Indus Waters Treaty 1960 - A flawed judgement

PK Saxena - Former Indian Commissioner for Indus Waters. Adviser, Ken Betwa Link Project Authority, Bhopal

On 6 July 2023 the Court of Arbitration at Hague rendered its Award on its competence, in an arbitration initiated by Pakistan against India on its two hydroelectric projects, namely Kishenganga (330 MW) in the Jhelum basin and Ratle (850 MW) on Chenab. India did not take part in the proceedings of the Court on its principled position that the constitution of this Court Arbitration (CoA) is in contravention of the provisions of the Indus Waters Treaty. In its decision, the Court held that India’s non-appearance in these proceedings does not deprive the Court of Arbitration of competence to address all questions raised in Pakistan’s Request for Arbitration.

India rejected the Court’s observation and reiterated its "consistent and principled" position that the constitution of the unauthorized "so-called Court of Arbitration" is in contravention of the provisions of the Indus Waters Treaty as the same violates the graded mechanism for resolution outlined in the treaty. India holds that, as per Article IX of the Treaty, when a question arises concerning the interpretation or application of this Treaty, it is first taken to the Permanent Indus Commission, comprising two Commissioners from either country; if the differences are not resolved, then either party can escalate the issue to a neutral expert. The matter can be taken to the Court only under two conditions: one, if both the parties agree that the issue requires legal interpretation of the Treaty; and two, when the neutral expert appointed earlier, refers the matter to the CoA. But in the present case, both options were not followed and Pakistan unilaterally dragged India to the CoA.

Analysis of the Court’s Award

The Court’s Award, which India rejected, is skewed - deliberately or otherwise - and overlooks a multitude of vital facts to reach the conclusion that India’s request for the appointment of a neutral expert was after Pakistan had already initiated the proceeding for the Court, an action which consequently resulted in the parallel proceedings.

In carefully chosen words, the Award stated that “By way of a Request for Arbitration dated 19 August 2016, Pakistan initiated the present arbitration proceedings before the Court of Arbitration..." and "Subsequently, on 4 October 2016, India requested the World Bank to appoint a neutral expert..." A careful read of the Award will reveal that while the Court mentioned the date on which Pakistan "initiated the proceedings" to appoint the Court i.e., 19 August 2016, it carefully avoided mentioning the date when India “initiated the proceedings" of appointment of the Neutral Expert and instead used the phrase "requested the World Bank". This skewed interpretation which was made by the Court several times in its Award doesn’t seem to be without an intent.

While arriving at this conclusion, the Court  completely ignored the fact that the request for appointment of the Neutral Expert is a three-stage graded procedure outlined in Annexure F of the Treaty. It begins with a notice issued by a commissioner to his counterpart under paragraph 5(a), to notify his intention to ask for the appointment of a Neutral Expert and prepare a joint statement within two weeks under paragraph (5)(b). After the expiry of the period of two weeks, the first Commissioner may request both  Governments under paragraph 5(c) to jointly appoint a Neutral Expert under paragraph 4(b)(i). If no appointment is made jointly by both  Governments within one month after the date of the request, the Commissioner can request the World Bank to appoint the Neutral Expert under paragraph 4(b)(ii). In the present case, India initiated the process by serving notice to Pakistan Commissioner on 11 August 2016, eight days before Pakistan initiated the proceedings of the Court. This was followed by the notice to both Governments on 6 September 2016 and then a request to the World Bank made on 4 October 2016. Clearly, India initiated the process of appointment of a Neutral Expert much before Pakistan, a fact that the predetermined Court chose to overlook, for the reason brought out subsequently.

Further, the Court noted that India’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.” In its zeal to go ahead, the Court ignored that the non-participation of a party in the proceedings of the already constituted Court is different from its non-participation in the constitution of the Court itself.

