The Arbitral Tribunal had earlier issued its unanimous award on the jurisdiction issue. According to Article 288(4) of the Convention, in the event of a dispute as to whether a court or tribunal has jurisdiction, the matter has to be settled by decision of that court or tribunal. Also Article 9 of Annex VII to the Convention requires that where a Party does not appear before the Tribunal, the arbitral tribunal must satisfy itself not only that it has jurisdiction over the dispute but also that the claim is well founded in fact as well as in law. It held that Philippines and China were parties to the Convention and that the provisions for the settlement of disputes, including through arbitration, formed an integral part of it.  Although the Convention specifies certain limitations and exceptions to the subject matter of the disputes that may be submitted to compulsory settlement, it does not permit other reservations, and a State may not except itself generally from the Convention’s mechanism for the resolution of disputes. The Tribunal also rejected the claim of China alleging abuse of the Convention holding that mere act of unilaterally initiating arbitration in itself cannot constitute an abuse of the Convention.

China contended that the Parties’ dispute is actually about sovereignty over the islands of the South China Sea and therefore not a matter concerning the Convention. It also contended that the Parties’ dispute was actually about the delimitation of the maritime boundary between them and therefore excluded from dispute settlement by an exception set out in the Convention that States may activate by declaration.  China contended that it had already activated the exception for disputes concerning sea boundary delimitations when it made a declaration in 2006.

The Tribunal observed that though there was a dispute between the Parties regarding sovereignty over islands, but yet the matters submitted to arbitration by the Philippines did not concern sovereignty. On the second issue the Tribunal observed that a dispute concerning whether a State possesses an entitlement to a maritime zone is a distinct matter from the delimitation of maritime zones in an area in which they overlap.  While a wide variety of issues are commonly considered in the course of delimiting a maritime boundary, it does not follow that a dispute over each of these issues is necessarily a dispute over boundary delimitation.  Accordingly, the Tribunal held that the claims presented by the Philippines do not concern sea boundary delimitation and are not, therefore, subject to the exception to the dispute settlement provisions of the Convention.

The Tribunal thus held that China’s non-appearance in the proceedings did not deprive the Tribunal of jurisdiction and Philippines’ act of initiating this arbitration did not constitute an abuse of process. It also found that the 2002 China–ASEAN Declaration on Conduct of the Parties in the South China Sea, the joint statements of the Parties, the Treaty of Amity and Cooperation in Southeast Asia, and the Convention on Biological Diversity, did not preclude recourse to the compulsory dispute settlement procedures available the Convention.