Legal Memorandum on International Law

and suggestive remedies to reach fair and

just settlement regarding West Philippine
Sea issue with China

May 30, 2018

Public International Law

Atty. John Ray Libiran

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 REPUBLIC OF THE PHILIPPINES

MEMORANDUM

To: Alan Peter Cayetano

Secretary of Department of Foreign Affairs

From: Diane Althea V. Pena

Law Student from University of Cordilleras, Baguio City

Subject: International Law and suggestive remedies to reach fair and just
settlement regarding West Philippine Sea issue with China

Date: May 30, 2018

I. INTRODUCTION

This memo includes the history of conflict between Philippines and China, as
well as the current decision of the Permanent Court of Arbitration regarding the
West Philippines Sea dispute. This memo includes a suggestive remedies that is
important to take into consideration to achievement fair and just settlement
with China. Likewise provides for venues that will govern an settlement or
agreement tht China and Philippines may enter into.

II. STATEMENT OF FACTS

In the period between 1947 and 1950, the fishing boats belonging to Tomas
Cloma, a Philippine citizen of considerable prominence made a number of visits
to the Spratly group of islands in search for better fishing grounds. There was at
the time some confusion about the identity of the Spratlys, which were
frequently referred to as the Paracels. The Paracels lie halfway between the
Chinese island of Hainan and the coast of Vietnam. Spratly Island itself, from
which the Spratly group takes its name, lies halfway between the southern tip
of Palawan (some 300 miles west of it) and Cape St Jacques, Vietnam. In 1956
was ignited the following year when Cloma laid claim to a territory in the South
China Sea, apparently including part or whole of the Spratly group. Cloma and
his associates decided to send an expedition to the territory he claimed. Cloma

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wrote to the Secretary of Foreign Affairs informing him that 40 Philippine
citizens were undertaking survey and occupation work “in a territory in the
China Sea outside the Philippine waters and not within the jurisdiction of any
country” and that the said territory was being claimed by him and his associates
Cloma sent a ‘Second Representation’ to the Secretary of Foreign Affairs,
renaming the claimed territory Kalayaan (Freedomland) The communist Chinese
Kwan Ming Daily said that the Freedomland islands, together with the Spratlys,
were in fact Nansha Islands which had been Chinese since the times before
Magellan. The South Vietnamese Government in Saigon issued a communiqué
stating that the Spratlys and the Paracels had always been part of Vietnam and
had been recognised as such in the San Francisco Peace Conference of
September 1951. Tomas Cloma made ‘Third Representation’, appealing to the
UN to create an arbitrating body composed of friendly powers which would
decide on the status of Freedomland.

Arriving at Itu Aba, the expedition found that the markers they had put up in
March had been removed and that the Nationalist Chinese had added their own
sign onto an old Japanese marker, also painting a sign on one of the ruined
concrete buildings. Cloma made a ‘Fourth Representation’, stating that two
small islands near Spratly Island, not previously included in the map of
Freedomland, had been discovered. The Foreign Affairs Association of the
Philippines adopted a resolution signed by Manuel V. Gallego, which they sent
to the President, the Vice President, the President of the Senate, the Speaker of
the House and to Cloma, declaring that the islands constituting Freedomland
were ‘res nullius’ and that consequently Cloma’s claim was legal. Cloma made a
“Fourth Representation” to the Department of Foreign Affairs, saying that his
second expedition had inspected all the islands of Freedomland except Spratly
Island. This representation followed a letter to the Chinese Ambassador stating
that the expedition had erected a radio station on Itu Aba and had left settlers
who had commenced planting bananas and other native crops. In the letter,
Cloma also pointed out that until the question of ownership was settled, he had
the right to protect a res nullius property of which he was guardian. Prompted
by Trayler, he also made plans for organising a government for Freedomland.
Trayler had pointed out that occupation of a discovered territory must
immediately be accompanied by establishing a governing authority over such a
territory. This also meant that, in the event of being driven out of Freedomland,
the government could establish its seat anywhere and fight for its rights from
exile. Cloma presented a paper to the Secretary of Foreign Affairs, signed by
Manuel Aguilar as Acting State Secretary of Freedomland, announcing the
establishment of a separate Government for the Archipelago of Freedomland.

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“The Proclamation” was also attached, giving the date of establishment of
Government as 17/6/1956, and describing the nature of the Government as
democratic. As the first act of the new Government, Cloma formally delivered
the Nationalist Chinese flag removed from Itu Aba to the Nationalist Chinese
Embassy in Manila. Two nationalist Chinese ships approached from the south
and invited Captain Cloma aboard for a conference. Captain Cloma protested
but was treated discourteously and kept under detention, even under threat to
their lives, Cloma and his officers refused to recognise that Freedomland was
Chinese territory and to sign a statement that they would leave Freedomland
and never come back. Cloma was forced to surrender arms for which he was
given a receipt. To avoid conflict, he said, trusteeship of the UN, administered
by the US, should be initiated. He even went to the UN to demand the initiation
of trusteeship, but was dissuaded from action by the Philippine Ambassador.
Cloma wrote to the Chinese Ambassador in Manila, expressing concern about
reports that the Nationalist Government had granted some private
businessmen the authority to undertake mining surveys. The Foreign Affairs
Association rebuked the Philippine Government for not condemning the
Chinese action and not protesting against it. It supported Africa’s opinion that
the occupation of the Spratlys by an unfriendly power would be threat to the
Philippines and recommended that the President should take action, and, if
such action were not to be taken, that Freedomland and the Spratlys be placed
as trusteeship under the UN, with the US as the Administering Authority. Failing
that, the Foreign Affairs Association of the Philippines Inc. would be free to take
whatever action was necessary. The Resolution was signed by Manuel Gallego.
In 1957 The Vice President and the Secretary for Foreign Affairs replied,
clarifying certain important issues. In 1960 Cloma initiated agreements with a
Hong Kong company for the exploitation of Freedomland’s resources. The
Government took no action. President Marcos issued and read a press
statement concerning Freedomland, saying that his Foreign Office had
requested the Nationalist Chinese Government to withdraw its garrison from Itu
Aba, which, being one of the Spratlys, belonged to the Allied war booty and no
one was permitted to introduce troops to it without the consent of the Allies.
The Chinese occupation of Itu Aba, Marcos said, was a threat to the national
security of the Philippines. In the same statement, President Marcos spoke
about Freedomland, defining it as a 53-island group with the exclusion of the
Spratlys – registered as res nullius and as such explored and occupied by Cloma.
Marcos said that he had taken steps to protect Freedomland and that the
Philippines were in occupation and control of the islands of Pagasa, Lawak and
Patag. In reality, the occupation amounted to establishing a two-man weather
station on Pagasa. Following this statement, the Governments of Great Britain

