International Law. A Treatise Volume Ii Part 2

[Sidenote: Binding force of Arbitral Verdict.]

-- 16. An arbitral verdict is final if the arbitration treaty does not stipulate the contrary, and the verdict given by the arbitrators is binding upon the parties. As, however, no such central authority exists above the States as could execute the verdict against a State refusing to submit, it is in such a case the right of the other party to enforce the arbitral decision by compulsion. Yet it is obvious that an arbitral verdict is binding only under the condition[16] that the arbitrators have in every way fulfilled their duty as umpires and have been able to find their verdict in perfect independence. Should they have been bribed or not followed their instructions, should their verdict have been given under the influence of coercion of any kind, or should one of the parties have intentionally and maliciously led the arbitrators into an essential material error, the arbitral verdict would have no binding force whatever. Thus the award given in 1831 by the King of Holland in the North-Eastern Boundary Dispute between Great Britain and the United States of America was not considered binding by the parties because the arbitrator had transgressed his powers.[17] For the same reason, Bolivia refused in 1910 to submit to the award of the President of Argentina in her boundary dispute with Peru.[18] And in October 1910, the Permanent Court of Arbitration at the Hague, deciding the case of the United States of America against the United States of Venezuela concerning the claims of the Orinoco Steamship Company, annulled,[19] with regard to certain points, a previous arbitration award given by Mr. Barge.

[Footnote 16: See Donker Curtius and Nys in _R.I._ 2nd Ser. XII. (1910), pp. 5-34 and 595-641.]

[Footnote 17: See Moore, VII. -- 1082, and Moore, _Arbitrations_, I. pp.

81-161.]

[Footnote 18: See Fiore in _R.G._ XVII. (1910), pp. 225-256.]

[Footnote 19: See Martens, _N.R.G._ 3rd Ser. IV. (1911), p. 79.]

[Sidenote: What differences can be decided by Arbitration.]

-- 17. It is often maintained that every possible difference between States could not be determined by arbitration, and, consequently, efforts are made to distinguish those groups of State differences which are determinable by arbitration from others. Now although all States may never consent to have all possible differences decided by arbitration, theoretically there is no reason for a distinction between differences decidable and undecidable through arbitration. For there can be no doubt that, the consent of the parties once given, every possible difference might be settled through arbitration, either by the verdict being based on rules of International Law, or rules of natural equity, or by opposing claims being compromised. But, differing from the theoretical question as to what differences are and are not determinable by arbitration, is the question as to what kind of State differences _ought_ always to be settled in this manner. The latter question has been answered by article 38 (formerly 16) of the Hague Convention for the peaceful adjustment of international differences, the contracting Powers therein recognising arbitration as the most efficacious, and at the same time the most equitable, means of determining differences of a judicial character in general, and in especial differences regarding the interpretation or application of international treaties. But future experience must decide whether the signatory Powers will in practice always act according to this distinction.

However this may be, when, in 1903, Great Britain and France, following the suggestion of this article 38 (formerly 16), concluded a treaty in which they agreed to settle by arbitration all such differences of a legal nature as do not affect their vital interests, their independence, or their honour, many other States followed the lead. Great Britain, in the same and the following years, entered into such arbitration treaties with Spain, Italy, Germany, Sweden, Norway, Portugal, Switzerland, Austria-Hungary, Holland, Denmark, the United States of America, Colombia, and Brazil. All these agreements were concluded for five years only, but those which have since expired have all been renewed for another period of five years.

Yet there is a flaw in all these treaties, because the decision as to whether a difference is of a legal nature or not, is left to the discretion of the parties. Cases have happened in which one of the parties has claimed to have a difference settled by arbitration on account of its legal nature, whereas the other party has denied the legal nature of the difference and, therefore, refused to go to arbitration. For this reason the arbitration treaties signed on August 3, 1911, between the United States of America and Great Britain and between the United States of America and France are epoch making, since article 3 provides that, in cases where the parties disagree as to whether or not a difference is subject to arbitration under the treaty concerned, the question shall be submitted to a joint High Commission of Inquiry; and that, if all, or all but one, of the members of such Commission decide the question in the affirmative, the case shall be settled by arbitration. Article 3 has, however, been struck out by the American Senate, with the consequence that these treaties have lost their intrinsic value, even should they be ratified.

