History

The modern history of international arbitration is generally recognized as dating from the so-called Jay Treaty of 1794 between the United States of America and Great Britain. This Treaty of Amity, Commerce and Navigation provided for the creation of three mixed commissions, composed of equal numbers of American and British nationals, whose task it would be to settle a number of outstanding questions between the two countries which it had not been possible to resolve by negotiation. While it is true that these mixed commissions were not strictly speaking organs of third-party adjudication, they were intended to function to some extent as tribunals. They reawakened interest in the process of arbitration. Throughout the nineteenth century, the United States and the United Kingdom had recourse to them, as did other States in Europe and the Americas.

The Alabama Claims arbitration in 1872 between the United Kingdom and the United States marked the start of a second, even more decisive, phase. Under the Treaty of Washington of 1871, the United States and the United Kingdom agreed to submit to arbitration claims by the former for alleged breaches of neutrality by the latter during the American Civil War. The two countries set forth certain rules governing the duties of neutral governments that were to be applied by the tribunal, which they agreed should consist of five members, to be appointed by the Heads of State of the United States, the United Kingdom, Brazil, Italy and Switzerland, the last three States not being parties to the case. The arbitral tribunal’s award ordered the United Kingdom to pay compensation, which it duly did. The proceedings served to demonstrate the effectiveness of arbitration in settling of a major dispute, and led during the latter years of the nineteenth century to a range of developments, namely:

• a sharp growth in the practice of inserting in treaties clauses providing for recourse to arbitration in the event of a dispute between the parties;
• the conclusion of general treaties of arbitration for the settlement of specified classes of inter-State disputes;
• efforts to construct a general law of arbitration, so that countries wishing to have recourse to this means of settling disputes would not be obliged to agree each time on the procedure to be adopted, the composition of the tribunal, the rules to be followed and the factors to be taken into consideration in making the award;
• proposals for the creation of a permanent international arbitral tribunal to avoid the need to set up a special ad hoc tribunal to decide each individual dispute.

The Hague Peace Conference of 1899, convened on the initiative of the Russian Czar Nicholas II, marked the beginning of a third phase in the modern history of international arbitration. The chief object of the Conference, in which — a remarkable innovation for the time — the smaller States of Europe, some Asian States and Mexico also participated, was to discuss peace and disarmament. It culminated in the adoption of a Convention on the Pacific Settlement of International Disputes, which dealt not only with arbitration but also with other methods of pacific settlement, such as good offices and mediation.

With respect to arbitration, the 1899 Convention provided for the creation of permanent machinery which would enable arbitral tribunals to be set up as desired and would facilitate their work. This institution, known as the Permanent Court of Arbitration, consisted in essence of a panel of jurists designated by each country acceding to the Convention — each country being entitled to designate up to four — from among whom the members of each arbitral tribunal might be chosen. The Convention also created a permanent Bureau, located in The Hague, with functions corresponding to those of a court registry or secretariat, and laid down a set of rules of procedure to govern the conduct of arbitrations. Clearly, the name “Permanent Court of Arbitration” is not a wholly accurate description of the machinery set up by the Convention, which consisted only of a method or device for facilitating the creation of arbitral tribunals as and when necessary. Nevertheless, the system thus established was permanent, and the Convention “institutionalized” the law and practice of arbitration, placing it on a more definite and more generally accepted footing. The Permanent Court of Arbitration was established in 1900 and began operating in 1902.

A few years later, in 1907, a second Hague Peace Conference, to which the States of Central and South America were also invited, revised the Convention and improved the rules governing arbitral proceedings. Some participants would have preferred the Conference not to confine itself to improving the machinery created in 1899. The United States Secretary of State, Elihu Root, had instructed the United States delegation to work towards the creation of a permanent tribunal composed of judges who were full-time judicial officers, with no other occupation, who would devote their time wholly to the trial and decision of international cases by judicial methods. “These judges”, wrote Secretary Root, “should be so selected from the different countries that the different systems of law and procedure and the principal languages shall be fairly represented”. The United States, the United Kingdom and Germany submitted a joint proposal for a permanent court, but the Conference was unable to reach agreement upon it. It became apparent in the course of the discussions that one of the major difficulties was finding an acceptable way of choosing the judges, since none of the proposals tabled had garnered widespread support. The Conference confined itself to recommending that States should adopt a draft convention for the creation of a court of arbitral justice as soon as agreement was reached “respecting the selection of the judges and the constitution of the court”. Although this court was never in fact to see the light of day, the draft convention that was to have given birth to it enshrined certain fundamental ideas that some years later were to serve as a source of inspiration for the drafting of the Statute of the Permanent Court of International Justice (PCIJ).