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and the Netherlands announced the abandonment of their rights as trustees
over Spratly Islands. In 1972 At the 72nd meeting of the Seabed Committee of
the United Nations, the Philippines reiterated their ungrounded claim on
Freedomland, acknowledging that the Seabed Committee was not an
appropriate body to adjudicate on such matters. Cloma constituted an Advisory
Council for the Government of Freedomland. De Venecia asked the Philippine
Government to either support Cloma’s claim or acquire the claim from him to
give validity to the Philippine claim on the territory.

In 1974 Cloma asked the Supreme Council to issue a proclamation changing the
name of the country to Colonia. The Document 1097 changed the name of the
state to the Kingdom of Colonia. Tomas Cloma confirmed his resignation and
Prince John was elected as Head of State with absolute power. The current
Philippine claim on Colonia is based entirely on that Deed of Cession. The deed,
however, has no legal validity, as Cloma retired as Head of State previous to
signing it and was thus at the time without authority to sign anything on behalf
of Colonia. Moreover, upon his release Cloma renounced the Deed of Cession
as it had been obtained under duress. In 1986 March, British Legal Counsel made
a search at the International Court in Hague, establishing that there were no
claims against the Kingdom of Colonia St John, formerly Freedomland

In 1988 to 1990 Lord Harold Wilson the former Prime Minister of the United
Kingdom presented the Kingdom’s position to the Government of the People’s
Republic of China in Beijing on three separate occasions, in an effort to arrange
a peaceful resolution to China’s claims. No conclusive solution to the problem
was reached at the time. In 1991 The Bandung Conference of the South China
Sea, in Indonesia, was organised to attempt a treaty partition of the area by
foreign claimants. The Kingdom made representation to the delegates that the
objective of the conference, that is, the wholesale distribution of the territory
amongst themselves, was illegal and in violation of international law. In 1998
China and the Philippines agreed to form a committee to agree a code of
conduct to prevent conflicts and expansionism in the area. In 1999 officials of
ASEAN agreed to form a draft code of conduct to prevent claimants fighting
amongst themselves. It was noted that no attempt was made to dispute the
sovereign claim of the Kingdom, but only to enjoin foreign claimants from
contentious hostilities. In The 1982 United Nations Convention on the Law of
the Sea extended the principles of international law regarding territorial claims
offshore with regard to a country’s continental shelf. The 1982 convention
created a number of guidelines concerning the status of islands, the continental
shelf, and territorial limits. The guidelines relevant to the Kingdom are: 1)

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Article 3, which established that “every state has the right to establish the
breadth of its territorial sea up to a limit not exceeding 12 nautical miles. 2)
Articles 55-75 define the concept of Exclusive Economic Zone (EEZ) which is an
area up to 200 nautical miles beyond and adjacent to the territorial sea. The EEZ
gives coastal states “sovereign rights for the purpose of exploring and
exploiting, conserving and managing the natural resources of the waters
adjacent, the seabed, and its subsoil.”The Kingdom extended its Exclusive
Economic Zone to 200 nautical miles beyond its 12 nautical mile territorial
waters. A legal dispute between the Province of Palawan and the Government
of the Philippines for a share of gas revenues resulted in the Phillippine
government abandoning its claim to the territory under the supposed Cloma
Deed of Cession. The Philippines instead restated its claim to part of the
territory under the 200 nautical mile EEZ.1

III. CURRENT STATE OF AFFAIRS

The Philippines submitted its maritime dispute memorial on March 3, 2014 to

the International Tribunal on the Law of the Sea (ITLOS), requesting a decision
on whether the People’s Republic of China’s (PRC) nine-dash line negates the
Philippines’ Exclusive Economic Zone (EEZ), under the United Nations
Convention on the Law of the Seas (UNCLOS), which the PRC has signed. Under
consideration too are: the status of certain submerged features, such as
Scarborough Shoal, as constituting a 200-nautical-mile EEZ or only a 12-nautical-
mile territorial sea; and the PRC’s ability to appropriate low-tide elevations, such
as Mischief Reef, within the Philippines’ EEZ.

