Spratly Islands (also known as Kalayaan Islands in the Philippines) is a group of about 100 low islands and coral reefs in the central South China Sea, which intersects busy shipping lanes. The whole group is claimed by China, Taiwan, and Vietnam, while parts are claimed by Malaysia and the Philippines. The Philippine claim in the Spratlys or Kalayaan Island group covers eight islands and reefs.
The islands, valued primarily for the petroleum and gas potential of the surrounding waters and to a lesser degree for their fishing grounds, are occupied by their claimants. In 1984 Brunei established an exclusive economic zone encompassing Louisa Reef, but it has not claimed the islet. There have been many disputes and some fighting, most notably between Chinese and Vietnamese vessels in 1988 and 1992. The Spratlys remain a source of tension among the claimants.
A 2002 agreement between the Association of Southeast Asian Nations and China called for all claimants to avoid activities that would heighten tensions over the islands. In 2004, China and the Philippines signed agreements to stop illegal fishing and to explore jointly for oil in the islands; the bilateral accord was criticized by Vietnam.
About 45 islands are occupied by relatively small numbers of military forces from China, Malaysia, the Philippines, Taiwan, and Vietnam. Brunei has established a fishing zone that overlaps a southern reef but has not made any formal claim. (Source: Excerpted from www.answers.com and other web sources)