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Starts with

Manila Water Inc rate dispute with the Metropolitan Waterworks and Sewerage
System (MWSS)
Manila Water originally proposed a P5.83-per-cubic meter (/cu.m.) increase in its
basic water charge of P25.07/cu.m., but MWSS instead ordered the company in
September 2013 to cut tariffs by P7.24/cu.m. The MWSS decision prompted Manila
Water to elevate the case to the International Chamber of Commerce that same
month, triggering an arbitration process1
TheAppealsPanelrendereditsFinalAwardinfavorofMWSSandtheRegulatoryOfficedisallowingthe
recoveryofcorporateincometax(CIT)byManilaWater.
InitsFinalAwarddated21April2015,theAppealsPanelconfirmedthedeterminationoftheRegulatory
OfficethatCITisnotrecoverablebecausetheconcessionaireisapublicutilityandthatCITisnotoneof
theexpendituresthattheConcessionAgreementallowstoberecovered.
The Appeals Panel,bymajority,ruledthat CITisnot anallowed expenditure under theConcession
AgreementbyvirtueoftheapplicationoftheprinciplesenunciatedintheMeralcocasetotheeffectthatthe
peopleofthePhilippinesshouldnotbeburdeneddirectlyorindirectlywithCITwhichhastobepaidbythe
Claimantasaresultoftheprofitsmadefromitsbusinessoperations.
ThedisallowanceoftherecoveryoftheincometaxtranslatestoaPhp2.77percu.m.downwardadjustment
or11.05%ofManilaWaters2012averagebasicchargeofPhp25.07percu.m.

On22January2013,the
Philippinesformallyconveyed
toChinathePhilippineNotification
andStatementofClaimthat
challengesbeforetheArbitral
TribunalthevalidityofChinasnine
dashlineclaimtoalmosttheentire
SouthChinaSea(SCS)including

1 http://www.bworldonline.com/content.php?
section=TopStory&title=manila-water-rate-cut-afterarbitration&id=106551

theWestPhilippineSea(WPS)and
todesistfromunlawfulactivitiesthat
violatethesovereignrightsand
jurisdictionofthePhilippinesunder
the1982UNConventionontheLaw
oftheSea(UNCLOS).
ThisNotificationinitiatedthearbitral
proceedingsunderArticle287and
AnnexVIIofUNCLOS.The
Philippineshasexhaustedalmostall
politicalanddiplomaticavenuesfor
apeacefulnegotiatedsettlementof
itsmaritimedisputewithChina.
Chinasnine

dashlineclaimis
contrarytoUNCLOSandunlawful.
ThePhilippinesisrequestingthe
Tribunalto,amongothers:

DeclarethatChinasrightsto
maritimeareasintheSCS,like
therightsofthePhilippines,are
establishedbyUNCLOS,and
consistofitsrightstoa

TerritorialSeaandContiguous
ZoneunderPartIIofUNCLOS,
toanEEZunderPartV,andtoa
ContinentalShelfunderPartVI

DeclarethatChinasmaritime
claimsintheSCSbasedonits
so

callednine

dashlineare
contrarytoUNCLOSandinvalid

RequireChinatobringits
domesticlegislationinto
conformitywithitsobligations
underUNCLOS;and

RequireChinatodesistfrom
activitiesthatviolatetherightsof
thePhilippinesinitsmaritime
domainintheWPS.
TheArbitralTribunalhasjurisdiction
tohearandmakeanawardasthe

disputeisabouttheinterpretation
andapplicationbyStatesPartiesof
theirobligationsunderthe
UNCLOS.
ThePhilippinespositioniswell
foundedinfactandlaw
The Department of Foreign Affairs Statement on Chinas Response
to the Philippines Arbitration Case, 20 Feb 2013
The Department received this afternoon from Chinese Ambassador to the
Philippines Ma Keqing a Note Verbale stating that China rejects and
returns the Philippines Notification and Statement of Claim.
The Department stresses that Chinas action will not interfere with the
process of Arbitration initiated by the Philippines on 22 January 2013. The
Arbitration will proceed under Annex VII of UNCLOS and the 5
member
arbitration panel will be formed with or without China.
In its
Note Verbale
, China reiterated its often stated position that it has
indisputable sovereignty over the entire South China Sea encompassed
by its 9
dash line claim. This excessive claim is the core issue of the
Philippines arbitration case against China.
March 39 2014 Philippines submitted its memorial to the arbitral tribunal which is
hearing the case. It presents presents the
Philippines case on the jurisdiction
of the Arbitral Tribunal and the merits
of its claims.
Ordinarily the next step would be a a counter memorial from china however On 21
May 2014, the Permanent Court of
Arbitration (PCA) received a Note
Verbale from China reiterati
ng its position that it does
not accept the arbitration
initiated by the Philippines and that t
he Note Verbale shall not be regarded as
Chinas acceptance of or parti
cipation in the proceedings.

