When Cooperation Falters: The Legal Contest over the Indus Water Treaty
The Indus Water Treaty, hereinafter referred to as ‘IWT’, is an agreement between India and Pakistan which assigns the three Eastern Rivers to India namely Ravi, Beas and Sutlej. With three Western Rivers allocated to Pakistan being Indus, Jhelum and Chenab. The World Bank, for a decade, facilitated and mediated the negotiation between the two signatories, India and Pakistan. The current dispute accords with the constitution of an arbitral tribunal by the Permanent Court of Arbitration, herein referred to as ‘PCA’, commonly known as the administrative arm of the PCA. The PCA rendered a supplemental award on the Competence of the Court under Article IX and Annexure G of IWT, to which India raises a jurisdictional challenge. However, what occurs when legal complications and conflicting interpretations challenge a treaty created to promote peace and harmony? When does collaboration devolve into confrontation, and what does this mean for peace as neighbours share critical resources? This article examines the tensions and implications of competence, consent, and sovereignty in the arbitration of Indus waters. It situated some of their effects within the broader context of international treaty law and transboundary water governance.
From Treaty Text to Tribunal: Legal Complexities in the Indus Water Arbitration
This section covers the legal contestation under the IWT examination through a framework analysis. Firstly, an analysis of the Treaty’s dispute resolution mechanism, beginning from the Permanent Indus Commission (PIC), transitioning to a Neutral Expert, and finally concluding with arbitration. Secondly, India’s jurisdictional objection to the PCA decision, examining the principles of Kompetenz Kompetenz (Competence-Competence) and Autonomy. Thirdly, a conclusion is drawn concerning the broader implications for rebus sic stantibus and the loss of consent and cooperation.
The IWT establishes a clear, tiered dispute resolution mechanism, prioritising cooperative technical solutions. The jurisdiction of the arbitral tribunal may be subject to challenge through a careful interpretation of Article IX of the IWT. This article explicitly mandates the establishment of a PIC, which is empowered to adjudicate any “questions” arising from the Treaty, thus effectively clarifying the rights and obligations resulting from it, making it the first dispute resolution mechanism.
In the past, the numerous issues that have arisen under the IWT have generally been solved cooperatively at the PIC level, evidenced by the cooperative agreement made regarding the Salal dam project. This cooperative approach highlights the imperative application of the Treaty in its context. The Treaty stipulates the appointment of a Neutral Expert, as detailed in Article IX(2)(a). It provides for a Neutral Expert to address more serious “differences”. Consequently, it is argued that only fundamental “disputes” that cannot be settled by these mechanisms are to be referred to a Court of Arbitration pursuant to Article IX(5). The word “dispute” refers to the most extreme degree of severity and, as a result, the only circumstance that can activate further legally binding mechanisms like Article IX(5). The Permanent Court of International Justice (PCIJ) case of Mavrommatis Palestine Concessions, which defines a dispute as “a disagreement on a point of law or fact, a conflict of legal views or interests between two persons,” serves as the clear source of the authoritative standard. Multi-Tiered Dispute Resolution Clauses (MDRCs) form an integral part of this framework, offering an institutionalised process for resolving differences. This tiered system is not a matter of choice, but rather an advanced system for resource management, conflict escalation control, and state relations.
As outlined in Article IX(5), the procedural minimum, which is usually referred to as a “difference” or “question” before it is filed as a “dispute,” has some connections to state sovereignty when both states can request corrective action in a way that preserves their relationship. This strategy is best illustrated by specialised regimes, such as the UN Convention on the Law of the Sea (UNCLOS) Part XV dispute settlement system, which mandates preliminary diplomatic obligations before states are permitted to select a binding judicial forum, such as the International Tribunal for the Law of the Sea (ITLOS). Before escalation, this framework makes sure that lower-intensity interactions are handled.
In 2016, Pakistan filed a suit for arbitration prior to the unilateral discharge by India; the disagreement over the Kishenganga and Ratle hydroelectric projects was mainly technical, relating to specific design specifications, rather than fundamental disagreement over the Treaty. The PIC and the Neutral Expert were initially tasked with resolving these technical disagreements. The progression from “question” to “difference” to “dispute” outlines a clear and sequential hierarchy. The arrangement is not a set of independent paths from which a party can choose without restriction, but is procedurally dependent on the failure of each prior step. The language in Annexure F, namely that a “difference” may be dealt with by a Neutral Expert, does not allow a party to bypass an earlier process and ignore the other options in going directly to arbitration. However, PCA has gone beyond its authority by labelling the technical issues as a “dispute”. This framework establishes a systematic approach to ensuring compliance and resolving disputes related to the Treaty. Therefore, it is argued that the PCA inherently lacks the jurisdiction to resolve the issue at hand.
