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 Manila filed the case in 2013 to seek a ruling on its right to
exploit the South China Sea waters in its 200-nautical mile
exclusive economic zone (EEZ) as allowed under the United Nations
Convention on the Law of the Sea (UNCLOS).
The Hague-based Permanent Court of Arbitration rejected Beijing's
claim that the disputes were about territorial sovereignty and said
additional hearings would be held to decide the merits of the
Philippines' arguments.
China has boycotted the proceedings and rejects the court's
authority in the case. Beijing claims sovereignty over almost the
entire South China Sea, dismissing claims to parts of it from
Vietnam, the Philippines, Taiwan, Malaysia and Brunei.
The tribunal found it had authority to hear seven of Manila's
submissions under UNCLOS and China's decision not to participate did
"not deprive the tribunal of jurisdiction".
The Chinese government, facing international legal scrutiny for the
first time over its assertiveness in the South China Sea, would
neither participate in nor accept the case, Vice Foreign Minister
Liu Zhenmin told reporters.
 "The result of this arbitration will not impact China's sovereignty,
rights or jurisdiction over the South China Sea under historical
facts and international law," Liu said.
"From this ruling you can see the Philippines' aim in presenting the
case is not to resolve the dispute. Its aim is to deny China's
rights in the South China Sea and confirm its own rights in the
South China Sea."
The Philippine government welcomed the decision.
Solicitor General Florin Hilbay, Manila's chief lawyer in the case,
said the ruling represented a "significant step forward in the
Philippines' quest for a peaceful, impartial resolution of the
disputes between the parties and the clarification of their rights
under UNCLOS".
Bonnie Glaser, a South China Sea expert at the Center for Strategic
and International Studies in Washington, called the outcome "a major
blow for China given that the opinion explicitly rejects China's
arguments that ... the Philippines has not done enough to negotiate
the issues with China."
The United States, a treaty ally of the Philippines that this week
challenged Beijing's pursuit of territorial claims by sailing close
to artificial islands China has constructed in the South China Sea,
welcomed the decision, according to a senior U.S. defense official.
"It shows that judging issues like this on the basis of
international law and international practice are a viable way of, at
a minimum, managing territorial conflicts if not resolving them,"
the official said, speaking on condition of anonymity.
Another U.S. official said the tribunal's decision undercut China's
claims under the so-called nine-dashed line that takes in about 90
percent of the 3.5 million sq km (1.35 million sq mile) South China
Sea on Chinese maps.
This vague boundary was officially published on a map by China's
Nationalist government in 1947 and has been included in subsequent
maps under Communist rule.
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"You can't say that the nine-dashed line is indisputable anymore
because by acknowledging jurisdiction here the court has made clear
that there is indeed a dispute," said the official, who asked not to
be named. "To my mind, this announcement drives a stake through the
heart of the nine-dash line."
The court's rulings are binding, although it has no power to enforce
them and countries have ignored them in the past.
"QUESTIONABLE CLAIMS"
Nevertheless, the decision keeps the spotlight on China.
"Today's ruling is an important step forward in upholding
international law against China's attempts to assert vast and, in my
view, questionable claims in the South China Sea," said John McCain,
chairman of the U.S. Senate's armed services committee.
On Thursday during a visit to Beijing, German Chancellor Angela
Merkel suggested China go to international courts to resolve its
rows over the South China Sea.
In a position paper in December, China argued the dispute was not
covered by UNCLOS because it was ultimately a matter of sovereignty,
not exploitation rights.
UNCLOS does not rule on sovereignty but it does outline a system of
territory and economic zones that can be claimed from features such
as islands, rocks and reefs.
The court said it could hear arguments including one contending that
several South China Sea reefs and shoals were not important enough
to base territorial claims on.
On seven other submissions, including that China had violated the
Philippines' sovereign right to exploit its own territorial waters,
the court said it would reserve judgment about jurisdiction until it
had decided the merits of the case.
No date has been set for the next hearings.
The Permanent Court of Arbitration was established in the
Netherlands in 1899 to encourage peaceful resolution of disputes
between states, organizations and private parties. China and the
Philippines are among its 117 member countries.
(Reporting by Anthony Deutsch and Toby Sterling; Additional
reporting by David Brunnstrom, Yeganeh Torbati and Arshad Mohammedin
Washington, Manuel Mogato in Manila and Michael Martina in Beijing;
Editing by Dean Yates and Alex Richardson)
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