The gathering in Vientiane is the first major regional talks since the UN-backed tribunal ruled earlier this month that China did not have historic rights to vast swathes of the strategic sea.
US Secretary of State John Kerry, who arrives in Laos tomorrow, and Chinese Foreign Minister Wang Yi are among the delegates attending meetings on the sidelines of the summit.
The 10-member Association of Southeast Asian Nations (ASEAN), which includes four members who have competing claims with Beijing over parts of the strategic sea, has long presented itself as the best place for China to negotiate with neighbours over disputes.
In recent years ASEAN has struggled to present a united front against China with allegations that the regional superpower has forged alliances with smaller countries like Laos and Cambodia through aid and loans.
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The UN tribunal ruling was a victory for the Philippines, which brought the case, and fellow ASEAN members Vietnam, Brunei and Malaysia who also claim parts of the South China Sea.
But it infuriated Beijing which rejected the verdict and has ramped up both its rhetoric and military manoeuvres in the disputed waters in the last two weeks.
Those involved in talks told AFP that Cambodia, a staunch Beijing ally, has so far opposed any mention of it.
A working draft of the communique obtained by AFP yesterday showed the section titled "South China Sea" as blank.
"Our house is in a mess right now," one diplomat involved in the talks told reporters late yesterday as the day's attempts to reach a consensus came to a close.
Washington has backed the Philippines and other South China Sea claimants against Beijing, arguing for free passage through what it considers international waters.
But the official added: "I'd put a little more value on the conversation that happens among the ministers themselves than I do in the often lengthy and torturous prose that is pulled together by the staff afterwards."
It is not clear whether Kerry intends to meet his counterpart Wang for talks during their visit.