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The diplomatic controversy between Great Britain and the United States respecting the legality of the remission of Panama Canal tolls to American vessels engaged in our coastwise trade, resolves itself into two main questions: (1) Does the phrase “ of all nations * contained in Article III of the Hay-Pauncefote Treaty include the United States, or does it mean all nations other than the United States? (2) Is the remission of such tolls a “ discrimination against any such nation * in the sense of the treaty?


Article III, Rule 1, of the Hay-Pauncefote Treaty of 1901 provides:

“The canal shall be free and open to the vessels of commerce and of war of all nations observing these Rules, on terms of entire equality, so that there shall be no discrimination against any such nation, or its citizens or subjects, in respect of the conditions or charges of traffic, or otherwise. Such conditions and charges of traffic shall be just and equitable.”

Article I of the Convention concerning Arbitration between the United States and Great Britain, signed April 4th, 1908, declares:

“Differences which may arise of a legal nature or relating to the interpretation of treaties eristing between the two Contracting Parties and which it may not have been possible to settle by diplomacy, shall be referred to the Permanent Court of Arbitration established at The Hague by the Convention of the 29th of July, 1899, provided, nevertheless, that they do not affect the vital interests, the independence, or the honor of the two Contracting States, and do not concern the interests of third parties.”

This treaty constitutes a legal obligation. It is a solemn compact between two great nations, and is as binding in law as are valid contracts between private individuals or corporations. It should be especially noted that it binds us to refer to The Hague Tribunal differences of a legal nature, and particularly those relating to the interpretation of treaties, which

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have not been settled by diplomacy, unless such differences affect the vital interests, independence, or honor of either State or concern the interests of third parties.

* “‘A treaty," says Plumley, umpire, in the case of the heirs of Jean Maninat (French-Venezuelan Commission of 1902, Ralston's Report, 44, 73). is a solemn compact between nations. It possesses in ordinary the same essential qualities as a contract between individuals, enhanced by the weightier quality of the parties, and by the greater magnitude of the subject matter. To be valid, it imports a mutual assent, and in order that there may be such a mutual assent there must be a similar understanding of the several matters involved. It can never be what one party understands, but it always must be what both parties understand to be the matters agreed upon and what in fact was the agreement of the parties concerning the matters now in dispute.'" Cited by Ralston, International Arbitral Law and Procedure, p. 4.

It will not be seriously maintained that the existing con

troversy falls within the scope of any of the exceptions above

named to the application of the treaty. Certainly the differ-
ence is not one which affects the vital interests, the indepen-
dence, or the honor of either State, as these terms are usually
understood. Such a contention would be too absurd for
serious argument. It may seem at first thought as though the
interests of third parties were involved in the settlement of
this dispute. But a little reflection will lead to the convic-
tion that the difference is one which does not concern the in-
terests of other States. Their interests may be affected (as,
indeed, is often the case when there are treaties between two
States), but they are not directly concerned in the dispute
itself, which is solely between Great Britain and the United
Inasmuch as the Arbitration Treaty in question was only
concluded for a period of five years from date of the exchange
of ratifications, it has been suggested that the United States
may avoid her obligations, if any, to Great Britain in the
matter of the Panama tolls by refusing to renew the Con-
vention upon its expiration in May, 1913. Even supposing
that the United States Government were willing to fly in the
face of public sentiment and attempt to evade the issue in this
disgraceful manner, it would probably be in vain; for the
controversy would be regarded as having arisen prior to the
expiration of the treaty, and the United States has agreed to
arbitrate eristing differences, i.e., existing under the treaty,
or while the treaty was still in force.
It has thus been demonstrated that the United States is
legally bound to arbitrate the dispute with Great Britain re-

specting the legality of the remission of the Panama Canal tolls to American vessels engaged in the coastwise traffic. What are our moral obligations in the premises

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The United States has been the consistent champion of international arbitration ever since this ancient practice was revived in modern times by the Jay Treaty of 1794. Among the many arbitrations to which this country has been a party, might be indicated various important boundary disputes, the Alabama Claims and Bering Sea Controversies, and the Northeastern Fishery Question (the latter involving an interpretation of Article I of the Treaty of 1898). As a keen student and practitioner of international law has well said:

“The experience of the United States affords abundant evidence of the fact that if an international controversy is of a legal character, it is capable of adjustment by arbitration whether the claims involved are national or private; whether the issue is one of fact or of law; whether the difference is one concerning the ownership of land or the control of water; whether the honour of the State is involved, or even its most vital interests.”