It should be mentioned that, whereas most arbitration treaties limit arbitration in one or more ways, exempting cases which concern the independence, the honour, or the vital interests of the parties, Argentina[20] and Chili in 1902, Denmark and Holland in 1903, Denmark and Holland in 1905, Denmark and Portugal in 1907, Argentina and Italy in 1907, the Central American Republics of Costa Rica, Guatemala, Honduras, Nicaragua, and San Salvador in 1907, Italy and Holland in 1907 entered into general arbitration treaties according to which all differences without any exception shall be settled by arbitration.[21]

[Footnote 20: Earlier than this, on July 23, 1898--see Martens, _N.R.G._ 2nd Ser. XXIX. p. 137--Argentina and Italy, and on November 9, 1899--see Martens, _N.R.G._ 2nd Ser. x.x.xII. (1905), p. 404--Argentina and Paraguay had concluded treaties according to which all differences without exception shall be settled by arbitration. See also above, -- 3, concerning the Compromise Clause.]

[Footnote 21: A list of all the arbitration treaties which have been entered into by the several States since the First Hague Peace Conference of 1899, is to be found in Fried, _op. cit._ p. 185.]

[Sidenote: Value of Arbitration.]

-- 18. There can be no doubt that arbitration is, and every day becomes more and more, of great importance. History proves that in antiquity and during the Middle Ages arbitration was occasionally[22] made use of as a peaceable means of settling international differences. But, although an International Law made its appearance in modern times, during the sixteenth, seventeenth, and eighteenth centuries very few cases of arbitration occurred. It was not until the end of the eighteenth century that arbitration was frequently made use of. There are 177 cases from 1794 to the end of 1900.[23] This number shows that the inclination of States to agree to arbitration has increased, and there can be no doubt that arbitration has a great future. States and the public opinion of the whole world become more and more convinced that there are a good many international differences which may well be determined by arbitration without any danger whatever to the national existence, independence, dignity, and prosperity of the States concerned. A net of so-called Peace Societies has spread over the whole world, and their members unceasingly work for the promotion of arbitration. The Parliaments of several countries have repeatedly given their vote in favour of arbitration; and the Hague Peace Conference of 1899 created a Permanent Court of Arbitration, a step by which a new epoch of the development of International Law was inaugurated. It is certain that arbitration will gradually increase its range, although the time is by no means in sight when all international differences will find their settlement by arbitration.

[Footnote 22: See examples in Calvo, III. ---- 1707-1712, and in Nys, _Les origines du droit international_ (1894), pp. 52-61.]

[Footnote 23: See La Fontaine's _Histoire sommaire et chronologique des arbitrages internationaux_ in _R.I._ 2nd Ser. IV. pp. 349, 558, 623. See also Scott, _Conferences_, pp. 188-252.]

The novel inst.i.tution of the Permanent Court of Arbitration at the Hague stands at present in the cross-fire of impatient pacifists and cynical pessimists. Because a number of wars have been fought since the establishment of the Permanent Court, impatient pacifists are in despair and consider the inst.i.tution of the Court of Arbitration a failure, whereas cynical pessimists triumphantly point to the fact that the millennium would seem to be as far distant as ever. The calm observer of the facts who possesses insight in the process of historical development, has no cause to despair, for, compared with some generations ago, arbitration is an established force which daily gains more power and influence. And when once a real International Court[24]

of justice is established side by side with the Permanent Court of Arbitration, the chances of arbitration will be greatly increased.

[Footnote 24: See above, vol. I. -- 476_b_.]

V

ARBITRATION ACCORDING TO THE HAGUE CONVENTION

Ullmann, ---- 155-156--Bonfils, Nos. 953'1-955'1--Despagnet, Nos.

742-746_bis_--Merignhac, I. pp. 486-539--Holls, _The Peace Conference at the Hague_ (1900)--Martens, _La conference de la paix a la Haye_ (1900)--Merignhac, _La conference internationale de la paix_ (1900)--Fried, _Die zweite Haager Konferenz_ (1908)--Meurer, I. pp. 299-372--Scott, _Conferences_, pp.

286-385--Higgins, pp. 164-179--Lemonon, pp. 188-219--Nippold, I.

pp. 36-231--Wehberg, _Kommentar_, pp. 46-164.

[Sidenote: Arbitral Justice in general.]

