Arbitration ‘award’: A P1-billion useless piece of paper

PRESIDENT Duterte was absolutely correct when he remarked the other night that the “award” (i.e., ruling) of the arbitration suit that the Aquino 3rd administration brought against China in 2013 was a useless “piece of paper.”

It is useless, since the “award,” after extensively discussing the UN Convention on the Law of the Sea (Unclos) provisions and the Philippine claims for 500 pages, does not order China to do anything. It even emphasized that its “award” was “without prejudice to any questions of sovereignty or maritime boundary delimitation.”

(I place the term “award” in quotation marks as it is used in the document of the arbitration panel, not in the ordinary sense of something substantial being given. The panel uses that term only since it can’t use “decision” or “ruling” as it is not a court of law. The “award” awards nothing. Read it and it turns out to be merely in the nature of an academic discussion.)

The “award” most definitely doesn’t declare, as our Twitter-mad foreign affairs secretary ignorantly claims, that the “West Philippine Sea” — which nomenclature the arbitration totally ignored — is ours.

It doesn’t order China to vacate the seven features in the South China Sea (SCS) that it has occupied since 1988. It doesn’t order it not to undertake patrols by its Coast Guard, “maritime militia, “and even by the People’s Liberation Army Navy in our exclusive economic zone (EEZ) and in that part of the Spratlys that we claim, the Kalayaan Island Group (KIG).

It doesn’t order Chinese fishermen not to fish in our EEZ but only for China not to bar Filipino fishermen fishing around Scarborough Shoal. 

Nansha and Zhongsha
Yes, the award “ruled” that no feature that China occupies generates an exclusive economic zone, and therefore only the Philippines has an EEZ in the Mischief Reef and Reed Bank areas. But does it order China to vacate these areas or to desist from stopping Philippine-authorized oil exploration ships from exploring for oil and gas in the Reed Bank? No.

It can’t as this would mean ruling that China’s claims of sovereignty over these areas it calls the Nansha and Zhongsha archipelagos are invalid, which it cannot do.

It finds that “China has, through the operation of its marine surveillance vessels in relation to M/V Veritas Voyager on 1 and 2 March 2011 breached its obligations under Unclos Article 77 with respect to the Philippines’ sovereign rights over the non-living resources of its continental shelf in the area of Reed Bank.” But does it order China not to ban in the future M/V Veritas Voyager nor any other similar Philippine-authorized vessel from exploring for oil and gas in that area?

No, which is the reason no Philippine-authorized vessel can’t go back to that area to explore for hydrocarbons.

The “award” didn’t order China to dismantle its fortifications on the artificial islands it built in response to the filing of the suit against it. It doesn’t order it to remove its vessels from Scarborough Shoal.

The award concluded that based on a seven-day study by an environmental scientist (who wrongly used his findings from Australia’s Great Barrier Reef as a substitute for the South China Sea, as he didn’t go there), China’s reclamation work has damaged the corals there. But does it order China to pay the Philippines whatever compensation for such damage? No.

Arctic Sunrise
Contrast that to the case of the Arctic Sunrise v. the Russian Federation, in which a tribunal categorically ordered the latter to pay the Dutch ship 5 million euros and the 500,000 euros cost of the arbitration, for detaining the ship and its crew for several weeks. An international tribunal similarly ordered the US to pay Nicaragua damages for its actions in supporting rebels and destabilizing the Sandinista government. No such orders in the Philippines v. China case.

The award’s provision that retired Supreme Court Justice Antonio Carpio has been repeating in Hitlerian fashion as a “landmark ruling” is even worse: that it invalidated China’s nine-dash line, crude markings (i.e., it had no precise geographical coordinates) that a Kuomintang official drew in 1946 on Chinese maps. Carpio claims this is the basis for China’s occupation of features in the South China Sea, its justification for having its fishermen and its Coast Guard patrols within the line.

This is Carpio’s colossal lie. As I explained extensively in a recent column on Carpio’s lies, even the US government says that China hasn’t defined what that line is. The award invalidated something nobody knows what it is.

Read the award yourself, even just its concluding “Dispositif” that lists its findings, and not just believe the liars Carpio and Albert del Rosario. The award blah-blahs that China “breached’ this or that provision of Unclos but doesn’t order it to do anything. It doesn’t even tell it that it must not “breach” again in the future.

Prosecutor
Duterte as private lawyer for five years and nine as public prosecutor would have probably immediately seen through the award’s deception, and I can imagine him scratching his head and remarking angrily, “Niloloko tayo nito a.

An analogy that he would immediately think of would be if he had prosecuted somebody who had fake titles to a property. The award would be the equivalent of the judge ruling that the title was indeed bogus, but not ordering the land to be vacated and turned over to the real owner.

But wouldn’t the next step to ask the judge to issue such orders? Of course it is, but only in domestic courts. But in this kind of arbitration, the relevant Unclos provision specifies that the decisions of such panels are “final.”

But that means, as international law expert Stefan Talmon* pointed out, only in the procedural case. The panel will never meet again for appeals or to hear a Philippine plea to issue the “necessary” orders against China.

If the Philippines wants a body to give China specific orders, or if China decides to contest the “award,” an entirely new panel, and entirely new process, would have to be undertaken. The “finality” isn’t in its substance, says Talmon: a new arbitration panel or other bodies such as the International Tribunal on the Law of the Sea may reverse its ruling.

Accommodations
What would have made Duterte blow his top was if he were told that the arbitration cost us taxpayers P1 billion. This amount is for the professional fees and expenses not just for the Washington, D.C.-based law firm Foley Hoag LLP, but also the three other lawyers from London; the salaries of the five-man panel; the cost of the venue in The Hague; and the first-class tickets and accommodations of over 50 Philippine “observers” in the arbitration’s six hearings — many of whom had no business being there, such as Aquino’s political adviser Ronald Llamas, Antonio Carpio’s wife “Bach Nguyen” and even very low-ranking government officials.

I’m curious: Carpio has boasted it was he who thought of the case and proposed it to the Aquino administration. Did he or a firm connected to him charge Foley Hoag the usual referral fees?

The five members of the arbitral were probably laughing all the way to the bank for an “award” they issued that meant nothing. Sources familiar with international arbitration claimed they were paid at least P20 million each ($400,000), excluding the hotel and airfare expenses. This is probably why they reject the suit immediately even if China when it signed the Unclos document categorically declared that it will not agree to any arbitration involving sovereignty and maritime-delimitation issues. All the costs for the arbitration were borne by the Philippines as China refused to participate in it.

However, Duterte’s claim that the arbitration was useless is correct, but only up to a point.

It was a boon for the US in its campaign to demonize China as a bully in the region. It strengthens the legal basis of the US’ warships’ patrols (euphemistically called “freedom of navigation operations”) in the South China Sea intended to tell Asia it is still the hegemon of the area. For the Yellows, it was a smokescreen for the Aquino regime’s disaster of losing the Scarborough Shoal to China.

The Yellows have also been exploiting the arbitration to the hilt to paint Duterte as kowtowing to China since he is “not enforcing” the “award.” Indeed, Duterte is in a propaganda dilemma: How the hell can he enforce an “award” which ordered nothing to enforce?

*Stefan Talmon, “The South China Sea Arbitration and the Finality of ‘Final’ Awards,” Journal of International Dispute Settlement (Vol. 8, Issue 2, May 2017).

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This Post Has One Comment

  1. Bautista, Vic.

    Why did we volunteer to become “budol budol” victims and even had to pay lawyers’ fees to americans and british lawyers for their con job?

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