Notwithstanding the fate of these proposals, the Permanent Court of Arbitration, which in 1913 took up residence in the Peace Palace that had been built for it thanks to a gift from Andrew Carnegie, has made a positive contribution to the development of international law. The landmark cases that have been decided through recourse to it include the Carthage and Manouba cases (1913) concerning the seizure of vessels, and the Timor Frontiers (1914) and Sovereignty over the Island of Palmas (1928) cases. Although these cases demonstrate that arbitral tribunals set up using permanent machinery could decide disputes between States on a basis of law and justice and command respect for their impartiality, they also threw into bold relief the shortcomings of the Permanent Court of Arbitration. Tribunals of differing composition could hardly be expected to develop a consistent approach to international law to the same extent as a permanently constituted tribunal. Besides, there was the entirely voluntary character of the machinery. The fact that States were parties to the 1899 and 1907 Conventions did not oblige them to submit their disputes to arbitration. What is more, even if they were minded to do so, they were not duty-bound to have recourse to the Permanent Court of Arbitration, nor to follow the rules of procedure laid down in the Conventions.

The Permanent Court of Arbitration has recently sought to diversify the services that it can offer, alongside those contemplated by the Conventions. For example, the International Bureau of the Permanent Court of Arbitration serves as a registry in important international arbitrations. Moreover, in 1993, the Permanent Court of Arbitration adopted new “Optional Rules for Arbitrating Disputes between Two Parties of Which Only One Is a State” and, in 2001, “Optional Rules for Arbitration of Disputes Relating to Natural Resources and/or the Environment”.

For more information on the Permanent Court of Arbitration, please visit its website .

The work of the two Hague Peace Conferences and the ideas they inspired in statesmen and jurists had some influence on the creation of the Central American Court of Justice, which operated from 1908 to 1918. In addition, they helped to shape the various plans and proposals submitted between 1911 and 1919, both by national and international bodies and by governments, for the establishment of an international judicial tribunal, which culminated in the creation of the PCIJ as an integral part of the new international system set up after the end of the First World War.

Article 14 of the Covenant of the League of Nations gave the Council of the League responsibility for formulating plans for the establishment of a Permanent Court of International Justice (PCIJ), which would be competent not only to hear and determine any dispute of an international character submitted to it by the parties to the dispute, but also to give an advisory opinion upon any dispute or question referred to it by the Council or Assembly of the League of Nations. All that remained was for the League Council to take the necessary action to give effect to Article 14. At its second session early in 1920, the Council appointed an Advisory Committee of Jurists to submit a report on the establishment of the PCIJ. The committee sat in The Hague, under the chairmanship of Baron Descamps (Belgium). In August 1920, a report containing a draft scheme was submitted to the Council, which, after examining it and making certain amendments, presented it to the First Assembly of the League of Nations, which opened in Geneva in November of that year. The Assembly instructed its Third Committee to examine the question of the Court’s constitution. In December 1920, after an exhaustive study by a subcommittee, the Committee submitted a revised draft to the Assembly, which unanimously adopted it. This was the Statute of the PCIJ.

The Assembly decided that a vote alone would not be sufficient to establish the PCIJ, and that the Statute would have to be formally ratified by each State represented in the Assembly. In a resolution of 13 December 1920, it called upon the Council to submit a protocol adopting the Statute to the Members of the League of Nations, and decided that the Statute should come into force once a majority of Member States had ratified it. The protocol was opened for signature on 16 December. By the time of the next meeting of the Assembly, in September 1921, a majority of the Members of the League had signed and ratified the protocol. The Statute thus entered into force. It was to be revised only once, in 1929, the revised version coming into force in 1936. Among other things, the new Statute resolved the previously insurmountable problem of the election of the members of a permanent international tribunal, by providing that the judges were to be elected concurrently, but independently, by the Council and the Assembly of the League, and that it should be borne in mind that those elected “should represent the main forms of civilization and the principal legal systems of the world”. Simple as this solution may now seem, in 1920 it represented a considerable achievement. The first elections were held on 14 September 1921. Following approaches by the Netherlands Government in the spring of 1919, it was decided that the PCIJ should have its permanent seat at the Peace Palace in The Hague, which it would share with the Permanent Court of Arbitration. It was accordingly in the Peace Palace that the Court’s preliminary session devoted to the elaboration of the Court’s Rules opened on 30 January 1922, and it was there too that its inaugural sitting was held on 15 February 1922, with the Dutch jurist Bernard C. J. Loder as President.

