There is no doubt that Malaysia and Singapore established an important diplomatic precedent in the manner in which both countries resolved a disagreement over taxes relating to the transfer of railway land. Not only was the issue unambiguously defined and separated from other settled points of a larger agreement, the parties referred it to an international tribunal for arbitration, and a "win-win" outcome was sought that would leave each better off than before. In the same spirit, the tribunal's decision was mutually received "with an open heart", as Malaysian Prime Minister Najib Razak put it.

Settling the issue amicably in order to move forward on various fronts, as Prime Minister Lee Hsien Loong noted, is a reflection of the underlying pragmatism that is now driving bilateral ties.

But it was not always so, as amply illustrated by the chequered past of the Points of Agreement. This had been signed in November 1990 to settle the matter of railway lands in Singapore which, along with water agreements and a "crooked bridge", had been a persistent source of vexation for both sides. But various efforts over the years to resolve outstanding issues failed to achieve what arbitration has neatly effected, following a land swop that Mr Lee and Datuk Seri Najib had crafted in 2010.

Third-party arbitration to deal with Gordian knots is a rational way to settle matters that have been left to fester for decades. Successive generations would otherwise be left to wonder why the logic of mutuality and cooperation had not prevailed over politics much earlier - all the more when the costs of lost opportunity and inflation are factored into bilateral projects that do manage to take off ultimately.

When nations refuse to address thorny issues reasonably, what can emerge are positions that are contentious, like China's "nine-dash line" to lay hands on maritime rights in a manner that is inconsistent with international law, and Brazil's "frontage theory" to lay claim to Antarctic resources. However, considerations of tribunals like the Permanent Court of Arbitration in The Hague are more likely to be well grounded in fact and accepted international norms.

As a model of dispute resolution, the arbitral route has much to commend itself to nations that simply cannot see eye to eye on a wide range of issues relating to trade and commerce, competition for resources, migration, ethnic groups or borders. It offers contenders control over how differences can be resolved, an impartial setting, the opportunity to sequester politically charged matters so cool heads can ponder the implications, and an objective judgment that is likely to be more palatable.