Arbitration

There can be no clearer signal our diplomacy failed.

This week the DFA formally asked the UN to arbitrate the South China Sea dispute under the framework of the Convention on the Law of the Sea. The UN procedure, let this be clear, cannot rule on sovereignty issues. At best, this procedure will contest China’s claims over the reefs and shoals in this troubled sea.

The advantage of resorting to the UN procedure, it seems, is that this is a compulsory process. It does not require China’s consent to submit to arbitration. As a matter of policy, Beijing maintains the territorial dispute is strictly a bilateral matter.

Last year, Manila tried to bring the matter to the International Tribunal on the Law of the Sea (ITLOS). This option, however, requires the consent of both countries to submit to arbitration. Given its standing policy, Beijing would never consent to submission of the matter to multilateral adjudication.

The DFA decision marks the endpoint of our diplomatic engagement with Beijing on the matter of the contested areas. Having opted for international arbitration, there can no longer be any front- or back-channel open to resolve our disagreement amicably.

This is where the initial reaction of UN Secretary General Ban Ki-Moon is of consequence. Ban expressed the hope the matter could be resolved in an “amicable” fashion. The veteran diplomat is always very careful in his choice of words. An arbitration procedure opposed vigorously by one of the parties involved can hardly be called “amicable.”

The DFA decision signals our frustration — or desperation — with the diplomatic course for resolving this dispute. Both Beijing and Manila have hardened their respective stances over the past year. The space for compromise shrunk dramatically in a matter of months.

Should the outcome of the UN procedure fall short of our expected goals, we will have no diplomatic wiggle room left. That is the gamble here.

Too, even if the process achieves its intended goals, there is no enforcement clause. It will not result in driving out Chinese forces from the reefs and shoals they have more visibly occupied the past year. It will not reverse Chinese domestic policy establishing a local government unit encompassing the contested areas.

At best, a resolution in Manila’s favor will pose Beijing some reputational risks. China’s expected refusal to abide by such a resolution (if it even happens) will not be enough to reduce China to pariah status — not with its powerhouse economy that will be the world’s largest in a few short years.

The Palace spin machine tries to portray the DFA’s decision as some sort heroic endeavor to finally win settlement of the South China Sea issues in our favor. That produced a rather disproportional public appreciation of what is achievable by this process.

It is the spin machine itself that accomplished heroic things the past few days. For instance, it managed to create the impression President Aquino will be travelling to Davos, Switzerland to be featured as a keynote speaker in the influential economic forum to be held there.

Rigoberto Tiglao, now writing for the Manila Times, did excellent background research on the facts concerning the President’s actual participation in the events at Davos. Nowhere in the main conference organized by the World Economic Forum (WEF) in Davos is Aquino listed as a speaker. In fact, until a few days ago, he was not listed as a participant. Our diplomatic mission did truly heroic things getting our President in as a late-registrant.

It turns out, according to Tiglao’s research, the President will participate as part of a panel organized by a small caucus of European businessmen outside the main WEF meeting (or in the “sidelines”, which sounds better). The panel will discuss prospects for the ASEAN. The members of this caucus are also participants in the main WEF meeting.

Trust the Palace mouthpieces to deliver a different version of the universe.

At any rate, what lacks in the DFA announcement of our initiation of arbitration proceedings is any estimate of the cost the move would entail. Such proceedings are not cheap. The option will cost us millions — possibly tens of millions — of dollars to pursue. The longer the proceedings, the costlier it will be for us.

I am not sure where the estimate of three to four years to complete the arbitration proceedings came from. That estimate seems to be influenced by the number of years left in the incumbent administration’s term. This proceeding could take a decade or more to complete. By then, the world should have changed dramatically and the process we opted for in place of diplomacy might have been reduced to mere nuisance.

There are a handful of firms specializing in international arbitration. All of them charge an arm and a leg for their services.

Our enterprising reporters might want to dig up the facts on how much it cost us in legal fees alone to engage in international arbitration. Recall newspaper reports about how much Chief Justice Sereno was supposed to have made as a mere assistant to the international legal team working on the arbitration case over Terminal 3 of the airport. This should give an indication of what international lawyers charge for arbitration cases.

The legal costs of pursuing arbitration is important for us to properly weigh the costs and benefits of doing this. Unfortunately, no one seems to have a clear idea of the costs we are prepared to absorb to sustain this option.