Thursday, October 31, 2013

China Reluctant as Philippines Pushes for Arbitration.

Below is a guest post from Vaisakh Shaji, a final year student of West Bengal National University of Juridical Sciences. Vaisakh is enthusiastic about the subject and has earlier interned with maritime arbitration team of a Mumbai based law firm. 

The West Philippine Sea arbitration claim which Philippines has initiated against China in January this year has been at a stalemate due to China’s reluctance to take part in arbitration. 

This sea route is one of the largest trading routes and roughly around 5.3 trillion $ worth of trade pass through it annually.[1] Burdened with several maritime claims over the years, the disputes of the recent past have been mostly settled through diplomatic channel or by following procedure under International Law. In 2002 ASEAN and China agreed to develop a Code of Conduct, which has failed to materialize till date. 

The legal framework: 

The United Nations Convention on the Law of the Sea (UNCLOS) in Part XV contains provisions for compulsory arbitral proceedings over dispute arising under the convention. The choice of procedure is left to the discretion of the States and the parties may choose either the International Tribunal for the Law of the Sea or the International Court of Justice. However vide article 298, a State may decline to accept compulsory jurisdiction over specific kind of disputes on issues relating to sea boundary delimitations. 


The China-Philippine conflict gathered momentum around April 2012, when Philippine navy found multiple Chinese vessels at Scarborough Shoal, which is one of the disputed islands in West Philippine Sea.[2] China on the other hand claims that the entire West Philippines Sea is party of its territory. Manila initiated arbitration under UNCLOS provision for arbitration under Annexure VII. Article 288 in Part XV of the Annexure sets out its jurisdiction “over any dispute concerning the interpretation or application of this Convention which is submitted to it in accordance with this Part.” The matter was brought before the UN Arbitral Tribunal by Philippines over the alleged incursions into its Exclusive Economic Zones (EEZ) by China and to seek clarifications regarding maritime boundaries in West Philippine Sea. China has however decided not to cooperate with the arbitration proceeding and had sent two Note Verbale to Manila and the Permanent Court of Arbitration[3], which is the registry for the proceedings. The Tribunal has however gone ahead with the proceedings and via a recent press release; it has set March 30th, 2014 as the deadline for Philippines to submit its memorial fully addressing all its claims and issues arising out of the arbitration. 

Brokered diplomacy: 

Manila has consistently held the view that a fastidious resolution to the dispute would best serve international peace and cooperation over trade and commerce. India’s Foreign Ministry Salman Kurshid recently echoed Manila’s claims in the recently concluded visit to Manila. He emphasized that compulsory arbitration proceedings provided under UNCLOS should be adhered to order to maintain peace over international waters.[4] In fact Indian Prime Minister Manmohan Singh recently stated that regional forums should have a greater say in trying to find peaceful resolution and to develop maritime norms.[5] This was at the displeasure of China which criticized India’s joint maritime operations with Vietnam in disputed waters between Hanoi and Beijing.[6] Though India has made that its stand merely reflects its foreign policy and is not willingly interfering in a bilateral issue between China and Philippines, Manila is keen on garnering a larger global opinion supporting its claim. 

The legal issue has revolved around enforcement of one-party arbitration. Professor Myron Nordquist is of the view that, “For one thing, it is doomed to failure because if the party won’t consent to the arbitration there is then no room for enforcement”. This however is a misunderstanding over the nature of arbitration under Annexure VII. If there is a non-consenting party, the tribunal would continue to give notice to the boycotting party, and would develop its own independent assessment based on law and facts and by not solely relying on the claims of the participating party.[7]However Julian Ku argues in this post[8] that even though China has agreed to constitute a tribunal and establish its jurisdiction, consent to arbitration would not necessary guarantee enforcement. UNCLOS is absent of any sanction regime if any party fails to comply with its award. For the award to have any sanction, it should be coupled with diplomatic pressure, either from neighboring countries or through regional bodies. 

Drawing parallel from the sphere of investor-state arbitration, Luke Eric Peterson, Editor of the Investment Arbitration Reporter, is of the view that even if the respondent state has refused to participate in arbitration, arbitrations have managed to proceed to final resolution and the non-participating country had ended up paying the adjudged amount.[9] 

It will be pertinent to see whether China would change its stance if Philippine is able to garner enough international support for its cause. Sean Mirski writes[10] that, President Obama’s last minute cancellation of his Asian diplomatic tour was a big blow to Manila and has lead to an increase in anxiety around the region. However a recent notable development is the statement by Philippines, Department of Foreign Affairs that it is shifting the focus to the establishment of a code of conduct in West Philippine Sea.[11] 

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