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your question 3 of the reference, and to the reply to the latter. This report of predecessors would appear to be decisive on the point suggested, should you find yourselves in agreement with it. In the event of its being necessary to refer to arbitration the question whether the present dispute is within the scope of the Anglo-German Arbitration Agreement, the facts relating to the convention between Brazil and Venezuela, as set out above, would afford a strong argument in support of the contention of His Majesty's Government.

In the present instance it is possible that a similar case of the kind now under discussion may arise at any time, and, assuming that His Majesty's Government resorted to forcible measures in order to assert their rights on board à German vessel in British waters, it is probable that the German Government would, in the first instance, protest and, in the event of such protest proving of no avail, ultimately demand a reference to arbitration. In these circumstances three courses would apparently be open to His Majesty's Government :—-

1. To agree to arbitration;

2. To contend that the question did not, on a reasonable construction of the language of Article 1 of the Anglo-German Arbitration Agreement, come within the scope of such agreement at all; or

3. To claim that the matter was one affecting their vital interests, inde-

pendence, or honour.

It appears to Sir Edward desirable that the question should be definitely decided whether either or both of the two latter pleas would be or would not be justified.

In these circumstances, before addressing any fresh communication to the German Government, Sir Edward would be glad to be favoured with your opinion on three further points :-

:-

1. Whether the question now at issue is one which, on a reasonable construc- tion of Article 1 of the Anglo-German Arbitration Agreement of 1904, comes within the scope of such agreement at all.

2. Whether, in the event of a difference of opinion between His Majesty's Government and the German Government as to whether the question now at issue is within the scope of the arbitration agreement, such difference of opinion would be a difference of a legal nature, or relating to the interpretation of treaties," on which the German Govern- ment would be entitled to claim arbitration.

3. Whether, in any case, the question is one which should in no circumstances be referred to arbitration, as involving, in the opinion of His Majesty's Government, a question of the vital interests, independence, or honour of this country.

The correspondence transmitted to you on the 4th December last, together with your report of the 15th ultimo,t is returned herewith for convenience of reference. (Papers (C) and (D).)

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is

If this principle were disputed by Germany we think the difference would be a difference within the scope of the Anglo-German Arbitration Agreement of 1904, unless excluded by the proviso. The expression "difference of a legal nature somewhat indefinite, and might, perhaps, be construed to include more than would ❝ contentious question of law "the literal rendering of the German text; but the latter expression is wide enough to cover such a difference as that here supposed. In our opinion, however, a difference upon this point would be excluded from the operation of the Agreement by the proviso.

It is true that, construed strictly, the proviso only excludes questions which affect the vital interests, independence, or honour of the two contracting Powers, but it is clear that the intention must have been to exclude questions of this bature, although affecting only one and not the two contracting Powers in any of the directions indicated.

The question of our right to the absolute control of our own ports and harbours is a matter which affects us in all the three ways stated, and a difference upon this point is, therefore, excluded from the scope of the Agreement.

2. We are unable to concur in the opinion expressed by our predecessors to the effect that a difference as to whether a particular question was or was not within the Arbitration Agreement is a matter which under that Agreement must itself be referred to arbitration.

We are led to this conclusion by the consideration that, if it is for the tribunal to decide whether a particular question is a "difference of a legal nature or relating to the interpretation of a treaty" within the meaning of the opening words of Article 1, it must equally be for the tribunal to decide whether it affects the vital interests, independence, or honour of the objecting country within the meaning of the proviso a result which cannot have been intended. Moreover, the provisions of Article 2 point to the conclusion that the functions of the tribunal are only to be. called into operation when both Powers agree that there is a question which under the Treaty is to be submitted to arbitration.

Royal Courts of Justice,

December 23, 1912.

We have, &c.,

RUFUS D. ISAACS. JOHN SIMON.

I have, &c.,

EYRE A. CROWE.

List of Papers.

(A.) Arbitration Agreement between Great Britain

and Germany. (No. 1170. Treaty)

(B.) Law Officers' Report

(C.) Law Officers' Report (in original with Minutes)

D.) Printed correspondence.

(E.) Memorandum by the Librarian

Report-

July

12, 1904. January 19, 1910.* March 15, 1912.†

April

19, 1912.

1 and 3. The principle upon which our report of the 15th March, 1912,† was based is that, as a matter of international law, a sovereign State has complete control over its ports and harbours, and that it may either exclude foreign vessels altogether from entering them for the purposes of trade, or may admit them upon such terms and conditions as it may choose.

• No. 128 in Vol. VII.

↑ No. 155A in Vol. VII.

PUBLIC RECORD OFFICE

C.O.

Reference :-

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16 PUBLIC RECORD OFFICE, LONDON

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