Hundreds of Filipinos celebrated a sweeping victory after the Permanent Court of Arbitration at The Hague ruled that China has no legal basis for its extensive claims over the South China Sea. People wept with joy and embraced one another, after decades of territorial disputes over the waters.

The UN tribunal decision, which was rejected by China, has aggravated the regional dispute with its large-scale land reclamation and construction of artificial islands that destroyed coral reefs and the natural condition of the disputed areas. The court said China had been exploring oil and gas near the Reed Bank, which violated Philippines sovereign rights and interfered with their traditional fishing rights, particularly at Scarborough Shoal. It was also revealed that China had damaged part of the ecosystem of the Spratly Islands with activities such as overfishing and creating artificial islands.

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Activist lawyer Joy Ban-eg who travelled to disputed Scarborough Shoal and was blocked by Chinese Coastguard a few months ago raises a clenched fist, after a ruling on the disputed South China Sea went in the favour of PhilippinesErik De Castro/ Reuters
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Anti China protestors mount a protest rally against China's territorial claims to the Spratly group of islands in the South China Sea in front of the Chinese Consulate in Makati, PhilippinesDondi Tawatao/ Getty Images
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Activists who travelled to disputed Scarborough Shoal and were blocked by Chinese Coastguard a few months ago, watch an announcement by a government official regarding a ruling on the disputed South China Sea at a restaurant in ManilaErik De Castro/ Reuters
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Protesters release balloons as they display placards as while chanting anti-China slogans during a rally by different activist groups over the South China Sea disputes, along a bay in metro Manila, PhilippinesRomeo Ranoco/ Reuters

China was also criticised for building a large artificial island on Mischief Reef, the court claimed it caused "permanent irreparable harm" to the coral reef ecosystem while permanently destroyed evidence of the natural conditions of the feature.

The five-member panel unanimously concluded that China had violated its obligation to refrain from aggravating conflict with the Philippines, at a time when it should have been resolving them.

Meanwhile, Vietnam accused Chinese vessels of sinking a Vietnamese fishing boat in disputed waters. Nguyen Thanh Hung, a local fisheries executive in Quảng Ngãi Province, reported that two Chinese vessels had chased, and sank the Vietnamese boat around midday while it was fishing for Parcel islands. On board were five fisherman, who were not rescued until roughly seven hours later.

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Soldiers of China's People's Liberation Army (PLA) Navy patrol near a sign in the Spratly Islands, known in China as the Nansha Islands. The sign reads "Nansha is our national land, sacred and inviolable."Reuters
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Filipino activists and Vietnamese nationals release flowers as they anticipate a favourable decision from a UN tribunal ruling on the legality of China's claims to an area of the South China sea contested by the Philippines, during a demonstration along the bay walk in Roxas Boulevard in ManilaTed Aljibe/ AFP
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Map of the Philippine Islands made in 1774, depicting Scarborough Shoal as Panacot ShoalPedro Murillo Velarde
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Chinese paramilitary police officers secure the front entrance of the Philippines embassy in BeijingNicolas Asfouri/ AFP
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Landsat 7 image of Scarborough Shoal in the South China SeaNASA
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Philippine Department of Foreign Affairs secretary Perfecto Yasay delivers a statement during a press conference following a ruling by a UN-backed tribunal on the South China Sea, at the DFA building in ManilaNoel Celis/ AFP
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Vessels believed to be Chinese dredging boats in the waters around Mischief Reef in the disputed Spratly Islands in the South China Sea in 2015US Navy/Reuters
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Activists protest against China's reclamation and construction activities on islands and reefs in the Spratly Group in front of the Chinese Consular Office in Manila on 12 June, 2015Noel Celis/AFP
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This photograph taken in late 1998 by a Philippine Air Force reconaissance plane shows a two-storey Chinese garrison, armed with naval guns on the rooftop, built on Johnson Reef in the disputed Spratly islands in the South China SeaAFP
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Aerial view of a concrete structure which the Philippine military identified as a Vietnamese fortification built on South Reef, one of the many islets, shoals and reefs located in the disputed Spratly Islands in April, 1995Romeo Gacad/AFP
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Aerial view of Chinese national flag flying above octagonal structures built on stilts on Mischief Reef in the disputed Spratly Islands in April, 1995 Romeo Gacad/AFP

The South China Sea has become Asia's biggest potential military flashpoint as Beijing's sovereignty claim over the huge area has set it against Vietnam and the Philippines as the three countries race to tap possibly huge oil reserves. China took full control of the islands in 1974 after a naval showdown with Vietnam.

China claims most of the energy-rich waters through which about $5 trillion in ship-borne trade passes every year. Neighbours Brunei, Malaysia, the Philippines, Taiwan and Vietnam also have claimed.

Philippine Foreign Secretary Perfecto Yasay welcomed the decision, and pledged to pursue a peaceful resolution of his country's territorial disputes with China. "The Philippines strongly affirms its respect for this milestone decision as an important contribution to ongoing efforts in addressing disputes in the South China Sea," he said in Manila. Yet China still refused to accept the panel's jurisdiction, that it "solemnly declares that the award is null and void and has no binding force. China neither accepts nor recognises it" the foreign ministry's statement said.

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A Chinese paramilitary police officer (C) salutes as he walks across a street in front of the Philippine embassy in BeijingNicolas Asfouri/ AFP
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Protesters display placards during a rally by different activist groups over the South China Sea disputes, along a bay in metro ManilaRomeo Ranoco/ Reuters
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Anti-China protestors mount a protest rally against China's territorial claims to the Spratly group of islands in the South China Sea in front of the Chinese Consulate in Makati, PhilippinesDondi Tawatao/ Getty Images
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Chinese police officers keep watch outside the Philippines embassy in BeijingNicolas Asfouri/ AFP
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Anti China protestors mount a protest rally against China's territorial claims to the Spratly group of islands in the South China Sea in front of the Chinese Consulate in Makati, PhilippinesDondi Tawatao/ Getty Images

Japan's Foreign Minister Fumio Kishida said the Hague tribunal's decision is "final and legally binding" and that the two sides should comply with it. In a statement, he said: "Japan strongly expects that the parties' compliance with this award will eventually lead to the peaceful settlement of disputes in the South China Sea."

China says that bilateral talks between Beijing and other claimants is the only way to address the South China Sea disputes. However a new Philippine leader who appears friendlier to Beijing could also influence the aftermath of the ruling.

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An activist wearing a hat representing the Philippine navy boat 'Sierra Madre', now half-submerged at Second Thomas shoal of the Spratly islands, sits with protesters during a demonstration in front of the Chinese consulate in ManilaTed Aljibe/ AFP
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An activist holds a placard during a protest in front of the Chinese consulate in ManilaTed Aljibe/ AFP
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During a demonstration along the bay walk in Roxas Boulevard in Manila, Filipino activists and Vietnamese nationals march as they anticipate a favourable decision from a UN tribunal ruling on the legality of China's claims to an area of the South China sea contested by the PhilippinesTed Aljibe/ AFP
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Anti China protestors mount a protest rally against China's territorial claims to the Spratly group of islands in the South China Sea in front of the Chinese Consulate in Makati, PhilippinesDondi Tawatao/ Getty Images
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Vietnamese nationals mount a protest rally against China's territorial claims to the Spratly group of islands in the South China Sea near Manila