By INS Contributors

KUALA LUMPUR, Malaysia: The South China Sea ruling remains one of the most important legal reference points in the region’s maritime security landscape. Its value does not rest only on the legal victory of one state over another, nor should it be reduced to a narrow bilateral dispute between the Philippines and China.

Its broader significance lies in the way it reaffirmed a basic principle: maritime order cannot be built on power alone. It must be anchored in law, restraint and accepted rules of conduct.

The South China Sea is not just a contested body of water. It is a strategic space where sovereignty claims, energy resources, fisheries, trade routes, naval mobility and great-power competition intersect. Spanning roughly 3.5 million square kilometres, it links the Pacific and Indian Ocean systems and sits astride some of the world’s most important sea lines of communication.

This makes the dispute especially sensitive. Any instability there is not limited to claimant states alone; it affects regional confidence, supply chain security, freedom of navigation and the wider balance of power in the Indo-Pacific.

In trade terms, around US$3.4 trillion in trade passed through the South China Sea in 2016, representing about 21 percent of global trade that year. For China alone, nearly 40 percent of total trade was estimated to have transited through the South China Sea in 2016. In this sense, the 2016 arbitral ruling was significant because it clarified the legal framework through which competing maritime claims should be assessed.

The ruling, issued on 12 July 2016 by an arbitral tribunal constituted under Annex VII of the United Nations Convention on the Law of the Sea, addressed issues relating to historic rights, maritime entitlements, the status of maritime features and the lawfulness of certain actions in the South China Sea. Importantly, the case did not decide sovereignty over disputed islands, nor did it settle all maritime boundaries. Instead, it clarified what types of maritime rights can be generated under UNCLOS and what claims go beyond the limits allowed by international law.

This distinction matters. In many maritime disputes, ambiguity can serve political purposes. It allows states to maintain broad claims, avoid concessions and preserve strategic room for manoeuvre. But excessive ambiguity also creates danger.

It increases the risk of overlapping enforcement actions, confrontations between coast guards, harassment of fishermen, disruption of resource activities and military miscalculation. The ruling helped reduce that ambiguity by making clear that maritime claims must be measured against UNCLOS, not against historical narratives, strategic pressure or unilateral maps.

The most important effect of the ruling was therefore normative. It strengthened the idea that the South China Sea should be governed by a rules-based maritime order. This does not mean the ruling ended the dispute. It clearly did not.

Legal decisions do not automatically change behaviour at sea, especially when major powers reject or reinterpret them. The ruling created a legal benchmark. Even when compliance is incomplete, the existence of a benchmark matters because it helps define what is lawful, what is excessive and what actions undermine regional stability.

For smaller and middle powers in Southeast Asia, this is especially important. International law provides them with a form of strategic protection. It does not erase the power gap between large and small states, but it gives them a common language to defend their rights.

Without UNCLOS, maritime order would depend more heavily on military capacity, economic leverage and coercive presence. That would place smaller claimant states in a far weaker position and make the South China Sea more vulnerable to power politics. 

The ruling also matters because maritime security today is no longer defined only by naval confrontation. Much of the pressure in the South China Sea takes place in the grey zone: coast guard operations, maritime militia activity, fishing restrictions, survey vessel movements, artificial island infrastructure, law-enforcement patrols and administrative assertions.

These actions may fall below the threshold of open conflict, but over time they can change facts on the water. They can normalise pressure, weaken resistance and make excessive claims appear routine. 

This is why adherence to international law is not merely a diplomatic phrase. It is a practical security necessity. If states are free to expand maritime claims without legal restraint, the result will be a more unstable region.

If law enforcement vessels are used to intimidate other states within their lawful maritime zones, the risk of escalation increases. If resource activities are disrupted through pressure rather than resolved through legal or diplomatic mechanisms, confidence in regional order will decline. A rules-based maritime system is therefore not an abstract ideal; it is a mechanism for preventing conflict.

At the same time, the ruling also exposed the limitations of law when enforcement is weak. A legal decision can clarify rights, but it cannot by itself compel compliance. This is the central dilemma in the South China Sea.

The region has a strong legal framework in UNCLOS, but it lacks an equally strong political and enforcement mechanism to ensure that all parties behave accordingly. This gap between legal clarity and strategic reality is where the need for a meaningful Code of Conduct becomes most urgent.

