1. The basis of the Philippines in going for Arbitration is the 1982 UNCLOS which took effect of 1994, it governs the conflicting maritime claims in the south China Sea. Philippines and China have ratified UNCLOS. UNCLOS codified the customary international law of the sea and adopted a compulsory dis0pute settlement mechanism to insure that there is a final authoritative body to interpret and apply its provisions. Under the UNCLOS, every coastal state is entitled as a matter of international law to a 200 nautical miles drawn from the baselines on continental land or island. This legal maritime entitlement is one of the most important reasons why developing coastal states approved UNCLOS.
In this present case, the claim of China based on its alleged historical right over the disputed area are against the UNCLOS provisions on coastal states right to 200 nm EEZ. On the other hand, the claim of China that the filing of Philippines in ITLOS is premature because they must come to an agreement without going to arbitration first is countered by the Philippines that as provided in UNCLOS that incase the parties did not reach any on the dispute on how to settle their disputes, then arbitration will govern the dispute. There is arbitration because of the Philippines agree with the offer of China of joint development of the disputed areas. In the said offer, China and Philippines will jointly develop the EEZ of the Philippines but EEZ of China will be exclusive only to them. Philippines did not agree because this is violation of the Philippine Constitution because such acceptance of the offer will mean the acceptance of the indisputable sovereignty of China.
2. The refusal of China for arbitration will affect the economy, tourism, and OFW because the China becomes more aggressive in using its military personnel so that the Philippines cannot exploit its own exclusive economic zone. This means that Philippine investors venturing in the said disputed areas will be backing out because of the military presence of China. The tourism will be affected also because this might be a bad publicity throughout the world. And OFW might experience such oppression especially those in Chinese Territories. On the other hand, China might experience displeasure of the international legal communities because of not abiding power of the UN because UN cannot imposed sanctions to China aside from the displeasure from other signatories.