Goodbye UNCLOS Dispute Settlement? China Walks Away from UNCLOS Arbitration with the Philippines

by Julian Ku

Breaking news:  China has rejected arbitration under Annex VII of the UN Convention on the Law of the Sea with the Philippines, dealing a heavy blow to the future of dispute settlement under UNCLOS (h/t China Law Prof Blog).  According to this China Daily report,

“Chinese Ambassador to the Philippines Ma Keqing had an appointment with officials from the Philippines’ Foreign Ministry on Tuesday and returned a note and related notice after expressing China’s rejection,” spokesman Hong Lei said at a daily press briefing.

“The note and related notice not only violate the consensus enshrined in the Declaration on the Conduct of Parties in the South China Sea (DOC), but are also factually flawed and contain false accusations,” Hong said.

As I have noted here (and as Prof. Clarke notes as well), the Philippines is now within its rights to ask the President of the International Tribunal for the Law of the Sea to appoint all four remaining arbitrators for the Annex VII tribunal.  Once the President of ITLOS has done so, the duly constituted arbitral tribunal may act even without China’s participation.

Upon reflection, I am not really surprised China has decided to walk away from the Annex VII tribunal.  As I noted earlier, such tribunals have tended to combine their considerations of jurisdiction with those of the merits.  They have not generally bifurcated their proceedings, nor do they seem to have any obligation to do so.

This is a problem for China because while their jurisdictional challenge is pretty strong, their argument on the merits is undeveloped and fuzzy.  They have never exactly spelled out what they mean by having “indisputable sovereignty” over the South China Sea.   Do they mean it is a territorial sea? Or that they have general economic rights similar to an Exclusive Economic Zone?

So I am not shocked that China is walking away here. The question for the Philipppines is: what next? Do they continue with the Annex VII arbitration without China? Well, their DFA seems ready to move forward without China.  But would any award issued by this tribunal be pretty meaningless?

I’m not sure. I think that any award there would have little impact on China, but it should be useful in helping rally allies in Southeast Asia, especially within ASEAN.  It is not going to stop China much, but an award that undermines the legality of China’s claims is certainly better to have than not to have. But it is not nearly as much as it would have been if China had played ball (and lost).

China’s statement contains a curious and hard to understand argument.  According to the Chinese foreign ministry, the Philippines arbitration claim “complicates” resolution of conflicts in the South China Sea in violation of the Declaration on Parties’ Conduct in the South China Sea.    Presumably, China is referring to Article 5 of the Declaration:

5. The Parties undertake to exercise self-restraint in the conduct of activities that would complicate or escalate disputes and affect peace and stability including, among others, refraining from action of inhabiting on the presently uninhabited islands, reefs, shoals, cays, and other features and to handle their differences in a constructive manner.

Does making an arbitration claim under Annex VII “complicate or escalate disputes”?  Given the whole context of Paragraph 5, I am highly doubtful of this argument. One must also note that the previous paragraph instructs all parties to

undertake to resolve their territorial and jurisdictional disputes by peaceful means, without resorting to the threat or use of force, through friendly consultations and negotiations by sovereign states directly concerned, in accordance with universally recognized principles of international law, including the 1982 UN Convention on the Law of the Sea;

The explicit reference to UNCLOS (albeit the 1982 version) doesn’t really add much weight to the claim that the the Declaration somehow prohibits parties from resorting to UNCLOS arbitration.  If anything, it goes the other way.  Given that the Declaration is not technically binding under international law anyway, let’s just say this is the weakest of a series of weak arguments trotted out by China in this dispute.

So let’s just call this what it is: China is thumbing its nose at UNCLOS and it has now dealt a  serious, near fatal blow, to the UNCLOS dispute settlement system, at least in its ability to resolve serious disputes involving major powers.  UNCLOS arbitration is not going to restrain China in any significant way. At least, China doesn’t think it will pay any serious costs to walking away, which is why it is willing to accept the equivalent of a default judgment.

From the perspective of the United States, the China-Philippines episode is a cautionary tale. On the one hand, it suggests that those critics of UNCLOS worried about the impact of Annex VII arbitration tribunals need not fear them all that much.  On the other hand, this episode should put an end to the always silly argument that the US needed to join UNCLOS in order to use UNCLOS against China.  That was never really going to work, and we now have ample evidence.

13 Responses

  1. I didn’t really shock China walks away from UNCLOS arbitration. South China dispute is much like power contest for China into ASEAN. Why China’s walk away from arbitration it because fearness about loosing in merit. If it happens China will lost his prestige in a region.
    A win-win solution to resolve the dispute, I think is joint cooperation between parties. As like Timor Gap case between Indonesia (former) and Australia.

  2. My first impression about this China’s move is surprising – in the context that in recent decades, the Chinese goverment has acquired considerable knowlege of international law when they put forth candidates to various international adjudicatory bodies like ICJ, WTO and even ITLOS.
    I had a little hope that the modern China would behave differently – but it is not the case here.

  3. Great post, Julian. Your move, ITLOS President Shunji Yanai.

  4. China has made a Declaration in 2006 on the dispute settlement under UNCLOS, which makes it clear that China does not accept jurisdiction of any tribunal. Until now we see that China doesn’t change its policy. Although Philippines filed this issue/dispute to international arbitration, without China’s consent, no tribunal will be established and then no case will be accepted at all. Philippines’ behavior on this matter is totally unilateral and it’s meaningless under international law. After all, when political aspect is involved, the issue seems more interesting.

