Game version used: 1.05b (Game originally started on 1.02)
In my game a new treaty limits new ship construction to 12" guns and a maximum displacement of 18,000 tons. I auto-generated a design to start with. It correctly used 12" cannons, but it has a displacement of 19,800 tons.
- The checkmark says the design is OK. - If I try to save it, it lets me. - If I change to 13" cannons, the checkmark says it violates treaty limitations. - If I change it to 12" with 19,900 tons, it says it violates treaty limitations.
Thus, it appears that the Designer thinks the treaty limits ships to 19,800 tons, while the text initially given to the player, and listed in the tooltip next to Treaty Time Remaining says "Max displacement: 18,000".
Autocracies can cheat on displacement by 10%, while democracies are limited to the exact treaty limit.
It's specifically only Liberal Democracies that are restricted to the exact treaty limit. All the other government types - Limited Democracy, Autocracy, Fascist, Communist, and Eastern - can exceed the treaty displacement limit by up to 10%.