These events were nearly the cause of a war between Britain and Spain—backed by France—and all three countries were poised to dispatch armed fleets to defend the rival claims to sovereignty of the barren but strategically important islands.

The British thus had managed to gain a diplomatic victory,[1] and reached an inconclusive compromise with Spain in which both nations maintained their settlements but neither relinquished its claim of sovereignty over the islands.

[citation needed] During the 17th century, the English government was to make a claim, but it was only in 1748—with the report of Admiral Lord Anson—that London began to give the matter its serious attention.

In January 1765, unbeknown to the French, the British, under John Byron, surveyed and claimed the Falklands, and decided that Port Egmont on the western island was the best site for a base.

Responding to Spanish pressure on learning of Bougainville's settlement, the French reluctantly handed over Port Louis to their closest ally on 1 April 1767, and it was renamed Puerto Soledad.

That if the Spaniards talking of their possessions included the A[merican] & S[outh] Seas, and that our navigating there gave occasion to them to Suspect a War, I had no hesitation to say that I would advise one if they insisted on reviving such a vague & strange pretension, long since wore out, as the exclusive right of those Seas.In June 1770, the Spanish governor of Buenos Aires, Francisco de Paula Bucareli y Ursua, sent five frigates under General Juan Ignacio de Madariaga to Port Egmont.

[6] Amid this flurry of threats and counter-threats, the Spanish attempted to strengthen their position by winning the support of France, invoking the Pacte de Famille between the two Bourbon crowns.

[9] This was satisfactory; both were done: On 22 January 1771, the Prince of Masserano[10][11] (ambassador of the Spanish Court[12]) delivered a declaration,[13] in which the King of Spain "disavows the violent enterprise of Bucareli," and promises "to restore the port and fort called Egmont, with all the artillery and stores, according to the inventory."

The agreement also stated: "this engagement to restore port Egmont cannot, nor ought, in any wise, to affect the question of the prior right of sovereignty of the Malouine, otherwise called Falkland's islands.