Indus Water Treaty: Hague Court of Arbitration Says It Is Competent To Decide Proceedings Initiated By Pakistan; India Rejects Ruling

Rejecting India's objections, the Permanent Court Of Arbitration at The Hague has ruled that it is competent to decide the proceedings instituted by Pakistan in relation to the Indus Water Treaty in 2016.

Pakistan had approached the court over the design and operation of run-of-river hydro-electric plants on the Indus, Jhelum, and Chenab rivers and their tributaries. India had said the Court was not competent to decide the questions placed before it and chosen not to appoint its two arbitrators to the Court of Arbitration.

"In a unanimous decision, which is binding on the Parties and without appeal, the Court rejected each of the objections raised by India and determined that the Court is competent to consider and determine the disputes set forth in Pakistan’s Request for Arbitration," the Permanent Court of Arbitration said in a press release.

In light of the determination in the Award, the court said it has also issued a Procedural Order, regarding the next phase of these proceedings. "In the next phase, the Court will address certain questions concerning the overall interpretation and application of the Treaty’s provisions on hydro-electric project design and operation, as well as the legal effect of past decisions of dispute resolution bodies under the Treaty," it said.

The Court of Arbitration is chaired by Professor Sean D. Murphy of the United States. The other members are Professor Wouter Buytaert of Belgium, Jeffrey P. Minear of the United States, Judge Awn Shawkat Al-Khasawneh of Jordan, and Dr. Donald Blackmore of Australia. The Permanent Court of Arbitration is an intergovernmental organization established by the 1899 Hague Convention on the Pacific Settlement of International Disputes. 

Dispute

Pakistan raised seven disputes in its Request For Arbitration:

• It asked whether India’s design for maximum Pondage of 7.55 million cubic meters of water for the Kishenganga Hydroelectric Plant is based on a method of calculations that contravenes the Treaty and whether India’s design for submerged power intakes at the Kishenganga Hydroelectric Plant contravenes the Treaty. Pakistan said the intakes are not located at the highest level consistent with satisfactory and economical construction and operation of the Plant as a Run-of-River Plant and with customary and accepted practice of design.
• Pakistan raised similar question in respect of Ratle Hydroelectric Plant.
• It further asked whether India’s design for low-level sediment outlets at the Kishenganga Hydroelectric Plant, in the form of a deep orifice spillway with three large, gated openings below Dead Storage Level and close to the reservoir bottom, contravenes the Treaty.
• It further asked whether India’s design for gated spillways for flood control at the Kishenganga Hydroelectric Plant, with the bottom level of the gates in normal closed position located 14.5 meters below Dead Storage Level and close to the reservoir bottom, contravenes the Treaty.
• It raised similar question with regard to Ratle Hydroelectric Plant, and further asked whether India’s proposed design for 2 meters of freeboard at the Ratle Hydroelectric Plant contravenes the Treaty

Decision

Preliminary Issues

In the press release, the Court said in relation to the applicable law, it observed that the Treaty is the primary source of law for the Court to interpret and apply, but that where necessary for the Treaty’s interpretation or application, it may also apply international conventions and customary international law.

"The Court also observed that some of India’s objections raised issues of interpretation or application of the Treaty that had already been determined by a prior Court of Arbitration convened under the Treaty, known as the Indus Waters Kishenganga Arbitration (PCA Case No. 2011-01), and that such determinations remained final and binding upon both India and Pakistan," it added.

On India’s non-appearance before the Court, it concluded that a Party’s non-appearance does not deprive the Court of competence, nor does it have any effect on the establishment and functioning of the Court, including the final and binding nature of its awards. At the same time, India’s non-appearance does not lessen the Court’s standing duty to verify that it is competent and that it has jurisdiction over the dispute before it, it added.

"The Court of Arbitration has competence, in accordance with Paragraph 16 of Annexure G to the Indus Waters Treaty 1960, to decide all questions relating to its competence," it said in the ruling.

India's Objections

The World Bank had transmitted India's correspondence to the Court of Arbitration. The Court decided that it would consider India’s objections.

On India's objection that the Court of Arbitration was illegally constituted, the Court said India had provided its consent by entering into and ratifying the Indus Waters Treaty, including its compulsory dispute settlement provisions. "Under the Treaty, India expressly agreed that “the Court shall decide all questions relating to its competence” (Annexure G, para. 16), and not that either Party alone could do so," it said.

On the objection that “dispute” can be said to have arisen only if a neutral expert first had been appointed and they had determined that a part or all of the difference between the Parties should be treated as a “dispute”, it said:

"The Court first recalled that the Parties had been unable to resolve the questions that had arisen through discussions in the Commission, despite determined efforts over a period of years. In the language of the Treaty, these questions had become “differences” able to be resolved by an independent third party. The Court further noted that the nature of the differences had evolved over time, to include legal differences of Treaty interpretation as well as technical differences".

The court also rejected the argument that Pakistan had not satisfied the procedural requirements of Articles IX(3), (4), and (5) of the Treaty. It also said there were no flaws in procedure for empaneling the court of arbitration.

"The Court observed that India’s Fifth Objection was that Article IX(6) of the Treaty prevented the Court from considering the questions “being dealt with by” the Neutral Expert. In interpreting Article IX(6), the Court found that the provision only operates so as to preclude certain steps up until the initiation of a court of arbitration proceeding (and not at any later point in time). In the present case, Pakistan’s Request for Arbitration initiated the Court of Arbitration proceeding on 19 August 2016. At that point in time, India had not yet requested the appointment of a neutral expert, and thus there was no neutral expert “dealing with” the questions placed before the Court so as to preclude the initiation of the Court’s proceeding," it added.

India Rejects Ruling

The Ministry of External Affairs (MEA) on Thursday said India’s "consistent and principled position" has been that the constitution of the "so-called Court of Arbitration" is in contravention of the provisions of the Indus Waters Treaty.

"A Neutral Expert is already seized of the differences pertaining to the Kishenganga and Ratle projects. The Neutral Expert proceedings are the only Treaty-consistent proceedings at this juncture. The Treaty does not provide for parallel proceedings on the same set of issues," it said.

India cannot be compelled to recognize or participate in illegal and parallel proceedings not envisaged by the Treaty, the MEA said.

"The Government of India has been in talks with the Government of Pakistan regarding the modification of the Indus Waters Treaty under Article XII (3) of the Treaty. This recent development only underlines why such modification is so necessary," it added.

On the Neutral Expert Process, the Court has said that it had not been asked to decide, and had not decided, whether the Neutral Expert was properly appointed or was competent to decide the issues before him.

"Nevertheless, in light of Pakistan’s consent to participate in the Neutral Expert process, a situation potentially arose in which both the Court of Arbitration and Neutral Expert were competent to address certain design and operation issues specific to the Kishenganga and Ratle hydro-electric plants. The Court recalled that situations in which multiple bodies may have competence over the same subject matter are relatively commonplace in public international law, and when parallel proceedings arise, each body has a duty of mutual respect and comity. This duty means that each body must perform its function in such a way as to facilitate the resolution of the Parties’ dispute," it added.

However, the court also said the issues before it are broader than those before the Neutral Expert. "The Court decided to proceed in a phased manner, with the next phase to address certain questions concerning the overall interpretation and application of the Treaty’s provisions on hydro-electric project design and operation, as well as the legal effect of past decisions of dispute resolution bodies under the Treaty. These questions were solely before the Court and not before the Neutral Expert," according to the Court's Press Release.

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