Other countries will reject arbitrations favoring Beijing

China desires so much to become a naval power. Last August after a joint exercise with Russia in the North Pacific its warship ventured into Alaska’s 12-nautical mile territorial waters. US President Barack Obama happened to be visiting the state then. Still the US Navy only watched silently as the Chinese vessel eventually maneuvered off. After all it was innocent passage, to which mature navies entitle foreign counterparts in freedom of navigation.

Yet China cannot bring itself to reciprocate. Thrice since last year single US cruisers have sailed within 12 nm by reefs that Beijing made into artificial islands in the South China (West Philippine) Sea. Each time the Chinese Navy shrieked like a brat against perceived provocative territorial intrusion. The Chinese foreign ministry followed up with shrill protests, and state media came out with editorial war cries.

How can the world esteem China as a true power, when it cannot act like one? Beijing ignores international conventions, and concocts its own rules. One cannot earn respect by comporting itself disreputably.

If Beijing is inconsistent in conduct of a blue-water navy, it is more so in other aspects of global relations. That is most evident in its bratty rejection of the UN arbitration of its sea dispute with Manila.

Arbitration is the recourse of mature parties in case of deadlocks in dispute resolution. It is the alternative to confrontation, in which both sides likely are to lose in varied ways.

Beijing knows that. It is no stranger to arbitration. The Chinese capital is the headquarters of a commercial arbitration commission of companies that come into dispute with each other or with state agencies. That body was formed as far back as 1956, Communist rulers presently are even promoting Beijing as an adjudication capital for international spats. There are financial, tourism, and reputational gains in mimicking similar settlement centers like Washington DC, Singapore, and The Hague. China is able to rise in global economy by submitting itself to the World Trade Organization. It is in fact the complainant or the complained party in most of the 5,500 or so trade disputes that the WTO has refereed.

A deadlock ensued between Manila and Beijing in 2012. It arose when Chinese combat ships evicted Filipinos from traditional fishing grounds in Scarborough Shoal 123 nm off Luzon. Manila sought mediation by the UN Permanent Court of Arbitration (PCA) in The Hague.

The PCA this month upheld modern maritime pacts against Beijing’s imagined “historic sea rights.” On three counts Manila won. Firstly, the UN Convention on the Law of the Sea (UNCLOS) grants China a 200-nm exclusive economic zone from its coasts, and binds it to respect similar EEZs of neighbor-countries. False therefore is Beijing’s “nine-dash” boundary encompassing 90 percent of the South China Sea and encroaching on others’ EEZs.

Secondly, Beijing broke the UNCLOS in occupying Scarborough and seven reefs within the Philippines’ EEZ. Thirdly, Beijing destroyed the environment by concreting the reefs into fake islands, and in letting Hainan fishers poach endangered giant clams, sea turtles, and fan corals.

Manila rightly did not gloat about its victory. Instead it amicably invited Beijing to talk. At once the Chinese foreign ministry set a condition that any talks shall not consider the arbitration ruling. Manila whispered that it’s impossible, since the UN binds both sides to the ruling. Whereupon China’s deputy naval chief said if that’s the case then both sides are headed for confrontation.

China’s rejection of the PCA ruling is bound to affect its economy. It has been lending state funds to other countries through the Asian Infrastructure Investment Bank (AIIB). Such infrastructure lending is its best hedge against internal industrial decline and potential mass unemployment. Yet the very AIIB rules rely heavily on arbitration as a means of dispute settlement. Beijing thus needs to have a consistent stand regarding arbitration.

Section 55 of the AIIB charter details the dispute settlement procedures. In case of deadlocks, a three-man body is to adjudicate, and its rulings shall be final, binding, and executory. The three members shall be: one to be nominated by the AIIB, one by the disputing borrower-country, and one by the UN International Court of Justice as chairman.

Here’s the catch. The PCA at The Hague is an adjunct established by none other than the ICJ. The ICJ stands by the PCA rulings. So how can China’s AIIB enforce its dispute resolutions overseen by the ICJ, if at the same time it rejects an arbitration court of the ICJ that happened to rule against it? What if other countries become intransigent like Beijing, and reject UN and WTO rulings against them in disputes with China?

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