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Beijing gave up South China Sea rights after signing UN treaty, Chuck Hagel says

Beijing gave up its rights to the South China Sea after signing up to a United Nations convention, a former U.S. Defense Secretary said Wednesday, a day after an international tribunal ruled that China's claims of historical rights over the disputed waters were not founded on evidence.

A tribunal at the Permanent Court of Arbitration in The Hague, Netherlands, decided on Tuesday that China's claims to the disputed waters were counter to international law.

The Philippines had contested China's expansive territorial claims in the South China Sea, which Manila contended were invalid under international law.

China, however, said its historic rights predated the United Nations Convention on the Law of the Sea (UNCLOS) and were not at odds with the provisions of the treaty , to which both countries were signatories.

But the East Asian giant relinquished those rights when it signed the UNCLOS, former U.S. Secretary of Defense, Chuck Hagel said.

"(It) explicitly states in that treaty and when you sign that treaty, you would and do relinquish all previous historical rights to any contested territory. So China essentially put itself in this position to be part of whatever the international tribunal comes down with," Hagel told CNBC's "Squawk Box".

"(The tribunal) is one of the most important post World War II institutions that has been set up to try to bring some order to a world that had gone without any order which lead to two world wars. I think it's important that we continue not only to maintain, but to support the force of those international tribunals," he added.

The Philippines wasn't the only big winner in a legal decision on rights to the resource-rich South China Sea, according to experts.

Malaysia, Vietnam and Indonesia are also set to benefit from the ruling, which dealt a painful blow to China's national pride

The Hague found the so-called 'nine-dash line' — a rough demarcation that China uses to set out what it believes is its territory—was illegal when applied to the Philippines, that meant it was also illegal when applied to other countries, added Paul Reichler, a partner at Foley Hoag and lead lawyer for the Philippines in the case.

"They are big winners as well," Reichler told CNBC's "The Rundown."

Hagel concurred with that assessment.

"This decision by the Hague really gives all those countries in that part of the world the high ground here and has isolated China. China has to pay attention to how other nations in the world are viewing this and will view them (the Chinese)," said Hagel, who described the ruling as "critically important."

China has said repeatedly that the arbitration tribunal had no real jurisdiction on the matter and that it would not abide by its decision.

Both Hagel and Reichler called for cool heads.

"This certainly isn't the end of the story," Reichler said. "When passions calm and different parties truly consider what's in their best interest, all parties will come to the conclusion that these disputes have to be resolved peacefully through diplomatic negotiations, whether it's bilateral or multilateral."

Regarding talks that China and Philippines may talk one-on-one on a deal, Hagel said the U.S. did not want to see "further escalation here by anyone."

U.S. is seeking to maintain "freedom of navigation" in the region for its ships, including military ships.

Noel Celis | AFP | Getty Images

"Freedom of navigation is absolutely critical; when a nation starts to threaten that in any way, that's very, very serious…. We don't want an over-reaction to this but we've got to be very clear with our allies and our friends in that area that (freedom of the seas) is not negotiable," said Hagel.

The real impact of Tuesday's ruling was that it clearly established the rights and obligations of the various parties involved, Reichler said.

"The Philippines succeeded in establishing that it enjoys the rights, guaranteed by the U.N., to an exclusive economic zone, in which it alone can enjoy the resources."

President Xi Jinping's administration reiterated his country's stance in an official statement after Tuesday's decision. Because China was the first to have discovered, named and explored the 1.4 million-square mile body of water, it had a right to establish territorial sovereignty, the statement said, added that the country was willing to continue resolving disputes peacefully through negotiations.

There is precedence if China wished to ignore The Hague's decision, although Reichler said that that would be an ill-advised move.

In 1986, the U.S. ignored the International Court of Justice's ruling regarding a spat with Nicaragua.

The Central American country had accused Washington of supporting Nicaraguan Contra rebels in an effort bid to undermine the country's socialist government, but the U.S. largely boycotted the proceedings, stating the court had no jurisdiction. It later vetoed a United Nations Security Council resolution that demanded Washington adhere to the ruling.

It was only in 1988, when U.S. Congress voted to terminate all support for the Contras that a settlement was ultimately reached.

"China can't thumb their nose at this," Reichler said. "It's not good practice to follow someone else's bad example. It was a great stain on the U.S. when it refused to honor the Nicaragua ruling.

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