The Philippines is seeking to treat the islands as a maritime dispute, which binds
signatories of the UNCLOS to compulsory arbitration, and not as a territorial
dispute, which is governed by general rules and principles of international law.
The Philippines and PRC have no treaty agreeing to compulsory arbitration of
territorial disputes. The PRC is not submitting to arbitration on this matter citing
the UNCLOS’ lack of jurisdiction due to the overlapping EEZs claimed by the PRC
and the Philippines and the historical right of China’s nine-dash line that
predates the UNCLOS. The PRC released a position paper that reasserted this
and that denied that the nine-dash line claim is inconsistent with UNCLOS
principles. Vietnam issued a confidential submission of its position on this

1The History of Kingdom of Colonia St. John. Retrieved from http://www.colonia.asia/history%20-

%20the%20history%20of%20the%20kingdom%20of%20colonia%20st%20john.htm

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arbitration case to the tribunal on December 5, 2014. The Hague tribunal
decided on October 29, 2015 that it has jurisdiction to hear the Philippines’ case.

While Vietnam has brought its maritime jurisdictional claims into conformity
with UNCLOS, it has not relinquished its claims to sovereignty over all the islands
and features in the Spratly Island group. Vietnam’s statement apprises the
tribunal of its own claims to the islands and other features within the area of the
dispute, and places a greater onus on the Philippines to demonstrate that its
claims can be granted without regard to the competing claims to sovereignty
made by other states. The problem arises on account of the proximity of
Vietnam’s occupied islands and rocks in the Spratly area, particularly around the
Chinese positions on which the Philippines has asked the tribunal to rule. On
December 16, 2014 the tribunal sent 26 questions for clarification to the
Philippines regarding the merits of the case and issues of jurisdiction. On March
16, 2015 the Philippine Department of Foreign Affairs submitted supplemental
documentation to the Permanent Court of Arbitration.

In May 16, 2012, a fishing ban at Panatag (Scarborough) Shoal by the

governments of China and the Philippines takes effect. 2China and Philippines
are enforcing the fishing ban in the South China Sea to conserve resources and
curb overfishing. The ban includes waters around Huangyan Island, China’s
name for Scarborough Shoal, where Philippine and Chinese vessels have been
standing off over sovereignty since. The fishing prohibition also covers foreign
fishers, including those from countries with rival territorial claims in the Spratly
Islands, an archipelago in the South China Sea believed to have vast mineral and
gas deposits and straddled by sea lanes vital to global trade3

In January 1, 2014, the China imposes a fishing permit rule in the West Philippine
Sea, defying the objections of the US, the Philippines. 4 The new Chinese law that
requires foreigners to seek China's permission to fish in the disputed South
China Sea. This new regulation that would require foreign fishing vessels to
obtain approval from Chinese regional authorities before fishing or surveying in

2 Rappler.com. 2016, July 12. TIMELINE: The Philippines-China maritime dispute. Retrieved from
https://www.rappler.com/world/regions/asia-pacific/139392-timeline-west-philippine-sea-dispute
3 Esmaquel, Paterno. 2012, May 16., PNoy: PH fishing ban not due to China. Retrieved from

https://www.rappler.com/nation/5453-pnoy-ph-fishing-ban-not-due-to-china
4 Rappler.com. 2016, July 12. TIMELINE: The Philippines-China maritime dispute. Retrieved from

https://www.rappler.com/world/regions/asia-pacific/139392-timeline-west-philippine-sea-dispute

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a large portion of the South China Sea,” the DFA said. The new law “reinforces
China's expansive claim” under the 9-dash line.5

The Enhanced Defense Cooperation Agreement (EDCA) signed between the

United States of America (U.S.) and the Philippines on March 4, 2014 provides
the U.S. with better access to military bases, ports, and airfields in the
Philippines, through which U.S. 6 troops, ships, and warplanes will rotate and
hold joint training with Philippine troops. This is part of the U.S.’s long-term
rebalancing toward the Asia-Pacific region. However, the EDCA does not cover
the Spratly Islands, whether the U.S. would defend the Philippines if the
territorial dispute with China breaks into armed conflict, the goal is not to
counter China. Our goal is not to contain China. Our goal is to make sure
international rules and norms are respected and that includes in the area of
international disputes."

The U.S. sees the Spratlys Islands dispute as a matter of territorial expansion not
territorial defense. The position of the U.S. on whether the Mutual Defense
Treaty (MDT) between the U.S. and the Philippines would be activated for the
defense of the Philippines should an attack occur in the disputed areas has been
consistently negative. The U.S. State Department’s ‘Limits in the Seas No. 143’
publication recently released regarding China’s maritime claims reaffirmed U.S.
neutrality. Commitment in the event of attack on forces must be construed in
context of overall purpose and provisions of MDT. Preamble sets forth collective
defense purpose and provisions of MDT and reaffirms parties’ commitments to
principles and purposes of UN Charter, while in Article I Parties undertake to
refrain from ‘threat or use of force in any manner inconsistent with UN Charter.”
Nevertheless, there is also U.S. recognition that when the legitimate rights and
presence of Philippine ships and aircrafts are threatened, the MDT could be
engaged.

China’s artificial island-building threatened the U.S.’s ‘pivot’ to Asia, however,

and elevated the West Philippine Sea into a potential strategic conflict. At the
end of May, 2015 the U.S. navy missile cruiser Shiloh paid a “routine port call”
at Subic Bay and the U.S. Defense Secretary Ashton Carter reaffirmed to defense
ministers gathered in Singapore at the 14th Asia Security Summit that U.S.
military aircraft and ships would continue to pass through/over any
international waters, despite the PRC’s warnings against a U.S. surveillance

5 Esmaquel, Paterno. 2012, May 16., PNoy: PH fishing ban not due to China. Retrieved from
https://www.rappler.com/nation/5453-pnoy-ph-fishing-ban-not-due-to-china
6 Rappler.com. 2016, July 12. TIMELINE: The Philippines-China maritime dispute. Retrieved from

https://www.rappler.com/world/regions/asia-pacific/139392-timeline-west-philippine-sea-dispute

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plane that flew over the Fiery Cross Reef on May 5, 2015. At the security
conference, China’s reclamation activity is “out of step”: Vietnam has developed
48 outposts, the Philippines 8, and Malaysia 5, as opposed to China’s over 2,000
acres of reclaimed land accomplished only in the last 18 months. On May 5,
2015, the U.S. accused China of deploying two artillery pieces on one of its
artificial islets; though the weapons posed no security threat, they have since
been removed.

