A map showing China’s “nine-dash line” demarcation in the South China Sea.

Clarity and instability in the South China Sea

  • The arbitration panel’s decision strengthens the case of countries disputing with China over territory in the South China Sea
  • However, many of these countries must make a delicate balance between standing up for their rights and not provoking Beijing’s ire
  • The decision will solve nothing in the short term, while the Philippines and Vietnam are likely to strike conciliatory notes
  • Taiwan, which had previously supported China’s claims, will soften this stance as it continues to distance itself from Beijing

This is the second in a two-part series on the repercussions of the South China Sea decision from The Hague. For the first report, click here.

On July 12, 2016, the Permanent Court of Arbitration in The Hague (PCA) invalidated the most ambitious interpretation of China’s claims in the South China Sea. An arbitration panel empowered to rule in a case brought by the Philippines declared that China’s famous nine-dash line provides no legal basis for its claims to the vast maritime territory it encloses.

The panel did not have jurisdiction to determine sovereignty over land features within the line, and did not attempt to do so. However, it did say that none of the features occupied by China in the Spratly Islands – a hotly disputed chain of features within the South China Sea – can legally be considered “islands.” This means they cannot generate rights to waters beyond a 12-mile territorial sea. Some features, it said, were not even “rocks” and therefore justified no rights to surrounding waters. It also confirmed that the United Nations Law of the Sea (UNCLOS) classifies all these features by their natural condition, that is, before the sort of land reclamation that Beijing has carried out on an unprecedented scale.

A satellite photo of Mischief Reef and some of the structures China has built on it.
The panel found that Mischief Reef, in the Spratly Islands, is within the Philippines’ sovereign area. However, China controls it and has been building structures there (source: dpa/Center for Strategic and International Studies/Asia Maritime Transparency Initiative/Digital Globe)

As a result of this decision, there is suddenly some legal clarity around the South China Sea dispute. The People’s Republic of China (PRC) has no legitimate claim to the 90 percent of the sea within its nine-dash line, and any alternative claim it makes to water rights based on its land claims must be drastically scaled back. The implications are central to the dispute between China and other countries in the region. How these states – particularly the Philippines, Vietnam and Taiwan – react will be critical to the peace and security in the South China Sea.

The Philippines

Aside from China, the Philippines is the country most affected by the decision. It brought the case three years ago and won most of the points over which the PCA determined it had jurisdiction. The panel declared that “certain [disputed] areas are within the exclusive economic zone of the Philippines, because those areas are not overlapped by any possible entitlement of China.” For example, the panel found that Mischief Reef, a feature seized by the Chinese in 1994 that has since been reclaimed, “lies within an area in which sovereign rights are vested exclusively in the Philippines and where only the Philippines may construct or authorize artificial islands.”

It found similarly with regard to Second Thomas Shoal, a feature occupied by a Philippine naval wreck and crew since 1999. What’s more, because both are what are called “low tide elevations,” Chinese sovereignty claims over the features themselves are legally meaningless. The panel also found the Chinese in violation of Philippine rights in Scarborough Shoal – a major source of controversy since the Chinese seized control of it in 2012.

This embarrassment of riches presents the Philippines with an immediate diplomatic quandary. The statement from the Philippines Department of Foreign Affairs (DFA) welcoming the judgment was very carefully worded. It said DFA experts were studying the decision and “call[ed] on all concerned to exercise restraint and sobriety.”

The Philippines will continue to emphasize caution and refrain from anything that can be construed as provocative

At a meeting of Association of Southeast Asian Nations (ASEAN) foreign ministers weeks after the decision, Philippine Foreign Secretary Perfecto Yasay, Jr. initially pressed for mention of the case, in the joint communique after the talks. Unlike during a similar impasse over Scarborough Shoal in 2012, however, after coming up against resistance from China’s diplomatic allies, most notably Cambodia, the Philippines backed down.

New Philippine President Rodrigo Duterte is stressing restraint and pursuing bilateral talks with China. The basis for these talks has not yet been determined. The Philippines has vacillated between insisting that they revolve around the PCA ruling and acknowledging that they will not. The Chinese, by contrast, are consistent. Having rejected the authority of the arbitration panel, the Chinese insist that talks ignore the legal decision. Whatever the basis, the talks are likely to fail. If President Duterte caves to the Chinese position, the talks will fail for the same reasons they have failed for the last 25 years. The parties to the dispute have consistently agreed on vague principles with no practical application to the concrete national interests at stake. If the talks proceed and the Philippines manages to get the PCA decision on the agenda, Chinese intransigence will block it from serving any useful purpose, let alone serve as the basis of their conversation.

The Philippines will continue to emphasize caution and refrain from anything that can be construed as provocative. Talks with China, regardless of their impact on the dispute itself, help Manila preserve other elements of its relationship with Beijing and present its partners in ASEAN and its American allies an image of reasonableness and responsibility. Going forward with talks will put some onus on the Chinese side for continuing tensions; refusal to talk would put the onus on the Philippines.


Vietnam claims both of the South China Sea’s principle island chains, the Paracels and the Spratlys. Next to China and Taiwan, which claim those and more, Vietnam is, therefore, claimant to the most territory in the South China Sea. In fact, it currently occupies most of the land features in the Spratly Islands. The outcome of the arbitration clearly benefits Vietnam because it undermines Chinese claims. In particular, it serves as helpful background in the event of another crisis along the lines of what occurred in 2014, when the Chinese deployed an oil rig inside Vietnam’s exclusive economic zone (EEZ). The finding that Mischief Reef is subject exclusively to Philippine sovereignty applies to as much to Vietnam as to China. The classification of other land features in the Spratlys is similarly important in that it determines the legal boundaries of Vietnamese rights to waters surrounding the land features.

