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Beijing should not ignore rulings over South China Sea claims

OPINION: Manila has won the first round of its South China Sea arbitration case against Beijing. The Chinese government is determinedly boycotting the proceedings, but choosing to ignore the court’s decisions could lead to huge geopolitical losses

United in anger: Filipinos protest against China’s moves to claim parts of the South China Sea outside the Chinese Consular Office in Manila in June 2015. Photo: AFP/Noel Celis

The latest twist in the South China Sea dispute came in late October when the international arbitration court, considering the Philippines’ case against China, ruled it has jurisdiction to hear seven claims filed by Manila.

In recent years, tensions have been rising between the two countries over competing claims to parts of the sea, including the Scarborough Shoal (called Huangyan Island in China) and the mostly uninhabited chain of islands known as the Spratlys. The Philippines claims a 200 nautical mile exclusive economic zone under the United Nations Convention on the Law of the Sea (UNCLOS), while China lays claim to a huge tract of ocean extending south and east from its island province of Hainan.

Following a protracted military standoff in early 2012, Manila submitted its grievances over the territorial dispute to the Permanent Court of Arbitration (PCA) at The Hague, in the Netherlands, in 2013. As well as planning further hearings on the first seven submissions, the UN arbitration court has reserved its decision on jurisdiction for the remaining seven. Not only does this bring hope to the Philippines but also to its neighbours – Vietnam, Taiwan, Malaysia and Brunei – that have claims to the waters.

China is boycotting the case, repeatedly telling the PCA that it “will neither accept nor participate in the arbitration unilaterally initiated by the Philippines”. Beijing’s attitude leads to the question of whether there is any point looking forward to the arbitral decision, which is due to be handed down in early 2016, if one of the key players plans to ignore it.

In disputes between nation-states, arbitral and judicial decisions are not carried out by enforcement agencies, and foreign intervention is naturally limited by the principle of supreme sovereignty. A victory for the Philippines in this dispute would therefore be limited as a purely legal one. Yet seen from another perspective, the prospects are not that gloomy. The theory presented by Andrew T. Guzman, dean of the University of Southern California’s law school, in his well-known book, How International Law Works: A Rational Choice Theory, may shed light on the discussion.

Guzman’s theory explains why states often choose to comply with international law – even when it is not binding or enforceable. Called the ‘loss avoidance’ theory, and more commonly known as the ‘three R’s’ theory, Guzman suggests that if a state acts contrary to its international obligations, it will suffer from sanctions corresponding to the three Rs of compliance: reciprocity, retaliation and reputation.

Applied to the dispute between China and the Philippines, where it is anticipated that Beijing will decline to recognise any decision of the PCA, the theory throws up a number of interesting considerations.

Regarding the first point, reciprocity, it is arguable that states conform to international law partly to seek reciprocal compliance from other states. Therefore, noncompliance by one state may entail the threat of reciprocal actions. In the case that Beijing refuses to abide by a PCA ruling against it, this may lead the Philippines – and possibly other countries in the region – to suspend bilateral and plurilateral pacts previously agreed with China. In a worst-case scenario, it could disrupt ACFTA, the free trade area encompassing China and the Asean community.

Such a situation could be a wakeup call for China. Despite a desire to take full control of the disputed sea, it is also desperately unwilling to face ‘southern unrest’ at a time when it is dealing with serious domestic instability such as in the autonomous regions of Tibet and Xinjiang.

Retaliation should be interpreted in a broader meaning than the military sense. In the current case, military intervention is unlikely due to China’s permanent membership of the UN Security Council. However, the Philippines may suspend diplomatic relations and it is entirely conceivable that the US, as Manila’s closest ally, could also take action against China.

Some countries may also seize the opportunity to use their non-retaliation as a lever to gain concessions from Beijing in other negotiations. Moreover, in an era of increasingly sophisticated trade measures, other nations or interest groups may take advantage of China’s violation to initiate boycotting campaigns against Chinese goods. In this case, China could face significant political and economic losses.

Nevertheless, the greatest potential loss for Beijing seems to be in terms of reputation. So far, the Chinese government has always declared that its position is justified. Even if the government is willing to absorb the embarrassment of ignoring an undesirable outcome at the tribunal, it should think of the longer-term consequences of reputational harm. If China is found to have violated UNCLOS but refuses to comply with the award, its trustworthiness in other international treaties will be seriously damaged. Furthermore, China cannot avoid territorial disputes with its neighbours. At some point, it may need to invoke international law to protect itself, which could prove a highly problematic issue for a country with such a long history of territorial conflict.

Although the prospect of victory for the Philippines is far from certain, a ruling in favour of Manila would become a sharp weapon for the country – and its neighbours – in the South China Sea dispute. 

Dinh Khuong Duy is a PhD candidate in legal studies at the Università Commerciale Luigi Bocconi in Milan, Italy.

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