On 21 November 1901, the Governments of Bolivia and Peru concluded a general treaty of arbitration,z by virtue of which they bound themselves to submit to arbitration all controversies present or future "whatever may be their nature and causes, provided that it has been found impossible to settle them by direct negotiation " (article 1). In case of a dispute between the Parties a special agreement was to be concluded " with a view to determining the subject-matter of the controversy, to fixing the points that are to be settled, the extent of the powers of the arbitrator, and the procedure to be observed " (article 2). Articles 7 and 8 determined the powers of the arbitrator, who was to decide " in strict obedience to the provisions of international Law, and, on questions relating to boundary, in strict obedience to the American principle of uti posidetis of 1810, whenever, in the agreement mentioned in article 2, the application of the special rules shall not be established, or in case the arbitrator shall not be authorized to decide as an amicable referee".

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