Paragraph 4 of Annexure G of the Treaty stipulates how the Court is established. It states that “Unless otherwise agreed, between the Parties, a Court of Arbitration shall consist of seven arbitrators appointed as follows…” and goes on to describe how these seven Arbitrators are appointed, i.e. two Arbitrators each from both the countries and the three Neutral Umpires appointed pursuant to paragraph 4(b) of Annexure G. Further, paragraph 11 of the same Annexure stipulates that “As soon as the three umpires have accepted the appointment, they together with such arbitrators as have been appointed by the two Parties under paragraph 6 shall form the Court of Arbitration.”

There is not a single provision in the Treaty that provides for a different or curtailed composition of the Court in the absence of the participation of a party. This vouches for India’s assertion that the formation of the court itself is illegal.

Pakistan relies on paragraph 11 of Annexure F, that “Unless the Parties otherwise agree, the Court shall be competent to transact business only when all the three umpires and at least two arbitrators are present.” This is a “transaction of business clause” for the seven-member court constituted under paragraph 4 of Annexure G and not for constituting the Court itself. It is difficult to believe that ignoring such a glaring provision by the Court is not deliberate.

Furthermore, the Court held that “a “dispute” could arise and be placed before a court of arbitration without first being addressed by a neutral expert, so long as a commissioner had not already made an actual request for the appointment of a neutral expert to address the matter. On the factual record, India made no such request prior to Pakistan’s initiation of the Court’s proceedings”. This conclusion, again, has been reached based on the skewed interpretation of the dates of “initiating” the respective proceedings, as mentioned earlier.

Lastly, the Court admitted that an essential requirement of Article IX(3) relating to the preparation of a report in the Commission on the “dispute” has not been fulfilled and no report had been prepared by the Commission. To justify the same, it jumped to the provisions of Article IX(4) to hold that “the Treaty permitted the process of forming a court of arbitration to move forward where one Party was of the view that the report was being “unduly delayed”. The Court found that, in the present circumstances, Pakistan had reasonably come to the conclusion that the report was being “unduly delayed”. The fact that the then Pakistan Commissioner intimated his intent to constitute the Court of Arbitration on 25 February 2016 and the Indian Commissioner, on 14 March 2016 had requested for an early meeting of the Commission, only to be ignored by Pakistan, is  not commensurate with this assertion. Pakistan continued to reject India’s requests for a meeting of the Commission.

It is also interesting to note that the questions raised by Pakistan explicitly fall within the provisions of Part 1 of Annexure 'F' which requires them to be resolved by a Neutral Expert under Article IX(2)(a). This was done in the case of Baglihar (2005-2007) where the issues were resolved by the Neutral Expert. This fact was admitted several times by the Pakistan side itself before giving the notice for the appointment of the Neutral Expert to resolve these issues in 2015 but revoked later in 2016. The Court did not explain why it had chosen to ignore this unambiguous provision of the Treaty, as well as the precedence. Ignoring the facts brought out by India and even twisting them while giving the Award, highlights the bias in the award.

The dubious conduct of the World Bank

Despite the World Bank’s claims that its role is procedural, the facts remain that backed by some poor legal advice, the World Bank did not interpret its role accurately, much to the ire of both parties. To cover up the initial follies, it went on to commit a series of blunders resulting in what can only be dubbed as a tragedy of errors.

More than a week after India filed a request with Pakistan on 11 August 2016 to jointly appoint a Neutral Expert, Pakistan responded on 19 August 2016 to appoint a court of arbitration and quite mischievously copied the request to the World Bank as well. It was duly acknowledged by the President of the World Bank pursuant to paragraph 9 of Annexure G. This was against the provisions of the Treaty. Paragraph 7 (b)(ii) of Annexure G allows both parties 60 days to establish the Court of Arbitration jointly. Only if the parties fail to do so, does the Treaty allow the World Bank to step in. Thus there was no reason for the World Bank to enter the stage in this issue before 18 October 2016. However, the Bank brought itself into the act, invoking paragraph 9 of Annexure G, much before the mandatory sixty days, based only on Pakistan's perception that “there is no reason to wait until that date”. The Treaty does not provide for the World Bank to act on the requests based on the perceptions of either party.

