THE HAGUE, Netherlands " Dealing a huge blow to China, the Permanent Court of Arbitration handed down the ruling over Chinas claims in the disputed South China Sea.

The International Tribunal has ruled that Chinas claim to historic rights in most of the South China Sea has no legal basis. Further, The Wall Street Journal reported that the tribunal in The Hague claimed that Beijings nine-dash line to delineate its South China Sea claims contravenes a United Nations convention on maritime law.

Six Pacific nations including Brunei, Malaysia, Philippines, Taiwan and Vietnam have territorial claims in theSouthChinaSea that is believed to have huge deposits of oil and gas and also witness over $5 trillion in global ship-borne trade passing by each year.

The case was brought to the tribunal in 2013 by the Philippines under the United Nations' 1982 Convention of the Law of the Sea (UNCLOS), alleging that China has illegally claimed about 90 percent of the South China Sea, including reefs and islands, also claimed by others.

The tribunal is said to have further clarified that China was not entitled to an exclusive economic zone (EEZ), extending up to 200 nautical miles from one island in the Spratlys archipelago, Itu Aba, which is claimed by China and currently controlled by Taiwan.

China did not take part in the tribunal and has refused to recognise the tribunal making sweeping statements in the past few weeks claiming that it would not won't comply with the ruling, although it is one of the 167 parties to have signed and ratified UNCLOS

Although the decision is legally binding for China and the Philippines, UNCLOS has no enforcement body.

Meanwhile, with the ruling proving to be a major setback for China, U.S. is said to be on guard in the region to prevent China from establishing its control over the waters by force.

Chinese officials on the other hand, have not ruled out the possibility of further military action to tighten claims, prompting the U.S. Navy to deploy Task Force 70, including the aircraft carrier USS Ronald Reagan into the South China Sea to maintain the seas open for all to use.

Earlier last week, China had started week-long military drills in the South China Sea by deploying two guided missile destroyers, the Shenyang and Ningbo, and one missile frigate, the Chaozhou in the region. Further military exercises were held inside a 100,000 square kilometre zone around the disputed Paracel Islands.

Days before the verdict, a Chinese newspaper published by the ruling Communist Party's official People's Daily had declared that China should prepare itself for military confrontation in South China Sea.

The newspaper, Global Times had said that the situation had already been complicated by U.S. intervention. It said, Washington has deployed two carrier battle groups around the South China Sea, and it wants to send a signal by flexing its muscles: As the biggest powerhouse in the region, it awaits China's obedience. Even though China cannot keep up with the U.S. militarily in the short-term, it should be able to let the U.S. pay a cost it cannot stand if it intervenes in the South China Sea dispute by force. China hopes disputes can be resolved by talks, but it must be prepared for any military confrontation. This is common sense in international relations."

Further, Foreign Ministry spokesman, Hong Lei had argued, With regard to territorial issues and maritime delimitation disputes, China does not accept any means of third-party dispute settlement or any solution imposed on China. The Chinese government will continue to abide by international law and basic norms governing international relations as enshrined in the Charter of the United Nations, and will continue to work with states directly concerned to resolve the relevant disputes in the South China Sea through negotiation and consultation on the basis of respecting historical facts and in accordance with international law, so as to maintain peace and stability in the South China Sea.

Meanwhile, Japan along with the Group of Seven large industrialised democracies and the 28 members of the European Union have brokered a statement on the South China Sea ruling expressing their support for the arbitration process as part of a proactive diplomacy drive.