

Article 298 of UNCLOS, and has avoided raising subjects or making claims that China has, by virtue of that Declaration, excluded from arbitral jurisdiction.⁴

29. In response, China presented a Note Verbale to the Department of Foreign Affairs of the Philippines on 19 February 2013, rejecting the arbitration and returning the Notification and

Statement of Claim to the Philippines.⁵ In its Note Verbale, China stated that its position on the

South China Sea issues “has been consistent and clear” and that “[a]t the core of the disputes between China and the Philippines in the South China Sea are the territorial disputes over some islands and reefs of the Nansha Islands.” China noted that “[t]he two countries also have overlapping jurisdictional claims over parts of the maritime area in the South China Sea” and that both sides had agreed to settle the dispute through bilateral negotiations and friendly consultations.

CONSTITUTION OF THE TRIBUNAL AND APPOINTMENT OF THE PCA AS REGISTRY

30. As detailed in the Award on Jurisdiction, the Philippines appointed Judge Rüdiger Wolfrum, a German national, as a member of the Tribunal in accordance with Article 3(b) of Annex VII to the Convention. As China did not appoint an arbitrator, the President of the International Tribunal for the Law of the Sea, pursuant to Articles 3(c) and 3(e) of Annex VII to the Convention, appointed Judge Stanislaw Pawlak, a national of Poland, as the second arbitrator. In accordance with Articles 3(d) and 3(e) of Annex VII to the Convention, the President of the International Tribunal for the Law of the Sea also appointed the remaining three arbitrators, namely Judge Jean-Pierre Cot, a national of France; Professor Alfred H.A. Soons, a national of the Netherlands; and as the Presiding Arbitrator, Judge Thomas A. Mensah, a national of Ghana. The present Tribunal was constituted on 21 June 2013.

31. On 12 July 2013, the Tribunal issued Administrative Directive No. 1, pursuant to which the Tribunal appointed the Permanent Court of Arbitration as Registry and set in place arrangements for a deposit to cover fees and expenses. On 15 July 2013, the Secretary-General of the PCA informed the Tribunal and the Parties that Ms. Judith Levine, PCA Senior Legal Counsel, had been appointed to serve as Registrar. Copies of Administrative Directive No. 1, as with all subsequent documents issued by the Tribunal and correspondence issued on its behalf by the Registry, were transmitted to the Agent and Counsel for the Philippines, and the Embassy

of  the  People’s  Republic  of  China  in  the  Kingdom  of  the  Netherlands  (the  “Chinese

Embassy”). Throughout the proceedings, the Chinese Embassy has returned the communications and reiterated that “it will neither accept nor participate in the arbitration unilaterally initiated by the Philippines.”

32. On 27 August 2013, the Tribunal issued Procedural Order No. 1, by which it adopted the Rules of Procedure and fixed 30 March 2014 as the date for the Philippines to submit a Memorial that

“shall fully address all issues including matters relating to jurisdiction, admissibility, and the merits of the dispute” (the “Memorial”).

WRITTEN ARGUMENTS

33. On 11 March 2014, the Tribunal granted leave pursuant to Article 19 of the Rules of Procedure for the Philippines to amend its Statement of Claim, which added a request to determine the status of Second Thomas Shoal.⁶

34. On 30 March 2014, pursuant to Procedural Order No. 1, the Philippines submitted its Memorial and accompanying annexes, addressing all aspects of the case including issues of jurisdiction, admissibility, and the merits. The Memorial concluded with 15 specific submissions setting out the relief sought by the Philippines (the “Submissions”), which are reproduced in their final and amended version in Chapter III ⁷

35. On 7 April 2014, the Philippines wrote further to the Tribunal regarding “China’s most recent actions in and around Second Thomas (Ayungin) Shoal.” This followed an earlier complaint that the Philippines had submitted to the Tribunal on 18 March 2014 concerning “recent actions of China to prevent the rotation and resupply of Philippine personnel stationed at Second Thomas (Ayungin) Shoal.” The Philippines wrote again to the Tribunal on 30 July 2014, expressing concern about China’s activities at several features in the South China Sea, in particular the land reclamation at McKennan Reef, Hughes Reef, Johnson Reef, the Gaven Reefs, and Cuarteron Reef. These complaints to the Tribunal are set out in more detail at Chapter VIII on aggravation of the dispute.

(…)

37. On 7 December 2014, the Ministry of Foreign Affairs of the People’s Republic of China published a “Position Paper of the Government of the People’s Republic of China on the Matter of Jurisdiction in the South China Sea Arbitration Initiated by the Republic of the Philippines,” copies of which the Chinese Embassy deposited with the PCA for distribution to members of

the Tribunal. ⁹   The Chinese Embassy expressed in a Note Verbale that “[t]he Chinese

Government reiterates that it will neither accept nor participate in the arbitration unilaterally initiated by the Philippines. The Chinese Government hereby makes clear that the forwarding of the aforementioned Position Paper shall not be regarded as China’s acceptance of or its participation in the arbitration.”

38. The Tribunal conveyed copies of China’s Position Paper and Viet Nam’s Statement to the Parties on 11 December 2014 and invited their comments.

(…)

39. On 6 February 2015, the Chinese Ambassador to the Kingdom of the Netherlands wrote individually to the members of the Tribunal, setting out “the Chinese Government’s position on issues relating to the South China Sea arbitration initiated by the Philippines.” The letter described China’s Position Paper as having “comprehensively explain[ed] why the Arbitral Tribunal . . . manifestly has no jurisdiction over the case.” The letter also stated that the Chinese Government “holds an omnibus objection to all procedural applications or steps that would require some kind of response from China.” The letter further clarified that China’s non-participation and non-response to any issue raised by the Tribunal “shall not be understood or interpreted by anyone in any sense as China’s acquiescence in or non-objection to any and all procedural or substantive matters already or might be raised by the Arbitral Tribunal.” The letter further expressed China’s “firm opposition” to some of the procedural items raised in the Tribunal’s correspondence, such as “intervention by other States,” “amicus curiae submissions,” and “site visit[s]”. Finally, the letter recalled the commitment of China and countries of the Association of Southeast Asian Nations (“ASEAN”) to resolving disputes through consultation and negotiation and expressed the hope that “all relevant actors will act in a way that contributes to peaceful settlement of the South China Sea disputes, cooperation among the coastal States of the South China Sea and the maintenance of peace and stability in the South China Sea.”

HEARING ON JURISDICTION AND ADMISSIBILITY

47. On 2 June 2015, the Tribunal confirmed the schedule for the Hearing on Jurisdiction. The Tribunal advised that the hearing would not be open to the general public, but that it would consider allowing representatives of interested States to attend upon receipt of a written request.

