The

Impact of the Arbitral Tribunal

Award on Peace and Security in the
South China Sea Area and the World

Carlyle A. Thayer

Presentation to
International Conference on South China Sea Disputes:
Award of the Arbitral Tribunal Constituted under
Annex VII to the United Nations Convention on the Law
of the Sea (UNCLOS) and its Implementation
Sponsored by the Geneva Association
Centre International de Confrence Gneve,
Geneva, December 6, 20016

2
The Impact of the Arbitral Tribunal Award on Peace and Security
in the South China Sea Area and the World
Carlyle A. Thayer

This presentation is divided into five parts. Part one, the introduction, sets out the
theoretical and geo-strategic framework of the presentation. Part 2 reviews the Award
issued by the Arbitral Tribunal in the claim brought by the Philippines against China. Part
3 discusses the implications for the South China Sea area. Part 4 discusses the
implications for the wider international community. Part 5 offers some concluding
remarks.
Part 1. Introduction
This part is divided into two sections; the first discusses the theoretical framework for
this presentation. The second section discussed the main drivers behind Chinas
assertiveness and militarization of the Spratly islands.
This presentation is framed by the influential writing of Hedley Bull in his book The
Anarchical Society (1977). Bull argues that the central characteristic of the global
political system is its anarchical nature because it lacks an effective world government
with a monopoly on the use of force. This system operates mainly on the basis of a
balance of power. At the same time, however, various states interact with one another
and form a society of states (as distinct from a system of states). According to Bull,
when a group of states, conscious of certain common interests and common values,
form a society [and] conceive themselves to be bound by a common set of rules in
their relations with one another, and share in the working of common institutions. In
summary, world order exists through the mechanisms of balance of power,
international law, diplomacy, war and the central role of great powers.
There are four main drivers behind Chinas policy of constructing artificial islands and
militarization in the South China Sea: nationalism, fisheries, hydrocarbons and geo-
strategic considerations. This presentation discusses each in term and argues that geo-
strategic imperatives are the most important. China seeks to counter the naval
hegemony of the United States in East Asian waters by developing sufficient military
power to dominate the first island chain running south from Japan, Okinawa, Taiwan,
and the Philippines. China seeks to dominate the South China Sea to protect its sea lines
of communications and to secure its southern flank against intervention by the U.S.
Navy and Air Force.
Chinas artificial islands in the Spratly archipelago will serve as forward operating bases
for Chinese fisheries and hydrocarbon industries as well as maritime law enforcement
agencies. More importantly, the infrastructure on these artificial islands will support a
growing military presence in the future.

Part 2. The Philippines-v-China Arbitration Award

This section discusses the main findings of the Award issued by the Arbitral Tribunal set
up under Annex VII of the United Nations Convention on the Law of the Sea (UNCLOS) to
hear the claims brought by the Philippines against China.
Maritime disputes in the South China Sea have been the prime source of regional
tension in Southeast Asia since 2009. The main driver of these tensions has been Chinas
assertiveness in imposing its nine-dotted line ambit claim to well over half of the South
China Sea and its claim to all the land features encompassed within this line.

In 2012 Chinas investment in a military sense of Scarborough Shoal led to the
Philippines decision to file a claim under Annex VII of UNCLOS seeking, inter alia, to
clarify its entitlements.
On July 12, 2016 the Arbitral Tribunal issued its Award. This award is binding on both
China and the Philippines and must be carried out immediately and is not subject to
appeal. The Arbitral Tribunals Award may be grouped into five categories:
First, the Tribunal ruled that UNCLOS comprehensively allocates rights in the maritime
domain and that Chinas claim to historic rights, other sovereign rights and jurisdiction
in the South China Sea enclosed by its nine-dotted line are contrary to the Convention
and without lawful effect because they exceed the limits set by UNCLOS.
Second, the Tribunal ruled that none of the land features in the South China Sea were
islands as defined by UNCLOS Article 121 and therefore were not entitled to a 200
nautical mile (nm) Exclusive Economic Zone (EEZ) or an extended continental shelf.
Third, the Arbitral Tribunal found that China was in breach of its obligations as a
signatory to UNCLOS and as a flag state signatory to the International Maritime
Organizations 1972 Convention on the International Regulations for Preventing
Collisions at Sea.
Fourth, the Arbitral Tribunal found that China failed to meet its obligations to protect
and preserve the maritime environment in the South China Sea.
Fifth, the Arbitral Tribunal found that Chinas construction of artificial islands after the
Philippines lodged its claims in January 2013 aggravated and extended the legal dispute
over maritime entitlements and protection and preservation of the marine environment.
UNCLOS contains no provisions for enforcement. As a result, because of Chinas
rejection of the entire compulsory dispute resolution process under UNCLOS, the Award
is stillborn. Chinas actions have undermined not only UNCLOS as the constitution for
the seas but international law in general as an instrument in maintaining a rules-based
global order. Chinas actions suggest it has not yet been fully socialized into
international society of states that value a rules-based international order.
Part 3. Implications for the South China Sea Area
The Arbitral Tribunals Award came after national elections in the Philippines and the
inauguration of a new government headed by President Rodrigo Duterte. Duterte