* IIyde, in 2 Proceedings of the Second National Peace Congress (1900), p. 232. For a very complete account of the arbitrations to which the United States had been a party up to 1898, see Moore's monumental History and Digest of International Arbitration, in 5 vols. See also Darby's International Tribunals (4th ed., 1904), for a brief digest of modern arbitrations. Out of 228 instances of “formal” arbitrations occurring between 1794 and 1901, cited by Darby, the United States was a party in 68 cases, Great Britain in 81, France in 2S, Prussia or Germany in 17, and Russia in 8.


At the First Hague Conference of 1899 the United States was particularly active in urging arbitration and assisting in the creation of the so-called Permanent Court of Arbitration at The Hague. Our Government subscribed to the following declaration contained in the Arbitration Convention adopted at The Hague:

“In questions of a legal nature, and especially in the interpretation or application of International Conventions, arbitration is recognized by the Signatory Powers as the most

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effective, and at the same time the most equitable means of settling disputes, which diplomacy has failed to settle.”

*Article 16, of the Convention of 1899 for the Pacific Settlement of International Disputes. At the Second Hague Conference, the following recommendation was added: “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 circumstances permit. Article 38 of the First Hague Convention of 1907.


At the Second Hague Convention of 1907 the United States was one of the most vigorous advocates of a scheme for obligatory arbitration, and the American delegation proposed a project for a Court of Arbitral Justice which, if adopted, would have transformed The Hague Tribunal, or so-called Court of Permanent Arbitration created in 1899, into a real permanent High Court of International Justice, or Supreme Court of the Nations. Both schemes failed of adoption, but the Contracting Powers represented at The Hague declared themselves “unanimous”: “ (1) In admitting the principle of obligatory arbitration. (2) In declaring that certain disputes, in particular those relating to the interpretation and application of the provisions of international agreements, may be submitted to obligatory arbitration without restriction.” A Convention providing for the establishment of a system of real international justice will probably be agreed upon at the Third Hague Peace ConferenCé.


However authorities on international law may differ in their views as to the possible scope of arbitration as applied to the settlement of international disputes, there appears to be a consensus of opinion among them that interpretation of treaties is a proper subject for judicial determination. The rules for such interpretation are derived from general juris. prudence, and there is general agreement among the authorities as to the more important of these rules."

“On the Interpretation of Treaties, see especially: Adler, in 26 Law Magazine Review (5th series, pp. 62ff, and 164ff.; Bonfils, Manuel de droit int, public (Fauchille's 5th ed.), Nos. 835-844; 1 Corbett, Cases, pp. 328-333; Hyde, in 3 American Journal of Int. Law (1910), pp. 46ff. : Hershey, Essentials of Int. Public Law (1912), sec. 299; 2 Fiore, Nouveau droit int. public (Antoine's French trans.), Nos. 1032-1046; Hall, Int. Taw (Atlay's 6th ed.),

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int. public, Nos. 1171-1188; Taylor, A Treatise on Int. Public Law. o secs. 377-393 : Vattel, Le droit des gens (Eng. trans, in 1859), Bk. --

II., ch. 17 ; 2 Wharton, Digest of Int. Law, sec. 133; Wheaton
(Atlay's ed.), sec. 287 a ; Wilson, II and book of Int. Law, ch. 7 ; --
Woolsey, Introduction to Int. Law (6th ed.), sec. 113.
“The method of interpretation consists in finding out the
connection made by the parties to an agreement between the o
terms of their contract and the objects to which it is to be
applied. This involves two steps. One is to ascertain what
has been called the ‘standard of interpretation ; that is, the
sense in which the various terms are employed. The other is -
to learn what are the sources of interpretation; that is, to - *
find out where one may turn for evidence of that sense.” "

* Hyde, in 3 American Journal of Int. Law (1910), p. 46.

The main purpose of interpretation is to determine the real intentions of the parties. To this end diplomatic correspondence, or interchange and expression of views lead- --ing up to the final negotiation and ratification of the treaty, would be all-important. For instance, the fact that an amendment was lost in the Senate providing that the United States should reserve the right to discriminate in respect to charges in favour of our own citizers, would not be decisive in itself. All the circumstances leading up to this vote would have to be taken into account. Besides, there are many other conditions surrounding the case which would have to be considered, such, for example, as the bearing of the Clayton-Bulwer upon the Hay-Pauncefote Treaty, more particularly whether the latter treaty was the main consider- ation for the abrogation of the former.


As stated at the outset, one of the main questions for judicial determination is: “Does the phrase of all nations’ contained in Article III of the Hay-Pauncefote Treaty include the United States or does it mean all nations other than the United States ?” There seems here to be an ambiguity of language to which well-known rules of interpretation may be readily applied. But granted that Great Britain's interpretation of this phrase is correct, there remains the question: “Is the remission of such tolls a “ discrimination against any such nation,’ in the sense of the

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