Furthermore, it is argued that the exercise of power by PCA concerning the adjudication of questions arising out of the Treaty is outright illegitimate due to the operation of Article IX(6). The aforementioned article explicitly states that the constitution of a court of Arbitration shall be barred when the issues are being dealt with by a Neutral Expert. A Neutral Expert is empowered to “determine the effect of the provisions of this Treaty”, which suggests that any disputes in their interpretation should be dealt with less aggressively. The PCA argues that there is a disagreement between the parties regarding the interpretation of the Treaty, even though the Treaty states that the purpose and object is “to promote cooperation between the two sides”. This amounts to misclassification of the dispute, which invalidates the PCA’s competence. It is further contended that India, in good faith during 2022, actively participated in the proceedings before the Neutral Expert, therefore opting for a firm stand regarding the patent illegality and untenability of ‘parallel proceedings’ being embarked upon before the Neutral Expert and Court of Arbitration.
In 2023, PCA applied the Principle of Kompetenz Kompetenz, which empowers the tribunal to determine its own jurisdiction. PCA found India’s non-appearance did not deprive them of competence, thereby enabling them to assume jurisdiction despite claims of parallel proceedings. This aforementioned principle is presented as a corollary of the Principle of Autonomy, a widely recognised and well-established tenet in international arbitration. In other words, the decision of an arbitrator to retain power and separate the arbitral clause from the main agreement to determine jurisdiction must be founded on the Principle of Autonomy, and not solely on the “Competence-Competence” rule. The basis of the arbitration agreement rests on the foundation of consent. The power of the tribunal cannot exceed the core established principle of consent.
In this context, the consent given by India is based on a condition that is triggered upon the failure of the prior dispute resolution mechanism. The PCA applied the Principle of Autonomy to justify the arbitration clause as a distinct agreement to assume competence. Therefore, it is contended that procedural preconditions for activating the arbitration clause have not been met. The tiered dispute mechanism itself grants an arbitration tribunal jurisdiction. Thus, the arbitration clause cannot be separated as the preceding tiers specify the particular conditions under which the consent is to be bound by arbitration. India maintains that the tribunal’s establishment and procedures amount to a “clear infraction” of the Treaty.
The PCA describes it as a standard application of international arbitration principles; however, the PCA’s claim to jurisdiction amounts to an unreasonable, tawdry breach of the IWT’s non-divisible, cohesive dispute resolution scheme. The intention of both parties was to create a procedural hierarchy to de-escalate and resolve issues at the lowest level. The PCA performed a critical act of implicit severance by labelling India’s action as procedural hurdles, therefore isolating the issue from the context of the IWT multi-tier dispute mechanism.
Article 31(1) of the Vienna Convention on the Law of Treaties “(VCLT)” states that a treaty should be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the Treaty in their context and in light of its object and purpose. Therefore, it is conclusively established that the interpretation of the Treaty terms by the PCA amounts to a unilateral interpretation of the Treaty’s structure, labelled by India as “illegal”. Article 62 “of the VCLT” codifies the doctrine of Rebus Sic Stantibus, whichprovides that when there has been a fundamental change of circumstances since an agreement was concluded, a party to the agreement may terminate it. The provision is essentially intentionally restrictive in its application.
In 1998, the European Court of Justice upheld the suspension of a trade agreement between the European Community and Yugoslavia following an outbreak of war and the collapse of the Yugoslav state institutions. The unforeseeable change that radically alters the parties’ obligations is necessary for Article 62 to be operative in function. The claim that conflict is “foreseeable” does not distinguish between discernible political tension and the commission of a jus cogens violation.
An act of aggression is a shocking and unanticipated breach of the absolute norm of peace in the relationship that occupies an entirely different legal category than chronic border skirmishes. Such a fundamental shift irrevocably alters the political fabric required for the operation of the treaty. Report A/74/10 by the United Nations consists of peremptory norms of general international law (jus cogens) which explicitly recognise and prohibit acts of aggression by a State. In 2025, India held the Treaty in abeyance through application of the aforementioned doctrine as Pakistan initiated an act of aggression against India. Thereby, fundamentally changing from the prior stance of cooperation to an act of aggression
Rethinking Arbitration in Treaty-Based Disputes
In conclusion, this analysis has elaborated on the complex relationship of competence, consent, and sovereignty in the IWT arbitration. The dispute mainly revolved around the conflicting claim of jurisdiction made by the PCA, which India labelled as excessive and procedurally improper, against the intended framework for a cooperative resolution of disputes established in the Treaty. When different interpretations of legal authority become evident alongside changing political circumstances, the exploratory tiered framework, conceived to promote the peaceful settlement of disputes, is often tested.
This case will require us to reconsider how international treaties can adapt to ever-evolving conditions without compromising commonly held principles. What alternatives should future treaty frameworks look into to strike a balance between the requirement for legal certainty and flexibility in light of the shifting “geopolitical landscape?” There are a number of plans that can be put in place to outline the necessary processes for prospective treaty structures, thus responding to the inadequacies of the IWT model. Such agreements need to include certain clauses that balance assurance and adaptability in volatile conditions. This is possible through sunset clauses, review terms on schedules, and clearly outlined mandatory security interest clauses.
Ashmit Khurana is a fourth-year law student at CHRIST (Deemed to be University), Bangalore, with a keen interest in arbitration law and international dispute resolution.
Picture Credit: PTI
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