On 12 July 2016, the final Award in the arbitration between the Republic of the Philippines and The Peoples' Republic of China was issued by the Tribunal constituted under the United Nations Convention on the Law of the Sea ("UNCLOS"). Much international media attention has been focused on the arbitration, which concerned a number of issues in relation to the rights and maritime entitlements in the South China Sea, in respect of an area known as the "nine-dash line". The Award has been hailed as "historic" in terms of the interpretation and application of UNCLOS.
In the Award, the Tribunal emphasised that in light of limitations on compulsory dispute settlement under UNCLOS, it would not rule on any question of sovereignty over territory and would not delimit any boundary between the Parties. The Tribunal found in favour of the Philippines on the main points in issue. In the Award, amongst other things, the Tribunal made a number of important statements on the interaction between UNCLOS and claimed historic rights, the nature and features of "low tide elevations", "rocks" and "islands", and the obligations of States in relation to the protection of the marine environment.
A summary of the 500-page Award and the key findings of the Tribunal are set out below.
Summary of the Award
In its Award dated 12 July 2016, the Tribunal found that:
- there was no legal basis for China's "nine-dash line" claim to historic rights in the South China Sea which were in excess of the rights provided for by UNCLOS;
- none of the land features claimed by China in the South China Sea are "islands" for the purposes of UNCLOS, under which islands generate an exclusive economic zone ("EEZ") and continental shelf;
- China had breached certain of its obligations under UNCLOS in respect of the Philippines' sovereign rights regarding fishing, oil exploration, navigation, and the construction of artificial islands and installations, as well as China's obligations under UNCLOS to protect and preserve the marine environment and ensure safety at sea; and
- China had aggravated and extended the dispute including by engaging in large-scale land reclamation activities and construction of artificial islands, during the arbitration.
The Tribunal made clear that it was neither asked to nor did it rule on any question of sovereignty over the land features in the South China Sea, whether claimed by China or any of the other littoral states in the South China Sea, including the Philippines, nor did it rule on any question concerning maritime delimitation. That is because the Tribunal had no jurisdiction to decide such matters. The scope of its jurisdiction was limited to questions concerning the interpretation and application of UNCLOS, and UNCLOS is of no application to disputes over sovereignty over land territory. In addition, following China's 2006 declaration under Article 298 of UNCLOS to exclude maritime boundary delimitation from its acceptance of compulsory dispute settlement under UNCLOS, the Tribunal accepted that it had no jurisdiction to determine maritime delimitation; it was instead limited to considering the maritime entitlements of certain features in the South China Sea, without prejudice to claims to sovereignty over those features.
The Philippines initiated arbitration proceedings against China in January 2013, alleging various breaches of UNCLOS linked to China's claims to the "nine-dash line". China refused to appear in the proceedings, but set out its objections to the Tribunal's jurisdiction in a December 2014 Position Paper.
In its October 2015 Award on Jurisdiction and Admissibility, the Tribunal rejected China's arguments that the dispute was outside the Tribunal's jurisdiction, though it deferred making a decision on jurisdiction in relation to certain of the Philippines' claims until after the merits hearing. In its final Award, the Tribunal found that it had jurisdiction to decide all of the Philippines' claims except those relating to certain military activities (which were also excluded from the Tribunal's jurisdiction pursuant to China's 2006 declaration under Article 298 of UNCLOS).
UNCLOS provides that any decision rendered by a court or Tribunal having jurisdiction is final and binding between the parties (and the Tribunal appeared keen to emphasise that the Award binds only those parties, by repeatedly prefacing its findings in the dispositf with the words "as between the Philippines and China"). China has stated that it will not recognise or comply with the Award, and maintains that the Tribunal had no jurisdiction to decide the case.
Historic title and the "nine-dash line"
The Tribunal found that, while China had never clearly articulated the nature of its claims in the "nine-dash line", these claims were not claims to historic title or sovereignty, but rather claims to historic rights short of title, i.e. sovereign rights to exploit living and non-living resources.
