An international tribunal has dealt a blow to China, ruling it has the power to hear a case brought by the Philippines over disputed islands in the South China Sea.
Manila has insisted the UN Convention on the Law of the Sea, which the Philippines and China have both ratified, should be used to resolve the dispute, which has triggered growing international concern.
But China has refused to participate in the proceedings, arguing the tribunal - based in The Hague and known as the Permanent Court of Arbitration - had no jurisdiction over the case.
"Reviewing the claims submitted by the Philippines, the tribunal has rejected the argument" by China that the "dispute is actually about sovereignty over the islands in the South China Sea and therefore beyond the tribunal's jurisdiction," the court said in a statement on Thursday.
Instead, the court ruled the case reflects "disputes between the two states concerning the interpretation or application of the convention" - something which falls within its remit.
China insists it has sovereign rights to nearly all of the South China Sea, a strategic waterway through which about a third of all the world's traded oil passes.
The disputed waters - claimed in part by Vietnam, Malaysia, the Philippines and others - have also become the stage for a struggle for regional dominance between Beijing and Washington, the world's two largest economic and military powers.
Following a stand-off between Chinese ships and the Filipino Navy in 2012, China took control of a rich fishing ground called Scarborough Shoal that is within the Philippines' exclusive economic zone.
China has also undertaken giant reclamation activities raising fears it will use artificial islands to build new military outposts close to the Philippines and other claimants.
The tribunal - set up in 1899 to resolve international disputes between countries - stressed on Thursday its ruling did not yet go to the heart of the merits of Manila's case, which was first filed in 2013.
A new hearing will now be held behind closed doors in The Hague, and a final ruling is not expected until next year.
China has said it will not abide by any ruling, but the Philippines hopes a judgment in its favour will pressure China into making concessions.