48. No comments had been received from China by 16 June 2015, the date set by Procedural Order No. 3 for China’s comments on the Philippines’ Supplemental Written Submission.

49. In line with its duty to satisfy itself that it has jurisdiction, the Tribunal did not limit the hearing to the issues raised in China’s Position Paper, and on 23 June 2015, the Tribunal sent the Parties a list of issues as guidance for the Hearing on Jurisdiction.

50. Throughout June and July 2015, the Tribunal received requests from several States, interested in the arbitration, for copies of relevant documents and for permission to attend the Hearing on Jurisdiction. After seeking the views of the Parties on each occasion, the Tribunal granted such requests from Malaysia, Japan, Viet Nam, Indonesia, Thailand, and Brunei.

51. On 1 July 2015, the Chinese Ambassador to the Kingdom of the Netherlands sent a second letter to the members of the Tribunal recalling China’s “consistent policy and practice of [resolving] the disputes related to territory and maritime rights and interests with States directly concerned through negotiation and consultation” and noting China’s “legitimate right” under the

Convention not to “accept any imposed solution or any unilateral resorting to a third-party settlement,” a right that it considered the Philippines breached by initiating the arbitration. The

Ambassador stated that his letters and the Chinese Government’s statements “shall by no means be interpreted as China’s participation in the arbitral proceeding” and that China “opposes any moves to initiate and push forward the arbitral proceeding, and does not accept any arbitral arrangements, including the hearing procedures.”

52. The Hearing on Jurisdiction took place from 7 to 13 July 2015 at the Peace Palace in The Hague. A list of attendees is contained in the Award on Jurisdiction. Copies of the daily transcripts, questions from the Members of the Tribunal, answers from the Philippines and all materials submitted during the hearing were made available to both Parties. A press release was issued by the Registry at the close of the hearing and the transcripts were subsequently published.

53. On 23 July 2015, the Philippines filed written responses to questions posed by the Tribunal. China did not respond to the invitation to submit by 17 August 2015, comments on matters raised during or after the Hearing on Jurisdiction. However, on 24 August 2015, China published “Foreign Ministry Spokesperson Hua Chunying’s Remarks on the Release of the Transcript of the Oral Hearing on Jurisdiction by the South China Sea Arbitral Tribunal Established at the Request of the Philippines.” The spokesperson recalled that China had “consist[e]ntly expounded its position of neither accepting nor participating in the South China Sea arbitration unilaterally initiated by the Philippines” and that China’s Position Paper had “pointed out that the Arbitral Tribunal . . . has no jurisdiction over the case and elaborated on the legal grounds for China’s non-acceptance and non-participation in the arbitration.”

ISSUANCE OF AWARD ON JURISDICTION AND ADMISSIBILITY

60. On 29 October 2015, the Tribunal issued its Award on Jurisdiction, the key findings of which are summarised in Chapter IV The Award, which was unanimous, only addressed matters of jurisdiction and admissibility; it did not address the merits of the Parties’ dispute. In the dispositif, the Tribunal:

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

1. FINDS that China’s non-appearance in these proceedings does not deprive the Tribunal of jurisdiction.

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

1. FINDS that there is no indispensable third party whose absence deprives the Tribunal of jurisdiction.

1. 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 paragraphs 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.

1. FINDS that the Parties have exchanged views as required by Article 283 of the Convention.

1. FINDS that the Tribunal has jurisdiction to consider the Philippines’ Submissions

No. 3, 4, 6, 7, 10, 11, and 13, subject to the conditions noted in paragraphs 400, 401, 403, 404, 407, 408, and 410 of this Award.

1. 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 exclusively 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.

1. 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.

1. RESERVES for further consideration and directions all issues not decided in this Award.

61. The Tribunal confirmed that it was ready to proceed in late November with a hearing on the merits and any outstanding questions of jurisdiction and admissibility (the “Hearing on the Merits”) and stated that it was willing to make appropriate adjustments to the schedule if China decided to participate. The Philippines confirmed the schedule, and China did not comment on it. However, on 30 October 2015, the Chinese Ministry of Foreign Affairs issued a “Statement

. . . on the Award on Jurisdiction and Admissibility of the South China Sea Arbitration by the

Arbitral Tribunal Established at the Request of the Republic of the Philippines” as follows:

The award rendered on 29 October 2015 by the Arbitral Tribunal established at the request of the Republic of the Philippines (hereinafter referred to as the “Arbitral Tribunal”) on jurisdiction and admissibility of the South China Sea arbitration is null and void, and has no binding effect on China.

1. China has indisputable sovereignty over the South China Sea Islands and the adjacent waters. China’s sovereignty and relevant rights in the South China Sea, formed in the long historical course, are upheld by successive Chinese governments, reaffirmed by China’s domestic laws on many occasions, and protected under international law including the United Nations Convention on the Law of the Sea (UNCLOS). With regard to the issues of territorial sovereignty and maritime rights and interests, China will not accept any solution imposed on it or any unilateral resort to a third-party dispute settlement.

1. The Philippines’ unilateral initiation and obstinate pushing forward of the South China Sea arbitration by abusing the compulsory procedures for dispute settlement under the UNCLOS is a political provocation under the cloak of law. It is in essence not an effort to settle disputes but an attempt to negate China’s territorial sovereignty and maritime rights and interests in the South China Sea. In the Position Paper of the Government of the People’s Republic of China on the Matter of Jurisdiction in the South China Sea Arbitration Initiated by the Republic of the Philippines, which was released by the Chinese Ministry of Foreign Affairs on 7 December 2014 upon authorization, the Chinese government pointed out that the Arbitral Tribunal manifestly has no jurisdiction over the arbitration initiated by the Philippines, and elaborated on the legal grounds for China’s non-acceptance of and non-participation in the arbitration. This position is clear and explicit, and will not change.

III. As a sovereign state and a State Party to the UNCLOS, China is entitled to choose the means and procedures of dispute settlement of its own will. China has all along been committed to resolving disputes with its neighbors over territory and maritime jurisdiction through negotiations and consultations. Since the 1990s, China and the Philippines have repeatedly reaffirmed in bilateral documents that they shall resolve relevant disputes through negotiations and consultations. The Declaration on the Conduct of Parties in the South China Sea (DOC) explicitly states that the sovereign states directly concerned undertake to resolve their territorial and jurisdictional disputes by peaceful means through friendly consultations and negotiations. All these documents demonstrate that China and the Philippines have chosen, long time ago, to settle their disputes in the South China Sea through negotiations and consultations. The breach of this consensus by the Philippines damages the basis of mutual trust between states.

