In 1960, India's then Prime Minister Shri Jawaharlal Nehru and Pakistan's then President Field Marshal Mohammad Ayub Khan, under the aegis of the World Bank, inked a treaty known as the Indus Water Treaty 1960 (IWT) in order to agree upon the mechanics of utilization of the Indus Basin (mainly comprising of six rivers- Indus, Ravi, Beas, Chenab, Jhelum and Sutlej) the to each country's mutual benefit. IWT has been lauded as one of the best examples of settlement of inter-country water disputes (p 183, International water law: selected writings of Professor Charles B. Bourne). In fact, some argue that the IWT has significantly contributed to the development of international water law (including the Helsinki Rules on the Uses of the Waters of International Rivers).
Indo-Pak Dispute over the Indus River Basin:
Even pre-independence, there were differences between the Punjab (located upstream) and the Sind (located downstream, a part of the Bombay province) in relation to water sharing and building of dams in the Indus basin, especially in regard to the Sutlej river. In 1935, a commission known as the Anderson Commission/ the Indus Commission was appointed to resolve disputes relating to water allocation. Post independence, India and Pakistan had severe differences over harnessing the Indus river. On 1st April 1948, the Indian Punjab government stopped flow of the river to the Pakistani Punjab region, thus escalating tensions between India and Pakistan. In 1950, both countries considered several agreeable models of water sharing, including the joint development management and management of the Indus basin (Joint management model is not something new to International Law. In the petroleum sector, countries have, despite serious border disputes, agreed upon joint licensing of petroleum exploration blocks to private players. See, Ana E. Bastida et al, Cross-Border Unitization and Joint Development Agreements: An International Law Perspective 29 Hous. J. Int'l L. 355 (2007) and David M. Ong, Joint Development Of Common Offshore Oil And Gas Deposits: “Mere” State Practice Or Customary International Law? 93 Am. J. Int'l L. 771 (1999) for a survey of such arrangements in the petroleum sector ).
In the 1950s, both parties tried to negotiate a settlement but failed. The building of the Bhakra dam had an adverse effect on the negotiations, especially from Pakistan's point of view as Pakistan viewed the building of the dam as denying them water supplies. While Pakistan was of the view that the discordance should to be resolved by a neutral tribunal, India considered it undignified as it showed two countries' inability to resolve disputes among them.
Money: The Catalyst:
Since India and Pakistan could not resolve the issue by mutual discussions, the World Bank offered its good offices to act as mediator in resolving the dispute. Money acted as a catalyst in making India and Pakistan keep their border disputes in abeyance and enter into the IWT. When the Bhakra-Nangal projects were conceived in India, World Bank was reluctant to finance the Nangal project because the Nangal project's viability depended on the Bhakra project and Bhakra project involved the the disputed waters, which was the cause of the reluctance of the World Bank. India was asked to resolve the Indus water dispute so that World Bank could consider financing of the Bhakra as well as the Nangal projects. USA, through David Lilienthal, was considering means of resolution of the dispute (as a part of its strategy to ensure that the world, and India, does not fall into the hands of communism) and came to a conclusion that intervention by a neutral third party like World Bank would be ideal for resolving the dispute. Consequently, and after prolonged negotiations, India and Pakistan signed the IWT in 1960.
For more than thirty years, India has been planning to build a dam in the Kishanganga River (a tributary of the Jhelum river, which forms a part of the Indus basin) for producing hydroelectricity. Media reports suggest that the said project involves diversion of water from one tributary of the Jhelum river to another tributary of the same river. Pakistan alleges that India is not permitted under the IWT to do so. The main provisions in this regard are Article III , Annexure D and E of the IWT. Pakistan also has some concerns about the design of the dam. Hence, Pakistan has invoked arbitration under the provisions of the IWT. Chiefly, Article IX and Annexure G of the IWT deal with arbitration. According to Annexure G, the arbitral tribunal would consist of seven arbitrators, two arbitrators to be appointed by each party and three umpires to be appointed by special procedures detailed in Annexure G to the IWT.
Pakistan has reportedly nominated Jan Paulsson and Justice Bruno Simma as their arbitrators. Readers who follow developments in arbitration need no introduction to Jan Paulsson. He is the President of the London Court of International arbitration and an authoritative figure in international arbitration. Justice Simma is a judge of the International Court of Justice.
In this blog, we generally do not follow non-commercial arbitration as non-commercial arbitration is a huge area encompassing several fields such as disputes under investment treaties, public law disputes, sports disputes etc, making it difficult to follow. However, we will make an exception to this case and endeavour to bring updates on the case.
1. Most of the information on the history of the IWT has been taken from a Ph.D. thesis submitted by Undala Z. Alam to the Durham University. The said thesis is a comprehensive work on the subject and can be downloaded from here.
2. For a critique of the Indus Water Treaty, see Manav Bhatnagar, Reconsidering the Indus Water Treaty, 22 Tul. Envtl. L.J. 271 (2009).