PCA Asserts Competence in India-Pakistan Hydroelectric Projects Dispute | 10 Jul 2023

Why in News?

The Hague-based Permanent Court of Arbitration (PCA) recently ruled that it has the competence to hear Pakistan's objections to India's Kishenganga and Ratle hydroelectric projects in Jammu and Kashmir.

• India, however, rejects the constitution of the "Court of Arbitration," asserting that it goes against the provisions of the Indus Waters Treaty(IWT).

What is Indus Waters Treaty?

• About:
  • The Indus Waters Treaty is a water-sharing agreement between India and Pakistan.
  • The treaty was brokered by the World Bank and signed on September 19, 1960.
  • It governs the distribution and utilization of the waters of the Indus River system, which includes six rivers: Indus, Jhelum, Chenab, Ravi, Beas, and Sutlej.
  • The treaty aims to promote cooperation and peaceful management of transboundary water resources between India and Pakistan.
• Allocation of Rivers:
  • Under the treaty, three eastern rivers (Ravi, Beas, and Sutlej) are allocated to India for unrestricted use.
  • The three western rivers (Indus, Jhelum, and Chenab) are allocated to Pakistan for unrestricted use.
  • India is allowed limited use of the western rivers for domestic, non-consumptive, and agricultural purposes.
• Key Provisions:
  • Construction of Projects:
    • The treaty permits India to construct run-of-the-river hydroelectric projects on the western rivers, subject to certain conditions.
  • Dispute Resolution:
    • Communication via Permanent Indus Commission (PIC):
      • PIC has a commissioner from each country.
      • Parties inform each other about planned projects on the Indus River.
      • PIC facilitates the exchange of necessary information.
      • Aimed at resolving differences and avoiding escalation.
    • Neutral Expert:
      • If the PIC fails to resolve the issue, it advances to the next level.
      • The World Bank appoints a neutral expert.
      • Expert attempts to resolve differences.
    • Court of Arbitration (CoA):
      • If a neutral expert fails, the dispute goes to CoA.
      • CoA resolves the dispute through arbitration.
      • The IWT states that Neutral Expert and CoA steps are mutually exclusive, meaning that only one of them can be used at a time for a given dispute.

What is the Hydroelectric Project Dispute Between India and Pakistan?

• Hydroelectric Projects:
  • The case involves a dispute between India and Pakistan over the Kishenganga hydroelectric project (on the Kishanganga River, a tributary of the Jhelum River), and the Ratle hydroelectric project (on the Chenab River) in Jammu and Kashmir.
    • The two countries disagree over whether the technical design features of these two hydroelectric plants contravene the IWT.
• Pakistan's Objections:
  • Pakistan objects to the hydroelectric projects, citing violations of the IWT, concerns about reduced water flow, environmental impact, and differing treaty interpretations.
  • In 2016, Pakistan retracted its request for a Neutral Expert and proposed a CoA instead.
  • India requested the appointment of a Neutral Expert in 2016, emphasizing its importance in the process, which Pakistan sought to bypass.
• World Bank Intervention:
  • World Bank paused the process due to separate requests from India and Pakistan, urging resolution through the PIC.
  • Pakistan refused to discuss the issue during PIC meetings, leading the World Bank to initiate actions on Neutral Expert and Court of Arbitration.
    • The Treaty does not empower the World Bank to decide whether one procedure should take precedence over the other.
    • The World Bank sought to fulfill its procedural obligations with respect to both the CoA and the Neutral Expert.
• India's Opposition:
  • India opposes the constitution of the CoA, citing contravention of Indus Waters Treaty provisions.
  • India also questioned the jurisdiction and competence of the CoA, stating that it was not properly constituted as per the treaty.
  • India has not appointed arbitrators or attended the court's proceedings, emphasizing the need for a single dispute resolution process.

What is the Ruling of the Permanent Court of Arbitration?

• Ruling:
  • The PCA ruled that the Court of Arbitration (CoA) has the competence to consider Pakistan's objections to India's hydroelectric projects in Jammu and Kashmir.
  • The ruling was based on a unanimous decision, binding on both parties and without any possibility of appeal.
  • The PCA rejected India's objections to the competence of the CoA, as raised through its communications with the World Bank.
• India's Response:
  • India has been maintaining that it will not join the Pakistan-initiated proceedings at the PCA as the dispute is being already examined by a neutral expert under the framework of the IWT.
• Implications:
  • The PCA's ruling adds complexity and uncertainty to the ongoing dispute between India and Pakistan regarding the hydroelectric projects.
  • The ruling challenges India's position and raises questions about the effectiveness and interpretation of the IWT.
  • The implications of the ruling extend beyond the specific dispute, potentially impacting bilateral relations between India and Pakistan, particularly concerning water-sharing and cooperation.

Source: IE