In October 26, 2015 the U.S. sent a guided missile destroyer to the disputed
territory, in the waters of Subi Reef near an artificial island; and China called the
naval patrol a “deliberate provocation.”7 The U.S. used this defense of the right
to freedom-of-navigation to show its strength to China, to communicate that
Chinese ambitions will not go unchecked. The New York Times recounted the
action as timid—“the destroyer traveled within 12 nautical miles of the new
island, and then left quietly and quickly, and American officials were barred from
describing it in any detail. It left the opposite impression of being strong in the
face of a determined power and allowed the Chinese to move ahead
undeterred.”

China has engaged in both reef reclamation and low-level militarization of

islands in the disputed territory. In May 2014 China without warning deployed
its first indigenous deep-water drilling rig (the HYSY981) around the Paracels,
causing clashes between Vietnamese and Chinese vessels and major anti-
Chinese protests in Vietnam. The Philippines called for a moratorium on all
activities that created tensions as part of a ‘Triple Action Plan’ to manage the
disputes. The Triple Action Plan called for: full implementation of the 2002 DOC,
conclusion of a regional Code of Conduct, and the establishment of a binding
dispute settlement mechanism. China rejected this proposal, but withdrew the
rig in July 2014 in response to the strength of the Vietnamese reaction. The PRC
began building an artificial islet in Mischief Reef (Panganiban Reef) in January
2015, which as of the end of April 2015 measured approximately 3.2 hectares
and would reach 500 hectares when completed, based on projections from
satellite photos. Chinese troops stationed on Mischief Reef currently shoo away
Filipino fishers from the reef. A heavily armed coast guard fleet patrols the area
for China.

Yet, China does not want a war and is seeking to avoid conflict. The rapid, recent
reclamation on the seven features was a response to the Philippine submission
to the ITLOS. The Philippine case argues that China’s occupation of the seven
7 Santos, David. 2012, April 16. “War games not vs China”. Retrieved from
https://www.rappler.com/nation/3934-war-games-not-vs-china

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features is illegal, must belong to the high seas, and cannot be occupied by any
country due to their submergence underwater; the artificial island-building
seeks to outflank and preempt the case verdict. China did not anticipate the
U.S.’s strong reaction; however, and the idea of a repetition of the kind of defeat
that marked the ‘century of humiliation’ that China seeks to overcome is
unthinkable to the Chinese. For this reason, they are seeking to avoid conflict.
China expert Chito Sta. Romana believes that caught in this bind, the Chinese
“will continue with their reclamation but because the Americans have made a
big fuss about militarization, [the reclamation] may [be moderated]. Because if
the Chinese were to introduce anti-ship missiles or anti-air missiles, this would
be a bigger story.” The understanding is that this is the hard line on militarization
that the U.S. is drawing and that China is tacitly accepting, at least for the near
future.

China offered to share with Filipino fishermen the use of its built facilities on the
islets, and on June 5, 2015 Zhao Jianhua, China’s ambassador to Manila, told a
small group of journalists that China is offering for the Philippines to return to
bilateral negotiations without preconditions. On June 7, 2015 the Philippines
refused these offers, citing their impossibility if the other claimants remain
excluded, and reaffirming the Philippines’ staunch position in favor of a more
binding Code of Conduct among China and ASEAN as well as the Philippines’
adherence to the principle of ASEAN centrality. Meanwhile, on June 3, 2015
President Benigno S. Aquino for a second time compared the PRC’s stance in the
West Philippine Sea to that of Nazi Germany’s annexation of the Sudetenland in
Czechoslovakia before the outbreak of World War II. Aquino made these
inflammatory remarks while in Japan, the country that was Nazi Germany’s ally
during World War II.

The West Philippine Sea is vital to China’s core interests. China currently has no
permanent, defensible security resources in the Spratly area, though the
lifeblood of its economy flows through it. To this end, the PRC’s strategic
objective is to mitigate key vulnerabilities in pursuit of stability and growth. The
Director of Asia Security Programs at the American Foreign Policy Council
explains, “Beijing is keenly sensitive regarding the vulnerability of the energy
imports that sustain China’s economy, the bulk of which must traverse
thousands of miles of open sea patrolled by the U.S. Navy and through the
narrow naval chokepoint at the Strait of Malacca. The naked vulnerability of
these imports (particularly in war time) is intolerable to Chinese strategists. The
goals of Chinese grand strategy can therefore be assumed to be attaining diverse
and defensible sources of energy and rapid economic growth bolstered by a
healthy support of export markets in an increasingly connected Asia.”