Further, after India’s request dated 11 August 2016 to appoint the Neutral Expert did not evoke a favourable response, the Indian Commissioner informed the Governments of both India and Pakistan on 4 September 2016 under the provisions of paragraph 4(b)(ii) of Annexure F. This was followed by a request dated 4 October 2016 to the World Bank, after the mandatory sixty days to appoint the Neutral Expert under paragraph 4(b)(iii) of Annexure F. Thus, on 4 October 2016, by way of India’s request to appoint the Neutral Expert, the World Bank had only one legal request before itself i.e. that of India. However, instead of acting on the same, the World Bank waited till 18 October 2016 when the aforesaid mandatory 60 days period elapsed and then declared that the Bank was now seized of two requests and would  initiate the two parallel processes. This, while acknowledging that “such an action is ‘fraught with practical and legal difficulties, risking to render the Treaty unworkable.’ ” The Bank has no acceptable answer for its inaction between 4-18 October 2016 thus keeping the Indian request pending. It attributed this delay to “due diligence” and “evaluating whether the submission had been made in accordance with the relevant Treaty requirements”. This action of keeping the Indian request pending for two weeks allowed Pakistan’s request to mature. Clearly, it is more than a “function of happenstance” as the Bank later claimed.

Additionally, during the first round of the process of appointment of the Neutral Expert, the World Bank deliberately and wrongly disclosed to Pakistan, the names acceptable to India as Neutral Expert and went on pursuing hasty and unreasonable timelines for action on Pakistan's request. This puts in shadow, the Bank's impartiality in handling the matter. In a nutshell, the World Bank’s actions were arbitrary - both legally and logically - and contradict its stated “usual neutral, proactive and pragmatic approach.”

Conclusion

The Indus Waters Treaty 1960 is the most generous Treaty ever signed by an upper riparian country wherein India could get only 18% of the waters and even for this, she contributed £62.06 million (around $ 4 billion at today’s level) towards the costs of the replacement works. The restrictions imposed by the Treaty are not generous but accepted nevertheless. It is India’s right to design the project on Western Rivers consistent with the principles of sound and economical designs within the limiting conditions imposed by the Treaty. India cannot relegate this right given under the not-so-generous provisions of the Treaty and cannot accept selective and convenient interpretations of Pakistan, based on nefarious perceptions to impose further restrictions.

India, as a responsible state, has never hindered water flows to which Pakistan is entitled, not even during wars and other periods of tense relations. The success of any water Treaty largely depends on the upper riparian state. The fact that the Treaty is widely quoted as a success story for over sixty years, highlights the commitment of India towards the successful implementation of the Indus Waters Treaty, which was originally signed with a mutual desire to attain the most exhaustive and satisfactory utilization of the waters of the Indus system of rivers.

Lately however, for quite a few years now, this Treaty is being abused by Pakistan to advance its political agenda of hampering the development of  Kashmir by objecting to every project in J&K, irrespective of its size. Because of Pakistan’s obstructionist approach, there is a growing feeling that the Treaty is a major impediment towards the development of water resources in the Union territory of J&KL, thereby becoming the proverbial albatross around our collective necks. The Pakistani "intransigence" on its implementation aided by the actions of the World Bank and the so-called Court of Arbitration has proven to be a flash point.

It is a welcome step by India to reject the Award of the illegally constituted Kangaroo Court and call for renegotiations of the Treaty. The dispute resolution mechanism in the present Treaty is a relic of the colonial era which heavily relies on the West and allows them to meddle in bilateral affairs. It is time for India to assert her right to exploit her resources for the benefit of our people, and take all necessary steps to secure this right.

(Exclusive to NatStrat)