6. Permanent Court of Arbitration (PCA)

6. Permanent Court of Arbitration (PCA) (1) Introductory Comments At the end of 2016, the PCA was acting as registry in seven inter-state arbitrations. Out of these, in the Arbitration between the Republic of Croatia and the public of Slovenia relating to territorial and maritime issues, a partial award was granted and in the South China Sea Arbitration (Republic of Philippines v People’s Republic of China), the arbitral tribunal rendered a final award. (2) Case Law and Arbitration (A) Arbitration between the Republic of Croatia and the Republic of Slovenia The arbitral tribunal resumed the hearing on 17 March. Croatia refused to make any representation as a result of its view that the PCA no longer had jurisdiction as it had terminated the 2009 Arbitration Agreement between the government of the Republic of Croatia and the government of the Republic of Slovenia (Arbitration Agreement) agreement because of the alleged material breach by Slovenia of Arbitration Agreement. The material breach related to a leak of confidential information regarding the arbitration tribunal deliberations. Slovenia, while acknowledging the situation, was of the view that the actions taken by the PCA and Slovenia to rectify the problem meant that Croatia was not entitled terminate the agreement. Slovenia appeared before the tribunal and argued that the tribunal has competence to determine the legal ramification of unilateral termination of the Arbitration Agreement and that it should complete its mandate by rendering an award. On 30 June, the tribunal issued a unanimous partial award. Croatia took the legal position that the tribunal did not have the competence to look into the termination of the Arbitration Agreement. Further, it contended that the entire arbitration process has been tainted and compromised. It gravely violated the fundamental principles of procedural fairness, due process, impartiality, and integrity of the arbitral process. As such, the actions being attributable to Slovenia resulted in the material breach of the Arbitration Agreement under Article 60 of the Vienna Convention on the Law of Treaties (VCLT). In light of these circumstances, Croatia argued that the termination of the Arbitration Agreement was both justified and necessary. In Slovenia’s view, the tribunal has inherent power to decide on its competence as well as possessing the tools to remedy the effects of any wrongdoing that has occurred. Moreover, the people who were involved in the misconduct had already resigned, and new arbitrators have been appointed. It redressed the purported breach of the Arbitration Agreement. Finally, Slovenia asserted that the breach invoked by Croatia does not constitute a material breach within the meaning of the VCLT. In its award, the tribunal regretted that Croatia did not participate in the proceedings. Nevertheless, Croatia’s position can be inferred from letters from the minister of foreign and European affairs of Croatia, dated on 24 July 2015 and 31 July 2015; two notes verbales, dated 30 July 2015 and 16 March 2016; as well as other documentary annexes specifically made available by Croatia on a website dedicated to the present arbitration. Coming to the first point—whether the tribunal has jurisdiction to determine unilateral termination of the Arbitration Agreement—it decided that the general international law as well as Article 21 of the PCA Optional Rules for Arbitrating Disputes between Two States confer on it the power to rule on any objection to the tribunal’s jurisdiction ‘with respect to the existence or validity of the Arbitration Agreement’ (<https://pcacases.com/web/sendAttach/1787>). The tribunal was recomposed, and no doubt had been expressed on the independence and impartiality of the tribunal in its new composition. Accordingly, and in view of the remedial action taken, the tribunal determined that the breaches of the Arbitration Agreement by Slovenia do not render the continuation of the proceedings impossible. Croatia was not entitled to terminate the Arbitration Agreement under Article 60 of the VCLT. It affirmed its jurisdiction and decided that the Arbitration Agreement remained in force and arbitral proceedings pursuant to it shall continue. The tribunal decided that ‘[a]fter consultation with the Parties, the Tribunal shall determine the further procedural steps in this arbitration.’ (B) Arbitration between the Republic of Philippines and People’s Republic of China On 12 July, the arbitral tribunal, acting under Annex VII of the United Nations Convention on the Law of the Sea (UNCLOS), rendered a lengthy 500-page final award. The dispute covered the gamut of issues concerning the role of historic rights and the source of maritime entitlements in the South China Sea as well as the status of certain maritime features. The focus of this report will be on the environmental dimension of the dispute: particularly, Submissions no. 11 and 12(b) of the Philippines’ claim regarding harm to the marine environment. The tribunal also concluded that it has jurisdiction to consider both of the submissions. The marine environment around Scarborough Shoal and the Spratly Islands has an extremely high level of biodiversity of species, including fishes, corals, echinoderms, mangroves, seagrasses, giant clams, and marine turtles, some of which are recognized as vulnerable or endangered. The Philippines alleged that China had violated Articles 192 and 194 of UNCLOS to protect and preserve the marine environment by undertaking harmful fishing practices and harmful construction