7 September 1939
GENERAL ACT FOR THE PACIFIC SETTLEMENT OF INTERNATIONAL DISPUTES
1. In view of the consideration being given by the Commonwealth Government to the question what action (if any) should be taken in relation to the Optional Clause of the Statute of the Permanent Court of International justice, the time would seem to be opportune to reconsider also the position of the Commonwealth in relation to the General Act for Pacific Settlement of International Disputes.
2. By the Pact of Paris which was signed in 1928, the Members of the League and certain other States had already renounced war as a means of solution of international disputes and the principle of pacific settlement had been affirmed. The establishment of the Permanent Court had met the need for adequate machinery to effectuate this principle in practice so far as legal disputes were concerned, but no general procedure was available for the purpose of settling disputes other than those specifically provided for in the Statute of the Court. To meet this need and to obviate the necessity for the conclusion of a number of bilateral arrangements, the General Act for Pacific Settlement of International Disputes was drafted in 1931. This Act made provision for the settlement of disputes of every kind between two or more parties to the Act. It was acceded to by the United Kingdom and the Dominions (other than South Africa) subject to certain conditions.
3. Following upon the developments in connection with Article 16 of the Covenant (The Sanctions Provisions) which have been referred to in connection with the Optional Clause, the Governments of the United Kingdom, New Zealand, India, and France denounced the General Act in February, 1939, following their denunciations by fresh accessions for a further period subject to a reservation excluding from the Act any disputes arising out of events occurring during war. At the same time the Commonwealth Government considered whether similar action should be taken by it.
4. On 13th February, 1939, the Commonwealth Government decided to reaffirm its decision taken a few days previously, that it was inexpedient at that juncture to denounce the General Act.  The grounds for this decision were that the political objections to denunciation were of paramount importance, in that the consequences of the proposal to denounce might result in a charge of subterfuge, that the Commonwealth Government was seriously considering war and abandoning a well established part of the international machinery for the peaceful settlement of disputes.
5. It is clear in present circumstances that the reasons considered adequate by the Commonwealth Government in February 1939 for its decision to continue bound by the General Act no longer hold good. Not only has the machinery of the Covenant and Pact of Paris supplemented by the Optional Clause and the General Act completely failed to avert the present crisis, but various Members of the League have already indicated that they will remain neutral in the existing war. For the reasons set out in the memorandum concerning the Optional Clause, it is suggested that action be taken as soon as possible to denounce the General Act in so far as disputes arising out of events occurring during the present crisis are concerned.
6. Although the Commonwealth Government cannot now, strictly speaking, denounce the General Act or add to its acceptance a new reservation since, in accordance with its provisions, it is bound by it for a further period of five years from 16th August, 1939, it is suggested that action might be based upon grounds similar to those suggested in relation to the Optional Clause.
7. Draft cablegram accompanies this memorandum.