American Paralysis and Troubles in the South China Sea: A Primer on the Philippines-China Arbitration

In response to the government shutdown at home, President Obama decided last week to cancel his planned participation in a series of Asian and Pacific summits. Unsurprisingly, the decision has provoked considerable consternation abroad as the United States' allies fret about American dependability, particularly in the shadow of a rising and increasingly assertive China. Perhaps the most alarmed of Washington's friends is the Philippines, which views President Obama's absence from the East Asia Summit (EAS) and Asia-Pacific Economic Cooperation (APEC) meetings as a significant blow to the American commitment to re-balancing toward Asia (and, arguably, against China) that President Obama has previously pledged. President Obama's cancellation is particularly important in light of the legal battle being waged by Manila against Chinese encroachments in the South China Sea. Given the importance of this ongoing arbitration, we felt that the occasion presented the perfect opportunity for a brief primer on developments in the region. A Turbulent History The South China Sea is criss-crossed by some of the world's most important and busy shipping lanes. Problematically, it is also bisected by a variety of territorial and maritime claims, many of which overlap and conflict. In recent years, the predominant source of tension has been China's claim. This expansive claim is often colloquially referred to as the "nine-dotted line" claim, a reference to its source, a historical map with nine dashes that encompass much of the Sea. While the waters of the South China Sea have occasionally been darkened with blood, the conflict in recent years has (thankfully) been waged largely through diplomatic marches and closed door meetings. In 2002, ASEAN and China signed a declaration that emphasized a peaceful resolution of the region's conflicts. The declaration also called for the ratification of a Code of Conduct, though the code has yet to come into existence. In the last five years, the situation has escalated largely as a consequence of increasing interest in the region's hydrocarbons by all sides. The Sino-Philippine conflict came to a head on April 8, 2012, when the Philippine navy found multiple Chinese fishing vessels at Scarborough Shoal, one of the disputed islands. The Philippine Navy attempted to arrest the fishermen, but was blocked by the arrival of Chinese maritime surveillance ships. The resulting stand-off lasted for approximately two months. By July 2012, though, China had erected barriers at the entrance to the shoals. Beijing now seems to tacitly control the shoal, and its ships routinely rebuff the efforts of Philippine vessels to enter. The Philippine Legal Strategy Faced with what it perceives as growing Chinese aggression, the Philippines has decided to counter with a strategy based on international law. Alternate strategies---premised on the island chain's economic, political, or military leverage---were off the table from the start, given the Philippines' vulnerability in all three areas when compared to the world's second largest economy that happens to be a permanent member of the U.N. Security Council with a rapidly modernizing military that is experiencing double-digit annual increases in funding. To compensate, the Philippines tried to bring the United States into the fray. But while Washington has made initial forays into the South China Sea issue in recent years, it has consistently maintained a policy of avowed neutrality, urging the parties to come to a peaceful and negotiated solution. Lacking stronger support, the Philippines launched an arbitration process under the auspices of the U.N. Convention on the Law of the Sea (UNCLOS) on January 22, 2013. The UNCLOS provides for a system of arbitration in Annex VII (Arbitration). As Article 1 (Institution of Proceedings) lays out: "Subject to the provisions of Part XV, any party to a dispute may submit the dispute to the arbitral procedure provided for in this Annex by written notification addressed to the other party or parties to the dispute." Article 288 in Part XV sets out the broad reach of this mechanism: the Annex VII tribunal "shall have jurisdiction over any dispute concerning the interpretation or application of this Convention which is submitted to it in accordance with this Part." Unsurprisingly, Beijing has condemned the process from the start. On February 19, China delivered a Note Verbale to Manila, stating that it rejected the proceedings. This view was reaffirmed half a year later, when China delivered a similar Note Verbale to the Permanent Court of Arbitration (the registry in the proceedings) on August 1. Beijing considers the unilateral move toward arbitration to be a breach of the 2002 Declaration on the Conduct of Parties in the South China Sea, signed by the members of ASEAN (including the Philippines) and China. Instead, China urges all parties to resolve the disputes through bilateral negotiation---a divide-and-conquer strategy, many experts suspect, designed to leverage China's strength in one-on-one encounters. Officials from the Philippines' Foreign Ministry have accused China of canceling a long-planned trip to the country by President Benigno Aquino over the matter; Chinese officials claim an invitation was never offered in the first place. Yet China's refusal to participate does not end matters. According to Article 9 of Annex VII to the UNCLOS:

If one of the parties to the dispute does not appear before the arbitral tribunal or fails to defend its case, the other party may request the tribunal to continue the proceedings and to make its award. Absence of a party or failure of a party to defend its case shall not constitute a bar to the proceedings. Before making its award, the arbitral tribunal must satisfy itself not only that it has jurisdiction over the dispute but also that the claim is well founded in fact and law.

For now, the arbitration seems to be going the Philippines' way. Despite China's nonparticipation, the five members of the tribunal have been chosen. They issued their first procedural order on August 27, directing the Philippines to submit its memorial by March 30, 2014. The Philippine memorial will attempt to "fully address all issues, including matters relating to the jurisdiction of the Arbitral Tribunal, the admissibility of the Philippines’ claim, as well as the merits of the dispute." Of course, even a ruling favorable to the Philippines is unlikely to be enforceable. But the entire arbitration process has emerged as a stand-in for the larger contests that roil the South China Sea's waters. The proceedings are being eagerly watched by other states, like Japan and Vietnam, locked in territorial disputes with China. If the Philippines can succeed, its approach may set an example for the future. Of course, if it fails, then the Philippines will have lost much political capital and given China a major public relations victory. For this reason, the island nation has put together a "crack international legal team" composed of some of the world's top Law of the Sea experts. But in order for the Philippines' strategy to work, Manila needs more than just good lawyers. It also needs to maintain international support for its cause so that if it does prevail, it can translate that legal victory into political pressure. The Last Week Against this background, President Obama's decision to cancel his Asian diplomatic tour must have come as a bitter disappointment to Manila. Richard Heydarian, a foreign policy adviser to the Philippine Congress, put the point bluntly: "Obama's inability to come has just deepened anxieties of allies in the region." One regional commentator described it as "the worst thing that could happen for perhaps the worst reasons." Although President Obama undoubtedly has his hands busy at the moment, it would be worth sparing a thought to Asia and how the United States can provide some deeply needed reassurance to friends there. Of course, the United States must play a delicate balancing game: if Washington does not back the Philippines sufficiently, the island nation may simply be bulldozed by China's superior economic, political, and military strength. But on the other hand, if the United States extends too much cover to Manila, it risks engendering a significant moral hazard problem as the Philippines is tempted to push back harder than strictly necessary. Indeed, this very concern has often animated Chinese protests against American involvement in the conflict. Many Chinese analysts have accused the United States of emboldening its neighbors against Beijing and thereby contributing to regional tension. But at least for now, that concern seems out of place. At the EAS this week, Chinese Premier Li Keqiang rebuked "unilateral moves" on the part of certain countries who had decided to raise the South China Sea's territorial dispute for international arbitration. The Philippines did not miss the clear reference to its legal strategy, and it seems likely that it blames this latest rhetorical jab---at least in part---on American quiescence.