The Tribunal held that UNCLOS defines the scope of maritime entitlements and sovereign rights of coastal states in the South China Sea. This superseded any historic rights, or other sovereign rights or jurisdiction in excess of the areas provided for by UNCLOS. UNCLOS was comprehensive in setting out the nature of maritime entitlements (e.g. a territorial sea, a contiguous zone, an EEZ and a continental shelf) and the rights of other states within those zones. While the Tribunal recognised that states could agree to modify the operation of UNCLOS between them to include a recognition of historic rights, it found there was no evidence of agreement in this case.
The Tribunal found that China’s claim to historic rights was not compatible with the provisions of UNCLOS. China's "nine-dash line" claim to most of the sea areas within the South China Sea was contrary to the allocation of maritime entitlements under UNCLOS, and was without lawful effect to the extent that it exceeded the geographic and substantive limits of China’s maritime entitlements under UNCLOS.
Status of features in the South China Sea
The Tribunal considered the status of the features claimed by China and the entitlements to maritime areas which could potentially be claimed pursuant to UNCLOS, focusing on Scarborough Shoal and certain features in the Spratly Islands. UNCLOS provides that an "island" is "a naturally formed area of land, surrounded by water, which is above water at high tide". It has entitlements to a 12 nm territorial sea, contiguous zone, 200 nm EEZ and continental shelf. A "rock" is a category of island which "cannot sustain human habitation or economic life of [its] own" and carries no entitlement to an EEZ or continental shelf.
The Tribunal found that none of the land features claimed by China in Scarborough Shoal and the Spratly Islands constituted "islands" for the purposes of UNCLOS. Some features are "rocks," while others are "low-tide elevations", which do not generate any maritime entitlements. The practical effect of this ruling is that, even if all of the maritime features in the South China Sea were recognised as being under Chinese sovereignty, the area of maritime entitlements generated by these features would be significantly less than the area of sea claimed by China in the "nine-dash line".
Breaches of UNCLOS
The Tribunal found that China had breached various obligations under UNCLOS in relation to the Philippines' sovereign rights, the protection and preservation of the marine environment, and the obligation of flag states to ensure safety at sea. It found that China:
- through the activities of its maritime surveillance vessels, its promulgation of a fishing moratorium in the South China Sea, and the construction of artificial islands and installations, had interfered with the exercise of the Philippines’ sovereign rights in its EEZ and continental shelf with respect to fishing, oil exploration, and navigation;
- failed to prevent exploitation of the Philippines’ living resources by Chinese fishing vessels in the Philippines' EEZ;
- interfered with the traditional fishing activities of Philippine fishermen at Scarborough Shoal;
- failed to protect and preserve the marine environment by tolerating and actively supporting Chinese fishermen in the harvesting of endangered species and the use of harmful fishing methods that damaged the fragile coral reef ecosystem in the South China Sea;
- inflicted severe harm on the marine environment by constructing artificial islands and engaging in extensive land reclamation at seven reefs in the Spratly Islands; and
- through the activities of its law enforcement vessels, created serious risk of collision and danger to Philippine vessels and personnel.
The Tribunal also found that China had aggravated and extended the dispute by, during the arbitration, restricting access to a detachment of Philippine marines stationed at Second Thomas Shoal (within the Philippines EEZ) and by engaging in the large-scale construction of artificial islands and land reclamation at seven reefs in the Spratly Islands.
In addition to exciting international public interest, the Award marks a significant contribution to the development of the law of the sea and is likely to be analysed and interpreted in detail. Of particular significance are the findings of the Award in relation to the primacy of UNCLOS over historic rights, the nature of "low tide elevations", "rocks" and "islands" and the obligations of states in relation to the protection of the marine environment. Some of these issues are highlighted below.
Rocks or islands
The Award is notable because it marks the first time that a judicial body has considered the conditions for a maritime feature to constitute a "low tide elevation", a "rock" or an "island" under Articles 13 and 121 of UNCLOS. The Tribunal set down detailed guidance on how these provisions should be interpreted, in particular the requirement that islands must be able to "sustain human habitation or economic life of their own":
- An island that is able to sustain either human habitation or an economic life of its own is entitled to both an EEZ and a continental shelf.
- The Tribunal clarified that a low-tide elevation has no EEZ or continental shelf. It also clarified that low-tide elevations do not form part of the land territory of a State and cannot be appropriated.
- The capacity of a feature to sustain human habitation or an economic life of its own must be assessed on a case-by-case basis. Evidence of physical conditions is not determinative and the most reliable evidence of the capacity of a feature will usually be the historical use to which it has been put.