visited China and ended a two-year hiatus in relations. Preliminary agreement was
reportedly reached to initiate bilateral discussions on their maritime disputes. Duterte
has neither pushed China to implement the Award nor abandoned the Award. As a
result, China has an incentive to moderate its behavior and curb further militarization of
its artificial islands in the South China Sea. It remains to be seen what role if any the
Award will play in managing maritime disputes between China and the Philippines.
Four other states have claims in the South China Sea: Taiwan (Republic of China),
Vietnam, Malaysia and Brunei. One implication of the Award is that all claimants will
come under international pressure to bring their maritime claims into line with
international law, a necessary first step towards identifying and demarcating areas of
overlap. As a result of the Award the scope of maritime claims has been considerably
reduced leaving an area on undisputed high seas where there are no restrictions on
freedom of navigation for military ships and aircraft.
Chinas refusal to accept the Arbitral Tribunals Award does not set a reassuring
precedent for other countries contemplating international litigation to resolve their
maritime disputes with China. For example, Vietnam could seek to determine the legal
status of features in the Paracel islands but if the Award went its way China could refuse
to comply.
The Award has implications for the Association of Southeast Asian Nations (ASEAN) that
had been conducting consultations with China on implementing a non-binding
agreement known at the Declaration on Conduct of Parties in the South China Sea (DOC,
2002) and a legally binding Code of Conduct in the South China Sea (COC). The
Philippines decision to take legal action against China, without prior consultations with
other regional states, resulted in internal disunity in ASEAN.
Now that the Award has been issued it provides a normative and legal basis for ASEAN
to press China to implement the DOC and reach agreement on the COC.
If China continues to curb its further militarization of the Spratly islands, the status quo
would favor ASEAN in negotiations with China. The longer the status quo prevails,
however, it will have the effect of undermining UNCLOS as a means of managing
territorial disputes in the South China Sea and allow China to consolidate its presence on
its artificial islands, two of which are low-tide elevations and not subject to
appropriation.
Part 4. Implications for the International Community
Although the Award only concerns the Philippines and China, the Arbitral Tribunals
clarification of the legal definition of what constitutes an island (entitled to a 12 nautical
mile territorial sea and a 200 nautical mile Exclusive Economic Zone), rock (entitled to a
12 nautical mile territorial sea), and a low-tide elevation (not subject to appropriation)
has global applicability. For example, excessive maritime claims made by Japan from
Okinotorishima and by United States from Johnston atoll could be legally challenged.

Chinas refusal to comply with the Award will bring it into conflict with major maritime
powers, particularly the United States. The U.S. has a long-standing Freedom of
Navigation (FON) program specifically aimed at challenging excessive claims to maritime
space. Although the United States has not ratified UNCLOS it is official U.S. policy to
observe UNCLOS as part of customary international law. The Arbitral Tribunals rejection
of Chinas nine-dotted lines will mean that the U.S. Navy could sail through the Spratly
islands to assert its freedom of navigation on the high seas. The U.S. Navy could also sail
quite close to Chinas artificial islands Mischief and Subi reefs because they have
been classified as low-tide elevations. U.S. FON operational patrols (FONOPs) could
result in increased tensions with China if not a misadventure.
Irrespective of Chinas rejection of the Award, all other major maritime powers will
accept the Award. This Award will become part of international case law and influence
all subsequent cases related to dispute settlement throughout the world. It is unlikely
that maritime powers will acquiesce in the face of Chinas non-compliance otherwise
they will undermine the very rules-based international order that they support.
It is an open question whether the Trump Administration will press allies such as Japan
and Australia to join with the U.S. Navy in FONOPs.
Part 3. Conclusion
Chinas rejection of compulsory dispute settlement mechanisms under UNCLOS has
undermined the role of international law in restraining the behavior the major powers.
This will result in a greater emphasis on realpolitik and balance of power by China and
the United States.
If the Award of the Arbitral Tribunal is not upheld this will mean that international law
UNCLOS in particular will be depreciated as one of the means of maintaining global
order. As a result, realpolitik and balance of power mechanisms will play a greater role
in determining regional order in Southeast Asia. If this is the case it is likely that regional
stability in the South China Sea area will be undermined by geo-strategic rivalry
between a rising China under Xi Jinping and a resurgent America under Donald Trump.
Such rivalry will undermine ASEANs self-proclaimed objectives of being central to the
regions security architecture and upholding Southeast Asias autonomy.