Ethiopia's diplomatic efforts succeeded in getting the League of Nations to officially discuss the issue. At that point, the Italian tactic changed, submitting to the issue being in the hands of the League. The Italian delegate announced that, in line with the spirit of the League's Covenant and its traditions, Italy wished to encourage direct negotiations concerning the dispute. This declaration of goodwill was deceptive on Italy's part.

Britain was annoyed by the stubbornness of Emperor Haile Selassie, who was confident that a strict adherence to collective security would strengthen his throne, as indeed happened, albeit over a longer period than he expected. British military experts agreed that military operations and economic difficulties would tame Mussolini, just as defeat would tame the Emperor, and then the path to a settlement would open.

The Italian ruse succeeded with Ethiopia, which agreed to refer the matter to direct arbitration at a time when Italy continued its military preparations, increasing the clamor of its general mobilization campaigns and preparing minds for invasion. Referring the matter to arbitration gave Italy sufficient time to complete its military preparations, benefiting from the pro-Italian stance of Britain and France.

Italy deliberately prolonged the arbitration procedures, aiming for them not to succeed, and benefiting from the impression created by its agreement to them, which portrayed it as seeking a peaceful settlement of the dispute through diplomatic channels and based on the 1928 agreement between the two countries.

The Italians initially demanded the establishment of a neutral zone before negotiations began. The Ethiopians agreed to this demand, and this zone was designated on the Ethiopian border with the Italian colony of Eritrea. Negotiations stalled due to Italy's insistence that Ethiopia first respond to its demand for compensation and an apology, while the Ethiopians refused to pay compensation or apologize except through a judicial ruling by an international court.

Ethiopia once again resumed its correspondence with the League of Nations, calling for the implementation of the League's Covenant regarding the dispute and drawing attention to the seriousness of the general mobilization in Italy and the dispatch of its forces and equipment to its borders. When the League rejected Italy's objection to the Ethiopian request, Italy informed the League that the direct negotiation phase had ended and that it would prepare the climate for initiating steps to establish an arbitration committee. This approach was intended to obstruct and delay the resolution of the dispute and keep it away from the League of Nations.