- The phrase "sustain human habitation" as used in Article 121 means to provide that which is necessary to keep humans alive and healthy over a continuous period of time, according to a proper standard. "Sustain economic life" means to provide that which is necessary not just to commence, but also to continue, an activity over a period of time in a way that remains viable on an ongoing basis.
- In this connection, "human habitation" implies a non-transient presence of persons who have chosen to stay and reside on the feature in a settled manner. Periodic or habitual residence of nomadic people on a feature could constitute habitation. It requires all of the elements necessary to keep people alive on the feature, but would also require conditions sufficiently conducive to human life and livelihood for people to inhabit, rather than merely survive on, the feature. A purely official or military population, serviced from the outside, does not constitute evidence that a feature is capable of sustaining human habitation.
- Additionally, the phrase "economic life" as also used in Article 121 will ordinarily be the life and livelihoods of the human population on the feature. "Economic life of its own" means that the resources around which the economic activity revolves must be local, not imported, as must be the benefit of such activity. Economic activity that can be carried on only through the continued injection of external resources and support from the outside is not sufficient. Purely extractive economic activities, which accrue no benefit for the feature or its population, are not sufficient.
- Economic activity derived from a possible EEZ or continental shelf must be excluded from consideration. Economic activity derived from the territorial sea may be considered because both "rocks" and "islands" generate a territorial sea. There must nevertheless be a link between the economic life and the feature itself, rather than merely its adjacent waters.
- Remote island populations often make use of a number of islands, sometimes spread over significant distances, for sustenance and livelihoods. Provided that such islands collectively form part of a network that sustains human habitation in keeping with the traditional lifestyle of the peoples in question, this will not equate with the role of multiple islands delivering external supply.
- The Tribunal stressed that UNCLOS referred to low-tide elevations, rocks and islands as a "naturally formed area of land", which required that the status of a feature be ascertained on the basis of its natural condition, prior to the onset of significant human modification. Just as a low-tide elevation or area of seabed cannot be legally transformed into an island through human efforts, a rock cannot be transformed into a fully entitled island through land reclamation. If states were allowed to convert any rock incapable of sustaining human habitation or an economic life into a fully entitled island simply by the introduction of technology and extraneous materials, there would be no practical restraint to prevent states from claiming for themselves potentially immense maritime space.
Obligation of states to protect and preserve the marine environment
The Tribunal made a number of findings in relation to the obligations of states under UNCLOS to protect and preserve the marine environment, which could mark a significant step in the development of the scope and application of such obligations.
Consistent with previous case law, the Tribunal noted that the obligations of states in relation to environmental protection apply to areas within national jurisdiction as well as areas beyond national jurisdiction and that states have a positive duty to prevent, or at least mitigate, significant harm to the environment.
It found that where a state is aware that vessels flying its flag are engaged in the harvest of species recognised internationally as being threatened with extinction or are inflicting significant damage on rare or fragile ecosystems or the habitat of depleted, threatened, or endangered species, the flag state's obligations under UNCLOS include a duty to adopt rules and measures to prevent such acts and to maintain a level of vigilance in enforcing those rules and measures. China had failed in its obligations by tolerating and actively supporting Chinese fishermen in the harvesting of endangered species and the use of harmful fishing methods.
The Tribunal also found that China’s land reclamation and construction projects caused irreparable harm to the coral reef ecosystem. China had not complied with its obligations under UNCLOS to cooperate and coordinate with the other states on the protection and preservation of the marine environment concerning such activities, and to communicate an environmental impact assessment of the potential effects of such activities on the marine environment.
These findings mark a significant step in the clarification and, in particular, the application, of states' obligations to preserve and protect the marine environment under UNCLOS. It is unclear how this will affect the treatment of these obligations by states and future international Tribunals. However, the Tribunal's findings of breaches of the environmental obligations of UNCLOS are timely, given the current work of the UN General Assembly to develop an international legally binding instrument under UNCLOS on the conservation and sustainable use of marine biological diversity of areas beyond national jurisdiction.
For further information, please contact Andrew Cannon, Partner, Dominic Roughton, Partner, Harry Ormsby, Associate or your usual Herbert Smith Freehills contact.
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