The Century of Arbitration and Peace

One of the challenges to those who advocate for an anarchic or a decentralized political order of society is that of conflict resolution.  Critics of anarchy will often claim that there must be some monopoly final arbiter – one accepted as the final voice if a dispute cannot otherwise be peacefully resolved.  Of course, such thinking can only lead to the conclusion of a world government, a point lost on many such critics.

Those advocating for a smaller state suggest that this need not be so, instead offering private and decentralized arbitration as an alternative.  Such suggestions are often deemed to be rather naïve by those who can only see resolution through a monopoly force over a geographic area and the threat of military engagement if the dispute involves another state.

Well, not so fast.  There was a time, throughout the nineteenth century, when countries in the west often turned to arbitration for the successful resolution of international disputes.  The United States and Great Britain, not on friendly terms throughout much of the century, on several occasions turned to international arbitration as a means of resolving conflict.  While obviously not a perfect example of private governance methods, this historic reality offers some possibilities of importance to those who favor both decentralized government and peace.

Not surprisingly, this history of successful arbitration via decentralized systems in diffusing international disputes is lost in modern thinking, where centralizing national and international structures are looked to for salvation in such disputes, and – like central banks are to bankers – such agencies offer an oversized opportunity for influence to lawyers who would otherwise have to compete in a less politicized structure.  From “International Law and the Nineteenth Century: History of an Illusion,” by David Kennedy:

I have asked numerous international lawyers what the nineteenth century means to them, what were its contributions, which of its insights and contributions remain relevant, and how did that discipline differ from our own.  For today’s international lawyer, the nineteenth century seems long ago and far away, in many ways more distant from current problems and reflections that the great publicists of the seventeenth and eighteenth centuries….

The system is forgotten – in a way, as if it was the “Dark Ages” of the legal profession.  It also seems to have been a system more effective at keeping peace:

To understand the nineteenth century’s contributions to the field, we must start with this gap, this forgetfulness, and with the thin factual and doctrinal traces which remain from what was a comparatively peaceful and law abiding century when compared to our own. (emphasis added)

W.T. Stead touches on this issue in a few short pages in his book, The Americanization of the World.  I will supplement his comments with other sources in order to paint a more complete picture of this supposedly naïve solution.

Stead offers several examples of disputes between the United States and Britain that were resolved by third-party arbitration.  All page references are to Stead’s book.

Disputed Boundaries

The first arbitration between the [United States and Great Britain] took place in 1816, when a dispute arose about the St. Croix River, and the Lake boundaries. (Page 249) In 1827 a question about the northeastern boundary of the United States was referred to the arbitration of the King of the Netherlands. (Page 250)

Three Commissions were established pursuant to the Treaty of Ghent – the treaty that brought to close the War of 1812 – to include resolution of the above-mentioned boundary disputes:

One commission tried to determine boundaries between British territory and the United States from the St. Lawrence River to the Lake of the Woods; it agreed upon a boundary through the Great Lakes but failed to determine the line from Lake Superior to the Lake of the Woods. The third commission was supposed to decide the boundary from the St. Croix to the St. Lawrence, but it failed to reach accord.

As a means to resolve the disputes, the matters were referred to arbitration:

The two governments thereupon referred the dispute to William I of the Netherlands. That monarch failed to find a clear basis for a decision but in 1831 made an award anyway, giving the United States and Britain what he believed to be equitable shares of a wilderness. The United States refused to accept this award, protesting that the king had not acted in accord with the agreement referring the controversy to him. While arbitration had failed in this instance, the case was of considerable importance, for it clearly established the principle that arbitrators should abide by the terms of a compromis or other preliminary agreements.

The matter was later resolved via the Webster-Ashburton Treaty in 1842.

Property to be Returned After the War of 1812

…a question arising out of the Treaty of Ghent was referred to the arbitration of the Emperor of Russia. (Page 249)

What was the dispute?

