SPECIAL AGREEMENT NO. 2

Whereas, an Arbitration Agreement was entered between Mr. Lance Paul Larsen, a Hawaiian subject, as Claimant, and the Government of the Hawaiian Kingdom, as Respondent, on October 30, 1999; and

Whereas, Paragraph 1 of Article I of the Arbitration Agreement provided that the "Parties agree to submit the following dispute alleged in the Complaint for Injunctive Relief filed on August 4, 1999, to final and binding arbitration in accordance with the Permanent Court of Arbitration Optional Rules for Arbitrating Disputes between the Two Parties of which Only One Is a State"; and

Whereas, on November 8, 1999, Claimant initiated arbitral proceedings in accordance with Article 8 of the Arbitration Agreement and pursuant to Article 3, Section 1 of the Permanent Court of Arbitration Optional Rules for Arbitrating Disputes between Two Parties of which Only One Is a State; and

Whereas, on December 3, 1999, both Parties were notified by correspondence of the Appointing Authority that he had spoken to Deputy Secretary General Phyllis Hamilton wherein she stated that both parties must adopt the UNCITRAL arbitration rules in place of the Optional Rules for Arbitrating Disputes between Two Parties of which Only One Is a State before the International Bureau of the Permanent Court of Arbitration could officially proceed in this matter (Attachment 1); and

Whereas, on December 3, 1999, both Parties did amend the arbitral proceedings as directed by Deputy Secretary General Phyllis Hamilton to adopt the UNCITRAL rules of arbitration in the place and stead of the Optional Rules for Arbitrating Disputes between Two Parties of which Only One Is a State; and

Whereas, the Parties thereafter submitted to the Arbitral Tribunal their Memorials and Counter-Memorials dated respectively 22 May 2000 and 22-23 June 2000; and

Whereas, the Arbitral Tribunal, by its Chairman, did submit to the Parties Procedural Order no. 3 of July 17, 2000, questioning "whether the dispute identified in Article 1 of the Arbitration Agreement is one which is capable of reference to arbitration under the UNCITRAL Rules, or which the Tribunal has jurisdiction to decide in accordance with international law; and

Whereas, the Parties do mutually agree that the present dispute does not necessarily fall within the scope of the UNCITRAL Rules, as there is no commercial contract in dispute between them, but rather under the Optional Rules for Arbitrating Disputes between Two Parties of which Only One Is a State, as originally agreed upon in the Arbitration Agreement of October 30, 1999 and the Notice of Arbitration of November 8, 1999; and

Whereas, the Parties did reluctantly submit to the direction of the Deputy Secretary General in amending the arbitration rules to reflect the UNCITRAL Rules in order for the International Bureau of the Permanent Court of Arbitration to proceed with the arbitral proceedings; and

Whereas, in a letter of correspondence to Mr. Allen Weiner, Legal Counsel for the American Embassy in the Hague of July 4, 2000, concerning the Hawaiian arbitration, Secretary General Tjaco T. van den Hout stated "[a]s you know this Arbitration is governed by the UNCITRAL Rules of Arbitration and it is expressly under those rules that the PCA has been willing to perform the registry functions" (Attachment 2); and

Whereas, the Parties are in agreement that the actions taken by the International Bureau of the Permanent Court of Arbitration throughout these proceedings do not necessarily acknowledge the continued existence of Hawaiian Statehood or it would not have required the Parties to amend the Notice of Arbitration to adopt the UNCITRAL Rules over the Optional Rules for Arbitrating Disputes between Two Parties of which Only One Is a State, and also to inform the American Embassy that it was only under the UNCITRAL Rules that the International Bureau of the Permanent Court of Arbitration was willing to serve as a registry for these arbitral proceedings; and

Whereas, in order for the International Bureau of the Permanent Court of Arbitration to properly function as a registry for the present arbitral proceedings between two Parties of which one is a State, the preliminary issue now before the Arbitral Tribunal is to verify the continued existence of Hawaiian Statehood as defined by international law; and

Whereas, should the Arbitral Tribunal issue an Interlocutory Award in the affirmative of Hawaiian Statehood, the International Bureau of the Permanent Court of Arbitration cannot deny the Parties' use of the Optional Rules for Arbitrating Disputes between Two Parties of which Only One Is a State that will provide the proper jurisdiction for the Tribunal in these proceedings;

Now therefore, Mr. Lance Paul Larsen, Claimant, and the Acting Council of Regency of the Hawaiian Kingdom, Respondent, have concluded the following Special Agreement:

ARTICLE I.
REQUEST FOR INTERLOCUTORY AWARD

Pursuant to Article 32(1) of the UNCITRAL Rules, the Parties request the Arbitral Tribunal to issue an interlocutory Award, on the basis of the 1843 Anglo-Franco Proclamation of 28 November 1843 and the rules and principles of international law, verifying the continued existence of Hawaiian Statehood with the Hawaiian Kingdom as its government.

ARTICLE II.
PROCEEDINGS

1. The proceedings shall consist of written pleadings and oral hearings.
   
   
2. The written phase shall include:
   
   
   1. Reply by both Parties to be submitted to the Arbitral Tribunal not later than 30 September 2000 pursuant to paragraph 17(a) of the Procedural Order no. 3 of 17 July 2000; and
      
      
   2. such other written pleadings as may be approved by the Arbitral Tribunal at the request of the Parties, or as may be directed by the Arbitral Tribunal.

3. An oral proceedings shall follow the written phase.
   
   
   1. The oral proceedings shall be held at the facilities of the Permanent Court of Arbitration at The Hague, the Netherlands, on the dates determined by the Arbitral Tribunal after consultation with the Agent of the Respondent.
      
      
   2. The oral proceedings shall be open to the Public.

ARTICLE III.
EXECUTION OF AGREEMENT

1. This agreement shall enter into force on the date of the signatures of the two Parties.
   
   
2. The parties shall notify the International Bureau of the Permanent Court of Arbitration of this Special Agreement in accordance with Article I(4) of the Amended Special Agreement of 25 January 2000, by joint letter of the Parties.

ARTICLE IV.
INTERLOCUTORY AWARD OF THE ARBITRAL TRIBUNAL

1. The Interlocutory Award of the Arbitral Tribunal as to the questions described in Article I shall be final and binding on the Parties and shall be made public.
   
   
2. Upon the issuance of the Interlocutory Award the Parties agree to amend the dispute as follows:
   
   The Arbitral Tribunal is asked to determine, on the basis of the Hague Conventions IV and V of 18 October 1907, and the rules and principles of international law, whether the Claimant has any redress against the Respondent Government of the Hawaiian Kingdom?

In witness whereof, the undersigned, being duly authorized thereto, have signed this Agreement.

Done at Honolulu, this 2nd day of August, 2000.

[signed] Ninia Parks, Esquire Attorney for Lance P. Larsen, Claimant

[signed] David Keanu Sai Agent for the Hawaiian Kingdom Respondent