Island of Palmas Case, (Scott, Hague Court Reports 2d 83 (1932), (Perm. Ct. Arb. 1928), 2 U.N.

Rep. Intl. Arb. Awards 829), was a case involving a territorial dispute over the Island of Palmas (or Miangas) between the Netherlands and the United States which was heard by the Permanent Court of Arbitration. The Island of Palmas (known as Pulau Miangas in Bahasa Indonesian) is now within Indonesian sovereignty. This case is one of the most highly influential precedents dealing with island territorial conflicts. Facts of the case Palmas, also referred to as Miangas, is an island of little economic value or strategic location. It is two miles in length, three-quarters of a mile in width, and had a population of about 750 when the decision of the arbitrator was handed down. The island is located between Mindanao, Philippines and the northern most island, known as Nanusa, of what was the former Netherlands East Indies. In 1898, Spain ceded the Philippines to the United States in the Treaty of Paris (1898) and Palmas sat within the boundaries of that cession to the U.S. In 1906, the United States discovered that the Netherlands also claimed sovereignty over the island, and the two parties agreed to submit to binding arbitration by the Permanent Court of Arbitration. On January 23, 1925, the two government signed an agreement to that effect. Ratifications were exchanged in Washington on April 1, 1925. The agreement was registered in League of Nations Treaty Series on May 19, 1925.[1] The arbitrator in the case was Max Huber, a Swiss national. The question the arbitrator was to resolve was whether the Island of Palmas (Miangas), in its entirety, was a part of the territory of the United States or the Netherlands. The legal issue presented was whether a territory belongs to the first discoverer, even if they do not exercise authority over the territory, or whether it belongs to the state which actually exercises sovereignty over it. The Arbitrator's decision The Arbitrator, Swiss lawyer Max Huber, ruled in favor of the Netherlands position and stated that the Netherlands held actual title to Palmas : For these reasons The Arbitrator in conformity with Article I of the Special Agreement of January 23rd, 1928 DECIDES that : THE ISLAND OF PALMAS (or MIANGAS) forms in its entirety a part of the Netherlands territory done at The Hague, this fourth day of April 1928 Max Huber, Arbitrator Michiels van Verduynen, Secretary-General Right by discovery In the first of its two arguments, the United States argued that it held the island because it had received actual title through legitimate treaties from the original "discoverer" of the island, Spain. The United States argued that Spain acquired title to Palmas when Spain discovered the island and the island was terra nullius. Spain's title to the island, because it was a part of the Philippines, was then ceded to the United States in the Treaty of Paris (1898) after Spain's defeat in the Spanish-American War. The arbitrator noted that no new international law invalidated the legal transfer of territory via cession.

However, the arbitrator noted that Spain could not legally grant what it did not hold and the Treaty of Paris could not grant to the United States Palmas if Spain had no actual title to it. The arbitrator concluded that Spain held an inchoate title when Spain discovered Palmas. However, for a sovereign to maintain its initial title via discovery, the arbitrator said that the discoverer had to actually exercise authority, even if it were as simple an act as planting a flag on the beach. In this case, Spain did not exercise authority over the island after making an initial claim after discovery and so the United States claim was based on relatively weak grounds. Contiguity The United States also argued that Palmas was United States territory because the island was closer to the Philippines than to Indonesia which was then held by the Netherlands East Indies. The arbitrator said there was no positive international law which favored the United State's approach of terra firma, where the nearest continent or island of considerable size gives title to the land in dispute. The arbitrator held that mere proximity was not an adequate claim to land noted that if the international community followed the proposed United States approach, it would lead to arbitrary results. Continuous and peaceful display of sovereignty The Netherlands primary contention was that it held actual title because the Netherlands had exercised authority on the island since 1677. The arbitrator noted that the United States had failed to show documentation proving Spanish sovereignty on the island except those documents that specifically mentioned the island's discovery. Additionally, there was no evidence that Palmas was a part of the judicial or administrative organization of the Spanish government of the Philippines. However, the Netherlands showed that the Dutch East India Company had negotiated treaties with the local princes of the island since the 17th century and had exercised sovereignty, including a requirement of Protestantism and the denial of other nationals on the island. The arbitrator pointed out that if Spain had actually exercised authority, than there would have been conflicts between the two countries but none are provided in the evidence. Conclusion Under the Palmas decision, three important rules for resolving island territorial disputes were decided:

Firstly, title based on contiguity has no standing in international law. Secondly, title by discovery is only an inchoate title. Finally, if another sovereign begins to exercise continuous and actual sovereignty, (and the arbitrator required that the claim had to be open and public and with good title), and the discoverer does not contest this claim, the claim by the sovereign that exercises authority is greater than a title based on mere discovery.