Permanent Court of Arbitration

The Permanent Court of Arbitration (PCA) recently ruled that it is competent to hear Pakistan’s objections to India’s Kishenganga and Ratle hydroelectric projects in Jammu and Kashmir. Read here to learn more about the PCA and the ruling.

India issued a statement saying it will not join proceedings initiated by Pakistan at the Permanent Court of Arbitration over two hydropower projects in Kashmir that have ruled it was competent to consider and determine the disputes.

The Indian side has argued that Pakistan’s decision to approach the Hague-based tribunal was unlawful because the Indus Waters Treaty’s clauses already required a neutral expert to resolve the disputes.

Due to the “obstinacy” of the Pakistani side, India also requested the amendment of the six-decade-old treaty earlier this year.

Permanent Court of Arbitration (PCI)

The PCA was established by the Convention for the Pacific Settlement of International Disputes, concluded at The Hague in 1899 during the first Hague Peace Conference.

The Conference had been convened at the initiative of Czar Nicolas II of Russia “with the object of seeking the most objective means of ensuring to all peoples the benefits of a real and lasting peace, and above all, of limiting the progressive development of existing armaments.”

Among the aims of the Conference had been the strengthening of systems of international dispute resolution, especially international arbitration.

The PCA has developed into a modern, multi-faceted arbitral institution ideally situated to meet the evolving dispute resolution needs of the international community.

Structure:

The PCA has a three-part organizational structure consisting of:

• An Administrative Council that oversees its policies and budgets
• A panel of independent potential arbitrators known as the Members of the Court
• Its Secretariat, known as the International Bureau, is headed by the Secretary-General.

Beyond its headquarters in the Peace Palace in The Hague, the PCA has opened offices in various cities to make its services more accessible in different regions of the world.

• Buenos Aires Office
• Ha Noi Office
• Mauritius Office
• Singapore Office
• Vienna Office

The PCA has a Financial Assistance Fund which aims at helping developing countries meet part of the costs involved in international arbitration or other means of dispute settlement offered by the PCA.

The decision of the PCA is binding on the parties, and there is no mechanism for appeal.

Read here: International Court of Justice

PCA ruling on India-Pakistan dispute

The Permanent Court of Arbitration (PCA) in the Hague rejected India’s objections to the Pakistan-initiated procedure over water use in the Indus River basin, reopening a process that had been blocked for many years.

India and Pakistan have been arguing over hydroelectric projects on the shared Indus River and its tributaries for decades, with Pakistan complaining that India’s planned hydropower dams in upstream areas will cut flows on the river which feeds 80% of its irrigated agriculture.

• To resolve the dispute, Pakistan sought resolution through PCA arbitration proceedings in 2016.
• This prompted India to request that the World Bank appoint a neutral expert under the terms of the treaty.
• India has boycotted The Hague court proceedings and questioned the competence of the court.
• India called the arbitration proceeding illegal as a neutral expert was also looking at the issue and the World Bank-brokered treaty prohibits parallel proceedings.

Also read: Alternative Dispute Resolution

Hydroelectric Project Dispute: A brief

The Indus Water Treaty allocates the Western Rivers (Indus, Jhelum, Chenab) to Pakistan and the Eastern Rivers (Ravi, Beas, Sutlej) to India. At the same time, the Treaty allows each country certain uses on the rivers allocated to the other.

The Treaty sets out a mechanism for cooperation and information exchange between the two countries regarding their use of the rivers, known as the Permanent Indus Commission, which has a commissioner from each country.

• The Treaty also sets forth distinct procedures to handle issues that may arise: “questions” are handled by the Commission; “differences” are to be resolved by a Neutral Expert; and “disputes” are to be referred to an ad hoc arbitral tribunal called the “Court of Arbitration.”
• As a signatory to the Treaty, the World Bank’s role is limited and procedural.
• In particular, its role in “differences” and “disputes” is limited to the designation of individuals to fulfill certain roles in the context of Neutral Expert or Court of Arbitration proceedings when requested by either or both of the Parties.

Disagreement over two hydroelectric power plants:

• The disagreement between India and Pakistan concerns the design features of the Kishenganga (330 megawatts) and Ratle (850 megawatts) hydroelectric power plants.
• The Kishenganga Hydro-Electric Plant is on the Kishenganga/Neelum River (a tributary of the Jhelum), and the Ratle Hydro-Electric Plant is on the Chenab.

Read here: Indus Water Treaty

Inferences of Permanent Court of Arbitration ruling

The PCA’s decision makes the current conflict between India and Pakistan over the hydroelectric dams more complicated and unclear.

The decision calls India’s stance into question and casts doubt on the Indus Water Treaty’s efficacy and application.

The effects of the decision go beyond the particular dispute; they could affect India and Pakistan’s bilateral relations, notably regarding cooperation and sharing of water resources.

Previous year questions

Q. Present an account of the Indus Water Treaty and examine its ecological, economic, and political implications in the context of changing bilateral relations. (Mains 2016)

-Article by Swathi Satish