Memorandum by the Department of External Affairs on referring the land annuities dispute and other British-Irish financial questions to the Council of the League of Nations for arbitration (Secret and Confidential)

Reference to the Council of the land annuities dispute and the other financial questions mentioned in Despatch No.95 dated the 5th July 1932.¹

In referring to the Council the land annuities dispute and the other financial questions mentioned in Despatch No. 95 of the 5th July 1932, the Government have two courses open to them. They can refer the issues as a whole or merely the legal issues involved. It is proposed to consider in this memorandum the procedure which the Council might adopt when the issues referred to come before it.

General reference of questions to the Council

Assuming that the issues submitted for enquiry by the Council under Article 11 are the land annuities dispute and the other financial questions generally (i.e., of course including the legal questions involved), what procedure is likely to be adopted by the Council?

When the Secretary General has been notified by the Government of the fact of their desire to submit the issues in question for enquiry and a full statement of the case (including relevant facts and documents) has been placed before the Council, the Council would proceed to the enquiry either at a special meeting convened for the purpose or at its next ordinary meeting as may be arranged. Statements of their respective cases would be made at a public session of the Council by the representatives of the parties to the dispute. This assumes that the representative of the British Government would in the normal way reply to the case made by the representative of the Government of the Irish Free State. The assumption may not be correct, but other possible action on the part of the British Government will be discussed later on.

As pointed out in a previous memorandum, the Council has the widest competence under Article 11. Its functions under that Article are conciliatory, and it can adopt any means which it considers desirable to bring about a settlement of the dispute. In the present case it is altogether likely that after having heard the representatives of the parties its first and most natural effort would be to bring the parties together. This would be done either through the medium of the President of the Council or some other person. The intervention of the Council in that way may be successful in bringing the parties together and in getting them to resume negotiations. In the event, however, of the failure of the Council to bring the parties together and to have negotiations resumed or in the event of the negotiations so resumed breaking down, the Council would itself proceed to deal with the subject-matter of the dispute.

For the purpose of considering the subject-matter of the dispute the Council would first of all appoint a Rapporteur who would normally be the representative of one of the other Members of the Council. The Rapporteur would examine the dispute and prepare a Report for the Council, with, possibly, a definite recommendation. If the recommendation of the Rapporteur is adopted by a resolution of the Council (including the parties) there would be a strong moral obligation on the parties to act in accordance with the resolution, and the matter would probably be at an end so far as the Council is concerned.

In a case of the kind under discussion, however, it is altogether probable that the Rapporteur would report to the Council that a number of legal issues are involved upon which the Council, before adopting any resolution, would require the assistance of some legal body. Assuming that the Rapporteur so reported, the Council would then refer the legal issues either to the Permanent Court of International Justice for an Advisory Opinion or to a Committee of Jurists appointed for the purpose. The consent of the parties would be required before an Advisory Opinion could be sought from the Permanent Court of International Justice. When the legal issues have been advised upon by the Permanent Court or a Committee of Jurists, the council would proceed to deal with the dispute on the basis of that advice. Very probably it would again attempt at that stage and on that basis to bring the parties together. Should it fail or should negotiations again break down the Council might conceivably pass a Resolution calling upon the parties to abide by the legal findings and to act accordingly. Presumably, the party against which the findings were made would not vote in favour of the Resolution and the Resolution would not, therefore, be in the strict sense a Resolution of the Council under Article 11 of the Covenant, but it would nevertheless be regarded as having great moral authority.

It will be understood, of course, that at any stage of the proceedings after the initial statement of their respective points of view by the parties the Council might suggest that the dispute be referred to arbitration. There is little room for doubt that it would appear to the Council that the method of arbitration is the normal, natural and usual way of settling a dispute of the kind under discussion. Should the Council therefore at any stage recommend arbitration the question of the constitution of the arbitral tribunal (discussed in a previous memorandum)² will fall to be decided. It is not necessary to consider again in the present memorandum the narrow issue of the appointment of the members of the tribunal: that has been done in the memorandum just referred to. There is, however, this point which should be borne in mind, namely, that should the British Government's representative have made an initial statement on the merits of the dispute before the Council and thus entered into the consideration of the matters referred to the Council under Article 11 of the Covenant by the Government of the Irish Free State, he would be in a difficult case should he decline to agree to a proposal by the Council that an international arbitral tribunal in the fullest sense be set up to consider and determine the dispute as a whole. Should the British Government decline to accept such a tribunal they would be in as difficult a position before the Council, the League and public opinion generally as were the Japanese Government when, during the discussions on the Sino-Japanese dispute, that Government earned the opprobrium of world opinion by consistently evading the question of the Council's jurisdiction.

