(This story first published on Saturday, has been corrected to remove "U.N.-backed" from 2nd paragraph)
By Simon Webb and Manuel Mogato
VIENTIANE (Reuters) - Southeast Asian nations were thrown into disarray after Cambodia on Saturday blocked them from issuing a statement referring to an international court ruling against China's territorial claims in the South China Sea, diplomats said.
The Permanent Court of Arbitration in The Hague handed an emphatic legal victory to the Philippines in the maritime dispute earlier this month, denying China's sweeping claims in the strategic seaway.
Foreign ministers from the Association of Southeast Asian Nations (ASEAN) will meet for the first time since the ruling on Sunday, before hosting U.S. Secretary of State John Kerry, and his Chinese counterpart, Foreign Minister Wang Yi among others.
The disputed sea, through which more than $5 trillion in global trade passes each year, is the most contentious issue for the 10 ASEAN members.
China claims most of the sea, but ASEAN members the Philippines, Vietnam, Malaysia and Brunei all have rival claims. Yi has described the Hague case as a farce, and Beijing says the ruling has no bearing on its rights in the sea.
China is adamantly opposed to an ASEAN stand on the South China Sea, preferring to deal with the disputed claims on a bilateral basis.
Cambodia is China's closest ASEAN ally and is the only country opposing any reference to the ruling in a statement due to be issued after ASEAN foreign ministers meet on Sunday, an ASEAN diplomat told Reuters.
Cambodia is also pushing to strike out any reference to the militarization of the South China Sea, watering down the language in statements issued previously by ASEAN this year.
Cambodia is heavily dependent on Chinese aid and investment. Last week, Cambodia’s Prime Minister Hun Sen announced China would give his government around $600 million in soft loans.
"Cambodia is unbelievable," one diplomat said on condition of anonymity. "It is blocking any phrase about the arbitration and about militarization."
A committee has been working since July 20 trying to hammer out an ASEAN statement acceptable to all, said another diplomat, but Cambodia has thwarted their efforts.
Indonesia has proposed that foreign ministers hold an informal meeting late on Saturday to thrash out an agreement.
FEEBLE TALK SHOP
Critics have long derided ASEAN as a feeble talk shop, whose overriding principle of making decisions by consensus keeps it from ever accomplishing anything of significance.
Some members of the group have started to talk about a change in a clause in ASEAN's charter on the need for consensus, a former Vietnamese diplomat told Reuters.
ASEAN is keen to avoid a repeat of a debacle in 2012, when for the only time in its 49-year history the group failed to issue a concluding joint statement for a regional foreign ministers meeting.
The group may issue a separate statement that emphasizes unity, said an Indonesian diplomat.
"Our house is in a mess," he said. "We don't want ASEAN to be like Europe. We want to save ASEAN and be unified again."
The United States has criticized China's building of artificial islands and facilities in the sea and has sailed warships close to the disputed territory to assert freedom of navigation rights. Washington has called on China to respect the court's ruling.
Barack Obama is set to become the first U.S. president to visit Laos in September to attend an annual summit hosted by the ASEAN chairman.
Laos, a one-party communist state with little experience hosting international gatherings and one of ASEAN's poorest members, is this year's chairman of the grouping.
(Additional reporting by Mai Nguyen in HANOI; Editing by Bill Tarrant)