1. Disregarding that the essence of this arbitration case is territorial sovereignty and maritime delimitation and related matters, maliciously evading the declaration on optional exceptions made by China in 2006 under Article 298 of the UNCLOS, and negating the consensus between China and the Philippines on resolving relevant disputes through negotiations and consultations, the Philippines and the Arbitral Tribunal have abused relevant procedures and obstinately forced ahead with the arbitration, and as a result, have severely violated the legitimate rights that China enjoys as a State Party to the UNCLOS, completely deviated from the purposes and objectives of the UNCLOS, and eroded the integrity and authority of the UNCLOS. As a State Party to the UNCLOS, China firmly opposes the acts of abusing the compulsory procedures for dispute settlement under the UNCLOS, and calls upon all parties concerned to work together to safeguard the integrity and authority of the UNCLOS.

1. The Philippines’ attempt to negate China’s territorial sovereignty and maritime rights and interests in the South China Sea through arbitral proceeding will lead to nothing. China urges the Philippines to honor its own commitments, respect China’s rights under international law, change its course and return to the right track of resolving relevant disputes in the South China Sea through negotiations and consultations.

62. On 6 November 2015, the observer States that had attended the Hearing on Jurisdiction, as well as Brunei and Singapore, were advised of the schedule for the Hearing on the Merits and that they could send delegations of up to five representatives as observers.

63. As it had done before the Hearing on Jurisdiction, the Tribunal provided on 10 November 2015 an “Annex of Issues the Philippines May Wish to Address” as guidance for the Hearing on the

Merits.

64. On 6 November 2015, the Philippines sought leave to present for examination two experts, Professor Clive Schofield and Professor Kent Carpenter; and on 14 November 2015, sought leave to supplement its written pleadings with additional documentary and testimonial evidence and legal authorities which it intended to reference during the Hearing on the Merits. The

Tribunal invited China’s comments on the requests by 17 November 2015.

HEARING ON THE MERITS

69. The Hearing on the Merits took place in two rounds on 24, 25, 26, and 30 November 2015 at the Peace Palace in The Hague, the Netherlands. As with the Hearing on Jurisdiction, it was not open to the general public. A press release was issued upon its commencement.

(…)

101. On 8 June 2016, representatives from the Chinese Embassy delivered to the Registry a third letter from the Chinese Ambassador to the individual members of the Tribunal. The letter, which was said not to constitute a plea or participation in the arbitration, enclosed a “Statement of the Ministry of Foreign Affairs of the People’s Republic of China on Settling Disputes Between China and the Philippines in the South China Sea through Bilateral Negotiation.” The statement laid out jurisdictional points previously made by China in other statements, including the Position Paper, under the following headings:

1. It is the common agreement and commitment of China and the Philippines to settle their relevant disputes in the South China Sea through negotiation.

. . .

1. China and the Philippines have never conducted any negotiation on the subject-matters of the arbitration initiated by the Philippines.

. . .

UNCLOS.

. . .

1. China will adhere to the position of settling the relevant disputes with the Philippines in the South China Sea through negotiation.

102. On 10 June 2016, a fourth letter from the Chinese Ambassador was delivered to the Registry, addressed to the individual members of the Tribunal, enclosing a statement by the Chinese Society of International Law, entitled “The Tribunal’s Award in the ‘South China Sea Arbitration’ Initiated by the Philippines is Null and Void.” The statement repeated many of the same jurisdictional points that were covered in the Position Paper and dealt with in the Award on Jurisdiction. Copies of the Chinese Ambassador’s correspondence of 8 and 10 June 2016 were forwarded to the Philippines for information.

103. During the same period that the Tribunal received the four most recent letters from the Chinese Ambassador, the Registry received copies or was made aware of various unsolicited statements and commentaries from Chinese associations and organisations pertaining to issues covered in the Award on Jurisdiction. These statements, however, were not provided to the Tribunal by the Chinese Government or any Party to the Convention. The statements were concerned with matters of jurisdiction already decided by the Tribunal and did not offer to assist the Tribunal on issues in dispute in the present phase of the proceedings.

DEPOSITS FOR COSTS OF THE ARBITRATION

110. Article 33 of the Rules of Procedure states that the PCA may from time to time request the Parties to deposit equal amounts as advances for the costs of the arbitration. Should either Party fail to make the requested deposit within 45 days, the Tribunal may so inform the Parties in order that one of them may make the payment. The Parties have been requested to make payments toward the deposit on three occasions. While the Philippines paid its share of the deposit within the time limit granted on each occasion, China has made no payments toward the deposit. Having been informed of China’s failure to pay, the Philippines paid China’s share of the deposit.

110. The deposit has covered the fees and expenses of members of the Tribunal, Registry, and experts appointed to assist the Tribunal, as well as all other expenses including for hearings and meetings, information technology support, catering, court reporters, deposit administration, archiving, translations, couriers, communications, correspondence, and publishing of the Awards. Article 7 of Annex VII to the Convention provides that “[u]nless the arbitral tribunal The South China Sea Arbitration Award of 12 July 2016 decides otherwise because of the particular circumstances of the case, the expenses of the tribunal, including the remuneration of its members, shall be borne by the parties to the dispute in equal shares.”

RELIEF REQUESTED AND SUBMISSIONS

112. On 30 November 2015, the Agent for the Philippines presented the Philippines’ Final Submissions, requesting the Tribunal to adjudge and declare that:

1. The Tribunal has jurisdiction over the claims set out in Section B of these Submissions, which are fully admissible, to the extent not already determined to be within the Tribunal’s jurisdiction and admissible in the Award on Jurisdiction and

Admissibility of 29 October 2015.

1. (1)China’s maritime entitlements in the South China Sea, like those of the

Philippines, may not extend beyond those expressly permitted by the United Nations Convention on the Law of the Sea (“UNCLOS” or the “Convention”);

China’s maritime entitlements expressly permitted by UNCLOS;

113. As described above at paragraphs 78 and 80, on 16 December 2015 in accordance with Article 19 of the Rules of Procedure, having sought the views of China, the Tribunal granted leave to the Philippines to make the amendments incorporated in its final Submissions.

114. While China does not accept and is not participating in this arbitration, it has stated its position that the Tribunal “does not have jurisdiction over this case.”

115. In accordance with its decision not to participate, China did not file a Counter-Memorial, has not stated its position on the particular Submissions of the Philippines, and has not commented

on specific substantive issues when given the opportunity to do so. China pointed out that its

Position Paper  “does  not  express  any  position on  the  substantive  issues   related  to  the subject-matter of the arbitration initiated by the Philippines.” Nevertheless, as described in relevant portions of the Award, in proceeding to assess the merits of the respective Submissions, the Tribunal has sought to take into account China’s position to the extent it is discernible from

China’s official statements and conduct.