So far we have been assuming the British representative will make a statement before the Council in the ordinary way recognising that the Council is properly seized of the matter and entering into a discussion on the substance of the dispute. Suppose, however, that at the very outset the British representative refuses to discuss the dispute on the ground that it is an issue which, having regard to the relationship between Great Britain and the Irish Free State, is not a proper subject for discussion by the Council or by any international body. In that event the Council would have to rule upon the question as to whether it was within its competence to entertain the dispute. It might refer the question of its competence to a Committee of Jurists. The Irish Free State representative could not, it is thought, properly refuse to agree to refer that question to such a Committee. Should the Council as a result of the finding of the Committee of Jurists hold that it is not competent to entertain the dispute on the ground of the relationships between Great Britain and the Irish Free State as Members of the British Commonwealth of Nations the whole international position of the Irish Free State would be involved. The representative of the Irish Free State would, of course, challenge the right of the Council to entertain the British refusal to discuss the dispute on the ground of the relationship between the two countries. There is no provision in the Covenant whereby one Member of the League can exclude a dispute between itself and another Member of the League from the jurisdiction of the Council on the ground of any political relationships between them.

The British representative might, however, refuse to discuss the dispute on the ground (based on paragraph 8 of Article 15 of the Covenant) that it is a domestic issue, i.e., on the ground that by international law it is within the sole and exclusive jurisdiction of the British Government. Should he do so, the Council would have to rule on that question. It is definitely thought that the Council (which might appoint a Committee of Jurists to advise it on the matter) would not for a moment concede to the British representative that the dispute in question is a domestic issue falling to be decided by the British Government themselves and on that ground outside the scope of the competence of the Council to entertain. But it is pointed out that even though the Council, contrary to expectation, held that the dispute is a domestic dispute, nevertheless, a decision to that effect would not prevent the Council from dealing with it in its conciliatory capacity under Article 11 of the Covenant.

Returning now to the main question of the handling of the dispute by the Council in the normal way, it is necessary to consider the course of procedure when the Permanent Court of International Justice or a Committee of Jurists has given an opinion on the legal issues involved. It has been pointed out that the Council might request the parties to abide by the legal findings and to act accordingly. On the other hand, if the dispute has been referred to the Council in general terms and not for a decision on the legal questions only the Council might at the stage now reached suggest that the entire dispute be referred to arbitration for a decision on the matter. The arbitration might in that case proceed upon the basis that the legal questions involved were decided and endeavour, apart altogether from the question of legal liability, to seek an ex aequo et bono solution of the problem.

Reference to Council of legal issues involved

When legal questions are referred to the Council under Article 11 of the Covenant, the Council obtains an Advisory Opinion of the Permanent Court or the advice of a Committee of Jurists. Normally legal disputes between Governments should go to the Permanent Court or to arbitration. The Government of the Irish Free State is denied arbitration by the attitude taken up by the British Government. On the other hand, the Government of the Irish Free State have not chosen to go to the Permanent Court. Had they so chosen the British Government would not have agreed and 'the consent jurisdiction' of the Court could not therefore have been invoked. An invocation of 'the compulsory jurisdiction' of the Court at the instance of the Government of the Irish Free State would not be successful. This view is based upon the terms in which the British Government accepted the compulsory jurisdiction of the Court when they signed the Optional Clause. The British Government reserved disputes between themselves and the other Members of the Commonwealth. Either that reservation was valid or it was invalid. If it was valid, then the British Government have not accepted the compulsory jurisdiction of the Court vis-à-vis the other States of the British Commonwealth and the Government of the Irish Free State cannot cite them to the compulsory jurisdiction of the Court. If it was invalid, then the view generally held is that the British have not accepted the compulsory jurisdiction of the Court at all. In either event, the invocation of the compulsory jurisdiction of the Court by the Government of the Irish Free State for the purpose of deciding the legal issues involved in the present dispute must fail. The only way, therefore, in which the legal issues involved in the present dispute could get to the Permanent Court would be at the instance of the Council seeking an Advisory Opinion thereon. The Opinion could, however, only be sought with the consent of the two Governments concerned. The Council could, however, refer the legal issues to a Committee of Jurists without the consent of both Governments.

When the Committee of Jurists have advised upon the legal issues referred to them, the Council would pass a resolution based upon the advice given by the Committee.

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It will be manifest from the foregoing that, should it be decided to approach the Council of the League under Article 11 of the Covenant, very careful consideration will have to be given to the issues to be submitted and the precise scope and form of the submission.

The wiser course might be to refer to the Council the narrow issue of the constitution of the arbitral tribunal. It is quite clear from the despatches between the two Governments that the present acute situation has resulted from failure to agree upon the scope of the choice of the personnel of an arbitral tribunal by the parties to the dispute. Any reference to the Council of the narrow issue of the constitution of an arbitral tribunal would, of course, be made without prejudice to the right of the Government of the Irish Free State to submit the dispute as a whole to the Council or to the Assembly should the narrow issue not be settled to the satisfaction of that Government.

If no examination has yet been made by any inter-Departmental Committee of the dispute relating to the land annuities and the other financial questions, it is suggested that such a Committee should be set up. The examination of the matter by such a Committee would, of course, be based upon the policy of the Government to withhold payment of the various sums in question and would be directed towards the preparation of the arguments upon which the case of the Irish Free State can best be presented. The Department of External Affairs should, it is submitted, be represented on the Committee referred to.