The Permanent Court of Arbitration in The Hague accused China of interfering with the Philippines fishing and petroleum exploration, building artificial islands in the waters and failing to prevent Chinese fishermen from fishing in the zone, media reports said.
The tribunal held that fishermen from the Philippines had traditional fishing rights in Scarborough Shoal in the South China Sea, and that China had interfered with these rights by restricting their access.
The court held that Chinese law enforcement vessels unlawfully created a serious risk of collision when they physically obstructed Philippine vessels in the region, the South China Morning Post reported.
The South China Sea is a marginal sea that is part of the Pacific Ocean, encompassing an area from the Karimata and Malacca Straits to the Straits of Taiwan, of around 3.5 million sq km.
The South China Sea is a resource rich strategic waterway through which more than $5 trillion worth of global trade is shipped each year. Beijing has placed runways and radar facilities on new islets it has created in the disputed sea after piling huge amounts of sand onto reefs.
The tribunal's much-anticipated verdict demolished China's expansive claims and its historical nine-dash line in the disputed South China Sea.
"There is no legal basis for China to claim historic rights to resources within the sea areas falling within the nine-dash line," the court said.
"China has violated the Philippines' sovereign rights with respect to its exclusive economic zone and continental shelf."
China reacted angrily the ruling, saying it did not accept or recognize it. "The award is null and void and has no binding force," the Foreign Ministry said.
China's territorial sovereignty and maritime rights and interests in the South China Sea should under no circumstances be affected by such rulings, it said.
Xinhua news agency issued a brief report reiterating Beijing's stance of rejecting the tribunal's authority over the case which Manila brought against Beijing.
Beijing refused to participate in the case and has denounced it as a plot against China led by the US.
Besides the Philippines, Vietnam, Malaysia, Brunei and Taiwan also have overlapping claims with China in the South China Sea, one of the world's busiest trade routes.
China, however, said it was ready to continue to resolve the dispute peacefully by negotiation "on the basis of respecting historical facts and in accordance with international law".
"Pending final settlement, China is also ready to ... enter into provisional arrangements of a practical nature, including joint development in relevant maritime areas, in order to achieve win-win results and maintain peace and stability in the South China Sea."
China said it respected the freedom of navigation and overflight enjoyed by all states in the South China Sea ... "to ensure the safety of and the unimpeded access to the international shipping lanes" in the region.
The ruling from the Hague was harsh on Beijing.
China caused severe harm to the coral reef environment in the South China Sea, the court said.
The Chinese authorities were aware that Chinese fishermen had harvested endangered sea turtles, coral and giant clams on a substantial scale in the region using methods that inflict severe damage on the coral reef environment, it said.
The announcement of the ruling came as China and its main rival claimants went on high alert amid heightened tensions over the maritime disputes.
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