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China’s Asian Infrastructure Investment Bank (AIIB), ‘String of Pearls’
investments in port facilities along the Indian Ocean (including a Chinese state-
owned enterprise’s assumption of control of Pakistan’s Gwadar Port in February,
2015), the web of new oil and gas pipelines from Myanmar to Kazakhstan, and
the new industrial and commercial rail links from Western China to Europe all
work together to help China achieve its ends. In its ideal vision, the AIIB would
grant China “a virtuous cycle of benefits, expanding its political and economic
leverage across Asia and aiding its efforts to elevate the yuan as an international
reserve currency.”8

IV. ISSUES TO BE ADDRESSED

A. The bindness of Permanent Court of Arbitration

B. The enforceability of Permanent Court of Arbitration
C. What are the costs if China continues to discredit the Permanent Court of
arbitration’s ruling
D. Whether the Permanent Court of Arbitration’s ruling can stop China’s
aggression in the South China Sea
E. What is the international effect of US decision for not taking the side of
the Philippines
F. The Danger of joint oil exploration entered between Philippines and China

V. SHORT ANSWER

While the decision is binding, the tribunal has no power to enforce it, and no
one expects that China will volunteer to dismantle its artificial islands and return
the sand to the ocean floor. The United States, the region’s dominant military
power, could use the decision to justify more naval patrols in the area, to recruit
new allies and give more support to old ones, and to rally world opinion against
Beijing’s behavior. While it will denounce the decision in public, the Chinese
leadership may decide to back off and begin easing tensions with neighboring
countries. It could start with the new Philippine president, Rodrigo Duterte, who
says he wants to improve relations with China and has proposed talks on
maritime cooperation. It could also begin transforming the reef at the center of
the dispute, Scarborough Shoal, into a military outpost, risking a clash with the
Philippines, an American ally. And it might try to impose a new “air defense
identification zone” over part of the South China Sea, asserting the right to
identify, monitor and take military action against planes in the area.

8 South China Sea Dispute: Current State of Affairs. 2016, January 4. Retrieved from
https://www.pampubliko.com/background-briefings/view/south-china-sea-dispute-current-state-of-affairs

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 VI. DISCUSSION

A. Bindness of the Permanent Court of Arbitration’s ruling

Article 296 of UNCLOS9 and Article 11 of Annex VII of the Convention10 provide
that the Tribunal's decision shall be final and binding and shall be complied with
by all parties to the dispute. This is a rule inherent in every judicial dispute-
settlement system, including UNCLOS. There is no exception. A party cannot
claim the award is not binding because the arbitration was instituted without its
consent. Under UNCLOS compulsory dispute-settlement regime, there is no
need for the parties to a dispute to give their consent for the dispute to be
referred to arbitration or adjudication. Their consent was already given in their
ratification of the Convention.

A party cannot claim the award is not binding because it challenges the
Tribunal's jurisdiction as China has done by insisting that the disputes in question
were about sovereignty and not regulated by UNCLOS, or about maritime
delimitation issues it chose to exclude from the UNCLOS dispute-settlement
system. But Article 28811 of UNCLOS provides that, in the event of a dispute on
the Tribunal's jurisdiction, the matter shall be settled by the Tribunal. The
Tribunal settled the issue of jurisdiction with its award on jurisdiction in October
last year and its final award this week A party cannot claim the award is not
binding because it didn't participate in the proceedings. Article 9 of Annex VII

9
Article 296 of UNCLOS. Finality and binding force of decisions; 1. Any decision rendered by a court or tribunal
having jurisdiction under this section shall be final and shall be complied with by all the parties to the dispute.
2. Any such decision shall have no binding force except between the parties and in respect of that particular
dispute. Retrieved from http://www.un.org/depts/los/convention_agreements/texts/unclos/part15.htm

10
Article 11 of Annex VII. Finality of award; The award shall be final and without appeal, unless the parties to
the dispute have agreed in advance to an appellate procedure. It shall be complied with by the parties to the
dispute. Retrieved from http://www.un.org/depts/los/convention_agreements/texts/unclos/annex7.htm

11
Article 288 of UNCLOS. Jurisdiction; 1. A court or tribunal referred to in article 287 shall have jurisdiction over
any dispute concerning the interpretation or application of this Convention which is submitted to it in
accordance with this Part. 2. A court or tribunal referred to in article 287 shall also have jurisdiction over any
dispute concerning the interpretation or application of an international agreement related to the purposes of
this Convention, which is submitted to it in accordance with the agreement. 3. The Seabed Disputes Chamber of
the International Tribunal for the Law of the Sea established in accordance with Annex VI, and any other
chamber or arbitral tribunal referred to in Part XI, section 5, shall have jurisdiction in any matter which is
submitted to it in accordance therewith. 4. In the event of a dispute as to whether a court or tribunal has
jurisdiction, the matter shall be settled by decision of that court or tribunal. Retrieved from
http://www.un.org/depts/los/convention_agreements/texts/unclos/part15.htm

Page 12
provides that non-participation of one party would not constitute a bar to the
proceedings.

Netherlands v. Russia.12 Russia also chose not to participate. The proceedings

went on in its absence. More than six months after the International Tribunal
for the Law of the Sea (Itlos) ordered provisional measures, Russia released the
activists and the ship, even though Russia claimed that it was merely following
a domestic decision, not the order of Itlos.

A party cannot claim that the award is not binding because the Tribunal has
members from Europe and Africa and not from China or Asia. China could have
appointed an arbitrator of its nationality or an Asian nationality. It didn't. China
could have participated in selecting the three remaining arbitrators. It didn't.
China could even have challenged the appointment of any arbitrator at any time.
It never did. Now it cannot use the nationality of the arbitrators, four of whom
are respected Itlos judges, to undermine the credibility of the Arbitral Tribunal's
decision.13

B. Enforceability of Permanent Court of Arbitration’s ruling

Like many international courts and tribunals, UNCLOS does not have an
enforcement mechanism. For the South China Sea disputes, failing to comply
with the Arbitral Tribunal's decision would damage China's image and
reputation. China will be seen as a rising power with little respect for
international law or "a legal order for the sea". Non-compliance by one party
means the rights of the other party are violated. Non-compliance also creates
an obstacle for the parties to move towards settling the underlying disputes in
accordance with international law. Even if China does not respect the award and
the Philippines does nothing to challenge the non-compliance, the award is still
significant in many ways.

