While the recent ruling by an Arbitral Tribunal in The Hague addressing the dispute between China and the Philippines in the South China Sea has been hailed as a ‘game changer’ (PDF) and a ‘heavy blow’ for China, it also presents new challenges and opportunities.

The first thing to say about the ruling is that its importance can be overstated. Despite much commentary to the contrary, it’s not a ruling from the Permanent Court of Arbitration (PCA). Rather it’s a ruling from a tribunal established under Annex VII of the 1982 UN Convention on the Law of the Sea (UNCLOS) for dispute resolution between parties to the Convention. The PCA only provided secretarial assistance for the tribunal. Referring to it as a ruling from the PCA inflates its importance.

The tribunal’s ruling is binding only on the participating countries. It doesn’t have the same status as rulings from major UN-sponsored international courts, such as the International Court of Justice (ICJ) and the International Tribunal on the Law of the Sea. The ICJ has taken the apparently unusual step of seeming to distance itself from the tribunal’s award. With more judges and greater sensitivity to the political implications of its judgments, a higher level court may have produced a more nuanced ruling, particularly with regard to the status of ‘islands’ and ‘rocks’.

No one expects China to quietly accept the ruling. Other countries, including the US, are open to allegations of hypocrisy if they are excessively critical of China in this regard. There’s a long tradition of big nations ignoring decisions when they lose cases.

The surprising feature of the ruling was the judgment that there are no ‘fully entitled’ islands in the Spratly group entitled to an EEZ and continental shelf. That particular ruling has far-reaching implications. It presents challenges for other countries, including Australia, France, Japan and the US, which have claimed a full set of maritime zones from small, isolated features. Those countries are all likely to ignore the precedent established by the tribunal on ‘rocks’ and ‘islands’.

Japan has already reasserted that the small feature of Okinotorishima in the Pacific Ocean, from which it claims both an EEZ and an extended continental shelf, is a true island rather than a rock. In doing so, Japan has pointed out that the recent ruling applies only to China and the Philippines.

Another challenge arises from the importance the tribunal accorded EEZs, which will likely reinforce the nationalistic attitude the South China Sea littoral states attach to their EEZs. That may shift their focus to unilaterally asserting sovereign rights in national zones rather than to more properly addressing their obligations and requirements to cooperate on managing the South China Sea and activities within it. Cooperation is an obligation of the littoral countries under Part IX of UNCLOS covering semi-enclosed seas. Assertions of sovereign rights in EEZs may become more strident after the ruling and this will inhibit progress towards effective cooperation.

At this stage there are relatively few maritime boundaries agreed in the South China Sea.  There are some continental shelf boundaries but very few EEZ boundaries. Theoretically the tribunal’s ruling that there are only ‘rocks’ in the Spratlys provides a basis for a system of maritime boundaries in the South China Sea with a number of enclaved territorial seas around the rocks and even a patch of high seas in the middle of the sea although this may be closed off in part by the outer continental shelf claims by Vietnam and Malaysia.

Despite the old adage that ‘good fences make good neighbours’, sometimes it’s physically impossible, for a variety of reasons, to build good fences—particularly in the sea. Agreement on further maritime boundaries in the South China Sea will be heavily complicated by the geography of the region and the need for tri-points where pairs of bilateral boundaries intersect. The extant claim by the Philippines to Sabah prevents a boundary agreement between Malaysia and the Philippines. A further challenge is that islands in both the Paracels and Pratas groups are much larger than those in the Spratlys and are likely to satisfy the criteria to be regarded as ‘fully entitled’ islands. Vietnam could also assist ASEAN solidarity by dropping its claim to features that lie within the EEZs of the Philippines and Malaysia.

On the credit side, the ruling provides opportunities, particularly by providing a basis for negotiations between the parties involved. Constructive dialogue is required rather than destructive sniping. As the editors of East Asia Forum have rightly pointed out, ‘It is not a time for grandstanding, adding insult to injury or taking action that could be construed as provocative’.

The focus of the negotiations should now be functional cooperation for activities, such as marine scientific research, fisheries management, protecting and preserving the marine environment, maritime law enforcement, and search and rescue. Unfortunately the need for those forms of cooperation has been lost in recent rhetoric on the South China Sea.

The bottom line is that China and ASEAN should now be given space to work out their differences and explore cooperation for managing the South China Sea without pressure or provocation from extra-regional/non-littoral powers. There’s no strategic imperative for these powers to take any action, including no extant threat to freedoms of navigation and overflight that warrant confrontational assertions of these freedoms. Dialogue between ASEAN and China must now be given the chance to work.