The Spanish Treaty of Peace in 1878 with the Sulu Sultanate had granted Spain suzerainty and permitted them to set up a small garrison on Siasi Island and in the town of Jolo.

Major General Elwell Stephen Otis sent Bates orders to agree with the Sultan of Sulu:[1] You are hereby appointed and constituted an agent on the part of the United States military authorities in the Philippines to discuss, enter into negotiations, and perfect, if possible, a written agreement of character and scope as hereinafter explained, with the Sultan [of Sulu] which upon approval at these headquarters and confirmation by the supreme executive authority of the United States, will prescribe and control the future relations, social and political, between the United States Government and the inhabitants of the [Sulu] archipelago.Otis mistakenly assumed the Sultan was the ruler of all Moros, concluding that Bates simply needed to enter into an agreement with him acknowledging a transfer of the treaty with the Spaniards in 1878.

However, with a close reading of supporting documents from the Philippine Commission, Bates discovered that while Spain ceded their rights to the United States in the Treaty of Paris, the Spaniards merely held suzerainty over the Sultanate of Sulu and not sovereignty.

Otis overlooked [clarification needed] which disproved that Spain had a valid basis in international law to include the Sulu Archipelago in its cessation of the Philippines to the United States.

Moreover, Sultan Jamal ul-Kiram and his datus (tribal chiefs) were to receive monthly payments in return for flying the American flag and for allowing the US the right to occupy lands on the islands.