PRELIMINARY MATTER

1. THE LEGAL AND PRACTICAL CONSEQUENCES OF CHINA’S NON-PARTICIPATION
2. As is evident from the procedural history recounted in Chapter II, China has consistently rejected the Philippines’ recourse to arbitration and has adhered to a position of non-acceptance and non-participation in the proceedings. China did not participate in the constitution of the Tribunal, it did not submit a Counter-Memorial in response to the Philippines’ Memorial, it did not attend the Hearings on Jurisdiction or on the Merits, it did not reply to the Tribunal’s invitations to comment on specific issues of substance or procedure, and it has not advanced any of the funds requested by the Tribunal toward the costs of the arbitration. Throughout the proceedings, China has rejected and returned correspondence from the Tribunal sent by the

Registry, reiterating on each occasion “that it does not accept the arbitration initiated by the Philippines.”

117. The Convention, however, expressly acknowledges the possibility of non-participation by one of the parties to a dispute and confirms that such non-participation does not constitute a bar to the proceedings. Article 9 of Annex VII provides:

Article 9

Default of Appearance

If one of the parties to the dispute does not appear before the arbitral tribunal or fails to defend its case, the other party may request the tribunal to continue the proceedings and to make its award. 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 law.

118. Pursuant to Article 9, the Philippines expressly requested that these proceedings continue. The Tribunal has continued the proceedings, confirming that despite its non-appearance, China remains a party to the arbitration, with the ensuing rights and obligations, including that it will be bound under international law by any decision of the Tribunal.

Steps Taken to Ensure Procedural Fairness to Both Parties

119. Article 9 of Annex VII seeks to balance the risks of prejudice that could be suffered by either party in a situation of non-participation. First, it protects the participating party by ensuring that proceedings will not be frustrated by the decision of the other party not to participate. Second, it protects the rights of the non-participating party by ensuring that a tribunal will not simply accept the evidence and claims of the participating party by default.

120. The respective procedural rights of the parties are further articulated in Article 5 of Annex VII, which provides that “the arbitral tribunal shall determine its own procedure, assuring to each party a full opportunity to be heard and to present its case.”

121. The Tribunal has taken a number of measures to safeguard the procedural rights of China. For example, it has:

122. The Tribunal has also taken measures to safeguard the Philippines’ procedural rights. As noted by the International Tribunal for the Law of the Sea in Arctic Sunrise, a participating party “should not be put at a disadvantage because of the non-appearance of the [non-participating party] in the proceedings.”

123. One possible disadvantage of non-participation is delay. While ensuring equality of opportunity, the Tribunal has also complied with the obligation in Article 10 of the Rules of Procedure to “conduct the proceedings so as to avoid unnecessary delay and expense and to provide a fair and efficient process for resolving the Parties’ dispute.”

124. A second possible disadvantage about which the Philippines expressed concern was that

China’s non-appearance might deprive it of “an opportunity to address any specific issues that the Arbitral Tribunal considers not to have been canvassed, or to have been canvassed inadequately.” The Tribunal has taken various steps to ensure both Parties the opportunity to address specific issues of concern to the Tribunal’s decision-making. For example, the Tribunal introduced the following process into Article 25(2) of its Rules of Procedure:

In the event that a Party does not appear before the Arbitral Tribunal or fails to defend its case, the Arbitral Tribunal shall invite written arguments from the appearing Party on, or pose questions regarding, specific issues which the Arbitral Tribunal considers have not been canvassed, or have been inadequately canvassed, in the pleadings submitted by the appearing Party. The appearing Party shall make a supplemental written submission in relation to the matters identified by the Arbitral Tribunal within three months of the Arbitral Tribunal’s invitation. The supplemental submission of the appearing Party shall be communicated to the non-appearing Party for its comments which shall be submitted within three months of the communication of the supplemental submission. The Arbitral Tribunal may take whatever other steps it may consider necessary, within the scope of its powers

under the Convention, its Annex VII, and these Rules, to afford to each of the Parties a full opportunity to present its case.

125. The Tribunal implemented the above procedure by issuing a Request for Further Written Argument on 16 December 2014, containing 26 questions pertaining to jurisdiction and the merits. Further, on 23 June 2015, in advance of the Hearing on Jurisdiction, and on 23 November 2015, in advance of the Hearing on the Merits, the Tribunal sent to the Parties lists of specific issues which it wished to be addressed. During both hearings, following the first round of arguments, the Tribunal circulated lists of questions to be addressed during the second round.

126. A third perceived disadvantage that the participating party may face as a result of non-participation is being put in the “position of having to guess” what the non-participating

party’s arguments might be and to “formulate arguments for both States.” The Philippines suggested that the Tribunal could discern China’s position on the issues raised by the Philippines’ Submissions by consulting communications from China’s officials, statements of those associated with the Government of China, and academic literature by individuals closely

associated with Chinese authorities. The Tribunal has done so, cognisant of the practice of international courts and tribunals of taking notice of public statements or informal communications made by non-appearing Parties.

127. Concerns about the Philippines “having to guess what China’s arguments might be” were to some extent alleviated, at least with respect to jurisdiction, by China’s decision to make public its Position Paper in December 2014. The Position Paper was followed by two letters from the former Chinese Ambassador, addressed to the members of the Tribunal, and four more-recent letters from the current Chinese Ambassador. The latter directed the Tribunal’s attention to statements of the Chinese Ministry of Foreign Affairs Spokespersons and other public statements and materials. Indeed, the Tribunal has taken note of the regular press briefings of the Chinese Ministry of Foreign Affairs, which frequently touch on issues before the Tribunal, and occasionally contain statements exclusively dedicated to aspects of the arbitration. On the very question of China’s non-participation, the Director-General of the Department of Treaty and Law at the Chinese Ministry of Foreign Affairs gave the following remarks in response to questions about why China did not participate and whether, having renounced the opportunity to appear before the Tribunal to contest jurisdiction, China should “bear the consequences”:

First, not accepting or participating in arbitral proceedings is a right enjoyed by a sovereign State. That is fully in conformity with international law. And certainly, China is not the first State to do so. For such a proceeding that is deliberately provocative, China has neither the obligation nor the necessity to accept or participate in it. The Philippines’ initiation of the Arbitration lacks basic grounds in international law. Such an act can neither generate any validity in international law, nor create any obligation on China.

Second, by not accepting or participating in the arbitral proceedings, we aim to safeguard the solemnity and integrity of international law, including the UNCLOS, to oppose the abuse of the compulsory arbitration procedures, and to fulfill our commitments with the Philippines to settle relevant disputes through negotiations. The commitments were breached by the Philippines, but China remains committed to them.

