China’s Vice-Minister for Foreign Affairs Casually Slanders the South China Sea Arbitral Tribunal

by Julian Ku

I have been trying to move on from writing about the blockbuster UN Convention on the Law of the Sea arbitral award on the South China Sea.  As our readers know, I have written way too much on this topic lately.  But the Chinese government’s outrageous statements criticizing the award deserve one last post from me before I head out for a South China Sea-free vacation this summer.

In particular, I wanted to turn our readers’ focus to statements such as those made by China’s Vice-Minister for Foreign Affairs, Liu Zhenmin, shortly after the award was released.  In his remarks denigrating the arbitral tribunal, Liu implied that the arbitrators may have been bribed to adopt the views of the Philippines in the award.  Below is an excerpt of a transcript of his remarks:

Besides, who supported the Arbitral Tribunal? The arbitrators are paid by certain parties, but who? Maybe by the Philippines or other countries. This system is completely different from the ICJ or the ITLOS.

Judges of the ICJ or the ITLOS receive salaries from the UN for the sake of independence and impartiality. But these five judges of the Arbitral Tribunal are doing it for a profit, and their payments come from the Philippines and probably others, too. We are unsure about the details but they do provide paid services.

These comments are outrageous on so many levels.   Liu knows, or should know, that the arbitrators were paid by the government of the Philippines.  The tribunal announced publicly in its Rules of Procedure Article 31-33 that it was exercising its treaty powers under Article 7 of Annex VII to UNCLOS to require payment from both parties. But Liu also knows that the only reason the arbitrators received all of their compensation from the Phillippines government is because China refused to participate and refused to pay its share. If China had actually showed up, it would have been obligated under Article 7 of UNCLOS Annex VII to pay half of the fees.  There is no evidence, and Liu cites none, that any government other than the Philippines paid the arbitrators.  Liu also conveniently fails to mention his own government’s failure to pay its fair share.

Such payments are almost always made in advance of the award being issued, or even before the proceedings begin.  In other words, the payments could not influence the award’s contents because the Philippines did not know the content of the award before they made their payments.

This manner of compensating arbitrators is so standard and unremarkable that China’s own leading commercial arbitration organization, CIETAC, allows in Rule III.C.1 for one party to pay fees for the entire arbitration even if the other party does not show up and refuses to pay its own share.   This is essentially the situation that the Philippines found itself in.  It could continue to demand that the Tribunal seek money from China for its share of the expenses, or it could pay up. It chose to pay China’s share as well, and (as a reward) is now being lambasted by China for doing so.

Vice-Minister Liu is not a party hack who doesn’t know anything about arbitration.  He is, in fact, on the roster of arbitrators available for appointment by the Permanent Court of Arbitration and he is a arbitrator of the aforementioned CIETAC.  In other words, Liu knows exactly how arbitration works, and he is feigning ignorance in order to defame the character of the UNCLOS arbitrators.

In the same press conference, Liu also claimed that UNCLOS arbitration is some sort of aberration that has never happened before, unlike the more established ICJ or ITLOS systems.  On this point, Liu is flatly incorrect. In fact, there have already been seven UNCLOS arbitrations convened under the exact same rules that were applied to the Philippines/China arbitration.  In fact, as Liu well knows, the Chinese government freely chose arbitration instead of the ICJ or ITLOS for any dispute settlement under UNCLOS.

When acceding to UNCLOS, China could have chosen under Article 287 to specify the ICJ or ITLOS as its preferred forum for dispute settlement.  It did not do so, thereby forcing any dispute involving China to be sent to UNCLOS arbitration pursuant to Article 287(5).  In other words, the Chinese government made a conscious choice to avoid the ICJ and ITLOS for disputes arising under UNCLOS.  It is astounding for one of China’s leading diplomats to denigrate the integrity of a system of dispute settlement that China freely chose and in fact demanded.

Liu’s borderline defamatory remarks matter even if China and the Philippines eventually work out a settlement of their dispute.  Liu has knowingly denigrated the integrity of five arbitrators – three of whom continue to sit on the International Tribunal for the Law of the Sea – using facts he almost certainly knows are false. As the esteemed Professor Jerome Cohen of NYU has noted, in many jurisdictions, this could be enough to constitute defamation or slander.  Since Liu would have immunity for his remarks, perhaps the softer sanctions could be imposed, such as demanding his resignation from the PCA’s roster of arbitrators or perhaps his removal from the position as an Associate Member of UNIDROIT.  At the very least, this sort of casual character assassination should not be forgotten nor forgiven.

5 Responses

  1. ‘the payments could not influence the award’s contents because the Philippines did not know the content of the award’

    That’s an odd thing to say. Payments to influence something which is still to come are by definition made in advance. (Of course, not saying that this is what happened, but what you say seems logically flawed)

    ‘China could have chosen under Article 287 to specify the ICJ or ITLOS as its preferred forum for dispute settlement. It did not do so, thereby forcing any dispute involving China to be sent to UNCLOS arbitration’

    Aren’t ITLOS and ICJ the applicable dispute settlement fora only when both parties agree to this? Even if China chose ICJ/ITLOS, in the absence of the same procedure accepted by the Philippines, the whole thing would go to Annex VII arbitration anyway. China can’t force anything, even if it wanted to.