  5. As Linda has rightly pointed out above, China made a reservation against the dispute settlement procedures provided by UNCLOS when it ratified the treaty (see the UN website): “The Government of the People’s Republic of China does not accept any of the procedures provided for in Section 2 of Part XV of the Convention with respect to all the categories of disputes referred to in paragraph 1 (a) (b) and (c) of Article 298 of the Convention.” The conclusion that “China is thumbing its nose” or dealt a “near fatal blow” to its dispute settlement system therefore seems hopelessly overblown. I would suggest that the US could actually have led by example by joining UNCLOS and its dispute settlement mechanisms and showing China that a great power can still willingly submit to international adjudication. However, the example that the US has provided in this regard is in fact to the contrary, given its history of withdrawing from international jurisdiction to which it had earlier consented after receiving an unfavourable judgment, such as was the case before the ICJ in the Nicaragua and subsequently the LaGrand and Avena cases. Unfortunate as China’s refusal to consent to UNCLOS dispute settlement mechanisms is, at least it is consistent with a long-standing policy (with its acceptance of WTO dispute settlement mechanisms as a major exception) which has been announced in advance. In addition, rumour has it that China is reconsidering its position with regard to international dispute settlement, although as is obvious in this case not just yet. Its appearance before the ICJ in the Kosovo proceedings may be an early indication.

  6. It seems I have been too generous to China in my previous post: as is clear from the UN website mentioned there, China’s reservation was made in a declaration ten years after it ratified UNCLOS. That means that under treaty law this Declaration is most likely invalid, although the question remains who is supposed to determine that. It does mean that China is backtracking on a commitment it made earlier.

  7. Thanks Wim! Actually, I’m waiting for someone to put up this question….
    Please kindly notice the Article 298 of UNCLOS, “Optional exceptions to applicability of section 2″”1. When signing, ratifying or acceding to this Convention or at any time thereafter, a State may, without prejudice to the obligations arising under section 1, declare in writing that it does not accept any one or more of the procedures provided for in section 2 with respect to one or more of the following categories of disputes….” So there’s no doubt about the validity of the China’s Declaration.
    And here’s UN General Secretary’s address about this issue at Press Conference on 22 Jan, 2013: “…. The United Nations, if necessary, if requested, is ready to provide technical and professional assistance; but primarily, all these issues should be resolved by the parties concerned.”

  8. Actually, upon some further reflection and bearing in mind what was written in earlier posts on this topic here, it seems that the main question is who has the authority to answer the question whether China’s declaration covers the current dispute or not. According to the Philippines and prof. Ku, if I understand correctly, it should be the arbitral panel itself and chances are quite high that they would uphold China’s jurisdictional objections, but there is no way to know for sure in advance, of course. But the language of UNCLOS seems sufficiently vague that China’s approach cannot really be dismissed either, so I still think the conclusion reached here is overblown.

  9. Hey Wim, I can’t agree with you more. We should think about this issue from a lawyer’s perspective, I mean, we should focus on the legal aspect.
    Who has the authority to decide whether China’s Declaration covers the current dispute? In both theory and practice, there is a dilemma. In international law, no one has the authority to answer this question. Now the compulsory procedures in UNCLOS meets it. As China has made such declaration, without its consent, China will not be subject to an arbitral procedure. That’s the role of a state’s will in international law.
    Well, I wonder why Prof. Ku doesn’t mention about China’s Declaration here. And I haven’t found the relevant information from other posts ….If it exists in his any post, I wonder if anyone can show me the link for me?

  10. Linda, Wim,
    China’s reservation only covers the particular categories of disputes listed in Article 298. The Philippines’ lawyers have jumped through hoops in their application to show that the specific issues they are bringing to the tribunal are not covered by the terms of China’s reservation. In any case, the applicability of a reservation is always an issue for a tribunal to decide in exercise of its Kompetenz-Kompetenz. Its true, as has been noted on this blog and elsewhere, that China has a strong case that there is no jurisdiction, but now the tribunal will be forced to determine wither it has jurisdiction without the aid of China’s arguments.
    Just to clarify, the following statement is not correct: “Without its consent, China will not be subject to an arbitral procedure.” Rather, without its consent, China will not be subject to the jurisdiction of an arbitral tribunal. It is still subject to the arbitral procedure to the extent of proving to the tribunal that it has not given its consent and that, as a result, no jurisdiction exits. If the tribunal determines that there is no jurisdiction, it cannot proceed to the merits of the dispute. That, and only that, is the extent of the principle of consent in light of the Annex VII’s power of Kompetenz-Kompetenz, and China’s lawyers know this much.

  11. Thanks for the clarification, Daniel. That was also the conclusion I reached eventually and I tried to reflect it in my last post. Annex VII actually contains provisions which govern how the tribunal proceeds if one of the parties to the dispute doesn’t show up, including determining its own jurisdiction (Article 9 Annex VII). In that respect, it is unfortunate that China seems not to even want to present its jurisdictional arguments.

  12. Thanks Daniel and Wim! Now the issue is much more clarified.

  13. Hi, here is a link to all of my posts on this subject.  

    As I note in an earlier post, the key provision is Article 288(4) which specifically states that an Annex VII arbitral tribunal has the power to decide its own jurisdiction.  China’s refusal to participate flies in the face of its Article 288 obligation to at least allow an arbitral tribunal to determine whether it has jurisdiction.  

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