An international arbitration tribunal Tuesday upheld almost all of a claim by the Philippines against China's claim to a large swathe of the South China Sea.
At the heart of the matter was the question of whether the contested formations are true islands or mere reefs or shoals.
Islands, which must be capable of sustaining human settlement, extend the territorial rights of whichever nation they belong to into the surrounding waters, according to the UN Convention on the Law of the Sea.
"China has internal waters, territorial sea and contiguous zone, based on Nanhai Zhudao," Beijing said in a statement carried by news agency Xinhua, using the name for all the islands in the zone.
But if they are reefs or shoals, submerged at high tide or otherwise uninhabitable, they cannot extend a nation's territory, and their status is determined by the proximity of the nearest nation within 200 nautical miles (340 kilometres).
In the case of the Spratly Islands and the Scarborough Shoal, which were the subject of Tuesday's ruling, that would put both within the Exclusive Ecoomic Zone of the Philippines.
The court found that the formations were not true islands, and that their status was therefore determined by their proximity of less than 200 nautical miles from the Philippines.