Is China trying use the COC to beef up its Article 281 defence?

Besides ‘we do not accept,’ another legal argument China used to argue that the Philippines case before An Arbitral Tribunal under Annex VII of UNCLOS was inadmissible was that the 2002 Declaration on the Conduct of Parties (DOC) in the South China Sea prevented arbitration as per UNCLOS Article 281. This article states that if states have agreed on a way to settle the dispute, no case can be brought in that area. However, the tribunal quashed the reasoning that the DOC prevents it from judging in this case in its award on admissibility of 29 October 2015.

Following the frenzy after the tribunal released its final decision on 12 July 2016, there have been various attempts to lower the tensions. Both sides appear committed to keep the peace, even if reaching an agreement proves difficult. At the same time, however, states are positioning themselves for future possible legal challenges. Some claimant states may see the Philippines’ success as encouragement to start their own cases. China must be preparing for such eventuality already by beefing up its legal defences. One area I think we should keep an eye on is Article 281.

After a senior officials’ meeting between China and ASEAN in Inner Mongolia on 16 August, Vice-Foreign Minister Liu Zhenmin stated that ‘[a]ll sides agreed to raise the frequency of the negotiations in a situation without interference, and seek to finish a draft framework of the COC by the middle of next year.’ The phrase ‘in a situation without interference’ is an iteration of China’s stance that no ‘third parties’ should be involved in the South China Sea. Beijing considers international tribunals to be third parties. More interesting is the aim to finally agree on the elusive Code of Conduct (COC) by mid-2017. Is China so intent on making progress here because the DOC turned out to be of no use to Beijing in court?

The DOC, adopted in 2002, was originally merely meant to be a stepping stone towards a legally binding COC for behaviour in the South China Sea. This has proven rather challenging and whole academic journals have been filled with its tribulations. But maybe the tensions provide the impetus for agreement. Therefore, it makes sense to watch out for any clauses in drafts that China might be able to invoke in a future Article 281 argument.

Article 281, Part XV of the United Nations Convention on the Law of the Sea reads as follows (emphasis mine):

1. If the States Parties which are parties to a dispute concerning the interpretation or application of this Convention have agreed to seek settlement of the dispute by a peaceful means of their own choice, the procedures provided for in this Part apply only where no settlement has been reached by recourse to such means and the agreement between the parties does not exclude any further procedure.

2. If the parties have also agreed on a time-limit, paragraph 1 applies only upon the expiration of that time-limit.

In its 2015 award the tribunal ruled that the DOC cannot be an agreement under Article 281 because it is not legally binding (¶218), but also looked into some other arguments. The tribunal finds that neither is dispute settlement under Part XV explicitly excluded in the DOC, nor is dispute settlement by a third party in general (¶222). More seriously, the court holds that the dispute settlement mechanism is so integral to the UNCLOS system that only an explicit opt-out suffices (¶¶224–225). The only exception to that is when an alternative dispute settlement mechanism has been agreed upon under Article 282. In that case an explicit opt-in is necessary.

This means that in order for a COC to prevent future Annex VII arbitrations, it will have to be binding and contain provisions that can be construed at a minimum to explicitly prevent recourse to at least third-party dispute settlement, or provide an alternative that can be seen as falling under Article 282. Southeast Asian claimant states surely must be on their guard for this. I expect that Chinese attempts to insert such language will be a major stumbling block in adopting a Code of Conduct.