“Arbitral Award Enhances Vietnam’s Bargaining Power vis-à-vis China”, a Commentary by Le Hong Hiep

Commentary 2016/31, 13 July 2016

As one of the main parties to the South China Sea dispute, Vietnam stands to benefit significantly from the final award issued by the arbitral tribunal on the Philippines’ case against China. Indeed, in an official statement issued on 12 July 2016, the Vietnamese Ministry of Foreign Affairs welcomed the ruling, adding that Hanoi would make a separate statement on the content of the award.

Two points in the tribunal’s award are of particular significance to Vietnam: China’s claim based on the so-called nine-dash line is legally invalid; and none of the features in the Spratlys are qualified as an island that is entitled to an Exclusive Economic Zone (EEZ) of its own.

These rulings help to narrow down the scope of the maritime dispute between China and Vietnam as there is now no overlapping zone between China’s nine-dash line and Vietnam’s EEZ, as well as between the hypothetical EEZ of certain “islands” in the Spratlys and Vietnam’s EEZ measured from its mainland. As such, Vietnam will be able to better protect its EEZ against China’s encroachments, especially in the southern half of the South China Sea where the Spratlys is situated.

The award may also encourage Vietnam to follow the Philippines’ step to file a similar arbitration case against China’s claims over the Paracels, which the two countries are also disputing. In such a case, Vietnam may ask the tribunal to rule that no feature in the Paracels is qualified as an island that can constitute an EEZ for itself. It may also seek the tribunal’s decision that the straight baseline China established around the Paracels in 1996 is illegal under the UNCLOS. Given the precedent set by the award on the Philippines’s case against China, Vietnam can reasonably expect a victory. Under such a scenario, Vietnam will be able to forestall the recurrence of incidents similar to China’s deployment of the Haiyang Shiyou 981 oil rig in Vietnam’s EEZ in 2014. In that major incident, China claimed that the rig was operating within the EEZ of the Paracels.

Vietnamese leaders have occasionally mentioned that they would consider legal actions against China if Beijing maintained its aggressive behaviours toward Vietnam. Due to various reasons, especially its wish to maintain a stable and peaceful relationship with China as well as the fear of a possible defeat, Hanoi has been rather reluctant in pursuing this course of action. However, emboldened by the arbitral award on the Philippines v. China case, Vietnam may now be more willing to challenge China’s claims through legal means.  In that sense, Vietnam’s bargaining power vis-à-vis China in the South China Sea has been enhanced as it now has another effective option to deal with China’s assertiveness.

Dr Le Hong Hiep is Fellow at the ISEAS – Yusof Ishak Institute.

The facts and views expressed are solely that of the author/authors and do not necessarily reflect that of ISEAS – Yusof Ishak Institute.  No part of this publication may be reproduced in any form without permission.