First, the award upholds the rule of law in the oceans. It reinforces the
compulsory nature of UNCLOS dispute-settlement regime and underscores
UNCLOS as a level playing field for all state parties, big or small, to settle their
disputes and protect their legal rights. Second, the award defends the EEZ
regime which is essential to the Convention and many coastal states. It confirms
that claims of historic rights to the natural resources in the EEZ of other coastal

12 The Arctic Sunrise Arbitration (Netherlands v. Russia). 2013, October 4. Retrieved from
https://www.pcacases.com/web/view/21
13 Phan, Hao. 2016, July 16. Why a ruling that cannot be enforced still matters. Retrieved from

https://www.straitstimes.com/opinion/why-a-ruling-that-cannot-be-enforced-still-matters

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states are incompatible with the EEZ regime provided for in the Convention.
Third, the award clarifies important legal issues concerning the interpretation
and application of Unclos, especially the island regime. It contributes to the
development of international law of the sea. Fourth, the award helps to clarify
several aspects of the South China Sea disputes. As a result, the scope of the
disputes is narrowed. The overlapping areas in the Spratlys are now limited to
only 12 nautical miles from the disputed rocks. As the award strengthens the
position of the Philippines and other claimants, it will affect their negotiation
direction and strategies. Space for compromise in their EEZ will decrease but
incentives for them to engage in negotiations on joint development and
cooperation in the newly defined overlapping areas will increase.14

C. Costs if China continues to discredit the ruling of Permanent Court

Arbitration

Politically, China has attempted to create a coalition of states that rejects the
arbitration proceedings, and may continue this effort. The list of supporters
appears to be only a handful of countries, none of the alleged members of this
coalition are major maritime powers, and other supposed members have
disavowed Beijing’s description of their respective positions. China will have
problems with painting the PCA’s decision as some kind of conspiracy led by the
United States and the West in general. The more China protests the PCA’s ruling
as being meaningless in the South China Sea dispute, the more weight China is
effectively attaching to the arbitration. In many ways China has already
absorbed a tremendous loss of prestige. Nevertheless, and despite my hopes for
a more restrained response, China will likely take actions to defy the PCA’s ruling
and aggravate the security dilemma in the South China Sea.15

D. Whether Permanent Court Arbitration’s ruling can stop China’s

aggression in the South China Sea?

A ruling by the Permanent Court Arbitration, an intergovernmental body with

no enforcement capacity, itself will not stop China’s aggression in the South
China Sea. Moreover, as noted briefly before, Beijing is likely to take actions that
openly challenge the Permanent Court Arbitration’s ruling, particularly the
findings that China’s historic claims have no basis under international law and
that certain Chinese-controlled features do not generate extended maritime
zones like EEZs. Certain details of the PCA’s ruling may unintentionally provoke
China. For example, with respect to its analysis of whether Chinese construction

14 Ibid.
15 Ibid.

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activities on Mischief Reef violated UNCLOS, the PCA maintained its jurisdiction
by holding China accountable for its description of the activities as being purely
“civil” in nature. If China’s activities were determined to be “military” in nature,
then the PCA would lack jurisdiction to rule on the issue, pursuant to a specific
exception under UNCLOS. In the future, if only to avoid future compulsory
arbitration, China may simply drop the thin veneer of civil-use and more
explicitly militarize its positions within the South China Sea.

What on paper appears to be a sound legal determination may be in reality an

unnecessary provocation in international affairs. This principle is at the heart of
criticism directed at the Philippines for resorting to the arbitration process. I do
not share this criticism because in the long term I believe the PCA’s ruling can
serve as a positive platform for the peaceful resolution of the South China Sea
dispute.

E. Effect of the decision of US for not taking the side of the Philippines

This is not just an environmental issue, but also a political issue in which the
“United States disregards Filipino sensitivity and treats Philippine sovereignty
with impunity”16 If the Philippines hopes to gain control over the Spratly Islands,
they are likely going to need the firm public support of the United States. Ideally,
the United States would act as a mediator between its strongest Southeast Asian
ally and its rival, China. The United States should proactively organize talks
between all the countries claiming the islands and urge for a peaceful resolution
to the dispute, as military intervention will cause more damage to the reefs
surrounding the islands. However, the Philippines should not stand for
subjugation from the United States, but rather implore the United States to
recognize the Philippines as an important ally and reciprocate with adequate
support for the Philippines claims.17

F. Danger of joint oil exploration between Philippines and China

For the Philippines, it would finally give it a way to secure its energy needs. These
needs are especially dire as the Malampaya gas field – which supplies nearly a
third of the electricity demand of Luzon, the country’s largest island – will run
out in a decade or so, and Manila has been unable to pursue new sources such
as in Reed Bank (Recto Bank) unilaterally due to Chinese opposition. More
broadly, as part of the warming of Sino-Philippine ties underway since Duterte

16Ibid.
17 Haw, Jim. 2013, June 4. The Philippines and Spratly Islands: a Losing Battle. Retrieved from
https://blogs.scientificamerican.com/expeditions/the-philippines-and-spratly-islands-a-losing-battle/

Page 15
came to office, the Duterte government hopes it could also lead to more Chinese
investments into the Philippines to boost the economy, whether these be in a
bilateral form or as part of wider initiatives like the much-ballyhooed Belt and
Road Initiative

the risks also extend to the near future. In particular, beyond Duterte’s own
domestic position, it is important to keep in mind that even if some sort of
agreement goes through initially, there is no guarantee that it will last. As I have
detailed repeatedly, the pattern of Chinese behavior over the past few years in
the South China Sea suggests that Beijing tends to calibrate its maritime
assertiveness with alternating periods of charm and coercion, taking into
account varying factors ranging from its own domestic politics (and rarely those
of other ASEAN claimants) to the degree of regional pushback.