  2. HI,

    A few clarifications.

    To be sure, payments to influence something could be made in advance, but my point is that it is just as common if not more effective to pay someone for services rendered. E.g. here is a bribe, and you will get the rest when you do what I want.

    The larger point is that arbitrations are always organized in this fashion, and the check on the use of payments to influence the award is that the payments are made in advance, rather than after the award is issued. This is true for any arbitration inside of China or elsewhere.

    On your second point about ITLOS and the ICJ: China could have selected the ICJ or ITLOS as its preferred option for dispute resolution when it acceded to UNCLOS. If the other country had also selected the ICJ or ITLOS, then the dispute would go there. By not choosing the ICJ or ITLOS, China made it impossible for any country to use those fora for UNCLOS dispute settlement, even if the other country wanted to. In other words, even if the Philippines had chosen the ICJ or ITLOS, China’s choice required arbitration.

    Thus, my larger point is that China is complaining about (and denigrating as completely illegal) a dispute settlement process (arbitration) that it specifically preferred over the ICJ or ITLoS. This seems and is ridiculous.

  3. Very interesting, if not disturbing piece. Whilst I would agree with the legal analysis, I’ll reserve judgement on Julian’s opinion of which is the most effective way to bribe someone!
    However I would think that the advance payment is not the most important check on the impartiality of the arbitration, but rather the consensual nature of the process as a whole.
    Arbitration proceedings are just another dispute settlement mechanism that requires the consent of both parties to submission – in this case provided by the provisions of UNCLOS, accepted by both as part of the package deal. Distrust dispute settlement mechanisms? Revoke treaties providing for obligatory dispute mechanisms procedures (if the disdain is greater than the benefits of such a treaty). Otherwise accept the other UNCLOS advantages and try to begin the long process of amendment.
    Nomination of arbitrators and the constitution of arbitral panels by parties is again about the consent and choices of the parties. This should provide for the integrity of the members as a whole, in the eyes of all parties to the dispute. Payment shouldn’t be an issue, and really if Liu wishes to dispute the proceedings it should be on the basis of the tribunal lacking jurisdiction under the provisions of UNCLOS, and thereby, without Chinese consent, the tribunal should not have proceeded to issue an award. Personally I would disagree with that conclusion, but at least it would open the way for real debate and a meeting of minds where interested parties could be persuaded and change their minds to agree with the Chinese State’s perspective on the arbitration. Instead statements like the one quoted paint an appeal to populist anger stirring over rational and considered debate. Brexit showed us how powerful these ‘arguments’ are, but it is damn annoying!

  4. Response…

    Testing bold [b]bold[/b]

  5. The Philippines’ arbitral tribunal may have failed to qualify as an UNCLOS Annex VII arbitral tribunal because it has failed to comply with all the compulsory procedures necessary to constitute it as an UNCLOS Annex VII arbitral tribunal. This is because, apart from the arbitrator appointed by the Philippines, the remaining four arbitrators (including the President of the tribunal) were appointed by the ITLOS President under the provisions of Article 3(e) of Annex VII without consultation with China. Article 3(e) of Annex VII expressly requires such consultation:

    Article 3
    Constitution of arbitral tribunal

    (e) Unless the parties agree that any appointment under subparagraphs (c) and (d) be made by a person or a third State chosen by the parties, the President of the International Tribunal for the Law of the Sea shall make the necessary appointments. If the President is unable to act under this subparagraph or is a national of one of the parties to the dispute, the appointment shall be made by the next senior member of the International Tribunal for the Law of the Sea who is available and is not a national of one of the parties. The appointments referred to in this subparagraph shall be made from the list referred to in article 2 of this Annex within a period of 30 days of the receipt of the request and in consultation with the parties. The members so appointed shall be of different nationalities and may not be in the service of, ordinarily resident in the territory of, or nationals of, any of the parties to the dispute.

    The words “arbitral tribunal” or “tribunal” referred in Articles 5 and 9 of Annex VII of UNCLOS and Article 288(4) of UNCLOS obviously does not mean any tribunal. It has to be a tribunal properly constituted under Article 3(b), (c), (d) and (e) of Annex VII of UNCLOS (an UNCLOS Annex VII arbitral tribunal).

    The Philippines’ arbitral tribunal cannot invoke any power or authority under these Articles or any other Article under UNCLOS unless it is an UNCLOS Annex VII arbitral tribunal as defined above. For the reason as pointed out above, the Philippines’ arbitral tribunal may have failed to be constituted as an UNCLOS Annex VII arbitral tribunal.

Trackbacks and Pingbacks

  1. There are no trackbacks or pingbacks associated with this post at this time.