Jurisdiction - China
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Asia – Sovereignty Over Islands And Consequences For Maritime Boundaries: The Dispute Over Senkaku/Diaoyu/Diaoyutai Islands.

 29 September, 2012



The last few weeks have seen anti-Japanese protests in almost a dozen Chinese cities. Demonstrators took to the streets apparently in response to the latest developments in a long-standing dispute between China and Japan concerning a group of islands in the East China Sea called Senkaku in Japan, Diaoyu in the People’s Republic of China (China) and Diaoyutai in the Republic of China (also known as Taiwan) that each of these countries claim as their own. The archipelago, which consists of five uninhabited islands and three rocks situated approximately 120 nautical miles northeast of Taiwan and 240 nautical miles southwest of Okinawa, has been administered by Japan since its return from US trustee administration in 1972 despite claims to its territory by both Beijing and Taipei.

Tensions increased when on 15 August 2012, Chinese activists sailing from Hong Kong landed on one of the islands and raised flags of both China and Taiwan, before being detained and deported back to Hong Kong.  A few days later, about 150 Japanese activists sailed to the islands to support their country’s claim to the territory, sparking the weekend’s protests in China.

 These are but the latest developments in a longstanding quarrel between Japan on one side and the Chinese and Taiwanese governments on the other, in the course of which activists have periodically sailed to the islands since the 1990s.  Indeed the most recent landings came little over a month after a different group (this time sailing from Taiwan) had landed on the islands, raising a Chinese (rather than Taiwanese) flag.  Previously, in September 2010, the collision of a Chinese trawler with a Japanese patrol boat near the islands (and the subsequent detention of the trawler’s captain and crew) caused a diplomatic row, during which China temporarily suspended the export of rare earth metals to Japan.

While the dispute ostensibly relates to questions of sovereignty over a territory with a total surface area of less than 7 square kilometres, important economic interests are at issue. Indeed, as between Japan and China, it fits into a larger disagreement regarding maritime boundaries and the associated sovereign rights to explore for and exploit natural resources in the East China Sea.  Under the regime of the 1982 United Nations Convention on the Law of the Sea (UNCLOS), to which China and Japan are both party, sovereignty over the islands could entail the right to exploit an area of roughly 67,800 square kilometres of seabed that is thought to contain important oil and gas reserves.

The bases for Japan and China’s territorial claims

Both Japan and China claim to have sovereignty over the islands.

According to Japan, it surveyed the islands from 1885 onwards, found that they were uninhabited and then in 1895 erected a sovereignty marker on one of the islands to claim them as part of its territory.  It subsequently regulated economic activity on the islands by leasing them to private businessmen for the collection of guano and bird feathers.  Under customary principles regarding the acquisition of territory, Japan would thus have acquired the archipelago as terra nullius or territory that previously belonged to no sovereign, by evidencing both the necessary intention to act as a sovereign over it (animus occupandi) and an actual display of sovereign authority within its territory (corpus occupandi).

By contrast, China claims that when the Japanese arrived at the end of the 19th century it had already held sovereignty over the islands for several hundred years.  China claims that historical records show that Chinese sailors of the 16th century fished in the waters surrounding the islands, used them as navigational reference points and on occasion as shelter from storms. China also points to evidence of the islands constituting the source of a rare herb used in Chinese medicine.  Accordingly, China claims that the islands were notterra nullius when Japan erected the sovereignty marker in 1895, but formed part of the territory of Taiwan.  As such they would have been ceded with the latter to Japan in the Treaty of Shimonoseki, which ended the Sino-Japanese War in the same year.

The question whether Japan originally acquired the islands as terra nullius or through cession under the Treaty is – according to the Chinese side – relevant for the fate of the islands after the end of World War II.  According to the Potsdam Declaration in July 1945, which set out the terms for a Japanese surrender and was accepted by Japan two months later, Japanese sovereignty was to be limited to those islands as would be determined by the victorious powers, and the terms of the Cairo Declaration were to be carried out.  The Cairo Declaration, issued in December 1943, in turn stated that “all the territories Japan has stolen from the Chinese, such as Manchuria, Formosa [Taiwan], and The Pescadores, shall be restored to the Republic of China.” According to China, this meant that its previous sovereignty over the Senkaku/Diaoyu/Diaoyutai islands, which on its reading had been ceded to Japan together with Taiwan, had to be restored.

