In 1923, disputes arose in Corfu, as 5 Italians were murdered on Greek soil. (They were working on redrawing national borders between Greece and Albania - WW1 peace settlement.)
Italian government blamed Greece and attacked Corfu. This went against the covenant of the L of N, which Italy had signed and so Greece brought matter to the league:
Italy was an important member of league with a permanent seat on the council and was also an ally of Britain and France.
Rather than blame Italy, L of N proposed Italy withdraw from Greece, but that Greece pay 50 million lire compensation for the 5 men said to have died on Greek soil. This highlighted the League's weakness in dealing with major powers.
Italy had clearly broken the covenant by attacking another member state, yet it was Greece who were ultimately expected to pay compensation despite there being no evidence in the Greek government's involvement in the Italian men's deaths.
Despite controversy this created surrounding the L of N, the crisis was solved peacefully.