The United States and Britain meanwhile had one other arbitration in connection with the Treaty of Ghent. The two powers were supposed to restore all property, both public and private, that they had seized from each other during the War of 1812. The treaty specifically mentioned slaves, but the British failed to return all American slaves under their jurisdiction at the close of hostilities. After many protests from Washington, British leaders agreed that an arbitrator should deal with the matter, and the two governments referred their dispute to Alexander I of Russia. The czar decided that Britain had failed to meet its obligations and should pay an indemnity. Upon his recommendation the United States and Britain concluded a convention setting up a commission to decide the amount due the United States. After elaborate proceedings, the commissioners decided that the indemnity should be $1,204,960, and, in a convention concluded 13 November 1826, the British government accepted this decision.

Liberated Slaves

In 1853 a dispute about some liberated slaves was settled by arbitration…. (Page 250)

This dispute is known as the Creole Case:

The Creole case was the result of an American slave revolt in November 1841 on board the Creole, a ship involved in the United States coastwise slave trade. As 128 slaves gained freedom after the rebels ordered the ship sailed to Nassau, it has been termed the "most successful slave revolt in US history". Two persons died as a result of the revolt, a black slave and a white slave trader.

Great Britain had abolished slavery effective 1834; its officials in the Bahamas ruled that most of the slaves on the Creole were freed after arrival there, if they chose to stay. Officials detained the 19 men who rebelled on ship until the Admiralty Court of Nassau held a special session in April 1842 to consider charges of piracy against them. The Court ruled that the men had been illegally held in slavery and had the right to use force to gain freedom; they were not seeking private gain. The 17 survivors were also released to freedom (two had died in the interval).

When the Creole reached New Orleans in December 1841 with three women and two child slaves aboard, Southerners were outraged about the loss of "property." Relations between the United States and Britain were strained for a time. The incident occurred during negotiations for the Webster-Ashburton Treaty of 1842 but was not directly addressed. The parties settled on seven crimes qualifying for extradition in the treaty; they did not include slave revolts. Eventually claims from the Creole case and two other US ships were covered in a claims treaty of 1853 between the US and UK, for which an arbitration commission awarded settlements in 1855 against each nation, dating to 1814.

The Claims of the Hudson's Bay and Puget's Sound Agricultural Companies

…in 1863 a difference that arose between the Hudson’s Bay and the Puget Sound Company was also settled in the same way. (Page 250)

These companies were ostensibly established to promote British settlement in the subject territories:

The Puget Sound Agricultural Company (PSAC), commonly referred to with variations of the name using Puget Sound or Puget's Sound, was a joint stock company formed around 1840 as a subsidiary of the Hudson's Bay Company (HBC).

In 1863, Great Britain and the United States agreed to arbitrate the disposition of the PSAC properties in US territory. The PSAC was awarded $200,000 in compensation in 1869 for all of its properties south of the Canadian-US border as spelled out in the Oregon Treaty.

The Alabama Claims and the San Juan Boundary

…the Alabama Claims under the Treaty of Washington of 1871 were referred to the Geneva Tribunal. …the disputed San Juan boundary was referred to the arbitration of the German Emperor, and a further dispute about the Nova Scotia fishery was also settled amicably. (Page 250)

Two issues were referred to two different arbitrators: the Alabama Claims, and the San Juan boundary dispute.

What were the Alabama Claims?

The Alabama Claims were a series of claims for damages by the U.S. government against the government of the United Kingdom for the assistance given to the Confederate cause during the American Civil War.

The British built several warships for the Confederate States during the war.  These ships caused significant damage, and the United States government wanted restitution.

The Treaty of Washington was negotiated by a commission of twelve representatives – six each from the US and British Empire.

The treaty included the settlement process for the Alabama Claims, settled disputed Atlantic fisheries and the San Juan Boundary (concerning the Oregon boundary line).

The method chosen to settle the Alabama Claims was via an international tribunal, made up of members from the US, Britain, Italy, Switzerland and Brazil.  The tribunal met in Geneva.

After international arbitration endorsed the American position in 1872, Britain settled the matter by paying the United States $15.5 million for damages done by several warships built in Britain and sold to the Confederacy, thus ending the dispute and ensuring friendly relations.