Third, the actual objective of the Philippines to initiate the Arbitration and that of some other States to fuel the fire are not to genuinely resolve disputes. The Philippines was fully aware that the Arbitral Tribunal has no jurisdiction over disputes concerning territorial sovereignty and maritime delimitation between the two States; it was fully aware that it was absolutely not possible that China would accept the compulsory arbitration; and it was also fully aware that such a means would not help resolve the problem. With full awareness of the above, the Philippines still decided to abuse the provisions of the UNCLOS by unilaterally initiating and then pushing forward the arbitral proceedings. Some other States, who were making every effort to echo it, apparently have their ulterior motives. For such a game, there is no point for China to humor it.

Fourth, whether or not China accepts and participates in the arbitral proceedings, the Arbitral Tribunal has the obligation under international law to establish that it does have jurisdiction over the disputes. But from what we have seen, it apparently has failed to fulfill the obligation and the ruling would certainly be invalid. So there is no such thing of China’s taking the consequence of the arbitration. If anything, it is the Philippines that should bear all the consequences of abusing the UNCLOS.

128. It is in relation to the fourth point above, “the Tribunal’s obligation under international law to establish that it does have jurisdiction over the disputes” to which the Tribunal next turns.

Steps Taken by the Tribunal to Satisfy Itself that It Has Jurisdiction and that the Claim is Well Founded in Fact and Law

129. China’s non-participation imposes a special responsibility on the Tribunal. There is no system of default judgment under the Convention. As will be apparent in the course of this Award, the Tribunal does not simply adopt the Philippines’ arguments or accept its assertions untested. Rather, under the terms of Article 9 of Annex VII, the Tribunal “must satisfy itself not only that it has jurisdiction over the dispute but also that the claim is well founded in fact and law” before making any award.
130. The Tribunal has actively sought to satisfy itself as to whether it has jurisdiction over the dispute. Following China’s decision not to file a Counter-Memorial, the Tribunal requested the Philippines under Article 25 of the Rules of Procedure to provide further written argument on certain jurisdictional questions and posed questions to the Philippines both prior to and during the Hearing on Jurisdiction. China’s Position Paper in December 2014 expounded three main reasons why it considers that the Tribunal “does not have jurisdiction over this case.” The Tribunal decided to treat the Position Paper and certain communications from China as constituting, in effect, a plea concerning jurisdiction, which under the Rules of Procedure meant

conducting a hearing and issuing a preliminary ruling dedicated to jurisdiction. However, in line with its duty to satisfy itself that it has jurisdiction, the Tribunal did not limit the hearing to the three issues raised by China. It also considered, and invited the Parties to address, other possible jurisdictional questions. These procedures led to the Tribunal’s Award on Jurisdiction, issued on 29 October 2015 (a summary of which appears at paragraphs 145 to 164 below).

131. With respect to the duty to satisfy itself that the Philippines’ claims are well founded in fact and law, the Tribunal notes that Article 9 of Annex VII does not operate to change the burden of proof or to raise or lower the standard of proof normally expected of a party to make out its claims or defences. However, as a practical matter, Article 9 has led the Tribunal to take steps to test the evidence provided by the Philippines and to augment the record by seeking additional evidence, expert input, and Party submissions relevant to questions arising in this merits phase, including as to the status of features in the South China Sea, the allegations concerning violations of maritime safety obligations, and claims about damage to the marine environment. These steps are described below.

132. First, pursuant to the procedure established in Article 25 of the Rules of Procedure, in the

Tribunal’s Request for Further Written Argument of 16 December 2014, the Tribunal noted the Philippines’ argument that “none of the features in the Spratlys—not even the largest among them—is capable of generating entitlement to an EEZ or a continental shelf.” The Tribunal invited the Philippines to “provide additional historical and anthropological information, as well as detailed geographic and hydrographic information regarding” Itu Aba, Thitu, and West York.” The Tribunal also invited the Philippines to provide written argument on the status of any maritime feature claimed by China—“whether or not occupied by China”—that could potentially give rise to an entitlement to an exclusive economic zone or continental shelf extending to any of Mischief Reef, Second Thomas Shoal, Subi Reef, Scarborough Shoal, Reed Bank, or the areas designated as Philippine oil blocks “Area 3” and “Area 4”. In so doing, the Philippines was invited to provide “historical and anthropological information, as well as detailed geographic and hydrographic information” regarding the following features: Spratly Island, North-East Cay (North Danger Reef); South-West Cay (North Danger Reef); Nanshan Island; Sand Cay; Loaita Island; Swallow Reef; Amboyna Cay; Flat Island; Lankiam Cay; Great Discovery Reef; Tizard Bank reefs; and Union Bank reefs. In response to this request, the Philippines submitted with its Supplemental Written Submission an atlas and an expert report by Professor Clive Schofield, Professor J.R.V. Prescott, and Mr. Robert van der Poll entitled “An Appraisal of the Geographical Characteristics and Status of Certain Insular Feature in the South China Sea” (the “Schofield Report”). The atlas provided for each feature: a geographic and hydrographic description, a satellite image, photographs, excerpts from various sailing directions and nautical charts, and a summation of the pertinent geographic and hydrographic information by geographer Dr. Robert W. Smith.

133. Second, in accordance with Article 24 of the Rules of Procedure, and after seeking the views of the Parties, the Tribunal retained an independent technical expert—Mr. Grant Boyes—to assist it in “reviewing and analysing geographic and hydrographic information, photographs, satellite imagery and other technical data in order to enable the Arbitral Tribunal to assess the status (as a submerged feature, low-tide elevation, or island)” of the features named in the Philippines’ Submissions or any other such feature determined to be relevant during the course of the reference. While the appointment of hydrographic experts is common practice in Annex VII arbitrations, in light of China’s non-participation, Mr. Boyes was also tasked with assisting with a “critical assessment of relevant expert advice and opinions submitted by the Philippines.”
134. Third, the Tribunal posed to Professor Schofield a series of written and oral questions during the Hearing on the Merits, about his testimony, his earlier writings, and specific points in the Schofield Report.

135. Fourth, the Tribunal similarly posed written and oral questions to Professor Kent Carpenter, who submitted two expert reports for the Philippines about the environmental consequences of China’s conduct in the South China Sea. Professor Carpenter’s second report was submitted, inter alia, to adequately address the issues identified by the Tribunal in its “Annex of Issues” circulated in advance of the Hearing on the Merits.

