Who is to arbitrate?
§ 14. States which conclude an arbitration treaty have to agree upon the arbitrators. If they choose a third State as arbitrator, they have to conclude a treaty (receptum arbitri) with such State, by which they appoint the chosen State and by which such State accepts the appointment. The appointed State chooses on its own behalf those umpires who actually serve as arbitrators. It can happen that the conflicting States choose a head of a third State as arbitrator. But such head never himself investigates the matter; he chooses one or more individuals, who make a report and propose a verdict, which he pronounces. And, further, the conflicting States may agree to entrust the arbitration to any other individual or to a body of individuals, a so-called Arbitration Committee or Commission. Thus the arbitration of 1900 in regard to the Venezuelan Boundary Dispute between Great Britain, Venezuela, and the United States was conducted by a Commission, sitting at Paris, consisting of American and English members and the Russian Professor von Martens as President. And the Alaska Boundary Dispute between Great Britain and the United States was settled in 1903, through the award of a Commission, sitting at London, consisting of American and Canadian members, with Lord Alverstone, Lord Chief Justice of England, as President.
On what principles Arbitrators proceed and decide.
§ 15. The treaty of arbitration must stipulate the principles according to which the arbitrators have to give their verdict. These principles may be the general rules of International Law, but they may also be the rules of any Municipal Law chosen by the conflicting States, or rules of natural equity, or rules specially stipulated in the treaty of arbitration for the special case.[15] And it can also happen that the treaty of arbitration stipulates that the arbitrators shall compromise the conflicting claims of the parties without resorting to special rules of law. The treaty of arbitration, further, as a rule, stipulates the procedure to be followed by the arbitrators who are investigating and determining the difference. If a treaty of arbitration does not lay down rules of procedure, the arbitrators themselves have to work out such rules and to communicate them to the parties.
[15] See below, § [335], concerning the "Three rules of Washington."
Binding force of Arbitral Verdict.
§ 16. An arbitral verdict is final if the arbitration treaty does not stipulate the contrary, and the verdict given by the arbitrators is binding upon the parties. As, however, no such central authority exists above the States as could execute the verdict against a State refusing to submit, it is in such a case the right of the other party to enforce the arbitral decision by compulsion. Yet it is obvious that an arbitral verdict is binding only under the condition[16] that the arbitrators have in every way fulfilled their duty as umpires and have been able to find their verdict in perfect independence. Should they have been bribed or not followed their instructions, should their verdict have been given under the influence of coercion of any kind, or should one of the parties have intentionally and maliciously led the arbitrators into an essential material error, the arbitral verdict would have no binding force whatever. Thus the award given in 1831 by the King of Holland in the North-Eastern Boundary Dispute between Great Britain and the United States of America was not considered binding by the parties because the arbitrator had transgressed his powers.[17] For the same reason, Bolivia refused in 1910 to submit to the award of the President of Argentina in her boundary dispute with Peru.[18] And in October 1910, the Permanent Court of Arbitration at the Hague, deciding the case of the United States of America against the United States of Venezuela concerning the claims of the Orinoco Steamship Company, annulled,[19] with regard to certain points, a previous arbitration award given by Mr. Barge.
[16] See Donker Curtius and Nys in R.I. 2nd Ser. XII. (1910), pp. 5-34 and 595-641.
[17] See Moore, VII. § 1082, and Moore, Arbitrations, I. pp. 81-161.
[18] See Fiore in R.G. XVII. (1910), pp. 225-256.