As mentioned, the treaty also included a provision to resolve disputes about the Oregon boundary line (the San Juan boundary).  This was also resolved via arbitration:

Finally, provision was made for submitting to the arbitration by William I, German Emperor, of the Pig War dispute concerning the maritime boundary in Puget Sound.

The Pig War was a confrontation between the United States and the British Empire over the San Juan Islands:

The territory in dispute was the San Juan Islands, which lie between Vancouver Island and the North American mainland.

This treaty formed the initial foundation for the Great Rapprochement, which would take full root by the turn of the century.

The Bering Sea Arbitration

In 1891 the question of the seal fisheries in the Bering Sea was referred to a Court of Arbitration in Paris…. (Page 250)

The roots of this dispute extend from the US purchase from Russia of Alaskan territories.  Congress passed laws regarding the killing of seals on the Pribiloff islands and in "the waters adjacent thereto."

In the summer of 1886, three British Columbian sealers, the Carolena, Onward, and Thornton, were captured by an American revenue cutter 60 miles from land. They were condemned by the district judge because they had been sealing within the limits of Alaska territory and owed a pro tanto obligation to respect the sovereign laws of the Territory of Alaska.

Negotiations to resolve the issue of sealing in the open seas proved fruitless, and the matter was referred to international arbitration:

On February 29, 1892, a definitive treaty was signed at Washington, D.C. Each power was to name two arbitrators, and the president of the French Republic, the king of Italy, the king of Norway and Sweden were each to name one.

The award, which was signed and published on 15 August 1893, was in favour of Great Britain on all points. The question of damages, which had been reserved, was ultimately settled by a mixed commission appointed by the two powers in February 1896, the total amount awarded to the British sealers being $473,151.26 - in excess of US$10 million in present-day inflation-adjusted dollars.

Venezuela Crisis of 1895

Finally, regarding a border dispute between Venezuela and Great Britain, arbitration was proposed by President Cleveland; his demand was greeted by a “storm of enthusiastic approval.” (Page 250, 251)

You rightly ask: what business is this of the United States?

The dispute had become a diplomatic crisis in 1895 when Venezuela's lobbyist William L. Scruggs sought to argue that British behaviour over the issue violated the Monroe Doctrine of 1823, and used his influence in Washington, D.C. to pursue the matter. Then US President Grover Cleveland adopted a broad interpretation of the Doctrine that did not just forbid new European colonies but declared an American interest in any matter within the hemisphere.

The subject of the dispute was the border between Venezuela and British Guiana:

The Venezuela Crisis of 1895 occurred over Venezuela's longstanding dispute with the United Kingdom about the territory of Essequibo and Guayana Esequiba, which Britain claimed as part of British Guiana and Venezuela saw as Venezuelan territory. As the dispute became a crisis, the key issue became Britain's refusal to include in the proposed international arbitration the territory east of the "Schomburgk Line", which a surveyor had drawn half a century earlier as a boundary between Venezuela and the former Dutch territory of British Guiana. The crisis ultimately saw Britain accept the United States' intervention in the dispute to force arbitration of the entire disputed territory, and tacitly accept the United States' right to intervene under the Monroe Doctrine.

The parties agreed to arbitration:

The agreement provided for a Tribunal with two members representing Venezuela (but chosen by the US Supreme Court), two members chosen by the British government, and fifth member chosen by these four, who would preside. Venezuelan President Joaquín Crespo referred to a sense of "national humiliation", and the treaty was modified so that the Venezuelan President would nominate a Tribunal member. However it was understood that his choice would not be a Venezuelan, and in fact he nominated the Chief Justice of the United States. Ultimately, on 2 February 1897, the Treaty of Washington between Venezuela and the United Kingdom was signed, and ratified several months later.

The final decision was to award the bulk of the disputed territory to British Guiana.

