China, the Philippines and the Rule of Law

As a rising global power, and being the largest and most important economy and military power in Asia, the People's Republic of China (PRC) has had the luxury of being able to do more or less whatever it wants in challenging its neighbors over disputed land and oil and gas claims -- knowing that in all likelihood, it would not be challenged. That dynamic is now changing, with Japan vigorously contesting the PRC's claim over the Senkaku Islands and the Philippines taking its claim over the Spratly Islands to court.

Earlier this week, the Philippines notified the Chinese Ambassador in Manila that it was pursuing "compulsory process" under Article 287 of the United Nations Convention on the Law of the Sea (UNCLOS). According to Foreign Affairs Secretary del Rosario, the "Notification and Statement of Claim" will initiate arbitral proceedings under UNCLOS over the merits of the PRC's claim to much of the South China Sea (known as the West Philippine Sea to Filipinos). The suit was immediately recognized as the first "legal case" against the PRC over a number of territorial and maritime disputes with its neighbors, many of them members of the ASEAN. In initiating arbitration, Del Rosario stressed that the Philippines has exhausted virtually all political and diplomatic avenues for a peaceful negotiated settlement since 1995, thus requiring the commencement of the arbitral suit.

The threshold question really is whether the PRC can be bound by UNCLOS courts and tribunals, including its arbitral panels. The PRC ratified UNCLOS in 1996, but in 2006 the Chinese government filed a statement with UNCLOS saying that it "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." These provisions of the Convention refer to "Compulsory Procedures Entailing Binding Decisions" issued by at least four venues: the International Tribunal on the Law of the Sea, the International Court of Justice, an "arbitral tribunal" which may refer to the Permanent Court of Arbitration (PCA), and a "special arbitral tribunal."

While there are venues available for the resolutions of disputes under the UNCLOS regime, the PRC does not wish to be bound by its compulsory processes -- the ICJ and PCA included. In essence, it wants to be able to pick and choose which statutes of the treaties it has voluntarily signed it wishes to adhere to, and be free to ignore those that it finds 'inconvenient.' Can a state remain a party to a treaty or convention without being bound by its rules? Can contracting states adhere to an international legal regime and simultaneously opt out of any binding force required or to be required by that regime?

The PRC knew this day would come. Its 2006 statement effectively served as a "reservation" against any binding outcome of UNCLOS's grievance procedure in the future. It is worth pointing out that international law does accord states the freedom to disclaim whole corpuses of treaty rules through irreducible principles of self-determination, state independence, and state sovereignty. In short, the PRC can decide to opt out of treaty rules which it considers to be inconsistent with national or domestic policy, and it did so in the manner required by the treaty.

Del Rosario actually concedes the PRC's 2006 reservation, and did not attempt to take any exceptions, at least at the time the Chinese Ambassador was served with notice. Del Rosario said: "... The Philippines is conscious of the PRC's Declaration of August 25, 2006 under Article 298 of UNCLOS (regarding optional exceptions to the compulsory proceedings), and has avoided raising subjects or making claims that the PRC has, by virtue of that Declaration, excluded from arbitral jurisdiction."

The Philippines' attempt to haul the PRC to an international tribunal is a problem because it is invoking the very compulsory jurisdiction which the PRC has disavowed since 2006. But even if the Philippine attempt to arbitrate fails, any marshaled argument can subsist, and that case may be fielded in other venues. If military activity were to flare up, the same case can be brought to the United Nations Security Council -- the principal repository of enforcement powers under the UN system. A state can be found to be in violation of a substantive legal norm even without a coercive or compulsory judgment in a given venue, provided of course that there is truth to the argument supporting a violation and is appreciated by the alternative venue.

While the PRC disavows UNCLOS against the Philippines, it is expressly invoking UNCLOS provisions in its claims against Japan -- so it wants to have its cake and eat it, too. In 2009, the PRC submitted a claim over the Senkaku Islands (which, like Scarborough Shoal and the Spratlys, are believed to be fuel rich) and turned to UNCLOS rules in defining and delineating its continental shelf beyond the 200 nautical mile exclusive economic zone, again within the meaning of UNCLOS. There is some international legal doctrine supporting the view that a state's acts in one place can be used as an admission and adversely bind that State in another set of circumstances.

The larger point is that the PRC has not personified the Rule of Law in this case, or in others related to maritime borders, and wants to be able to 'cherry pick' which provisions of international treaties it will willingly comply with, and which it will not. That is behavior unbecoming of a rising global power and will make states which are signatories to treaties with the PRC wonder if its signature is worth the paper it is printed on. This cannot be in the PRC's long-term interest. While it is too early to say whether the Philippine arbitration claim will prevail in court, the PRC will certainly not prevail in the court of international public opinion.


Daniel Wagner is CEO of Country Risk Solutions, a cross-border risk management consulting firm based in Connecticut (USA), and author of the book "Managing Country Risk".

Edsel Tupaz is owner of Tupaz and Associates and a professor of international and comparative law, based in Manila, Philippines. He is a graduate of Harvard Law School and Ateneo Law School.

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