Tribunal overwhelmingly rejects Beijing's South China Sea claims

AMSTERDAM/BEIJING – An arbitration court ruled on Tuesday that China has no historic title over the waters of the South China Sea and that it has breached the Philippines' sovereign rights with its actions, infuriating Beijing which dismissed the case as a farce.

China, which boycotted the hearings at the Permanent Court of Arbitration in The Hague, vowed again to ignore the ruling and said its armed forces would defend its sovereignty and maritime interests.

China's state-run Xinhua news agency said shortly before the ruling was announced that a Chinese civilian aircraft successfully carried out calibration tests on two new airports in the disputed Spratly Islands.

And China's Defence Ministry announced that a new guided missile destroyer was formally commissioned at a naval base on the southern island province of Hainan, which has responsibility for the South China Sea.

"This award represents a devastating legal blow to China's jurisdictional claims in the South China Sea," Ian Storey, of Singapore's ISEAS Yusof Ishak Institute, told Reuters.

"China will respond with fury, certainly in terms of rhetoric and possibly through more aggressive actions at sea."

China claims most of the energy-rich waters through which about $5 trillion in ship-borne trade passes every year. Neighbors Brunei, Malaysia, the Philippines, Taiwan and Vietnam also have claims.

Finding for the Philippines on a number of issues, the panel said there was no legal basis for China to claim historic rights to resources within its so-called nine-dash line, which covers much of the South China Sea.

It said China had interfered with traditional Philippine fishing rights at Scarborough Shoal, one of the hundreds of reefs and shoals dotting the sea, and had breached the Philippines' sovereign rights by exploring for oil and gas near the Reed Bank, another feature in the region.

None of China's reefs and holdings in the Spratly Islands entitled it to a 200-mile exclusive economic zone, it added.

China's Foreign Ministry comprehensively rejected the ruling, saying its people had more than 2,000 years of history in the South China Sea, that its islands did have exclusive economic zones and that it had announced to the world its "dotted line" map in 1948.

"China's territorial sovereignty and maritime rights and interests in the South China Sea shall under no circumstances be affected by those awards. China opposes and will never accept any claim or action based on those awards," it said.

However, the ministry also repeated that China respected and upheld the freedom of navigation and overflight and that China was ready to keep resolving the disputes peacefully through talks with states directly concerned.

China's Defence Ministry said in a bilingual Chinese and English statement shortly before the ruling was made public that the armed forces would "firmly safeguard national sovereignty, security and maritime interests and rights, firmly uphold regional peace and stability, and deal with all kinds of threats and challenges."

Chinese Foreign Minister Wang Yi said the case had been a farce from beginning to end and put the dispute into dangerous territory of worsening tensions and confrontation.

But Wang, in comments carried by state media, struck a more conciliatory tone too, saying the time had now come to put things back on the right track and noting the new Philippine government's sincerity in taking steps to demonstrate its willingness to improve ties.

The ruling also said China had caused permanent harm to the coral reef ecosystem in the Spratlys, charges China has always rejected.

The judges acknowledged China's refusal to participate, but said they sought to take account of China's position on the basis of its statements and diplomatic correspondence.

"The award is a complete and total victory for the Philippines … a victory for international law and international relations," said Paul Reichler, lead lawyer for the Philippines.

Vietnam said it welcomed the ruling.

Taiwan, which had maintained the island it occupies, Itu Aba, is legally the only island among the hundreds of reefs, shoals and atolls scattered across the seas, said it did not accept the ruling, which had seriously impaired Taiwan's territorial rights.

Ground-breaking ruling

The ruling is significant as it is the first time that a legal challenge has been brought in the dispute, which covers some of the world's most promising oil and gas fields and vital fishing grounds.

It reflects the shifting balance of power in the 3.5 million sq km sea, where China has been expanding its presence by building artificial islands and dispatching patrol boats that keep Philippine fishing vessels away.

The United States and China often conduct military exercises in the area and regularly accuse each other of militarizing the region.

"Our experts are studying the award with the care and thoroughness that this significant arbitral outcome deserves," Philippine Foreign Affairs Secretary Perfecto Yasay told a news conference, reading from a prepared statement.

"We call on all those concerned to exercise restraint and sobriety. The Philippines strongly affirms its respect for this milestone decision as an important contribution to the ongoing efforts in addressing disputes in the South China Sea." Japan said the ruling was legally binding and final.

Oil prices jumped following the findings from The Hague, with international Brent crude futures up almost 3 percent at $47.87 per barrel at 1130 GMT.

The deep waters of the South China Basin between the Spratly and also-disputed Paracel Islands are the most direct shipping lane between northeast Asia's industrial hubs of China, Japan and South Korea and Europe and the Middle East.

The case, brought by the Philippines in 2013, hinged on the legal status of reefs, rocks and artificial islands in the Scarborough Shoal and Spratly Island group.

Manila's 15-point case asked the tribunal to rule on the status of the nine-dash line, a boundary that is the basis for its claim to roughly 85 percent of the South China Sea.

The court has no power of enforcement, but a victory for the Philippines could spur Taiwan, Vietnam, Malaysia and Brunei to file similar cases.

Ahead of the ruling, around 100 members of a Philippine nationalist group demonstrated outside the Chinese consulate in Manila, calling on Beijing to accept the decision and leave the Scarborough Shoal, a popular fishing zone off limits to Filipinos since 2012.

In China, social media users reacted with outrage at the ruling.

"It was ours in the past, is now and will remain so in the future," wrote one user on microblogging site Weibo. "Those who encroach on our China's territory will die no matter how far away they are."

Spreading fast on social media in the Philippines was the use of the term "Chexit" – the public's desire for Chinese vessels to leave the waters.

(Additional reporting by Enrico Dela Cruz and Martin Petty in Manila, Megha Rajagopalan in Beijing, Tim Kelly in Tokyo, John Walcott in Washington, and Greg Torode in Hong Kong.; Editing by Lincoln Feast and Nick Macfie)