National and International Support

The concept of arbitration to resolve international disputes had some high-powered support:

Mr. Carnegie, the most peaceful of men, declared that arbitration was the one thing in the world for which he was willing to fight. (Page 251)

The United States Congress also passed resolutions in support of referring disputes to arbitration in order to avoid war.  Stead cites a resolution passed by both Houses of Congress in 1874:

…whereby matters in dispute between different Governments agreeing thereto may be adjusted by Arbitration, and if possible without recourse to war. (Page 250)

In fact, Britain passed a similar resolution in the House of Commons one year earlier:

The idea for a treaty which would place most, if not all, disputes between nations into a legal arbitration process – an idea described by Nelson M. Blake as “a typical product of nineteenth century liberalism” – developed both in Europe and America in the latter decades of the 19^th Century. It had particular support in Great Britain and the United States with the House of Commons passing a resolution in favour of the principle of international arbitration in 1873 and Congress doing likewise in 1874. (emphasis in original)

Again in 1890, both Houses of Congress passed similar language:

…any differences or disputes arising between [the United States and any other government with which it has diplomatic relations] which cannot be adjusted by diplomatic agency, may be referred to Arbitration, and be peaceably adjusted by such means. (Page 251)

Additionally in 1890, the representatives of seventeen American republics, meeting in Washington, issued a resolution committing to arbitration as settlement for all disputes of any type that may arise between them, except in the case where national independence is in peril.  Sixteen signed the resolution. (Page 252)

The resolution for arbitration appears to be watered down from that desired by the United States, due to mistrust of the United States by several of the other representatives.  Nonetheless, the United States proposed and ultimately secured arbitration as a means for resolving international disputes throughout much of the Western Hemisphere.

Summary and Conclusion

Stead summarizes the century of arbitration:

Up to the year 1895 the Government of the United States had entered into forty-seven agreements for referring matters to arbitration. (Page 253)

Up until this time, it seems, this was all accomplished without a centralized, global agent or arbitration panel – cases were taken in front of various and different trusted, qualified individuals outside of formal national or international structures.  The advantages of such a system seem obvious – the disputing parties are each free to nominate arbitrators, reducing the concerns of capture of the arbitrating body by the more powerful state/party to the arbitration.

Unfortunately, the United States and the western world couldn’t leave well enough alone – nor did the world learn from the successes of the past.  At the Peace Conference at The Hague in 1899, the establishment of a permanent International Tribunal was promoted. (Page 253)

Convention for the Pacific Settlement of International Disputes: This convention included the creation of the Permanent Court of Arbitration, which exists to this day. The section was ratified by all major powers, including United States, Great Britain, Austria-Hungary, Germany, France, Italy, Spain, Russia, Japan, and China. (emphasis added)

Correlation is not causation; however the previous system of ad-hoc tribunals seemed to work reasonably well in what was a relatively peaceful century, whereas the aftermath of The Hague Conventions, including a permanent international panel, are not so encouraging – including two world wars involving the same countries that ratified the arbitration convention.

From this examination, I draw certain conclusions:

1)      Counter to the practice of the last 100 years, it is not necessary – and in fact harmful – that a formal, centralized agency holds a monopoly position on adjudicating disputes, such as the United Nations or League of Nations. 

2)      Even the most powerful state can use arbitration as opposed to war to settle disputes.  Great Britain was the super-power of this time, yet did not always resort to violence to solve disputes.  The United States was the growing power of the same age, and also made liberal use of international arbitration to resolve disputes.

3)      Not all manners need be concluded by treaty – especially in politically charged situations, a lesson that was forgotten by the victorious powers in the aftermath of World War I.

4)      The US and Britain were in regular conflict throughout the period in question – these two states were not on otherwise friendly terms – yet utilized this most civilized manner to resolve conflict.

5)      All parties recognized the legitimacy and authority of the process.

6)      The nineteenth century of decentralized arbitration was one of relative peace – infinitely more so than the twentieth century, which was governed internationally by structures that were more permanent.

Finally, all of this provides a real-world example of the possibility of adjudicating disputes in a private and contractual manner.  It does not take a huge leap of faith to conclude that a decentralized arbitration system could be extended to smaller and smaller segments of the population, ultimately leading to a private security environment.

If it can be done between states, why not between individuals (or private insurance / security companies) in a world without states as we currently use the term?  Why limit the possibilities by geographical boundaries – some form of panarchy, if you will?

In other words, decentralized dispute resolution services can be provided privately between individuals or freely-contracting groups of individuals just as was successfully done between states more than a century ago.