The Arbitral Tribunal nevertheless


adopted and issued its second Procedural
Order on 3 June 2014.
Amid the rising tensions between both claimant and non-claimant parties
in the South China Sea, the Philippines officially proposed a Triple Action
Plan that consists of an immediate, intermediate, and final approaches to
address the escalating tensions in the South China Sea. The immediate
approach is a moratorium on destabilizing activities in the South China
Sea.
T
he Philippine delegation, consisting of high-level officials from all
branches of the government and international lawyers, appeared before
the Permanent Court of Arbitration at The Hague, The Netherlands, on 7-13
July 2015 for the hearing on the Arbitral Tribunals jurisdiction over the case
filed against China. The hearing, which was set by the Arbitral Tribunals
third meeting on 20-21 April 2015, addressed the issue of jurisdiction and
the admissibility of Philippine claims.
Secretary of Foreign Affairs Albert F. del Rosario explained the Philippines
reason for submitting the maritime dispute with China to international
arbitration. He also emphasized how the issue is important not only to the
Philippines and the littoral states around the South China Sea but also to
all parties to the UN Convention on the Law of the Sea (UNCLOS), stating
that the case is about the integrity of the Convention and the very fabric
of the legal order for the seas and oceans.
Chief Counsel Mr. Paul Reichler led the presentation of arguments on why
the case falls within the jurisdiction of the Tribunal. The delegation argued
that the Philippine case neither raises issues of land sovereignty and
maritime delimitation nor touches on specific exemptions in UNCLOS that
would bar the Tribunal from exercising jurisdiction over it. The delegation
also highlighted environmental and fishing issues against China.
The Tribunal has given China an opportunity to respond to the oral
arguments before 17 August 2015. However, China has reiterated that it is
neither accepting nor participating in the arbitration process initiated by the
Philippines, and referred to the Position Paper released in December 2014
as the statement of its views on the issue.
T
he Philippines presented before the Arbitral Tribunal the merits and
other remaining issues of jurisdiction and admissibility on the case that it
initiated against China regarding the West Philippine Sea / South China Sea.
The hearings were held from 24 to 30 November 2015 at the Peace Palace,
the headquarters of the Permanent Court of Arbitration (PCA) at The Hague,
The Netherlands.
The hearings followed the 29 October 2015 release of the Arbitral Tribunals
decision on the jurisdiction issue, in which the five judges unanimously affirmed
that the Tribunal was properly constituted and that non-participation by China

does not deprive it of jurisdiction over the case.


Solicitor-General Florin Hilbay, who heads the Philippine delegation,
introduced the countrys case. The Philippine legal team headed by Mr. Paul
Reichler explained why Chinas nine-dashed line and claims to historic rights
to waters of the South China Sea have no basis under the UN Convention on
the Law of the Sea (UNCLOS). They also pointed out that the features used
by China as basis to generate claims to exclusive economic zones (EEZ) and
continental shelf are either rocks or low-tide elevations, which at best can only
generate up to 12 nautical miles of maritime entitlements.
The delegation also presented how Chinas conduct has interfered in the
Philippines right to exercise sovereign rights and jurisdiction over its own
EEZ. They also called attention to how Chinas island-building and fishing
activities have caused irreversible damage to the marine environment of the
South China Sea.
Secretary of Foreign Affairs Albert F. del Rosario closed the Philippine
presentation by stressing anew the importance of the arbitration process to
the peaceful and rules-based resolution of disputes in the South China Sea.
The Tribunal has given China until 1 January 2016 to respond to any matter
raised during the hearing. Afterward, the Tribunal will deliberate and issue a
final decision in 2016.