activities. The adduced evidence indicated that activities complained of included the use of cyanide and explosives and the harvesting of endangered giant clams and sea turtles by Chinese fishing vessels. It corroborated the arguments with the help of scientific reports and new aerial and satellite photography. The tribunal sought an independent opinion on the environmental impact of China’s construction activities by appointing independent experts specializing in coral reef biology, namely Sebastian C.A. Ferse, Peter J. Mumby, and Selina Ward. The Philippines also periodically expressed to the tribunal its concerns about China’s extensive land reclamation and construction activities at several features in the Spratly Islands and their impact on the fragile marine environment in the vicinity of these sites. China had deployed a large fleet of vessels to the seven reefs, primarily using heavy ‘cutter-suction dredge’ equipment, to create more than 12.8 million square metres of new land in less than three years from 2013. The Philippines stated that ‘if unchecked [China’s] activities will continue to pose a significant threat to the marine environment of the South China Sea, and of all of the States which border the Sea’ (<http://www.pcacases.com/web/sendAttach/2086>). The Philippines submitted that there is very little evidence of genuine Chinese cooperation on matters of environmental protection in the South China Sea. Further, it argued that China was ‘fairly and squarely’ required to carry out an an environmental impact assessment within the meaning of Article 206 of UNCLOS. China did not directly state its position with respect to the allegations as presented in the Philippines’ Submissions no. 11 and 12(b). Nevertheless, China’s position can be discerned from contemporaneous official statements. A Chinese official stated in May 2015 that, as a state party to the Convention on Biological Diversity and to the Convention on International Trade in Endangered Species of Wild Fauna and Flora, ‘China will strictly observe provisions of the conventions and honour her obligations in good faith.’ The tribunal was not provided with evidence that Chinese fishers involved in poaching of endangered species had been prosecuted under Chinese law. China did not respond to the reports, forwarded by the tribunal in December 2015 and February 2016, concerning the widespread removal of giant clams by propellers cutting in and around features under Chinese control. Furthermore, Chinese officials claimed that the ‘main purpose’ of the construction activities was to ‘meet various civilian demands and better perform China’s international obligations and responsibilities in the areas such as … ecological environment conservation’ (<http://www.pcacases.com/web/sendAttach/2086>). Articles 192 and 194 of UNCLOS were assessed in this regard. Article 192 refers to the protection and preservation of the marine environment, while Article 194 refers specifically to marine pollution. The tribunal noted that the obligations of states under these two articles extend beyond the activities taken directly by states and encompass activities that are undertaken within areas under their jurisdiction and control. In the interpretation of the obligations, the tribunal recognized that they require ‘due diligence.’ The tribunal ruled that it was satisfied that Chinese fishing vessels had been involved in the harvesting of threatened or endangered species, relying on contemporaneous reports of naval, coastguard, and fisheries authorities, diplomatic exchanges, and photographic evidence presented in the record. The tribunal ruled that China had breached its obligations under Articles 192 and 194(5) of UNCLOS. The tribunal also found that China had breached its obligation to protect and preserve the marine environment in respect of its toleration and protection of the harvesting of giant clams by the propeller-chopping method. It further relied on the conclusions of the tribunal-appointed independent experts, who were unequivocal with respect to the more recent construction activities, which they say have ‘impacted reefs on a scale unprecedented in the region.’ Accordingly, the tribunal found that China had breached its obligation under Article 192 to protect and preserve the marine environment, had conducted dredging in such a way as to pollute the marine environment with sediment in breach of Article 194(1), and had violated its duty under Article 194(5) to take measures necessary to protect and preserve rare or fragile ecosystems, as well as the habitat of depleted, threatened, or endangered species and other forms of marine life. The award also dealt with the environmental impact assessment obligation provided under Article 206 of UNCLOS. China could not prove that it had undertaken thorough environmental studies. To fulfil the obligations of Article 206, a state must not only prepare an environmental impact assessment but also communicate it. The tribunal found that China had breached the obligation provided under Article 206. Although the tribunal recognized that significant environmental damage had been caused that cannot be undone, given the politically surcharged atmosphere with regard to the entire dispute, it is unlikely that any willingness will emerge to engage in cooperation on the basis of the award. © The Author 2017. Published by Oxford University Press. All rights reserved. For permissions, please e-mail: journals.permissions@oup.com http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Yearbook of International Environmental Law Oxford University Press

