Game over for China on South China Sea?

by Matej Šimalčík

On 12 July 2016, the Hague-based Permanent Court of Arbitration (PCA) gave its verdict on the Philippines vs. China case, putting a formal end to the three-year-long proceeding the Philippines initiated.

South China Sea (SCS) represents one of the world’s most important shipping lanes, with approximately 50 % of world trade being shipped through the SCS. Moreover, SCS’s bedrock contains vast reserves of oil and natural gas. According to the US Energy Information Administration there are proven reserves of 11 billion barrels of oil and 7500 cubic kilometers of natural gas. Furthermore, there are important fisheries found in the region. Naturally, every country in the region makes claims to portions of SCS. Typically, these claims are governed by the United Nations Convention on the Law of the Sea (UNCLOS), which entitles a state to 12-nautical-mile territorial sea and 200-nautical-mile exclusive economic zone (EEZ) within which a state has right to exploit resources; and in some cases allows for keeping of historically controlled waters. The largest of the claims is the Chinese one, covering about 90 % of the SCS’s area, enclosed within a so called Nine Dash Line, which is at odds with the other state’s claims (e.g. Vietnam, Philippines, Indonesia, or Taiwan). To reinforce her claims, China has engaged in artificial island building on several SCS features in Spratleys*.

As China possesses by far the most powerful navy in the region of Southeast Asia, other claimants can rely only on military alliances or extra-military means when countering China. Choosing the second, the Philippines have initiated proceeding against China at the PCA in 2013. Under UNCLOS, to which both China and the Philippines are a party, it is the PCA (among others) that is tasked with adjudicating any dispute that may arise from the treaty. In its claim, the Philippines challenged the validity of the Nine Dash Line. The central question of the case was not the one of sovereignty over the SCS features, but rather their very nature. Simply put, the Philippines asked the court to rule whether the features are islands (generating EEZ), or some other kind of feature (generating a territorial sea at best).

This seemingly straightforward case was not without controversies. After the case was filed, China refused to participate in the proceedings. On top of this, in a widely circulated position paper, China challenged the jurisdiction of PCA, stating that the case was essentially about sovereignty which falls outside the scope of UNCLOS and in turn within PCA’s jurisdiction. One of the basic principles of procedural law and law of Arbitration is the “competence-competence” principle, meaning that only the tribunal itself can decide whether it has competence (jurisdiction) to hear a case or not. Bearing this in mind, the PCA found that it indeed can hear the case and proceeded with adjudication of the merits of the case.

The final awards that were delivered by PCA essentially dispelled the Chinese claims, when it found that there is no historical basis for the Nine Dash Line and that the SCS features are not islands as per UNCLOS.

This begs to ask what the implications of this ruling will be? China has already stated it will not abide by the court’s judgement as in their view it is “null and void”. This is no surprise, as China is doing precisely what other big powers did in the past (the US withdrawal from the International Court of Justice obligatory jurisdiction following the Nicaragua case comes to mind, or ignoring the Avena case ruling of the same court).

Nevertheless, by ignoring the PCA’s ruling China is breaching international law, a binding treaty that China voluntarily signed up for and even played a big role in its drafting. According to the theory of credible commitments, states sign treaties when they anticipate that they will not violate such a treaty in the future. A breach would be viewed by other countries as a broken promise, leading to loss of credibility and reputation, making future negotiating harder as others simply will not trust a country that already broke its promises.

Secondly, China’s neighbors will view the purported “peaceful rise of China” thesis with increased skepticism. Coupled with increasing Chinese militarization, the smaller states won’t have much choice but to reinforce their alliances with the US in order to hedge against China.

Thirdly, the judgement could be viewed inside China as another attempt by the West to encroach on China and her rights. Chinese Communist Party has created elaborate narratives aimed at domestic audiences about how China has a historical claim to waters and resources of SCS. In this sense, having a court seated in Netherlands deny this right is in essence denying Chinese their “birthright.” This is further reinforced when looked at through the prism of Century of Humiliation, a period during which European powers essentially occupied parts of China. As a result, occurrence of anti-Western protests in China would not be of much surprise.

Overall, this can put China into an increasingly isolated position, in which it might be willing to take more daring unilateral actions to assert itself as a big power. The worst case scenario, an open military conflict, however, seems unlikely, as it would harm international trade on which Chinese economy largely depends. Post hoc compliance is also unlikely as it would undermine the position of communist leaders at home.

At best we can hope for a fragile status quo. In this scenario, China will cease carrying out the most provocative actions in SCS, such as island building, and will implicitly comply with (parts of) the PCA’s judgement, while maintaining the domestic position that SCS is rightfully Chinese.

Only time will prove these predictions right or wrong. One thing is sure though – interesting times are ahead of us to follow international politics in Southeast Asia.

* An earlier version of this article claimed that China engaged in artificial island building on the Paracels as well. This not the case.


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