His Majesty's Government in the United Kingdom have had under consideration their position in relation to the Optional Clause of the Statute of the Permanent Court of International justice. In the present circumstances it would not appear practicable to carry out the procedure of meeting of the members of the League of Nations such as was suggested in paragraph 3 my telegram 24th December, 1938 , and in any event it appears to His Majesty's Government in the United Kingdom that whether there were such a meeting or not it will be sufficiently directed  by means of governing forces under covenant have so far broken down as to justify us in releasing ourselves from our obligations under the Optional Clause as regards disputes arising out of events occurring during the present hostilities.
It is accordingly proposed to address the Secretary General of the League of Nations  a letter in the following terms:-
'I am directed by Viscount Halifax  to inform you that His Majesty's Government in the United Kingdom of Great Britain and Northern Ireland have found it necessary to consider the problem , in the existing circumstances, of their acceptance of the Optional Clause of the Statute of Permanent Court of International justice. Their acceptance of the Clause was for ten (10) years from the date of ratification, which took place on 5th February, 1930.
2. The condition under which His Majesty's Government gave their signature to the Optional Clause was described in a memorandum issued at the time, miscellaneous No. 12, 1929, a copy of which is enclosed for the convenience of reference.  Paragraphs 15-22 of that memorandum state the considerations which then satisfied His Majesty's Government, that they could accept the Optional Clause without making a reservation (which they would have been fully entitled to make) as to the dispute arising out of events occurring during a war in which they might be engaged. Those considerations were, in brief, that by the building up of a new International system based on the Covenant of the League of Nations and Pact of Paris, a fundamental change had been brought about in regard to the whole question of belligerent or mutual  rights.
In the only circumstances in which it was contemplated that His Majesty's Government could be involved in war, other members of the League, so far from being in the position of neutral with a right to trade with our enemy, would be bound under Article 16 of the Covenant to sever all relations with him.
The effect of this at the time of His Majesty's Government's signature was that the condition which might produce a justifiable  dispute between United Kingdom as a belligerent and another member of the League as a neutral would not exist, since other members of the League would either fulfil their obligations under Article 16 of the Covenant or, if they did not, would have no grounds upon which to protest against the measures which His Majesty's Government might take to prevent action on their part which was inconsistent with those obligations.
3. It is unfortunately clear that these conditions no longer exist. It has become evident that many of the members of the League no longer consider themselves bound to take action of any kind under the Covenant against an aggressor state.
At the League Assembly of September, 1938, note was taken of the expression of opinion, and it became clear that sanctions against an aggressor under the terms of the Covenant could not be regarded as obligatory. There remained only a general understanding that members should consult one another in the event of aggression against another member and that such aggression could not be treated with indifference.
4. For reasons which His Majesty's Government appreciate it has not proved possible, in the present crisis, to give any practical effect even to so limited an understanding as that just described.
Not only has there been no attempt at action under Articles 16 or 17 of the Covenant, but no action has even been taken under Article 11, and in advance of hostilities a number of States members of the League have announced their intention to maintain strict neutrality as between the two belligerents. It is not the intention of His Majesty's Government to make any complaints about the state of affairs, but it can only mean that the Covenant has, in the present instance, completely broken down in practice, that the whole machinery for preservation of peace has collapsed and that the conditions in which His Majesty's Government accepted the Optional Clause no longer exist.
This situation, so fundamentally changed from that which existed at the time of their signature of the Optional Clause, was mentioned as a possibility in paragraph 22 of the memorandum of 1929, and it was then stated that His Majesty's Government could not conceive that in the general collapse of the whole machinery for the preservation of peace, the one thing left standing should be the Optional Clause and commitment of the signatories thereunder.
5. I am, therefore, directed to notify you that His Majesty's Government, believing themselves to be firmly defending the principles on which the Covenant was made, but realizing the general breakdown of the means by which such principles were intended to be applied, will not regard their acceptance of the Optional Clause as covering the dispute arising out of the events occurring during the present crisis.
6. I am to request that this notification may be communicated to the Governments of all States which have accepted the Optional Clause, and to the Registrar of the Permanent Court of International justice.' His Majesty's Government will be grateful for information as to any action which may be taken by other members of the British Commonwealth.