-- 19. Of the 97 articles of the Hague Convention for the peaceful adjustment of international differences, no fewer than 44--namely, articles 37-90--deal with arbitration in three chapters, headed "On Arbitral Justice," "On the Permanent Court of Arbitration," and "On Arbitral Procedure." The first chapter, articles 37-40, contains rules on arbitral justice in general, which, however, with one exception, are not of a legal but of a merely doctrinal character. Thus the definition in article 37, first paragraph, "International arbitration has for its object the determination of controversies between States by judges of their own choice and upon the basis of respect for law," is as doctrinal as the a.s.sertion of article 38: "In questions of a judicial character, and especially in questions regarding the interpretation or application of International Treaties or Conventions, arbitration is recognised by the contracting Powers as the most efficacious and at the same time the most equitable method of deciding controversies which have not been settled by diplomatic methods. Consequently it would be desirable that, in disputes regarding the above-mentioned questions, the contracting Powers should, if the case arise, have recourse to arbitration, in so far as circ.u.mstances permit." And the provision of article 39, that an agreement of arbitration may be made respecting disputes already in existence or arising in the future and may relate to every kind of controversy or solely to controversies of a particular character, is as doctrinal as the reservation of article 40, which runs: "Independently of existing general or special treaties imposing the obligation to have recourse to arbitration on the part of any of the contracting Powers, these Powers reserve to themselves the right to conclude, either before the ratification of the present Convention or afterwards, new general or special agreements with a view to extending obligatory arbitration to all cases which they consider possible to submit to it." The only rule of legal character is that of article 37 (second paragraph), enacting the already existing customary rule of International Law, that "the agreement of arbitration implies the obligation to submit in good faith to the arbitral sentence."

On the signatory Powers no obligation whatever to submit any difference to arbitration is imposed. Even differences of a judicial character, and especially those regarding the interpretation or application of treaties, for the settlement of which the signatory Powers, in article 38, acknowledge arbitration as the most efficacious and at the same time the most equitable method, need not necessarily be submitted to arbitration.

Yet the principle of compulsory arbitration for a limited number of international differences was by no means negatived by the Hague Peace Conferences, especially not by the Second Conference.

The principle found, firstly, indirect recognition by the Convention respecting the Limitation of the Employment of Force for the Recovery of Contract Debts.[25] Since article I of this Convention stipulates that recourse to the employment of force for the recovery of contract debts claimed from the Government of one country by the Government of another country as being due to its nationals is not allowed unless the debtor State refuses arbitration, compulsory arbitration has in this instance been victorious.

[Footnote 25: See above, vol. I. -- 135, p. 192, where the so-called Drago doctrine is likewise discussed.]

Secondly, although it was not possible to agree upon some stipulation embodying compulsory arbitration for a number of differences in Convention I., the principle itself was fully recognised, and the Final Act of the Second Peace Conference includes, therefore, the Declaration that the Conference "is unanimous (1) in admitting the principle of compulsory arbitration; (2) in declaring that certain disputes, in particular those relating to the interpretation and application of international agreements, may be submitted to compulsory arbitration without any restriction."

The above shows reasonable grounds for the hope and expectation that one of the future Peace Conferences will find a way out of the difficulty and come to an agreement stipulating compulsory arbitration for a limited number of international differences.[26]

[Footnote 26: See Scott, _Conferences_, pp. 319-385, where the proceedings of both the First and Second Peace Conferences concerning compulsory arbitration are sketched in a masterly and very lucid style.]

[Sidenote: Arbitration Treaty and appointment of Arbitrators.]

-- 20. According to article 52 the conflicting States which resort to arbitration shall sign a special Act, the _Compromis_, in which is clearly defined: the subject of the dispute; the time allowed for appointing the arbitrators; the form, order, and time in which the communications referred to in article 63 of Convention I. must be made; the amount of the sum which each party must deposit in advance to defray the expenses; the manner of appointing arbitrators (if there be occasion); any special powers which may eventually belong to the Tribunal, where it shall meet, the languages to be used, and any special conditions upon which the parties may agree. Should, however, the conflicting States prefer it, the Permanent Court at the Hague is competent to draw up and settle the _Compromis_, and the Court is likewise in some other cases competent to settle the _Compromis_ (articles 53-54). The parties may agree to have recourse to the Permanent Court of Arbitration which was inst.i.tuted by the Hague Convention and regarding which details have been given above, Vol. I., ---- 472-476, but they may also a.s.sign the arbitration to one or several arbitrators chosen by them either from the members of the Permanent Court of Arbitration or elsewhere (article 55). If they choose a head of a State as arbitrator, the whole of the arbitral procedure is to be determined by him (article 56). If they choose several arbitrators, an umpire is to preside, but in case they have not chosen an umpire, the arbitrators are to elect one of their own number as president (article 57). If the _Compromis_ is settled by a Commission, as contemplated by article 54 of Convention I., and in default of an agreement to the contrary, the Commission itself shall form the Arbitration Tribunal (article 58). In case of death, resignation, or disability of one of the arbitrators from any cause, his place is to be filled in accordance with the method of his appointment (article 59). The place of session of the arbitrators is to be determined by the parties; but if they fail to do it, the place of session is to be the Hague, and the place of session may not be changed by the arbitrators without the consent of the parties; the Tribunal may only sit in the territory of a third State with the latter's consent (article 60). The International Bureau of the Court at the Hague is authorised to put its offices and its staff at the disposal of the contracting Powers in case the parties have preferred to bring their dispute before arbitrators other than the Permanent Court of Arbitration (article 47).

