In this connection it is of interest to draw attention to the fact that, in compliance with Article XIX of the Hay-Varilla Treaty of November 18, 1903, Section 5 of the Panama Canal Act entirely exempts vessels of the Republic of Panama from payment of the Panama Canal tolls. It would seem that this exemption in favour of the vessels of the Republic of Panama violates Article III, No. 1, of the Hay-Pauncefote Treaty, although it is in conformity with Article XIX of the Hay-Varilla Treaty which stipulates that:—
"The Government of the Republic of Panama shall have the right to transport over the Canal its vessels and its troops and munitions of war in such vessels at all times without paying charges of any kind."
A treaty between two States can never invalidate a stipulation of a previous treaty between one of the contracting parties and a third State. Bearing this point in mind, it must be maintained that the United States, being bound by Article III, No. 1, of the Hay-Pauncefote Treaty, had not the power to enter into the stipulation of Article XIX of the Hay-Varilla Treaty by which she granted exemption from payment of tolls to vessels of the Republic of Panama, and that Great Britain is justified in protesting against the enactment of Section 5 of the Panama Canal Act in so far as it exempts vessels of Panama from the payment of tolls. The fact that the right of Panama to demand exemption from payment of tolls for her vessels is one of the conditions under which the Republic of Panama ceded to the United States the strip of territory necessary for the construction, administration, and protection of the Canal, cannot invalidate the previously acquired right of Great Britain to demand equal treatment of the vessels of all nations without any exception whatever. It must be left to the United States and the Republic of Panama to come to an agreement concerning Article XIX of the Hay-Varilla Treaty. Although the United States promised an exemption from tolls which she had no power to grant, the Republic of Panama need not drop her claim to this exemption. Since, however, the grant of the exemption would violate previous treaty rights of Great Britain, the Republic of Panama is at any rate entitled to a claim to an equivalent of the exemption, namely, the refunding, on the part of the United States, of tolls paid by vessels of the Republic of Panama for the use of the Canal. Whether these vessels are exempt from the payment of tolls or can demand to have them refunded, makes very little difference to the Republic of Panama, although Article XIX of the Hay-Varilla Treaty stipulates exemption from, and not the refunding of, tolls.
But the case of the vessels of Panama is quite unique, for their exemption from tolls was one of the conditions under which the Republic of Panama ceded to the United States the Canal territory. Great Britain and the United States being the only contracting parties to the Hay-Pauncefote Treaty, and third States not having as yet either by formal accession become parties to this treaty or acquired, by custom, a claim to equal treatment of their vessels, there would seem to be nothing to prevent Great Britain from consenting to the exemption of the vessels of Panama, should she be disposed to do so.
X.
However this may be, the question as to whether the United States is by the British-American Arbitration Treaty compelled to consent to have the dispute concerning the interpretation of the Hay-Pauncefote Treaty brought before the Permanent Court of Arbitration is of minor importance. For, even if she be not compelled to do so, it must nevertheless be expected that she will do so. If any dispute is, by its very character, fit and destined to be settled by arbitration, it is this dispute, which is clearly of a legal nature and at the same time one which concerns the interpretation of treaties. Neither the independence, nor the honour, nor any vital interest of the parties can be said to be involved in the dispute.
Indeed it may be maintained that much more important than the dispute itself is the question whether it will or will not be settled by arbitration. Great Britain has already declared that if the dispute cannot be settled by means of diplomacy, she will request arbitration. The eyes of the whole world are directed upon the United States in order to find out her resolution. Throughout her history, the United States has been a champion of arbitration, and no other State has so frequently offered to go, or consented to submit, to arbitration. It was the United States who at the First, as well as the Second, Hague Peace Conference led the party which desired that arbitration should be made obligatory for a number of differences, and she will, I am sure, renew her efforts at the approaching Third Peace Conference. Should she refuse to go to arbitration in her present dispute with Great Britain, the whole movement for arbitration would, for a generation at least, be discredited and come to a standstill. For if the leader of the movement is false to all his declarations and aspirations in the past, the movement itself must be damaged and its opponents must be victorious. Prominent Americans are alive to this indubitable fact, and it would seem to be appropriate to conclude this study with the text of the letter of Mr Thomas Willing Balch of Philadelphia—the worthy son of his father who was the first to demand the settlement of the Alabama dispute by arbitration—which the New York Sun, an influential American paper, published on September 4, 1912, on its editorial page.
"To the Editor of the Sun. Sir:—
A half century ago, Americans believed firmly that we had a good cause of grievance against Great Britain for having allowed, during our great Civil War, the use of her ports for the fitting out of a fleet of Confederate cruisers, which caused our maritime flag to disappear almost entirely from the high seas. We pressed Great Britain long and persistently to agree that our claims, known under the generic name of the Alabama claims, should be submitted for settlement to an impartial arbitration. Finally, with reluctance, Great Britain acceded to our demands. And as a result the two Nations appeared as litigants before the Bar of the International Court of Justice, popularly known as the Geneva Tribunal. The result was a triumph for the United States, but also it was a greater triumph for the cause of civilization.