An international court on Tuesday delivered a damning verdict against China in a Philippine challenge over Beijing-occupied territory in the South China Sea.

China claims most of the sea, even waters approaching neighbouring countries, based on a vaguely defined "nine-dash-line" found on a 1940s Chinese map. The Philippines, and other countries, dispute this claim.

Commentators say the 3 million square kilometres (1.2 million square miles) of water are a potential flashpoint for regional conflict.

READ: Tribunal rules against Beijing in South China Sea dispute

READ: China rejects Hague tribunal judgement: foreign ministry

READ: Philippines 'welcomes' South China Sea ruling

Here are six key questions about the sea and the issues around it.

- What's there and who's disputing it?

It's mostly empty, and hundreds of the small islands, islets and rocks are not naturally able to support human settlement. Significant chains include the Paracels in the north, and the Spratlys in the south.

But everyone surrounding the sea -- Vietnam, Malaysia, the Philippines, tiny Brunei, Taiwan and, most significantly, China -- lay claim to some part of it.

- If there's nothing there, why is there any dispute?

Scientists believe that the seabed could contain unexploited oil, gas and minerals, which would be a boon to any country that can establish their claims to the region's waters, especially in resource-hungry Asia. It's also home to abundant fisheries that feed growing populations.

But the sea's key value is strategic. Shipping lanes vital to world trade pass through it, carrying everything from raw materials to finished products, as well as enormous quantities of oil.

Beijing views the South China Sea as its own backyard, a place where it is entitled to free, uninterrupted rein and where its growing navy should be able to operate unhampered.

- How have these disputes been playing out?

For years, claimants have been building up the tiny reefs and islets to bolster their claims to ownership. China's land-reclamation programme has been particularly aggressive.

Satellite pictures now show inhabited islands where there was once only submerged coral and many have multiple facilities, including some with runways long enough for huge planes.

Beijing insists its intent is peaceful but the US and others suspect China is trying to assert its sovereignty claims and say that it could pose threats to the free passage of ships.

Washington says the waters are international and regularly sends its warships there on so-called "Freedom of Navigation" missions.

China says these missions are provocations and warns the US not to interfere. It regularly stages its own exercises in the area as a show of force.

- What happened on Tuesday?

A five-member UN-backed tribunal of maritime affairs experts in The Hague ruled that China has no historic rights to resources within the sea areas falling within the so-called "nine-dash-line".

The tribunal further found that artificial islands that China has been furiously building over recent years do not have the 200 nautical mile "exclusive economic zone" (EEZ) enjoyed by inhabited land, effectively further shrinking areas of sea that China claims.

It said China had behaved unlawfully and damaged the environment.

Its decision cannot be appealed although the tribunal and the PCA have no means to enforce the verdict.

Manila and its allies -- including the United States -- say China will nevertheless be bound by the ruling.

But Beijing has said from the start that the tribunal is invalid and has boycotted its proceedings.

- What's likely to happen now?

Although China immediately dismissed the verdict, saying it "does not accept and does not recognise" the ruling, the decision is likely to embolden other neighbours.

"In the short-term, many other countries which have competing claims will no doubt wait to see how China responds." said Don Rothwell, a leading law of the sea expert at the Australian National University.

"But if they are not satisfied with China's response, there are certainly grounds that are within this decision which would encourage other countries which have disputes with China over their maritime entitlements to take similar action."

Other experts have said China may choose to withdraw from the UN Convention on the Law of the Sea, or begin building on Scarborough Shoal, a fishing ground within the Philippines' exclusive economic zone that it seized control of in 2012.

China could also declare an air defence identification zone over the sea, claiming the right to interrogate aircraft passing through the airspace.

Or it could seek to defuse tensions with the Philippines and enter into direct negotiations.

Yanmei Xie, China analyst for the International Crisis Group, said she expected to see "a continuation of the chest thumping we’ve seen especially from the China side. It will continually denounce... and refuse to accept the ruling.

"I expect escalation of the war of words is definitely likely. It cannot be ruled out there would be physical escalation as well."