Japan’s understanding of the post-war events is different.  It points out that, while its Peace Treaty with the US signed in 1951 confirms Japan’s abandonment of all claims with regard to Taiwan, it also provides for the islands to be placed under US trustee administration. The islands were indeed administered by the US until being returned to Japan in 1972.  Japan emphasizes that China only started to question these arrangements after a report by the United Nations Economic Commission for Asia and the Far East (ECAFE) in 1969 indicated the possibility of vast oil reserves in the vicinity of the islands.  Accordingly, Japan argues that China had in any event long acquiesced in Japan’s sovereignty over the islands, thereby giving up any territorial claim it might previously have held. China retorts that the political dependency of the Taiwan government on US support would have made it impossible for it to object to the US trustee administration of the territory.

Implications of territorial sovereignty over the Senkaku/Diaoyu/Diaoyutai islands for the right to exploit natural resources in the East China Sea

The economic relevance of the dispute results from the effects that sovereignty over the islands would have on maritime boundaries between Japan and China and the associated rights over natural resources in the East China Sea. These rights are linked to the delimitation of the maritime boundaries between the two countries, and in particular the continental shelf and Exclusive Economic Zone (EEZ).  Article 77 of UNCLOS gives a coastal state the sovereign right to explore and exploit the natural resources on its area of the continental shelf.  In addition, Article 56 UNCLOS allows a coastal state to claim an EEZ, and with it the sovereign rights over the exploration and exploitation of natural resources both in the waters above and on the seabed and its subsoil.  Both regimes in principle extend up to 200 nautical miles from the relevant baselines (with the continental shelf extending further up to 350 nautical miles in certain cases).

The East China Sea is only 360 nautical miles across at its widest point, in which case UNCLOS provides that the delimitation of both the continental shelf and the EEZ “shall be effected by agreement on the basis of international law … in order to achieve an equitable solution.“  The International Court of Justice recently endorsed a three-stage approach where a provisional equidistant or median line is drawn between the two baselines and then adjusted in the light of special circumstances to achieve an equitable result, before applying the test of proportionality. In addition, under Article 121 UNCLOS, islands that are capable of habitation may in principle generate claims for their own EEZ and continental shelf (including for an extended continental shelf).  Accordingly, if the maritime boundaries between China and Japan were to be determined using an equidistant line, sovereignty over the Senkaku/Diaoyu/Diaoyutai islands would determine control over 67,800 square kilometres of continental shelf and EEZs.

Sovereignty over the islands might also be seen as having broader implications on China’s and Japan’s claims as to their maritime boundaries.  While Japan has generally been in favour of drawing a boundary along the median line, China has argued that the line should follow the “Okinawa Trough”, a chasm in the sea floor running west of and parallel to Japan’s Ryukyu Islands, which China sees as a natural boundary delimiting the countries’ respective continental shelves.  Since the Senkaku/Diaoyu/Diaoyutai islands are situated east of the Trough, Japanese sovereignty over the archipelago could be seen as weakening China’s argument that it constitutes a natural boundary for the delimitation of the two countries’ respective zones in the East China Sea.


While UNCLOS in theory provides for a dispute resolution mechanism with regard to maritime boundaries, this would depend on resolution of the underlying sovereignty issues, which could not be determined without the consent of both countries.  Given the limited successes of recent attempts to agree on a joint development of the natural resources in the East China Sea, resolution of this matter seems far off.  The latest developments are unlikely to improve this situation.


For further information, please contact:


Charles Kaplan, Partner, Herbert Smith

Paula Hodges, Partner, Herbert Smith


Peter Godwin, Partner, Herbert Smith


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