There are two possible ways the Vietnamese could react to the ruling.

Hanoi could respond aggressively by doubling down and filing its own case. It has long accepted the PCA’s jurisdiction and officially welcomed the ruling. Filing its own claim would be a logical next step. Taking this option would depend on two things. Firstly, the Chinese would have to agree, at least tacitly, to compartmentalize the dispute. They have a record of doing this when relations with Vietnam are at their friendliest. Whether China would be so accommodating in this case is another question. Secondly, the Vietnamese would have to be certain of success. The legal issues are extremely complex. The last thing Hanoi could afford is to lose key elements of its own case after putting so much confidence in the process.

The mere prospect of progress should be enough to keep Vietnam from taking a more aggressive line

More likely, Hanoi will take a conciliatory approach. Often lost in the sensational headlines regarding China-Vietnam tensions is the fact that the two countries enjoy close relations. China is one of Vietnam’s key economic partners. The two are engaged in regular dialogue on diplomacy and defense. The man in the street may harbor hostility toward the Chinese, but at an official level, the relationship is shaped by close party-to-party ties and diplomatic prudence. In this context, it is not inconceivable that the Chinese and the Vietnamese could reach a solution. In fact, the mere prospect of progress should be enough to keep Vietnam from taking a more aggressive line.

The Philippines and Vietnam are tied together in this dispute, mostly because the Chinese tend to treat them as a package. When Beijing is aggressive with one, it seeks conciliation with the other – presumably to prevent a common front from developing between them. The Chinese reaction will therefore be an important determinant in how the situation plays out.


Taiwan’s position, despite the fact that the island nation falls outside all official regional diplomacy, is a critical factor in the dispute. It has long maintained essentially the same legal position as the Chinese. Indeed, the PRC’s claim to the South China Sea is based on maps drawn by its predecessor, the Republic of China – which now governs from Taipei. Any change in Taiwan’s position, therefore, has major implications for the PRC’s.

There are indications that the positions of the two governments are slowly diverging. Taiwan has increasingly tilted its claims in favor of the land features within what it calls the “U-shaped line” – which largely overlaps the PRC’s nine-dash line – and the rights to the sea they entail. China has been more ambiguous, preserving its historic rights to the entire enclosed area. By emphasizing the concept “that land dominates sea” and by explicitly rejecting China’s claims to historic rights to the seas, the PCA ruling has given a boost to Taipei’s effort to distance itself from China. Since the ruling, Taiwan has continued to mute its references to the “U-shaped line.”

These important nuances, however, have been overshadowed by Taiwan’s reaction to the ruling. Taipei reacted negatively for a variety of reasons, including not being invited to participate and references to Taiwan in the ruling as “Taiwan Authority of China” – a designation most Taiwanese find demeaning and dismissive of its sovereignty.

U.S. Secretary of State John Kerry speaks at a press conference during his visit to Manila, the Philippines, in July 2016.
U.S. Secretary of State John Kerry pointed out in a July visit to Manila that the PCA findings could serve as a basis for a peaceful resolution of the South China Sea dispute (source: dpa)

Most significant to Taiwan, however, was the finding by the panel that the one feature in the Spratlys that Taiwan occupies, Taiping Island, is not an “island” according to international law, but a “rock,” and therefore not entitled to a 200-mile EEZ. Taiwan rejected the panel’s findings and sent a destroyer to the region to make its point. Lawmakers from Taipei and fishermen have since also made private visits to underscore the Taiwanese case for Taiping. Although the ruling party in Taiwan does not have the same historical interest in the South China Sea as its predecessor, claim to Taiping Island in particular is too politically sensitive for the Taipei government to neglect.

Despite their overlapping positions, coordination between Beijing and Taipei on their South China Sea policies has always been far-fetched. Under Taiwan’s new government, which formally favors independence, it is even more out of the question. Taiwan will continue to move away from China regarding the legal basis of its claims to the South China Sea. It will continue to do so very slowly, so as to avoid a negative reaction from Beijing and a political backlash at home.

The findings will be used to bolster the long-term positions of the winners

More importantly, the United States will press for restraint, preventing Taiwan from making China’s position too uncomfortable, too quickly. Taiwan also has a newly expressed interest in intensifying its quasi-diplomatic engagement in South and Southeast Asia. If it is perceived as provoking China, the governments there will reject its overtures. So although it will continue to loudly protest the determination regarding Taiping Island, its more significant evolution away from the Chinese position will continue quietly.

Containing instability

In the near term, legal clarity has led to geopolitical instability in the South China Sea. All parties to the dispute, as well as outsiders, including the U.S. and other ASEAN countries, have interests in containing this instability. Going forward, this means caution on the part of the Philippines, Vietnam and Taiwan.

U.S. Secretary of State John Kerry pointed out in his July visit to Manila that the PCA findings have the potential to serve as a basis for a peaceful resolution of the South China Sea dispute. This is true, but unlikely. It is much more likely that the findings will be used to bolster the long-term positions of the winners, even as they seek to limit the fallout and protect against future risk.

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