Given the gamble both sides appear to be taking on joint development, one
hopes that this wisdom will not be limited to just seeing immediate
opportunities, but keeping in mind the risks inherent in them in the past, current
context, and foreseeable future.18

VII. CONCLUSION AND RECCOMMENDATION

ASEAN as the last hope for negotiating a Code of Conduct on the South China
Sea issue, in reality ASEAN does not have the capacity to meet such high
expectations. ASEAN is a much more fragile intergovernmental organization
than the EU. Now that even the EU has gone through the Brexit nightmare
because of inseparable individual national interests, ASEAN has little hope of
leading Southeast Asian countries toward a common position against China.
ASEAN countries are also natural competitors in economic development due to
their similarities in key economic sectors, food, tourism, or technological
development. There is no outstanding leader in ASEAN that is capable of leading,
gaining respect and submission from other member states. Thus, international
law is not an effective tool to alter superpowers’ behaviors. The only thing that
ASEAN nations can do, should they really want to stand together against China,
is to first focus on developing the individual countries’ economies and together
gradually try to reduce their dependence on Chinese products, markets, and aid.
ASEAN should reduce competition among its members, increase internal aid
programs, and exchange technology and experiences. Only when each and every

18Parameswaran, Prashanth. 2017, July 27. The Danger of China-Philippines South China Sea Joint Development.
Retrieved from https://thediplomat.com/2017/07/the-danger-of-china-philippines-south-china-sea-joint-
development/

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ASEAN nation is strong enough and really enjoys cooperation within the
organization, can a common approach finally be considered19 or the solution
may lie in the operationalization of the China-Asean Common Market, starting
with a China-Asean agreement to develop and manage the disputed islands with
Singapore, a non-claimant, as an obvious choice for administrator and with
China and the other Asean claimants tempering their respective ambitions to
allow the region to show the rest of the world that all must realize our respective
stewardship roles in the affairs of Planet Earth. 20

In addition, the resolution of the Spratly islands conflict may be reached through
diplomatic process by virtue of a cooperative management regime is the only
solution to the problems of the South China Sea. The only positive way to arrive
at certain mutually beneficial agreement could be through open dialogue
between the two claimant countries. Nonetheless, continued peaceful and
bilateral negotiations between China and the Philippines offer possible ways for
resolving the conflict. The most acceptable framework for a new regime would
be a web of provisional arrangements covering cooperation for different
functions with perhaps even different areas for each function. These functions
could include joint development of oil and gas resources, fisheries management,
marine safety, marine scientific research, good order at sea, and preservation
and protection of the marine environment. Regardless of whether or not
maritime boundaries are agreed, urgent safety, resource and environmental
problems dictate the need for increased dialog and cooperation. 21

Hence, any possible settlement or agreement that Philippines and China may
entered into concerning oil and gas management in Spratly islands may be
governed by the ICC International Court of Arbitration . Before entering into an
international arbitration agreement, a contracting party is advised to check
whether the states of the other contracting party and, if appropriate, of the
place of arbitration, have ratified the New York Convention or have signed other
multilateral or bilateral treaties offering the same guarantees, If this is the case
the convention will place said obligations’ on the parties. In essence the Court
organizes and supervises the arbitration and helps in overcoming obstacles. It
does not itself resolve disputes, a task that is carried out by independent
arbitrators. The Court makes every effort to ensure that the award is

19 Tong, Linh. 2016, July 21. Seeking a Solution to the South China Sea Disputes. Retrieved from
https://thediplomat.com/2016/07/seeking-a-solution-to-the-south-china-sea-disputes/
20 Osias, Josie. 2011, June 22. A way to settle disputes over the Spratly Islands. Retrieved from

http://opinion.inquirer.net/6783/a-way-to-settle-disputes-over-the-spratly-islands
21 Bateman, Sam. 2016, August 20. “The Only Way to Solve the South China Sea Showdown”. Retrieved from

http://nationalinterest.org/blog/the-buzz/the-only-way-solve-the-south-china-sea-showdown-17424

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enforceable in national courts if need be, although in practice the parties usually
comply with the award.

The ICC is particularly favoured in Oil and Gas contracts because of the
international cross border nature of the contracts themselves not simply with
the actual performance of the works but also with sub suppliers of plant and
equipment EPC contractors and professional service providers who can all have
their place of business remote to the works governed by differing jurisdictions
but requiring a binding international mechanism for the resolution of disputes
that is timely, cost effective and above all for many parties discrete.

The International Federation of Consulting Engineers or FIDIC may also govern.