136. Fifth, in light of China’s non-participation, the Tribunal decided to appoint coral reef ecology experts to provide their independent opinion on the impact of Chinese construction activities on the coral reef systems in the Spratly Islands. A team composed of Dr. Sebastian Ferse, Professor Peter Mumby, and Dr. Selina Ward prepared a report (the “Ferse Report”), on which both sides were invited to comment. In the course of preparing the report, some follow-up questions were put to the Philippines about sources relied on in the Carpenter Report, a process through which the Tribunal gained yet further information.

137. Sixth, the Tribunal has made efforts to understand China’s stance on environmental issues, including having (a) asked the Philippines and Professor Carpenter to identify any statements made by Chinese Government officials that suggest China had taken into account issues of ecological preservation and followed environmental protection standards in connection with its construction work; (b) presented to the Parties for their comment a number of official Chinese statements and reports from Chinese State-sponsored scientific institutes concerning the ecological impact of the construction work; (c) specifically and directly asked China whether it had undertaken an environmental impact study and if so, for the Tribunal to be provided with a copy. While China declined to comment, the Tribunal has taken note of its recent official statements to the effect that “[a]s owners of the Nansha Islands, China cares about protecting the ecological environment of relevant islands, reefs and waters more than any other country, organization or people of the world” and that “[b]ased on thorough studies and scientific proof, China adopts dynamic protection measures along the whole process so as to combine construction with ecological environmental protection and realize sustainable development of islands and reefs.” As noted below in Chapter D, neither the Tribunal nor its experts, however, have managed to retrieve copies of such studies.

138. Seventh, in relation to the Philippines’ Submission No. 13, alleging dangerous manoeuvring by Chinese law enforcement vessels in breach of the Convention’s maritime safety obligations, the

Tribunal considered it appropriate to appoint an expert to review the available documentary material and draw independent conclusions. In accordance with Article 24 of the Rules of Procedure and having consulted the Parties, the Tribunal commissioned a report by Captain

Gurpreet Singhota (the “Singhota Report”).

139. Eighth, in accordance with Article 22 of the Rules of Procedure, which provides that the

Tribunal may “take all appropriate measures in order to establish the facts,” and Article 25, which states that the Tribunal “may take whatever other steps it may consider necessary . . . to afford to each of the Parties a full opportunity to present its case,” the Tribunal has on several occasions invited the Parties to comment on various sources concerning the prevailing conditions on features in the South China Sea, including some materials in the public domain emanating from the Taiwan Authority of China. The Philippines has responded with comments both during the hearings and in written submissions after the hearings. On 11 March 2016, the Philippines submitted written comments, accompanied by two new expert reports on soil and water quality at Itu Aba. On 25 April 2016, the Philippines responded to an invitation to comment further on additional Taiwanese materials. While the Philippines considered that it would have been “within its rights in requesting, and the Tribunal would be well-justified in finding, that these materials should be disregarded,” it nevertheless “recognize[d] the exceptional difficulties China’s non-appearance has created for the Tribunal” and chose “not to object to the Tribunal’s consideration of Taiwan’s most recent materials.” Accordingly, the Philippines provided comments, translations and exhibits, and supplementary expert reports. China did not submit comments to the Tribunal in response to these materials, though its public statements on relevant questions have been noted.

140. Ninth, the Tribunal sought the Parties’ views on records obtained from the UKHO. Prior to the Hearing on the Merits, the Tribunal had requested the Philippines to confirm “whether it has sought and been able to obtain copies of hydrographic survey plans (fair charts), relating in particular to those surveys undertaken by the United Kingdom in the Nineteenth Century and by

Japan in the period leading up to the Second World War.” The Philippines replied that it had not and explained that it considered it unnecessary to do so. On 1 April 2016, the Tribunal informed the Parties that it considered it appropriate to have reference, to the greatest extent possible, to original records based on the direct observation of the features in question, prior to them having been subjected to significant human modification. As the most extensive hydrographic survey work in the South China Sea prior to 1945 was carried out by the Royal Navy of the United Kingdom, followed closely by the Imperial Japanese Navy, the Tribunal advised that it had undertaken to seek records from the archives of the UKHO, which also hold certain Japanese records captured during the Second World War. The Tribunal provided copies of records to the Parties and invited their comments, which the Philippines provided on 28 April 2016.

141. Tenth, the Tribunal also considered it appropriate to consult French material from the 1930s in

light of France’s occupation of the Spratly Islands announced in 1933 and in order to gain a more complete picture as to the natural conditions of the South China Sea features. Accordingly, the Tribunal sought records from the online database of the Bibliothèque Nationale de France and from the Archives Nationales d’Outre-Mer. On 26 May 2016, the Tribunal provided the Parties with the most pertinent documents obtained from those sources and allowed them an opportunity to comment. The Philippines sent its comments, with supplementary materials, on 3 June 2016.

142. As explained in the Tribunal’s communications to the Parties, the Tribunal considered historical records concerning conditions on features in the Spratly Islands, prior to them having been subjected to significant human modification, to be more relevant than evidence of the situation currently prevailing, which reflects the efforts of the various littoral States to improve the habitability of features under their control. Accordingly, although the Tribunal has fully considered the contemporary evidence provided by the Philippines, as well as certain materials made public by the Taiwan Authority of China, the Tribunal has not itself sought additional materials on contemporary conditions on any feature in the Spratlys. The Tribunal has, for the same reason, not sought to take advantage of the Taiwan Authority of China’s public offer to arrange a site visit to Itu Aba. In this respect the Tribunal notes that China, through its

Ambassador’s letter of 6 February 2015, objected strongly to the possibility of any site visit to the South China Sea by the Tribunal.

Conclusion on the Legal and Practical Consequences of China’s Non-Participation

143. For reasons set out above, despite its non-participation in the proceedings, China is a Party to the arbitration and is bound under international law by any awards rendered by the Tribunal.

144. In line with its duties under Annex VII to the Convention, in the circumstances of China’s non-participation, the Tribunal has taken steps to ensure procedural fairness to both Parties without compromising the efficiency of the proceedings. The Tribunal has also taken steps to ascertain China’s position on the issues for decision, based on statements made by Chinese officials publicly and in communications to the members of the Tribunal. In addition to its thorough review of the materials placed before it by the Philippines, the Tribunal has also taken steps to satisfy itself of its jurisdiction and the legal and factual foundations of the Philippines’ claims through obtaining independent expert input, reviewing other materials in the public domain, and inviting further comments from the Parties on those sources.