6. Permanent Court of Arbitration (PCA)

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© The Author 2017. Published by Oxford University Press. All rights reserved. For permissions, please e-mail: journals.permissions@oup.com
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0965-1721
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Abstract

(1) Introductory Comments At the end of 2016, the PCA was acting as registry in seven inter-state arbitrations. Out of these, in the Arbitration between the Republic of Croatia and the public of Slovenia relating to territorial and maritime issues, a partial award was granted and in the South China Sea Arbitration (Republic of Philippines v People’s Republic of China), the arbitral tribunal rendered a final award. (2) Case Law and Arbitration (A) Arbitration between the Republic of Croatia and the Republic of Slovenia The arbitral tribunal resumed the hearing on 17 March. Croatia refused to make any representation as a result of its view that the PCA no longer had jurisdiction as it had terminated the 2009 Arbitration Agreement between the government of the Republic of Croatia and the government of the Republic of Slovenia (Arbitration Agreement) agreement because of the alleged material breach by Slovenia of Arbitration Agreement. The material breach related to a leak of confidential information regarding the arbitration tribunal deliberations. Slovenia, while acknowledging the situation, was of the view that the actions taken by the PCA and Slovenia to rectify the problem meant that Croatia was not entitled terminate the agreement. Slovenia appeared before the tribunal and argued that the tribunal has competence to determine the legal ramification of unilateral termination of the Arbitration Agreement and that it should complete its mandate by rendering an award. On 30 June, the tribunal issued a unanimous partial award. Croatia took the legal position that the tribunal did not have the competence to look into the termination of the Arbitration Agreement. Further, it contended that the entire arbitration process has been tainted and compromised. It gravely violated the fundamental principles of procedural fairness, due process, impartiality, and integrity of the arbitral process. As such, the actions being attributable to Slovenia resulted in the material breach of the Arbitration Agreement under Article 60 of the Vienna Convention on the Law of Treaties (VCLT). In light of these circumstances, Croatia argued that the termination of the Arbitration Agreement was both justified and necessary. In Slovenia’s view, the tribunal has inherent power to decide on its competence as well as possessing the tools to remedy the effects of any wrongdoing that has occurred. Moreover, the people who were involved in the misconduct had already resigned, and new arbitrators have been appointed. It redressed the purported breach of the Arbitration Agreement. Finally, Slovenia asserted that the breach invoked by Croatia does not constitute a material breach within the meaning of the VCLT. In its award, the tribunal regretted that Croatia did not participate in the proceedings. Nevertheless, Croatia’s position can be inferred from letters from the minister of foreign and European affairs of Croatia, dated on 24 July 2015 and 31 July 2015; two notes verbales, dated 30 July 2015 and 16 March 2016; as well as other documentary annexes specifically made available by Croatia on a website dedicated to the present arbitration. Coming to the first point—whether the tribunal has jurisdiction to determine unilateral termination of the Arbitration Agreement—it decided that the general international law as well as Article 21 of the PCA Optional Rules for Arbitrating Disputes between Two States confer on it the power to rule on any objection to the tribunal’s jurisdiction ‘with respect to the existence or validity of the Arbitration Agreement’ (<https://pcacases.com/web/sendAttach/1787>). The tribunal was recomposed, and no doubt had been expressed on the independence and impartiality of the tribunal in its new composition. Accordingly, and in view of the remedial action taken, the tribunal determined that the breaches of the Arbitration Agreement by Slovenia do not render the continuation of the proceedings impossible. Croatia was not entitled to terminate the Arbitration Agreement under Article 60 of the VCLT. It affirmed its jurisdiction and decided that the Arbitration Agreement remained in force and arbitral proceedings pursuant to it shall continue. The tribunal decided that ‘[a]fter consultation with the Parties, the Tribunal shall determine the further procedural steps in this arbitration.’ (B) Arbitration between the Republic of Philippines and People’s Republic of China On 12 July, the arbitral tribunal, acting under Annex VII of the United Nations Convention on the Law of the Sea (UNCLOS), rendered a lengthy 500-page final award. The dispute covered the gamut of issues concerning the role of historic rights and the source of maritime entitlements in the South China Sea as well as the status of certain maritime features. The focus of this report will be on the environmental dimension of the dispute: particularly, Submissions no. 11 and 12(b) of the Philippines’ claim regarding harm to the marine environment. The tribunal also concluded that it has jurisdiction to consider both of the submissions. The marine environment around Scarborough Shoal and the Spratly Islands has an extremely high level of biodiversity of species, including fishes, corals, echinoderms, mangroves, seagrasses, giant clams, and marine turtles, some of which are recognized as vulnerable or endangered. The Philippines alleged that China had violated Articles 192 and 194 of