On January 1, 1906, General Leonard Wood -- the American Governor of Moro Province in the Philippines -- paid a visit to the island known variously as Palmas or Miangas. What he found surprised him. The island, which lay well within the boundaries of the territory Spain had ceded to the United States in the 1898 Treaty of Paris, was flying a Dutch flag. The Netherlands considered Palmas part of the Dutch East Indies. Wood reported the situation to the military authorities, and what might have been a minor diplomatic misunderstanding became a formal territorial dispute. The two governments agreed to submit the matter to binding arbitration before the Permanent Court of Arbitration in The Hague. Swiss jurist Max Huber was appointed as the sole arbitrator. The question was deceptively simple: did Palmas belong to the United States or to the Netherlands?

The American case rested on two arguments. First, discovery: Spain had found the island, and Spain's sovereign rights over it had been transferred to the United States through the Treaty of Paris in 1898. The Americans pointed to cartographers, treaties -- including the 1648 Treaty of Munster between Spain and the Netherlands -- and the island's location within the defined boundaries of the Philippine archipelago as proof of Spanish sovereignty. Second, contiguity: Palmas was geographically closer to the Philippines than to any Dutch territory, and therefore should belong to whichever power controlled the Philippines. The Dutch took a different approach entirely. They argued that the Dutch East India Company had exercised actual sovereignty over the island since at least 1677, through treaties with local princes, the establishment of Protestant practice, and the exclusion of other foreign nationals. Discovery was irrelevant, the Dutch maintained, if the discovering power had never actually governed.

Arbitrator Huber ruled for the Netherlands, and in doing so established principles that reshaped international law. On discovery, Huber acknowledged that Spain may have initially found the island, giving it what he called an inchoate title -- a preliminary claim that required follow-through to become definitive. But Spain had never exercised any actual authority over Palmas. No Spanish administration, no judicial presence, no governance of any kind. An inchoate title, Huber ruled, cannot prevail over a definite title established through the continuous and peaceful display of sovereignty. On contiguity, Huber was equally decisive. He found no basis in positive international law for the idea that geographic proximity alone confers sovereignty. If it did, the results would be arbitrary -- any powerful nation could claim distant islands simply by being closer to them than a rival. The Dutch, by contrast, had governed the island for over two centuries through treaties with local rulers, the administration of religious life, and the practical exercise of control.

The Island of Palmas decision established a rule that still resonates in territorial disputes around the world: sovereignty over territory requires continuous, peaceful exercise of state authority -- not merely the act of arriving first. Huber's distinction between discovering a place and governing it proved extraordinarily influential. The case is routinely cited in disputes over islands from the South China Sea to the Arctic, wherever nations argue about who owns a piece of land based on historical claims versus effective control. Miangas itself became part of the Netherlands East Indies and, after Indonesian independence, part of Indonesia. Today it remains a remote Indonesian island, roughly 100 miles east-southeast of General Santos in the Philippines and 70 miles north of the Talaud Islands. Its population was about 750 when the case was decided in 1932. The island that changed international law has itself changed very little.