An international arbitration tribunal has ruled that it has jurisdiction to consider issues in dispute between the Philippines and China regarding territorial claims in the South China Sea. The decision is a defeat for Beijing, which has insisted that it will not submit to international adjudication of its claims and, alternatively, that the issues in question cannot be considered by the tribunal. This is no time to celebrate, however: the decision is preliminary, addressing procedural issues, and does not deal with the substance of the matter. More significantly, Beijing could reject the tribunal’s findings. That would be a mistake, but that does not seem to much trouble Chinese leaders these days.

China claims that it has sovereignty over virtually the entire South China Sea. That claim is challenged by five other governments — Brunei, Malaysia, the Philippines, Taiwan and Vietnam — and efforts to resolve the disputes have failed. Absent a peaceful resolution of this situation, the claimants have gone about creating “facts on the ground” by seizing islands and rocks, building structures on top of them — frequently with military personnel — to bolster their claims to parts of the sea. International law generally holds that such structures do not change the status of such a “feature”; in other words, a government cannot create a land feature in water and then claim adjacent waters. Either the claim exists in nature — before a government intervenes, or not at all.

Frustrated with the slow pace of negotiations, the government of the Philippines in January 2013 filed a claim with the Permanent Court of Arbitration in The Hague to force China’s hand. Manila made 15 submissions to the tribunal, asking for resolution of questions ranging from whether certain features can be considered islands (and thus creating rights to adjacent waters) to whether China has interfered with Philippine fishing activities near Scarborough Shoal. The panel agreed to hear seven of the 15 submissions under the United Nations Convention on the Law of the Sea (UNCLOS).

Significantly, it rejected the claim that the tribunal was being asked to address issues of sovereignty as well as the assertion that Beijing’s refusal to participate deprived the tribunal of jurisdiction. It concluded that, for the first seven questions, it was being asked to adjudicate “disputes between the two states concerning the interpretation or application of the Convention,” which is precisely what it was set up to do. The tribunal reserved judgment on whether it could hear the remaining eight questions: It worries that they may prove to be so inextricably linked to questions of sovereignty as to make a decision that does not address that issue impossible.

The decision is a defeat for Beijing, which seeks to resolve this issue (like all the other disputes) diplomatically with its rival claimants or unilaterally. China has insisted that the court has no jurisdiction over this matter and did not submit papers to counter Manila’s claims. The Chinese government later issued a position paper (not to the court) reiterating its positions as the judges deliberated. That apparently had little effect.

The court will now rule on the merits of the issue in a closed hearing and the decision is expected next year. Beijing continues to repeat that the court has no jurisdiction but that position is increasingly problematic. After the ruling, Chinese Vice Foreign Minister Liu Zhenmin said that China would neither participate in, nor accept a case at the court, nor would the case affect China’s claims.

The outcome will have significant repercussions. It is reckoned that several trillion dollars worth of trade passes through the South China Sea each year; it is the lifeline for countries like Japan and South Korea. At least 500 million people depend on those waters for resources to live. A refusal to accept the ruling of a judicial body in which China has sought membership shows a disrespect for international law that exposes as fiction Beijing’s insistence that it seeks to rise peacefully, that it pursues win-win solutions, and that it believes in democracy and rejects the bullying of small nations by larger ones.

While it may prove emotionally gratifying to see China backed into a corner, that is unlikely to yield a satisfactory conclusion to this problem. Instead, all claimants should use this opportunity to breathe new life into the negotiations designed to turn the 2002 ASEAN-China Declaration on a Code of Conduct for the South China Sea into a real code of conduct. That effort has been underway for several years, but progress has been slow. That document commits the parties to build trust and confidence on the basis of equality and mutual respect, and they pledge to resolve their territorial and jurisdictional disputes peacefully. That should serve as the basis for a permanent solution to the overlapping claims and tensions that now roil the South China Sea.

The tribunal’s decision could provide legal cover for renewed diplomatic activism; that is better than virtually every alternative.

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