An international tribunal in The Hague on Tuesday ruled in favour of the Philippines and said China has no legal basis to claim "historic rights" over the South China Sea. The Permanent Court of Arbitration accused the country of breaching the sovereign rights of the Philippines by exploring resources near Reed Bank. It also said China had caused "severe harm to the coral reef environment" by building artificial islands. However, China dubbed the verdict "ill-founded", BBC reported.

The matter was brought to the arbitration tribunal under the United Nations Convention on the Law of the Sea by Philippines in 2013. The country had contested the legality of Chinese activity in the South China Sea region and alleged that Chinese claims of sovereignty were against international laws. China, however, said it would not recognise the five-judges' tribunal and had boycotted the proceedings.

Several rival countries – China, Philippines, Vietnam, Taiwan, Malaysia and Brunei – have been fighting over the resource-rich territory for years. China has claimed nearly 90% of the territory that is defined by the nine-dash line and also issued a map to back its claims.

Taiwan made similar assertions. Vietnam contested both and said that it has been ruling over Paracels and Spratlys islands, which are part of the region, since the 17th Century. Philippines, on the other hand, said it has claims over Spratly islands because of its geographical proximity. Malaysia and Brunei also lay claim over the region that, they say, falls within their economic exclusion zones. Malaysia claims a small number of islands in Spratlys.

The South China Sea also happens to be a major shipping route and home to fishing grounds. The ruling holds significance for India as it may affect its economic interests and security. India's interest in the region includes creating a "blue" ocean economy, which involves protecting marine resources and offshore infrastructure, The Times of India reported.

The United States had sent military ships and planes near the disputed islands to ensure access to key shipping and air routes. Both China and the US have accused each other of militarising the South China Sea.

Although the ruling is binding, the UN tribunal has no powers of enforcement. The China Daily quoted lawyers to dismiss the court case as a “farce directed by Washington”.