The UN tried to standardize offshore claims with the International Law of the Sea treaty. China is a signatory, but the US is not.[1]
Most of the problems come from areas which have many small islands off a continental coastline. An island in the coastal zone extends ownership. In the South China Sea, there are many islands which are in the coastal zone of more than one country. Hence the problem.
International Law of the Sea regulates issues related to the seas, not lands (including islands). Countries signed the treaty on the understanding that the treaty does not cover sovereign claims of islands.
What creative about this new arbitration ruling is that it redefines the concept of island, so many islands are now classified as rocks, in order for them to fall into the jurisdiction of the Law of the Sea. However, I don't think this works, as a law about seas cannot unilaterally defines what constitutes lands.
Most of the problems come from areas which have many small islands off a continental coastline. An island in the coastal zone extends ownership. In the South China Sea, there are many islands which are in the coastal zone of more than one country. Hence the problem.
[1] https://en.wikipedia.org/wiki/United_Nations_Convention_on_t...