28. The British Delegation commenced their labours by considering the second of these two tasks, as it was a British suggestion emanating from the Prime Minister himself. The question of the acceptance by His Majesty's Government of the principle of compulsory arbitration for legal disputes, as provided in the optional clause referred to in article 36, paragraph 2, of the Statute establishing the Permanent Court of International Justice, had been examined in London before the meeting of the Assembly. This examination had shown so clearly the difficulties which might arise in connection with disputes with neutral Powers arising out of British naval action in time of war, that the limitation of the acceptance by his Majesty's Government of the optional clause by the exclusion of disputes arising out of British belligerent action at sea was suggested. To achieve this it was proposed that His Majesty's Government {231} should make a reservation as to disputes arising out of action taken in conformity with the Covenant, or at the request, or with the approval, of the Council of the League. 29. The suggestion was accepted by the British Delegation. As however, the question was clearly one which affected the Empire as a whole, the Dominion and Indian Delegations were especially consulted in regard to it. The position as it appeared to the British Delegation was fully explained to them, and it was understood that they would telegraph to their respective Governments, making clear the nature of the reservation proposed.