The PCIJ was thus a working reality. The great advance it represented in the history of international legal proceedings can be appreciated by considering the following:

• unlike arbitral tribunals, the PCIJ was a permanently constituted body governed by its own Statute and Rules of Procedure, fixed beforehand and binding on parties having recourse to the Court;
• it had a permanent Registry which, inter alia, served as a channel of communication with governments and international bodies;
• its proceedings were largely public and provision was made for the publication in due course of the pleadings, of verbatim records of the sittings and of all documentary evidence submitted to it;
• the permanent tribunal thus established was now able to set about gradually developing a constant practice and maintaining a certain continuity in its decisions, thereby enabling it to make a greater contribution to the development of international law;
• in principle the PCIJ was accessible to all States for the judicial settlement of their international disputes, and States were able to declare beforehand that for certain classes of legal disputes they recognized the Court’s jurisdiction as compulsory in relation to other States accepting the same obligation. This system of optional acceptance of the jurisdiction of the Court was the most that it was then possible to obtain;
• the PCIJ was empowered to give advisory opinions upon any dispute or question referred to it by the League of Nations Council or Assembly;
• the Court’s Statute specifically listed the sources of law it was to apply in deciding contentious cases and giving advisory opinions, without prejudice to the power of the Court to decide a case >ex aequo et bono if the parties so agreed;
• it was more representative of the international community and of the major legal systems of the world than any previous international tribunal had ever been.

Although the Permanent Court of International Justice was brought into being through, and by, the League of Nations, it was nevertheless not a part of the League. There was a close association between the two bodies, reflected, inter alia, in the fact that the League Council and Assembly periodically elected the Members of the Court and that both Council and Assembly were entitled to seek advisory opinions from the Court. However, the latter never formed an integral part of the League, just as the Statute never formed part of the Covenant. In particular, a Member State of the League of Nations was not by that fact alone automatically a party to the Court’s Statute.

Between 1922 and 1940 the PCIJ dealt with 29 contentious cases between States and issued 27 advisory opinions. At the same time several hundred treaties, conventions and declarations conferred jurisdiction upon it over specified categories of disputes. Any lingering doubts about whether a permanent international judicial tribunal could function in a practical and effective manner were thus dispelled. The Court’s value to the international community was demonstrated in a number of different ways, and first and foremost by its development of a proper judicial process. This found expression in the Rules of Court, which the PCIJ originally drew up in 1922 and subsequently revised on three occasions, in 1926, 1931 and 1936. There was also the PCIJ’s Resolution concerning the Judicial Practice of the Court, adopted in 1931 and revised in 1936, which laid down the internal procedure to be followed during the Court’s deliberations on each case. In addition, while helping to resolve some serious international disputes, many of them consequences of the First World War, the decisions of the PCIJ at the same time often clarified previously unclear areas of international law or contributed to their development.

For more information on the Permanent Court of International Justice, please see the PCIJ pages on our website.

The outbreak of war in September 1939 inevitably had serious consequences for the PCIJ, which had for some years been experiencing a decline in its level of activity. After its last public sitting on 4 December 1939 and its last order on 26 February 1940, the Permanent Court of International Justice in fact dealt with no further judicial business and no elections of judges were held. In 1940 the Court relocated to Geneva, leaving one judge in The Hague together with a few Registry officials of Dutch nationality. Despite the war, consideration needed to be given to the future of the Court and to the creation of a new international political order.

