Legal > Proposal of the government of Finland to confer on the Permanent court of International Justice jurisdiction as a tribunal of appeal in respect of arbitral tribunals established by states

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For the purpose of determining what this procedure should be, and of settling its details,
the Committee was led to examine two kinds of question. It is necessary both to decide
what procedure the Assembly might adopt for the introduction of the new system and to set out
in what the system is to consist.
The first question involves considering whether the Assembly will recommend the conclusion
of a general agreement, which it would decide to open to signature by the States, or whether it
will recommend the conclusion of bilateral agreements, or whether, finally, it will devise some
other procedure. In all three events the object will be to confer on the Permanent Court of
International Justice compulsory jurisdiction over claims that an arbitral award is null.
In the course of examining this first question, the Committee was led to recognise that the
actual circumstances in which arbitral awards are made differ to a considerable extent.
It sometimes happens that the arbitral tribunal has been set up to deal with a whole series
of cases which are not specifically named in the instrument creating the tribunal. This has been
the case as regards the “ mixed arbitral tribunals ” and as regards the " claims commissions ”
which have been established at different times between different Governments. Questions of
jurisdiction are often raised before such tribunals. On the other hand, their composition makes
it easy to accept the notion of a kind of hierarchic relation between them and the Permanent
Court of International Justice. Accordingly, a recourse to the Court against decisions of such
tribunals on the ground that the tribunal had no jurisdiction to deal with the matter, or exceeded
its jurisdiction, or on the ground of a fault in the procedure, can be readily accepted. One might
even, as regards such tribunals, conceive—but the subject is outside the terms of reference of
the Committee—that recourse to the Court might be made possible on substantive questions
of law, with a view to unifying the jurisprudence of the tribunals, particularly where a numoei
of Governments, in connection with the same events, set up arbitral tribunals which exist side
by side but are juridically independent.
The position is different where an arbitral tribunal is set up by a special agreement for the
arbitration of a particular case. Before such tribunals questions of jurisdiction more rarely
arise. The tribunal’s task is ordinarily determined with greater precision than in the preceding case.
Finally, where arbitration has to deal with a political question, recourse against the decision
will often be contrary to the intention of the Governments; they are prepared to accept the solution
given by persons in whom they have confidence, and judicial proceedings upon some incident
of the dispute do not present themselves as a very appropriate means of reaching a final settlement.
It is this divergency of cases and the desire not to compromise the authority of arbitral
awards, which make it difficult to determine the procedure which should be followed by States
desirous of permitting recourse from arbitrators to the Permanent Court of International Justice.
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Two methods of procedure at once occur to the mind, based upon the methods followed for
the development of arbitration by the Ninth Assembly. The first would consist in recommending
the insertion of suitable provisions in those arbitration treaties which may be subsequently
concluded, or in agreements supplementary thereto, and in treaties which contain an arbitration
clause. Such provisions could also, to the extent deemed appropriate, find their place in the special
agreements by which particular questions are submitted to arbitration. The provisions would be
drafted now and recommended to the Governments. The second method would be to embody
the provisions giving jurisdiction to the Permanent Court of International Justice, and the rules
of such jurisdiction, in a Protocol which the Assembly would open to accession by the Members
of the League of Nations and the non-Member States.
The second method would have the advantages of simplicity and uniformity. It may, however,
be asked whether it would not be somewhat excessive to propose the conclusion, under the auspices
of the League of Nations, of a general agreement for the settlement of disputes as to the alleged
nullity of some arbitral awards when such disputes are in practice very rare. Is there not a risk
that the adoption of a procedure of a general character for the settlement of such disputes would
tend to increase their number ? .
The method of bilateral agreements (appropriate clauses to be inserted in arbitration treaties
or, possibly, in agreements for the arbitration of particular questions, according to a model which
would be submitted and recommended) has the advantage of being moie modest. Above all, it
makes it easier to do justice to the different cases to which attention is called above. On the other
hand, it may be asked whether a recommendation of this kind would have practical consequences,
particularly as regards treaties already in force. . 1 ^
Both the above methods, which, moreover, might be adopted simultaneously, would seek to
establish for the future a rule of law obliging a State which contested the validity of an arbitral
award to submit its claim to the Permanent Court of International Justice. Perhaqts, however, it
may be desired to resort to a method which would legally be less rigid but might nevertheless
in practice be equally effective. . , . . ,
The third method would be for the Assembly, basing itself upon the progress which has been
made by the notions of arbitration and international justice, to declare that a State, which disputes
the obligatory character of an arbitral award on the ground that the tribunal had no jurisdiction
or exceeded its jurisdiction or that there was a fault in the procedure, has the duty to propose
to the State against which it makes such claim the conclusion of a special agreement submitting
the decision of the question to the Permanent Court of International Justice. The bases of such
agreement would be set out in appropriate provisions. There is obviously implied a corresponding
duty of the other party to accept such proposal. .
The practical effectiveness of such a declaration would flow from its connection with the
provisions of the Covenant regarding the settlement of disputes and the part which the Council