UNCLOS to protect and preserve the marine environment by undertaking harmful fishing practices and harmful construction activities. The adduced evidence indicated that activities complained of included the use of cyanide and explosives and the harvesting of endangered giant clams and sea turtles by Chinese fishing vessels. It corroborated the arguments with the help of scientific reports and new aerial and satellite photography. The tribunal sought an independent opinion on the environmental impact of China’s construction activities by appointing independent experts specializing in coral reef biology, namely Sebastian C.A. Ferse, Peter J. Mumby, and Selina Ward. The Philippines also periodically expressed to the tribunal its concerns about China’s extensive land reclamation and construction activities at several features in the Spratly Islands and their impact on the fragile marine environment in the vicinity of these sites. China had deployed a large fleet of vessels to the seven reefs, primarily using heavy ‘cutter-suction dredge’ equipment, to create more than 12.8 million square metres of new land in less than three years from 2013. The Philippines stated that ‘if unchecked [China’s] activities will continue to pose a significant threat to the marine environment of the South China Sea, and of all of the States which border the Sea’ (<http://www.pcacases.com/web/sendAttach/2086>). The Philippines submitted that there is very little evidence of genuine Chinese cooperation on matters of environmental protection in the South China Sea. Further, it argued that China was ‘fairly and squarely’ required to carry out an an environmental impact assessment within the meaning of Article 206 of UNCLOS. China did not directly state its position with respect to the allegations as presented in the Philippines’ Submissions no. 11 and 12(b). Nevertheless, China’s position can be discerned from contemporaneous official statements. A Chinese official stated in May 2015 that, as a state party to the Convention on Biological Diversity and to the Convention on International Trade in Endangered Species of Wild Fauna and Flora, ‘China will strictly observe provisions of the conventions and honour her obligations in good faith.’ The tribunal was not provided with evidence that Chinese fishers involved in poaching of endangered species had been prosecuted under Chinese law. China did not respond to the reports, forwarded by the tribunal in December 2015 and February 2016, concerning the widespread removal of giant clams by propellers cutting in and around features under Chinese control. Furthermore, Chinese officials claimed that the ‘main purpose’ of the construction activities was to ‘meet various civilian demands and better perform China’s international obligations and responsibilities in the areas such as … ecological environment conservation’ (<http://www.pcacases.com/web/sendAttach/2086>). Articles 192 and 194 of UNCLOS were assessed in this regard. Article 192 refers to the protection and preservation of the marine environment, while Article 194 refers specifically to marine pollution. The tribunal noted that the obligations of states under these two articles extend beyond the activities taken directly by states and encompass activities that are undertaken within areas under their jurisdiction and control. In the interpretation of the obligations, the tribunal recognized that they require ‘due diligence.’ The tribunal ruled that it was satisfied that Chinese fishing vessels had been involved in the harvesting of threatened or endangered species, relying on contemporaneous reports of naval, coastguard, and fisheries authorities, diplomatic exchanges, and photographic evidence presented in the record. The tribunal ruled that China had breached its obligations under Articles 192 and 194(5) of UNCLOS. The tribunal also found that China had breached its obligation to protect and preserve the marine environment in respect of its toleration and protection of the harvesting of giant clams by the propeller-chopping method. It further relied on the conclusions of the tribunal-appointed independent experts, who were unequivocal with respect to the more recent construction activities, which they say have ‘impacted reefs on a scale unprecedented in the region.’ Accordingly, the tribunal found that China had breached its obligation under Article 192 to protect and preserve the marine environment, had conducted dredging in such a way as to pollute the marine environment with sediment in breach of Article 194(1), and had violated its duty under Article 194(5) to take measures necessary to protect and preserve rare or fragile ecosystems, as well as the habitat of depleted, threatened, or endangered species and other forms of marine life. The award also dealt with the environmental impact assessment obligation provided under Article 206 of UNCLOS. China could not prove that it had undertaken thorough environmental studies. To fulfil the obligations of Article 206, a state must not only prepare an environmental impact assessment but also communicate it. The tribunal found that China had breached the obligation provided under Article 206. Although the tribunal recognized that significant environmental damage had been caused that cannot be undone, given the politically surcharged atmosphere with regard to the entire dispute, it is unlikely that any willingness will emerge to engage in cooperation on the basis of the award. © The Author 2017. Published by Oxford University Press. All rights reserved. For permissions, please e-mail: journals.permissions@oup.com

Journal

Yearbook of International Environmental LawOxford University Press

Published: Dec 28, 2017

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