SUMMARY OF THE TRIBUNAL’S AWARD ON JURISDICTION

145. Pursuant to Article 288(4) of the Convention, “[i]n the event of a dispute as to whether a court or tribunal has jurisdiction, the matter shall be settled by decision of that court or tribunal.” As set out above, where a Party does not appear before the Tribunal, Article 9 of Annex VII to the

Convention requires that “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 law.” Additionally, the Rules of Procedure adopted by the Tribunal provide at Article 20(3) as follows:

The Arbitral Tribunal shall rule on any plea concerning its jurisdiction as a preliminary question, unless the Arbitral Tribunal determines, after seeking the views of the Parties, that the objection to its jurisdiction does not possess an exclusively preliminary character, in which case it shall rule on such a plea in conjunction with the merits.

146. China’s Position Paper was said by the Chinese Ambassador to have “comprehensively explain[ed] why the Arbitral Tribunal . . . manifestly has no jurisdiction over the case.” In its Procedural Order No. 4 of 21 April 2015, the Tribunal recalled the practice of international courts and tribunals in interstate disputes of (a) taking note of public statements or informal communications made by non-appearing Parties, (b) treating such statements and communications as equivalent to or as constituting preliminary objections, and (c) bifurcating proceedings to address some or all of such objections as preliminary questions.⁷⁰ The Tribunal considered that:

the communications by China, including notably its Position Paper of 7 December 2015 and the Letter of 6 February 2015 from the Ambassador of the People’s Republic of China to the Netherlands, effectively constitute a plea concerning this Arbitral Tribunal’s jurisdiction for the purposes of Article 20 of the Rules of Procedure and will be treated as such for the purposes of this arbitration.

147. Accordingly, the Tribunal decided:

in light of the circumstances and its duty to “assure to each Party a full opportunity to be heard and to present its case,” it is appropriate to bifurcate the proceedings and to convene a hearing to consider the matter of the Arbitral Tribunal’s jurisdiction and, as necessary, the admissibility of the Philippines’ submissions.”

148. The Tribunal also noted that it would not limit itself to hearing only the questions raised in

China’s Position Paper. The Tribunal accordingly convened the Hearing on Jurisdiction in The Hague on 7, 8, and 13 July 2015 and issued its Award on Jurisdiction on 29 October 2015. The principal findings of that decision are recalled herein.

Preliminary Matters

149. In its Award on Jurisdiction, 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 Convention’s mechanism for the resolution of disputes.

150. The Tribunal also noted China’s non-participation and held that this fact does not deprive the Tribunal of jurisdiction. In this respect, the Tribunal recalled the provisions of Article 9 of Annex VII to the Convention.

151. 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 in July 2015. The Tribunal also recalled the steps it had taken to safeguard the procedural rights of both Parties in the circumstances of China’s non-participation.

152. Finally, the Tribunal considered the argument set out in China’s 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 China’s concerns about the Tribunal’s jurisdiction as a preliminary objection. The Tribunal also noted that “the mere act of unilaterally initiating an arbitration under Part XV in itself cannot constitute an abuse” of the

Existence of a Dispute concerning Interpretation and Application of the Convention

153. The Tribunal next considered whether there is a dispute between the Parties concerning the interpretation or application of the Convention, which is the basis for the dispute settlement

mechanisms of the Convention. In so doing, the Tribunal considered two objections set out in

China’s Position Paper: first, that the Parties’ dispute is actually about sovereignty over the islands of the South China Sea and therefore not a matter concerning the Convention, and second, that the Parties’ dispute is actually about the delimitation of the maritime boundary between them and therefore excluded from dispute settlement by an exception set out in the Convention that States may activate by declaration. China activated the exception for disputes concerning sea boundary delimitations when it made a declaration in 2006.

154. With respect to the former objection, the Tribunal noted that there is a dispute between the Parties regarding sovereignty over islands, but held that the matters submitted to arbitration by the Philippines do not concern sovereignty. The Tribunal considered it to be expected that the Philippines and China would have disputes regarding multiple subjects, but emphasised that the

Tribunal did not accept that “it follows from the existence of a dispute over sovereignty that sovereignty is also the appropriate characterisation of the claims the Philippines has submitted in these proceedings.” The Tribunal also emphasised that “[t]he Philippines has not asked the Tribunal to rule on sovereignty and, indeed, has expressly and repeatedly requested that the Tribunal refrain from so doing.” The Tribunal emphasised that it did “not see that any of the Philippines’ Submissions require an implicit determination of sovereignty.”    Finally, the tribunal observed that it was “fully conscious of the limits on the claims submitted to it and, to the extent that it reaches the merits of any of the Philippines’ Submissions, intends to ensure that its decision neither advances nor detracts from either Party’s claims to land sovereignty in the South China Sea.”

155. With respect to the latter objection, the Tribunal noted that a dispute concerning whether a State possesses an entitlement to a maritime zone is a distinct matter from the delimitation of maritime zones in an area in which they overlap. While a wide variety of issues are commonly considered in the course of delimiting a maritime boundary, it does not follow that a dispute over each of these issues is necessarily a dispute over boundary delimitation. In particular, the Tribunal emphasised that:

A maritime boundary may be delimited only between States with opposite or adjacent coasts and overlapping entitlements. In contrast, a dispute over claimed entitlements may exist even without overlap, where—for instance—a State claims maritime zones in an area understood by other States to form part of the high seas or the Area for the purposes of the Convention.

Accordingly, the Tribunal held that the claims presented by the Philippines do not concern sea boundary delimitation and are not, therefore, subject to the exception to the dispute settlement provisions of the Convention. The Tribunal also emphasised that the Philippines had not asked it to delimit any boundary.

156. Turning to the matters raised in the Philippines’ Submissions, the Tribunal reviewed the record to determine whether disputes existed between the Parties at the time the Philippines commenced this arbitration and whether such disputes concerned the interpretation and application of the Convention. In so doing, the Tribunal noted that it was necessary to address some ambiguity regarding China’s position on the matters before it and recalled that the existence of a dispute may be inferred from the conduct of a State, or from silence, and is a matter to be determined objectively. The Tribunal considered that each of the Philippines’ claims reflected a dispute concerning the Convention and noted in particular that a dispute concerning the interaction between the Convention and other rights (including any Chinese historic rights) is a dispute concerning the Convention.

Involvement of Indispensable Third Parties

157. Having identified the disputes presented by the Philippines’ Submissions, the Tribunal considered whether the absence from this arbitration of other States, such as Viet Nam, that have claims to the islands of the South China Sea would be a bar to the Tribunal’s jurisdiction. The Tribunal noted that this arbitration differs from past cases in which a court or tribunal has found the involvement of a third party to be indispensable. The Tribunal recalled that “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” and held accordingly that “[t]he legal rights and obligations of Viet Nam therefore do not need to be determined as a prerequisite to the determination of the merits of the case.” The Tribunal also recalled that, in December 2014, Viet Nam submitted a “Statement of the Ministry of Foreign Affairs of Viet Nam” for the Tribunal’s attention, in which Viet Nam asserted that it has “no doubt that the Tribunal has jurisdiction in these proceedings.”