The proposed ASEAN-China Code of Conduct is important because the region needs operational rules, not only legal principles. UNCLOS provides the broad legal foundation, but the South China Sea also requires day-to-day mechanisms to manage encounters at sea.

A credible COC should help reduce miscalculation, prevent incidents from escalating and create clearer expectations for how states and their maritime agencies should behave. Recent diplomatic discussions have continued to stress that the COC should be grounded in UNCLOS and international law, although the question of whether it will be legally binding remains difficult. 

However, the COC should not be treated as a symbolic achievement. Its value depends entirely on substance. A weak COC may create the impression of progress while leaving the real sources of instability untouched. If it avoids hard questions, uses vague language or fails to address coercive behaviour, it will not change the security environment. Worse, it may provide political cover for continued pressure at sea.

A meaningful COC must therefore meet several basic tests. First, it must be clearly anchored in UNCLOS. Any document that weakens or sidelines UNCLOS would undermine the very legal order it is supposed to support. Second, it must not prejudice the legitimate rights of claimant and non-claimant states under international law, including freedom of navigation and overflight. Third, it must address not only naval conduct, but also coast guard behaviour, maritime militia activity, fishing incidents, resource exploration, environmental damage and crisis communication. Fourth, it must include practical mechanisms for communication, incident prevention and de-escalation.

The COC also has to avoid becoming a tool of strategic exclusion. The South China Sea is a regional sea, but it is also an international waterway of global significance.

External powers have interests there, especially in relation to navigation, trade and regional stability. A COC that seeks to turn the South China Sea into a closed sphere of influence would not strengthen regional security. It would create new tensions and weaken the openness of the maritime order.

For ASEAN, the COC is also a test of credibility. ASEAN has long relied on dialogue, consensus and confidence-building to manage difficult security issues. These tools are valuable, but they have limits. ASEAN cannot afford a COC that merely repeats familiar diplomatic language without shaping behaviour. If ASEAN wants to preserve centrality, it must ensure that the COC is not just a document of political convenience, but a serious framework for maritime stability. 

The stakes are not only legal or military. The South China Sea is also one of the world’s top five fishing zones, accounting for about 12 percent of global fish catch in 2015, with more than half of the world’s fishing vessels operating in these waters and about 3.7 million people directly employed in related fishing activity. This means maritime instability also carries social, food security and livelihood consequences.

This does not mean ASEAN should abandon caution or diplomacy. The South China Sea is too sensitive for reckless escalation. But caution should not become passivity. Diplomacy should not mean avoiding legal clarity. Consensus should not result in the lowest common denominator. The region needs a balance between pragmatism and principle: enough flexibility to keep negotiations alive, but enough firmness to ensure that the final outcome does not dilute international law.

This is made more urgent by the environmental dimension of the dispute. CSIS has estimated that fish stocks in the South China Sea have been depleted by 70 to 95 percent since the 1950s, while catch rates have declined by 66 to 75 percent over the last two decades. It also estimated that giant clam harvesting, dredging and artificial island-building damaged or destroyed more than 160 square kilometres of coral reefs.

The 2016 ruling remains significant because it reminds the region that maritime disputes cannot be managed sustainably through ambiguity and pressure. The real issue is not only who controls which feature, but what kind of order will govern the sea. 

The answer will shape more than the future of the South China Sea. It will influence the credibility of UNCLOS, the resilience of ASEAN, the confidence of smaller states and the wider strategic balance in the Indo-Pacific. The ruling provided legal clarity. The unfinished challenge is political: whether the region can translate that clarity into behaviour, restraint and durable rules of conduct. 

The energy dimension adds another layer to this challenge. The U.S. Energy Information Administration estimates that the South China Sea contains about 11 billion barrels of oil and 190 trillion cubic feet of natural gas in proved or probable reserves, although it also notes that most discovered resources are located closer to the shorelines of coastal states rather than around the most contested island groups.

A serious Code of Conduct is therefore necessary, but it must be the right kind of COC. It must strengthen international law, not bypass it. It must reduce coercion, not legitimise it. It must protect stability, not merely manage appearances. Above all, it must show that regional security in the South China Sea cannot be built on silence, ambiguity or power alone. It must be built on rules that all parties are expected to respect.