The future of the Indus Water Treaty is uncertain, as India sent a notice on 25 January 2023 to Pakistan about the treaty renegotiation, while Pakistan seemed to clutch on the “unilateral” decision of seeking the resolution mechanism by approaching the Court of Arbitration.
The issue of the amendment notice continues to be a point of contention between India and Pakistan. While the World Bank, their guarantor, has maintained and funded the treaty so far and agreed to acknowledge the applications of India and Pakistan througout the treaty.
The recent modification of the Treaty that India put forward is according to it's Article IX, which states a hierarchical amendment for the Settlement of Differences and Disputes. A step-by-step method to use the three resolution mechanisms is the expected amendment by India. However, disputes persist due to distrust and conflicts between countries over two significant projects: Kishanganga (Neelum) and Ratle.
On September 19, 1960, in Karachi, a treaty was signed between India and Pakistan, the Indus Water Treaty, a landmark agreement between both the countries that has facilitated co-operation and peace in the region. It governs the use of six rivers - the Indus, Jhelum, Chenab, Ravi, Beas, and Sutlej - that flow through both countries.
Under the treaty, India was given charge of the Eastern rivers: the Beas, Ravi, and Sutlej, while Pakistan was granted the Western rivers, the Indus, Jhelum, and Chenab. This arrangement allowed both nations to develop their respective agricultural and hydroelectric power industries while ensuring equitable distribution of water resources.
According to the information provided in a case study on the treaty, World Bank had stated before signing the treaty that the “entire flow of the eastern rivers to be allocated to India, and all of the western rivers, except a small amount from the Jhelum, to be allocated to Pakistan.”
The treaty also established a Permanent Indus Commission that held two commissioners from each country who would meet annually to “establish and promote cooperative arrangements for the treaty implementation; promote cooperation between the Parties in the development of the waters of the Indus system; examine and resolve by agreement any question that may arise between the Parties concerning interpretation or implementation of the Treaty; submit an annual report to the two governments.”
A neutral expert was appointed to handle any dispute situations as the second resolution mechanism if the commissioners couldn’t resolve the conflicts and settle for an agreement. If the case goes beyond the neutral expert's ability to determine and negotiate, then the resolution mechanism of appointing the Court of Arbitration should have opted. The World Bank straightforwardly explained the three resolution mechanisms as: ‘questions’ are handled by the Commission; ‘differences’ are to be resolved by a Neutral Expert; and ‘disputes’ are to be referred to a seven-member arbitral tribunal called the ‘Court of Arbitration.’
Followed by this, the two giant Indian projects - Kishanganga (Neelum) and Ratle hydropower were the primary reasons for the objection of Pakistan. In 2016, Pakistan directly proposed a unilateral decision to adjudicate this situation through the Court of Arbitration despite the request put forth by India to appoint a neutral expert in 2015.
In response to this situation, in 2016, the World Bank decided to process a parallel remedy by allowing a neutral expert along with the Court of Arbitration, which further complicated the situation. Notably, it was an unfavorable decision for India because, foremostly, their project construction would be vulnerable to injunctions as the Court of arbitration had the powers to do so. Injuncting the projects would pause the project in which India had invested handsomely.
Secondly, Pakistan opting for the court's decision as a resolution mechanism unilaterally violated Article IX, which is translucently stated in the treaty that follows a “graded mechanism of dispute settlement.” Abrogating the treaty was an extreme thought altogether.
Furthermore, in 2016, the World Bank realized the negative impact of this simultaneous solution and changed its decision. It put forward a mutually agreeable solution between India and Pakistan to discuss and resolve and withdraw the former parallel process.
Hereafter, between all the annual meetings held from 2017 to 2022, the conflicts between both countries persisted, and Pakistan disagreed to discuss the issues mutually. The disputes continued over the Kishanganga and Ratle Project, which India constructed on the Eastern Rivers rightfully. Pakistan claimed India for the diversion of the streams despite receiving the net water amount they were sanctioned.
These decisions and steps altogether did not bring peace; recently, on March 31, 2022, World Bank took the same conclusion of employing simultaneous resolution mechanisms by appointing a neutral expert along with the arbitration arrangement. This triggered India to amend and modify the treaty on January 25 for the first time after it was signed in 1960 when it sent a notice to Pakistan for a diplomatic solution.
It concerns Article XII of the treaty that states, “The provisions of this Treaty may from time to time be modified by a duly ratified treaty concluded for that purpose between the two Governments.” India has convened Pakistan to appoint two commissioners and has asked to strictly follow the resolution mechanisms' hierarchical approach instead of a direct abrogation.
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