The majority of standard forms used in the oil and gas industry will specify
arbitration as the final resort if interim measures fail, this is because litigation is
perceived to be less preferential in terms of cost and complexity. Disputes can
be brought before the most common institutions which are;

A. The London Court of international arbitration or LIAC

A.1. Commencing the Arbitration

The claimant commences the arbitration by submitting a written request for
arbitration (the "Request") to the Registrar of the LCIA Court (the "Registrar")
and serving copies on the other party (the "respondent").
The Request should contain a brief statement describing the nature of the
dispute and the claims advanced by the claimant. Where the arbitrator(s) are to
be nominated by the parties, the Request should also specify the claimant's
choice of nominee, although it is the LCIA Court that ultimately appoints the
arbitrator(s). The claimant should also enclose the contractual documentation
in respect of which the arbitration arises and ensure payment of the non-
refundable registration fee of £1,500
A.2. Within 30 Days of Service of the Request
Once the respondent has been served with the Request, it has 30 days to submit
to the LCIA, and serve on the claimant, a Response confirming or denying all or
part of the claims made by the claimant and, where appropriate, nominating an
arbitrator. If the respondent has any counterclaim to make it must give notice
of the counterclaims in its Response
The LCIA Court will appoint the arbitral Tribunal as soon as practicable after
service of the Response. Unless the parties have agreed otherwise or the LCIA

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Court determines that the circumstances mean that a 3 member Tribunal is
appropriate, a sole arbitrator shall be appointed as the Tribunal
Where a 3 member Tribunal is appropriate, the parties may agree (either in the
original arbitration clause or subsequently) to each nominate one arbitrator
although the LCIA Court retains the discretion to refuse to appoint a nominated
arbitrator who it considers not to be suitable, independent or impartial 8. The
Chairman, who will not be a party-nominated arbitrator, is then appointed by
the LCIA Court9.
In arbitrations involving a sole arbitrator, the LCIA Court will take into account
any method or criteria of selection agreed in writing by the parties (including an
agreement that an identified third party is to nominate the arbitrator) but the
LCIA Court alone is empowered to formally appoint arbitrators and retains the
discretion to refuse to appoint a nominated arbitrator nominated by a third
party who it considers not to be suitable, independent or impartial
In either event, the LCIA Court will ordinarily confirm the appointment of the
members of the Tribunal within 10 working days or so of the Response. Within
30 days of the appointment of the Arbitral Tribunal
Once the Tribunal has been appointed the claimant shall submit its detailed
Statement of Case, setting out the facts and any contentions of law it relies on,
together with the remedies sought insofar as such matters have not been set
out in its Request11. The claimant will provide with its Statement of Case copies
of all essential documents on which it relies
A.3. Within 30 days of receipt of the Statement of Case
The respondent then has 30 further days to provide its Statement of Defence
admitting or denying the claimant's claim and setting out in sufficient detail the
facts and contentions of law on which it relies.
A.4. Within 30 days of receipt of the Statement of Defence
The claim will then submit a Reply setting out its response to the Statement of
Defence and including a Defence to any Counterclaim. If there is a counterclaim,
the claimant will then have a further 30 days in which to prepare and serve the
final pleading in response
A.5. Duration
It is particularly difficult to provide general guidance as to the likely duration of
an arbitration. Much will depend upon the nature of the individual dispute and
factors such as the level of co-operation between the parties, and the availability
of the arbitrators are also likely to have an impact in the overall duration of the

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arbitration. Nonetheless it can be seen from the above summary that the initial
stages of appointing the Tribunal and pleading the issues in dispute can be
completed within a period of 3 months or so from the filing of the Request. If
this momentum is maintained it should prove possible in the majority of cases
to complete the arbitration and receive the final award within a period of 12 to
18 months.22
B. Singapore international arbitration centre or SIAC

B.1. Notice and hearing

The party wishing to commence the arbitration (the “Claimant”) shall serve on
the other party (the “Respondent”) and concurrently file with the Registrar of
SIAC a Notice of Arbitration. The arbitration commences upon the receipt of the
Notice of Arbitration by the Registrar. The Notice of Arbitration may also include
a proposal for appointment of the sole arbitrator or appointing authority or the
notification of appointment of the Claimant’s arbitrator where parties have
opted for a 3-member Tribunal.

B.2. The Response

The Respondent may within 14 days of the receipt of the Notice of Arbitration
send to the Claimant and concurrently file with the Registrar a Response. The
Response may also include a response to any proposal for appointment of the
sole arbitrator or the appointing authority or the notification of appointment of
the Respondent’s arbitrator where parties have opted for a 3-member Tribunal.

B.3. Number of arbitrator

A sole arbitrator shall be appointed unless the parties have agreed otherwise.

B.4. Oral hearing

Unless the parties have agreed on documents-only arbitration, the parties shall
have the right to oral hearing. If any party fails to appear at a hearing without
showing sufficient cause for such failure, the Tribunal may proceed and make an
award on the evidence before it.

B.5. The Award

Unless all parties agree otherwise, the Tribunal shall issue its written reasoned
award within 45 days from the close of hearing. If there are more than one
arbitrator and they fail to agree on any issue, they shall decide by a majority.
Failing a majority decision on any issue, the presiding arbitrator shall make the
22 Smith, Herbert. LCIA arbitration: the arbitration process. Retrieved from
https://www.lexology.com/library/detail.aspx?g=aae1e7de-d651-4aba-a2ed-18aa7495308d

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decision alone as if his is the sole arbitrator. The award shall be delivered to the
Registrar who shall transmit certified copies to the parties. The Tribunal may
award simple or compound interest. In the event of a settlement, the Tribunal
may render a consent award if the parties so request. 23

C. Hong Kong international arbitration centre or HKIAC

(diagram from http://www.hkiac.org/arbitration/rules-practice-

notes/administered-arbitration-rules )

23 Arbitrating in Singapore: the SIAC process. Retrieved from

http://www.gsla.de/download/SIAC_Presentation_010516_Conference.pdf

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