[Sidenote: Procedure of and before the Arbitral Tribunal.]

-- 21. The parties may agree upon such rules of arbitral procedure as they like. If they fail to stipulate special rules of procedure, the following rules are valid, whether the parties have brought their case before the Permanent Court of Arbitration or have chosen other arbitrators (article 51):--

(1) The parties may appoint counsel or advocates for the defence of their rights before the tribunal. They may also appoint delegates or special agents to attend the tribunal for the purpose of serving as intermediaries between them and the tribunal. The members of the Permanent Court, however, may not act as agents, counsel, or advocates except on behalf of the Power which has appointed them members of the Court (article 62).

(2) The tribunal selects the languages for its own use and for use before it, unless the _Compromis_ has specified the languages to be employed (article 61).

(3) As a rule the arbitral procedure is divided into the two distinct phases of written pleadings and oral discussions. The written pleadings consist of the communication by the respective agents to the members of the tribunal and to the opposite party of cases, counter-cases, and, if necessary, replies; the parties must annex thereto all papers and doc.u.ments relied on in the case. This communication is to be made either directly or through the intermediary of the International Bureau, in the order and within the time fixed by the _Compromis_ (article 63). A duly certified copy of every doc.u.ment produced by one party must be communicated to the other party (article 64). Unless special circ.u.mstances arise, the tribunal does not meet until the pleadings are closed (article 65).

(4) Upon the written pleadings follows the oral discussion in Court; it consists of the oral development of the pleas of the parties (article 63, last paragraph). The discussions are under the direction of the president of the tribunal, and are public only if it be so decided by the tribunal with the consent of the parties. Minutes with regard to the discussion are to be drawn up by secretaries appointed by the president, and only these official minutes, which are signed by the president and one of the secretaries, are authentic (article 66). During the discussion in Court the agents and counsel of the parties are authorised to present to the tribunal orally all the arguments they may think expedient in support of their case. They are likewise authorised to raise objections and to make incidental motions, but the decisions of the tribunal on these objections and motions are final and cannot form the subject of any further discussion (articles 70, 71). Every member of the tribunal may put questions to the agents and counsel of the parties and demand explanations from them on doubtful points, but neither such questions nor other remarks made by members of the tribunal may be regarded as expressions of opinion by the tribunal in general or the respective member in particular (article 72). The tribunal may always require from the agents of the parties all necessary explanations and the production of all acts, and in case of refusal the tribunal takes note of it in the minutes (articles 69).

When the competence of the tribunal is doubted on one or more points, the tribunal itself is authorised to decide whether it is or is not competent, by means of interpretation of the _Compromis_ as well as the other papers and doc.u.ments which may be adduced in the matter, and by means of the application of the principles of law (article 73).

During the discussion in Court--article 67 says, "After the close of the pleadings"--the tribunal is competent to refuse admittance to all such fresh acts and doc.u.ments as one party may desire to submit to the tribunal without the consent of the other party (article 67).

Consequently, the tribunal must admit fresh acts and doc.u.ments when both parties agree to their submission. On the other hand, the tribunal is always competent to take into consideration fresh papers and doc.u.ments to which its attention is drawn by the agents or counsel of the parties, and in such cases the tribunal may require production of the papers and doc.u.ments, but it is at the same time obliged to make them known to the other party (article 68).

The parties must supply the tribunal, within the widest limits they may think practicable, with all the information required for deciding the dispute (article 75). For the service of all notices by the tribunal in the territory of a third contracting Power, the tribunal applies direct to the Government of such Power. The same rule is valid in the case of steps being necessary in order to procure evidence on the spot. The requests for this purpose are to be executed by the Power concerned with the means at its disposal according to its Munic.i.p.al Law; they may not be rejected unless the Power concerned considers them of such a nature as to impair its own sovereign rights or its safety. Instead, however, of making a direct application to a third Power, the tribunal is always ent.i.tled to have recourse to the intermediary of the Power on whose territory it sits (article 76).

As soon as the agents and counsel of the parties have submitted all explanations and evidence in support of their case, the president declares the discussion closed (article 77).

[Sidenote: Arbitral Award.]

-- 22. The arbitral award is given after a deliberation which has taken place behind closed doors, and the proceedings remain secret (article 78). The members of the tribunal vote, and the majority of the votes makes the decision of the tribunal. The decision, accompanied by a statement of the considerations upon which it is based, is to be drawn up in writing, to recite the names of the arbitrators, and to be signed by the president and the registrar or the secretary acting as the registrar (article 79). The verdict is read out at a public meeting of the tribunal, the agents and counsel of the parties being present or having been duly summoned to attend (article 80).

[Sidenote: Binding force of Awards.]