Preconditions to Jurisdiction

158. The Tribunal then considered the preconditions to jurisdiction set out in the Convention. Although the dispute settlement mechanism of the Convention provides for compulsory settlement, including through arbitration, it also permits parties to agree on the settlement of disputes through alternative means of their own choosing. Articles 281 and 282 of the Convention may prevent a State from making use of the mechanisms under the Convention if they have already agreed to another means of dispute resolution. Article 283 also requires the Parties to exchange views regarding the settlement of their dispute before beginning arbitration.

159. The Tribunal considered the applicability of Articles 281 and 282 to the following instruments to determine whether the Parties had agreed to another means of dispute settlement: (a) the 2002 China–ASEAN Declaration on the Conduct of Parties in the South China Sea (the “DOC”), (b) a series of joint statements issued by the Philippines and China referring to the resolution of disputes through negotiations, (c) the Treaty of Amity and Cooperation in Southeast Asia, and (d) the Convention on Biological Diversity (the “CBD”). The Tribunal held that the DOC is a political agreement and “was not intended to be a legally binding agreement with respect to dispute resolution,” does not provide a mechanism for binding settlement, and does not exclude other means of settlement. The Tribunal reached the same conclusion with respect to the joint statements identified in China’s Position Paper. With respect to the Treaty of Amity and Cooperation in Southeast Asia and the CBD, the Tribunal noted that both are legally binding agreements with their own procedures for disputes, but that neither provides a binding mechanism and neither excludes other procedures. Additionally, the Tribunal noted that although there is overlap between the environmental provisions of the UN Convention on the Law of the Sea and the CBD, this does not mean that a dispute concerning one instrument is necessarily a dispute concerning the other or that the environmental claims brought by the Philippines should instead be considered under the framework of the CBD. Accordingly, the Tribunal concluded that none of these instruments prevent the Philippines from bringing its claims to arbitration.

160. With respect to the exchange of views on the settlement of the dispute, the Tribunal held that Article 283 requires parties to exchange views on the means of settling their dispute, not the substance of that dispute. The Tribunal held that this requirement was met in the record of diplomatic communications between the Philippines and China, in which the Philippines expressed a clear preference for multilateral negotiations involving the other States surrounding the South China Sea while China insisted that only bilateral talks could be considered. The Tribunal also considered whether, independently of Article 283, the Philippines was under an obligation to pursue negotiations before resorting to arbitration. In this respect, the Tribunal held that the Philippines had sought to negotiate with China and noted that it is well established that international law does not require a State to continue negotiations when it concludes that the possibility of a negotiated solution has been exhausted.

Exceptions and Limitations to Jurisdiction

161. Finally, the Tribunal examined the subject matter limitations to its jurisdiction set out in Articles 297 and 298 of the Convention. Article 297 automatically limits the jurisdiction a tribunal may exercise over disputes concerning marine scientific research or the living resources of the exclusive economic zone. Article 298 provides for further exceptions from compulsory settlement that a State may activate by declaration for disputes concerning (a) sea boundary delimitations, (b) historic bays and titles, (c) law enforcement activities, and (d) military activities. By declaration on 25 August 2006, China activated all of these exceptions.

162. The Tribunal considered that the applicability of these limitations and exceptions may depend upon certain aspects of the merits of the Philippines’ claims:

163. The Tribunal recalled that its Rules of Procedure call for it to rule on objections to jurisdiction as a preliminary matter, but permitted it to rule on such objections in conjunction with the merits if the objection “does not possess an exclusively preliminary character.” For the foregoing reasons, the Tribunal concluded that it was able, at that time, to rule that it has jurisdiction over certain of the claims brought by the Philippines, but that others were not exclusively preliminary and would be deferred for further consideration in conjunction with the merits.

Decisions of the Tribunal

164. In its Award, the Tribunal unanimously concluded that it:

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

1. FINDS that China’s non-appearance in these proceedings does not deprive the Tribunal of jurisdiction.

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

1. FINDS that there is no indispensable third party whose absence deprives the Tribunal of jurisdiction.

1. 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 paragraphs 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.

1. FINDS that the Parties have exchanged views as required by Article 283 of the Convention.

1. FINDS that the Tribunal has jurisdiction to consider the Philippines’ Submissions

No. 3, 4, 6, 7, 10, 11, and 13, subject to the conditions noted in paragraphs 400, 401, 403, 404, 407, 408, and 410 of this Award.

1. 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 exclusively 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.

1. 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.

1. RESERVES for further consideration and directions all issues not decided in this Award.

THE STATUS AND EFFECT OF THE TRIBUNAL’S AWARD ON JURISDICTION

165. The Tribunal’s Award on Jurisdiction is an “award of the arbitral tribunal” for the purposes of Article 10 of Annex VII to the Convention. Pursuant to Article 11 of Annex VII to the Convention, “[t]he award shall be final and without appeal, unless the parties to the dispute have agreed in advance to an appellate procedure. It shall be complied with by the parties to the dispute.”

166. The Tribunal is conscious that China has not, to date, accepted the decisions in the Tribunal’s Award on Jurisdiction and has stated that the Award “is null and void, and has no binding effect on China.” The Tribunal is also conscious that China has continued to assert publicly that the Tribunal lacks jurisdiction for the same reasons set out in China’s Position Paper of 7 December 2014, specifically that:

South China Sea through negotiation, the Philippines is precluded from initiating arbitration unilaterally.”

China has also continued to assert its view that (e) “the Philippines’ initiation of the arbitration is a typical abuse of compulsory arbitral procedures stipulated in the UNCLOS.”

167. The Tribunal considers that each of these objections—concerning (a) the link between sovereignty and the Philippines’ claims, (b) the link between maritime delimitation and the Philippines’ claims, (c) the effect of the DOC, (d) the Parties’ exchange of views on the settlement of the dispute prior to the commencement of the arbitration, and (e) the appropriateness of the Philippines’ recourse to arbitration —has been fully addressed and decided in the Tribunal’s Award on Jurisdiction, in keeping with the Tribunal’s power pursuant to Article 288(4) to decide any dispute concerning the scope of its own jurisdiction.

168. For the avoidance of doubt, the Tribunal hereby reaffirms in full, and incorporates by reference, the conclusions and reasoning set out in its Award on Jurisdiction.

International courts III: The Permanent Court of Arbitration

Philippines v. China