In 1942 the United States Secretary of State and the Foreign Secretary of the United Kingdom declared themselves in favour of the establishment or re-establishment of an international court after the war, and the Inter-American Juridical Committee recommended that the PCIJ’s jurisdiction should be extended. Early in 1943, the United Kingdom Government took the initiative of inviting a number of experts to London to constitute an informal Inter-Allied Committee to examine the matter. That Committee, under the chairmanship of Sir William Malkin (United Kingdom), held 19 meetings, which were attended by jurists from 11 countries. In its report, which was published on 10 February 1944, it recommended:

• that the Statute of any new international court should be based on that of the Permanent Court of International Justice;
• that the new court should retain an advisory jurisdiction;
• that acceptance of the jurisdiction of the new court should not be compulsory;
• that the court should have no jurisdiction to deal with essentially political matters.

Meanwhile, on 30 October 1943, following a conference, China, the USSR, the United Kingdom and the United States issued a joint declaration recognizing the necessity “of establishing at the earliest practicable date a general international organization, based on the principle of the sovereign equality of all peace-loving States, and open to membership by all such States, large and small, for the maintenance of international peace and security”.

This declaration led to exchanges between the Four Powers at Dumbarton Oaks (United States), and resulted in the publication on 9 October 1944 of proposals for the establishment of a general international organization, to include an international court of justice. A meeting was subsequently convened in Washington, in April 1945, of a committee of jurists representing 44 States. This Committee, under the chairmanship of G. H. Hackworth (United States), was entrusted with preparing a draft Statute for the future international court of justice, for submission to the San Francisco Conference, which was meeting from April to June 1945 to draw up the United Nations Charter. The draft statute prepared by the Committee was based on the Statute of the PCIJ and was therefore not a completely new text. The Committee nevertheless felt obliged to leave a number of questions open which it felt the Conference should decide: Should a new court be created? In what form should the court’s mission as the principal judicial organ of the United Nations be stated? Should the court’s jurisdiction be compulsory and, if so, to what extent? How should the judges be elected? The final decisions on those points, and on the definitive form of the statute, were made at the San Francisco Conference, in which 50 States participated. The Conference decided against compulsory jurisdiction and in favour of the creation of an entirely new court, which would be a principal organ of the United Nations, on the same footing as the General Assembly, the Security Council, the Economic and Social Council, the Trusteeship Council and the Secretariat, and whose statute would be annexed to the Charter, forming an integral part of it. The main reasons that led the Conference to decide to create a new court were the following:

• as the court was to be the principal judicial organ of the United Nations, it was felt inappropriate for that role to be filled by the Permanent Court of International Justice, with its connection to the League of Nations, which was itself on the point of dissolution;
• the creation of a new court was more consistent with the provision in the Charter that all Member States of the United Nations would ipso facto be parties to the court’s statute;
• several States that were parties to the Statute of the PCIJ were not represented at the San Francisco Conference and, conversely, several States represented at the Conference were not parties to the Statute;
• there was a feeling in some quarters that the PCIJ formed part of an older order, in which European States had dominated the political and legal affairs of the international community, and that the creation of a new court would make it easier for States outside Europe to play a more influential role. This proved to be true: the membership of the United Nations has grown from 51 in 1945 to 193 in 2020.

Nevertheless, the San Francisco Conference considered that a degree of continuity should be maintained, particularly since the Statute of the PCIJ had itself been drawn up on the basis of past experience, and had seemed to work well. The Charter therefore clearly stated that the Statute of the International Court of Justice was based upon that of the PCIJ. At the same time, the necessary steps were taken to transfer as much of the PCIJ's jurisdiction as possible to the International Court of Justice. In any event, the decision to create a new court necessarily involved the dissolution of its predecessor. The PCIJ met for the last time in October 1945 and resolved to transfer its archives and effects to the new International Court of Justice, which, like its predecessor, was to have its seat at the Peace Palace. The judges of the PCIJ all resigned on 31 January 1946, and the election of the first Members of the International Court of Justice took place on 6 February 1946, at the First Session of the United Nations General Assembly and Security Council. In April 1946, the PCIJ was formally dissolved, and the International Court of Justice, meeting for the first time, elected as its President Judge José Gustavo Guerrero (El Salvador), the last President of the PCIJ. The Court appointed the members of its Registry (largely from among former officials of the PCIJ) and held an inaugural public sitting on the 18th of that month. The first case was submitted in May 1947. It concerned incidents in the Corfu Channel and was brought by the United Kingdom against Albania.