Agendum 294 26 February 1940
THE OPTIONAL CLAUSE OF THE STATUTE OF THE PERMANENT COURT OF INTERNATIONAL JUSTICE
1. On 7th September, 1939, Cabinet gave consideration to the question of the position of the Commonwealth Government in relation to the Optional Clause of the Permanent Court of International Justice. (A copy of the previous submission to Cabinet is annexed hereto for reference. ) It will be remembered that the Optional Clause provides that, as between the parties to it, the Permanent Court shall have jurisdiction in respect of certain classes of legal disputes between nations. It will also be remembered that Great Britain and the Dominions adhered to the Clause in 1930, but this adherence was based upon the belief that a new international system based on the Covenant of the League and the Pact of Paris would be established and would bring about a considerable change in the question of belligerent and neutral rights. In view of the fact, however, that the principles of the Covenant had broken down in practice, it was decided that steps should be taken by the Commonwealth Government to notify the League of Nations that it would not regard its acceptance of the Optional Clause as covering any disputes arising out of the present war. The Governments of the United Kingdom and the other Dominions took similar steps.
2. At least seven Governments, including several with whom disputes arising out of belligerent action might well occur, have formally reserved their position in relation to these notifications.
3. As was pointed out in the previous submission to Cabinet, the Optional Clause could not, so far as the Commonwealth Government was concerned, be lawfully denounced until 18th August, 1940, since the original acceptance of the Clause was for 10 years from 18th August, 1930. In the case of the United Kingdom the term of 10 years ran from 5th February, 1930.
4. A telegram has now been received from the Secretary of State for Dominion Affairs  pointing out that the date after which notice of denunciation could lawfully be given on behalf of the United Kingdom was 5th February, 1940, and the Government of the United Kingdom considers it advisable, in order to put the question beyond all doubt, to terminate its acceptance of the Optional Clause, as it can now lawfully do, and deposit with the League of Nations a new acceptance with the addition of a new reservation covering disputes arising out of events occurring in relation to hostilities. The proposal is that the new acceptance should be limited to a period of five years.
5. The Government of the United Kingdom desires to receive the views of Dominion Governments in the matter.
6. It is recommended that the Commonwealth Government agree with the action proposed by the Government of the United Kingdom and that, for its part, the Commonwealth Government take similar action to that now proposed in August, 1940, when it will be in a position lawfully to do so.
7. If this course be approved it is suggested that the following telegram be despatched to the Secretary of State:
'Your telegram Circular D.64. Optional Clause. His Majesty's Government in the Commonwealth of Australia had already given some consideration to this question but deferred final decision until August 1940, when period of its acceptance terminates. In view of receipt of your telegram further consideration has now been given to the matter and the Commonwealth Government concurs in proposal set out in your telegram under reference. For its part it intends to take action on same lines in August.' 
H. S. GULLETT