@Beast, this is what I wrote a month ago in another thread. If you read the position report that China has just released, you can see that I was right about China's best hope is to argue against the jurisdiction of the tribunal.
But too bad it is up to the tribunal to make the decision about the tribunal's jurisdiction, not China:
Taiwan Conducts Live Fire Drills on Spratlys, Angering Vietnam | Page 18
There are two components to this arbitration case. The first component is whether the tribunal has authority to issue legally binding rulings or not (jurisdiction over the dispute). The second component is whether the tribunal agree with the Philippines arguments or not (merits). For the Philippines to succeed, they must receive favourable decisions for both components.
Now, I'll try to explain what the Philippines is doing, and how the PRC has responded to it.
As we know, both the Philippines and China are signatories to UNCLOS, which means that they have legally binded themselves to UNCLOS laws and conventions.
Under UNCLOS, there is a rule that says that when there is a maritime dispute between two parties, both parties
must participate in a dispute settlement procedure as declared inSection 2 Part XV:
SECTION 2. COMPULSORY PROCEDURES ENTAILING BINDING DECISIONS
Article 286
Application of procedures under this section
Subject to section 3, any dispute concerning the interpretation or application of this Convention shall, where no settlement has been reached by recourse to section 1, be submitted at the request of any party to the dispute to the court or tribunal having jurisdiction under this section.
Article 287
Choice of procedure
1. When signing, ratifying or acceding to this Convention or at any time thereafter, a State shall be free to choose, by means of a written declaration, one or more of the following means for the settlement of disputes concerning the interpretation or application of this Convention:
(a) the International Tribunal for the Law of the Sea established in accordance with Anne VI;
(b) the International Court of Justice;
(c) an arbitral tribunal constituted in accordance with Anne VII;
(d) a special arbitral tribunal constituted in accordance with Anne VIII for one or more of the categories of disputes specified therein.
As you can see here, the Philippines is using option (c) and the tribunal's ruling will be binding.
But China has rejected this tribunal by arguing that they have the right to reject those procedures and its ruling because they have already made a declaration in 2006 for exemption. Here is the declaration:
“The Government of the People’s Republic of China does not accept any of the procedures provided for in Section 2 of Part XV of the Convention with respect to all the categories of disputes referred to in paragraph 1 (a) (b) and (c) of Article 298 of the Convention.”
China is declaring that they can reject these compulsory dispute settlement procedures if the dispute belongs to the three categories listed in Article 298. Here is Article 298:
Article 298
Optional exceptions to applicability of section 2
1. When signing, ratifying or acceding to this Convention or at any time thereafter, a State may, without prejudice to the obligations arising under section 1, declare in writing that it does not accept any one or more of the procedures provided for in section 2 with respect to one or more of the following categories of disputes:
(a) (i) disputes concerning the interpretation or application of articles 15, 74 and 83 relating to sea boundary delimitations, or those involving historic bays or titles, provided that a State having made such a declaration shall, when such a dispute arises subsequent to the entry into force of this Convention and where no agreement within a reasonable period of time is reached in negotiations between the parties, at the request of any party to the dispute, accept submission of the matter to conciliation under Anne V, section 2; and provided further that any dispute that necessarily involves the concurrent consideration of any unsettled dispute concerning sovereignty or other rights over continental or insular land territory shall be excluded from such submission;
(ii) after the conciliation commission has presented its report, which shall state the reasons on which it is based, the parties shall negotiate an agreement on the basis of that report; if these negotiations do not result in an agreement, the parties shall, by mutual consent, submit the question to one of the procedures provided for in section 2, unless the parties otherwise agree;
(iii) this subparagraph does not apply to any sea boundary dispute finally settled by an arrangement between the parties, or to any such dispute which is to be settled in accordance with a bilateral or multilateral agreement binding upon those parties;
(b) disputes concerning military activities, including military activities by government vessels and aircraft engaged in non-commercial service, and disputes concerning law enforcement activities in regard to the exercise of sovereign rights or jurisdiction excluded from the jurisdiction of a court or tribunal under article 297, paragraph 2 or 3;
(c) disputes in respect of which the Security Council of the United Nations is exercising the functions assigned to it by the Charter of the United Nations, unless the Security Council decides to remove the matter from its agenda or calls upon the parties to settle it by the means provided for in this Convention.
In other words, if anyone wants to raise a dispute against China that belongs to any of these categories, then China has the right to ignore it. Any ruling on these kind of dispute will not be legally binding on China (meaning, the tribunal has no jurisdiction over the dispute).
But the Philippines is arguing that the dispute that they are bringing to the arbitral tribunal does not belong to any of the categories as listed in Article 298. In other words, the Philippines is saying that the Chinese 2006 declaration can only be invoked if the dispute belong to the 3 categories described in Article 298, but the dispute that they are bringing to the tribunal is actually not under any of those 3 categories.
So if China cannot invoke the 2006 declaration, then it means that the tribunal will go ahead and investigate the dispute according to Section 2 Part XV. More importantly, their ruling will be legally binding on China (but not enforced).
Now since there is a disagreement about whether the tribunal has jurisdiction over the dispute or not, it will be up to the tribunal to decide according to Article 288 (4):
4. In the event of a dispute as to whether a court or tribunal has jurisdiction, the matter shall be settled by decision of that court or tribunal.