Any deal between the Philippines and a Chinese firm to jointly explore for gas in the Reed Bank of the South China Sea will be illegal unless China recognizes the Southeast Asian nation's sovereign rights there, a Philippine judge said on March 5.
Manila has identified two areas in the crowded waterway suitable for joint exploration and the two countries seek a way to tackle the diplomatic and legal headache of jointly exploring in the waters, but without addressing the issue of sovereignty.
The Reed Bank is claimed by both sides, but international law says it falls within the Exclusive Economic Zone (EEZ) of the Philippines. China says it falls within the so-called nine-dash line on maps recording its historic rights in the area.
Antonio Carpio, the acting top judge of the Supreme Court, said it was legal for the Philippines' energy ministry to talk to state-owned China National Offshore Oil Corp. (CNOOC) as a possible sub-contractor.
"There's no problem as long as CNOOC will recognise that that is our exclusive economic zone," he told news channel ANC in an interview. "But that is the problem, because CNOOC will not recognize (Philippine jurisdiction)."
Carpio was speaking as an expert on international law and staunch advocate for the Philippines to assert its maritime sovereignty claims.
He was among the lawyers involved in the Philippines' legal challenge against China, which Manila brought to the Permanent Court of Arbitration in The Hague in 2013.
The tribunal, in its 2016 ruling, invalidated China's nine-dash line, making clear that the Reed Bank fell within the Philippines' EEZ, and that Manila had sovereign rights to resources there.
China is a signatory to the United Nations Convention on the Law of the Sea (UNCLOS) but it does not recognize The Hague court ruling.
"The stumbling block has always been the insistence of China that we recognize their sovereign rights," Carpio said.
"We cannot do that anymore because there's already a ruling. And the (Philippine) constitution says the state shall protect its marine wealth in its exclusive economic zone, it's very specific."
The Reed Bank was the site of exploration by the Philippines' PXP Energy Corp to evaluate the block's gas reserves, until the energy ministry suspended activities there in late 2014 because of the arbitration case.
PXP has had talks with CNOOC for possible joint exploration and development, but the arbitration halted negotiations. Carpio said who should collect taxes was also an issue between the two companies.
Last week, Philippine presidential spokesman Harry Roque, said any potential deals between Manila and Beijing should be agreed with a company and not the Chinese government.
On March 5, he said the Philippines and China would have to sign a treaty to enter into joint exploration and development in the Reed Bank.
"That's on the assumption that (the Reed Bank) is contested territory," he told reporters. "We have no treaty on joint exploration as of yet."