On January 22, 2013, the administration of then-President Benigno Aquino III of the Philippines instituted arbitral proceedings against China under the dispute settlement provisions of the UN Convention on the Law of the Sea (UNCLOS). The arbitration concerned the role of historic rights and the source of entitlements in the South China Sea, the status of certain maritime features there, and the lawfulness of certain related actions by China that the Philippines alleged to be in violation of UNCLOS.
According to the July 12, 2016 arbitration decision, China’s historic claim to the area and its resources is not consonant with UNCLOS and is thus legally invalid. This means that the resources within some of the Philippines’ claimed zones — like the fisheries outside the territorial sea around Scarborough Shoal and any oil or gas under the Reed Bank — are Manila’s alone.
But China disagrees. It refused to participate in the proceedings or to accept the result. So that means that China’s vague claims to and in the area still stand and Beijing has made clear by word and deed that it will go to the mat over them — against the Philippines and anyone else that dares to get involved militarily. However, China has quietly modified some of its practices like allowing Philippines fishermen to fish near Scarborough Shoal.
So for the time being current Philippine President Rodrigo Duterte has decided to put aside the legal victory and negotiate shared access to the resources. The result has been continued access to the fisheries for Filipino fishermen and the possibility of “joint development” of any oil and gas. The alternative would be no access to Manila’s own resources and crippling economic punishment by China.
But the remaining conundrum for Duterte and the Philippines is how to enter into joint development with China while preserving its legal victory. Obviously both Chinese and Philippine leaders – but especially Duterte – are hemmed in by their own nationalists who prefer pride over pragmatism
To circumvent this problem, language must be found that would satisfy several contradictory seemingly sine qua non. The Philippines must not abandon or undermine its rightful ownership of resources in its legal exclusive economic zone (EEZ) and on its legal continental shelf. But by entering into a joint development agreement with a rival claimant it may implicitly be undermining its legal position. Indeed, in a future legal and public relations battle this could be interpreted as a recognition that China’s claim has merit. That would also set a negative precedent for the other ASEAN claimants vis-a-vis China.
As Philippine maritime law expert Jay Batongbacal says, “Given that we have the arbitration ruling on our side, it’s really hard to think of a way to proceed with this joint development without somehow giving up the arbitration ruling.” As Batongbacal elaborated in a conversation with me, the essence of joint development is joint control and supervision by the partner states, “which is not allowed by the [Philippine] Constitution.”
“A service contract inherently assumes that the foreign entity is a sub-contractor of the State subject fully to Philippine law, thus it is not a case of joint development but unilateral development, and for these reasons will not be acceptable to China,” he explained.
That may be true. But if there is good will, there is a way.
Perhaps language could be found that is acceptable to both parties, leaving joint control and supervision to the interpretation of each party. Perhaps the agreement could establish a private third party entity whose ownership is at least 51/49 in the Philippines’ favor – either explicitly or finessed in the details so that the Philippines retains nominal control of the venture. Any agreement should say right up front that the agreement is in no way a recognition – explicit or implicit — of either party’s claims. The Philippines should declare that it is entering the agreement in the spirit of friendship, cooperation, and peace in the region and preserving the UN Charter’s prohibition on engaging in threat or use of force. Manila should also state publicly that it is not surrendering its sovereignty over resources in the area of joint development — but simply deferring its claim to be implemented by future wiser generations.
Meanwhile it can privately communicate red lines, which if crossed would have consequences (like pivoting politically – and militarily – back towards the United States). Such “red lines” might be China’s unilateral extraction of petroleum from the Philippines’ EEZ or continental shelf, construction on Scarborough Shoal, or harming of Filipino troops. China is again harassing Filipino troops trying to resupply their comrades on Second Thomas Shoal.
In the interim, the Duterte administration should be careful not to prejudice its claims or rights by avoiding making any official statement that legally undermines them. It can and should continue to protest privately, as it has been doing, or even publically when it believes China – or any other country — has violated any understanding between them or the details of the arbitration result itself.
This is only a layman’s attempt to suggest tactics and language that might resolve the serious conundrum facing the Philippines. Surely clever lawyers and negotiators can improve on it and solve the conundrum. After all, lawyers representing the Philippines were clever enough to circumvent the problem that territorial sovereignty and maritime delimitation and military and law enforcement activities were technically beyond the arbitration panel’s jurisdiction. Lawyers got the Philippines into this situation by focusing solely on law and neglecting the politics of what would happen if the arbitration case was won. They should now help pro bono to come up with language that might resolve this conundrum. Indeed, they should be challenged to at least try rather than simply say “it can’t be done” and hurl brickbats at the very idea.
Mark J. Valencia is an Adjunct Senior Scholar at the National Institute for South China Sea Studies, Haikou, China