The Permanent Court of Arbitration considers its jurisdiction under the Indus Waters Treaty between India and Pakistan | Arbitration Links | Perspectives | linklaters

Introduction

The recent decision of the Permanent Court of Arbitration (“PCA“) in Islamic Republic of Pakistan v. Republic of India (Indus Water Treaty) has confirmed the jurisdiction of the PCA to determine certain disputes under the Indus Water Treaty (the “Treaty”), which was signed by Pakistan and India (the “Parties”) in 1960 after a dispute over water sharing. Pakistan commenced arbitration under the Treaty in 2016, alleging that the Kishanganga hydroelectric project (the “Kishanganga Project”) in the Indus River system consumed more water than it was entitled to under the Treaty.

factual background

mid 20’s^th In the 19th century, disputes arose between Pakistan and India regarding the use of water from the Indus river system. On September 19, 1960, the Parties signed the Treaty, which governs the respective rights and obligations of the Parties in relation to the water provided by the Indus River system. The Treaty also contains provisions relating to the settlement of “differences and disputes” arising under the Treaty.

In 2007, India started construction of the Kishanganga Project, a hydroelectric project that diverts water from the Kishanganga River to a power station on the Jhelum River. Pakistan argues that this has the effect of diverting to India water that would otherwise have flowed to Pakistan.

In 2007, Pakistan raised objections to India’s Kishanganga Project. Although the dispute was largely resolved by an arbitral award rendered in 2013, a number of issues related to the design of the Kishanganga Project remained outstanding, including the location of power outlets, the design of outlets, and the type and location of outlets. spillways. After unsuccessful negotiations with India between 2013 and 2016, Pakistan issued a Request for Arbitration on August 19, 2016. On October 4, 2016, under Article IX of the treaty, India requested that the World Bank appoint a neutral expert to determine a number of issues that were substantially similar to the issues that Pakistan had already raised in its Request for Arbitration.

Arbitration and the PCA decision

India objected to the PCA’s jurisdiction on the following grounds:

• the PCA had no jurisdiction to decide on its own jurisdiction;
• the PCA had no competition like no”dispute”had arisen in the sense of the dispute resolution mechanism;
• the prerequisites for the establishment of an arbitration court had not been established; that the CPA was not duly constituted;
• the PCA had no jurisdiction as a neutral expert had been appointed to determine the issues in dispute;
• Pakistan had not demonstrated theneed” required to establish an arbitration tribunal under the Treaty.

In February 2023, the PCA decided that it would consider India’s objections and determine its jurisdiction on an expedited basis as a preliminary phase of the proceedings. India refused to name arbitrators in the dispute, appear before the PCA, or otherwise participate in the proceedings.

However, the PCA concluded that India’s failure to “participated (did not) nor (could not) prevent the proceeding before the Court from advancing, nor prevent the Court from issuing orders, directives or decisions, which culminated in awards with final and binding effect for both Parties.”.

In reaching this conclusion, the PCA referred to India’s conduct during the 2013 arbitration proceedings. In those proceedings, while India did not accept that the PCA had jurisdiction to resolve the dispute in 2013, it appointed two arbitrators and appeared before the PCA. The PCA concluded that India had accepted that, under the terms of the Treaty, its jurisdictional objections were to be decided by the PCA and were not a matter for it to determine unilaterally. However, the PCA noted that India’s non-participation did not diminish the importance of the PCA’s duty to verify its competence and jurisdiction over the dispute before it.

The PCA unanimously rejected each of India’s jurisdictional objections.

The PCA concluded that India’s act of signing and ratifying the treaty indicated its consent that the PCA could determine its own jurisdiction in respect of disputes before it. In relation to India’s second, third, fourth and sixth objections, the PCA concluded that the prerequisites for arbitration had been established and that the Tribunal was properly constituted.

Ultimately, the PCA concluded that although the Treaty prohibits arbitration from being initiated while disputes are being dealt with by a neutral expert, India had only appointed a neutral expert. after Pakistan had already issued its Request for Arbitration. Consequently, the arbitration had not been improperly initiated. In addition, the PCA noted that the Treaty does not prohibit Parties from arbitrating and seeking a neutral expert determination such as “parallel proceedings”, and that such agreements “are, in fact, commonplace in public international law… In such circumstances, there is a general duty of any international dispute resolution body to exercise its competence in such a way as to facilitate the actual resolution of the dispute of the Parties and avoid risks. of duplicate procedures or contradictory decisions”. However, the PCA decided to advance the procedure in a manner “stages”, first considering the issues that were not examined by the neutral expert (ie, issues of interpretation and application of the Treaty) before subsequently deciding whether and how the other issues should be addressed.

Conclusion

The PCA’s interpretation of the Treaty in the decision is consistent with established principles of international law and arbitration. As the PCA noted, it is a hackneyed law that “Fewer propositions can be advanced in international law with greater confidence than that a party’s failure to appear does not deprive a duly constituted court or tribunal of its jurisdiction.”, including arbitration proceedings governed by the Treaty. While it did not appear at the jurisdictional stage, it remains to be seen whether India appears at the merits stage and in the PCA’s decision on the substantive issues before it.