The 2016 ruling on the South China Sea was made by an Arbitral Tribunal constituted under Annex VII of the United Nations Convention on the Law of the Sea (UNCLOS). The case was initiated by the Philippines against China in 2013, and it was handled by the Permanent Court of Arbitration (PCA) in The Hague, which administered the proceedings but did not make the ruling itself.
In summary, while the PCA administered the proceedings, the actual ruling came from the Arbitral Tribunal established under UNCLOS Annex VII.
On the merits, the Tribunal concluded that the United Nations Convention on the Law of the Sea ("the Convention") comprehensively allocates rights to maritime areas and that protections for pre-existing rights to resources were considered, but not adopted in the Convention. Accordingly, the Tribunal concluded that, to the extent China had historic rights to resources in the waters of the SCS, such rights were extinguished to the extent they were incompatible with the exclusive economic zones provided for in the Convention. The Tribunal also noted that, although Chinese navigators and fishermen, as well as those of other States, had historically made use of the islands in the SCS, there was no evidence that China had historically exercised exclusive control over the waters or their resources. The Tribunal concluded that there was no legal basis for China to claim historic rights to resources within the sea areas falling within the "nine-dash line."
Coins, pottery, and ancient housing found in the islands of the SCS strongly appear "to establish that Chinese people were likely living on the islands at different points in history. However, such artifacts do not prove that the government in power at those times considered the islands part of China or made any claims of exclusive sovereignty. Neither do such relics show that other groups were not also living and trading in the islands, nor that other countries did not consider the islands as part of their sovereign territory. Naval expeditions may show that Chinese mariners traveled through the area but do not prove that these seafarers made exclusive claims of sovereignty over the islands or that other groups were not there at the time. Maps may show that a particular Chinese government claimed the islands as part of its sovereign territory, but such documents do not show that the islands were uninhabited by other groups or that other countries did not also claim the islands. These various remnants of history do not show that the Chinese government openly claimed the islands as part of its territory, and perhaps most important, they do not show that China’s neighbors agreed that these lands belonged to China."