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.