THE AUTHOR:
Smeeksha Padney, Academic Fellow at the National Law University Delhi
The Permanent Court of Arbitration’s (“PCA”) most recent Award in Pakistan v. India does more than just establish the legal status of the Indus Waters Treaty. It raises a more profound question about international arbitration: can a dispute-resolution system operate effectively when one State seeks to place the treaty “in abeyance” while technical proceedings concerning the same infrastructure remain ongoing?
The Indus Waters Western Rivers Arbitration (Pakistan v. India) has become a significant contemporary inter-State arbitration before the PCA. What began in 2016 as a dispute concerning the design of Indian hydroelectric projects on the Western Rivers has now evolved into a disagreement concerning treaty continuity, unilateral cessation, provisional safeguards, the interplay between conflicting dispute-resolution frameworks, and the boundaries of arbitral jurisdiction.
This latest development is especially significant. On 31 August 2026, the Court of Arbitration decided unanimously that the Indus Waters Treaty (“IWT”) remained fully in force, although India had decided in April 2025 to suspend the treaty. In the meantime, it imposed interim restrictions on certain construction activities at the Ratle Hydroelectric Plant (“RHEP”) until the Neutral Expert issues its final decision, which is anticipated in July 2027.
The 31 August 2026 developments are significant because the Court issued two closely connected questions: the continuing legal force of the Indus Waters Treaty and the preservation of the Ratle Hydroelectric Plant dispute while the parallel Neutral Expert process remains pending. In its Award on Treaty Status, the Court considered the legal effect of India’s April 2025 decision to place the Treaty “in abeyance”. It examined the possible legal grounds invoked or potentially available to justify suspension or termination, including sovereignty, fundamental change of circumstances, armed conflict and countermeasures, and unanimously concluded that none of those grounds permitted the unilateral suspension or termination of the Treaty. The Court therefore held that the Treaty remains fully in force and that India continues to be bound by its obligations under the Treaty, including those governing the design and operation of hydroelectric projects on the Western Rivers. At the same time, in its Order on Interim Measures, the Court addressed Pakistan’s request for restrictions on construction at the Ratle Hydroelectric Plant pending the Neutral Expert’s decision on whether the project complies with the Treaty. The Court unanimously imposed measures preventing India from carrying out specified construction works on the dam wall and power intake structure above designated levels, with those restrictions extending until 90 days after the Neutral Expert’s final decision, which is expected in July 2027. It also imposed a reporting measure concerning the RHEP construction schedule, while declining two other measures requested by Pakistan. Importantly, these measures do not amount to a final finding that the Ratle project violates the Treaty; rather, they are preservative in character, designed to prevent construction from advancing to a stage at which any later finding of non-compliance would be ineffective or excessively difficult to remedy. The twin decisions therefore reinforce the central procedural issue identified in this article: the PCA is not merely determining substantive Treaty rights, but is also attempting to preserve the institutional space within which the Court of Arbitration and the Neutral Expert can continue to perform their respective functions.
The significance of the present dispute becomes clearer when situated against the PCA’s earlier jurisprudence, particularly the South China Sea Arbitration, Baglihar Determination, and the Kishenganga Arbitration. The South China Sea Arbitration provides the closest structural analogue to the present procedural impasse. China challenged the tribunal’s jurisdiction, declined to participate in the proceedings, and subsequently rejected the award, yet the tribunal proceeded on the basis that China’s non-appearance did not deprive the tribunal of jurisdiction. The Indus Waters proceedings have now moved into a comparable, though not identical, phase: following India’s April 2025 decision to place the Treaty “in abeyance”, India declined to participate in the subsequent Treaty Status proceedings, while the Court nonetheless proceeded to determine the legal effect of that decision. The PCA expressly recorded that, although India made no submissions, the Court considered positions discernible from Indian governmental correspondence and public statements. The analogy with the South China Sea case should, however, be treated cautiously. Unlike the UNCLOS framework, the Indus Waters Treaty contains a deliberately differentiated architecture between the Permanent Indus Commission, the Neutral Expert and the Court of Arbitration. The difficulty in the present case is therefore not merely one of a recalcitrant State refusing to participate; it is also whether a treaty designed around differentiated forms of dispute settlement can maintain institutional coherence when one State no longer accepts the authority of the arbitral mechanism. Pakistan’s 2023 proposal for coordination sought to address this problem precisely by assigning the Court the task of resolving systemic questions of Treaty interpretation under paragraph 8 of Annexure D, while leaving the Neutral Expert to apply those principles to the technical circumstances of individual projects. The subsequent trajectory of the dispute makes that proposed division considerably more difficult to sustain in practice.
The relationship between the Baglihar Determination and the Kishenganga Arbitration reveals a deeper substantive challenge. Pakistan’s 2023 Statement accurately recognised that the two resolutions embraced fundamentally divergent methodologies regarding the interplay between the Treaty’s linguistic limitations and advancing engineering practices. The Baglihar Neutral Expert relied on modern scientific and technical expertise and determined that drawdown flushing was allowable under the Treaty. Kishenganga later rejected “best practices” as an independent standard for assessing the legality of project design. It held that the Treaty’s own limitations governed the design of the plant and concluded that drawdown flushing was prohibited. Nevertheless, Kishenganga did not eliminate Baglihar. It carefully maintained the binding nature of the Neutral Expert’s decision on the Baglihar project, while not treating that decision as having universal precedential significance. This is an important distinction. The problem lies not only in the different outcomes in Baglihar and Kishenganga but in the Treaty’s allocation of different geographical and precedential effects to decisions issued under different institutional frameworks. The 2023 Statement was warranted in recognising a systemic risk: conflicts regarding pondage, storage capacities, submerged intakes, sediment discharge, spillways, and freeboard are expected to arise in future Western Rivers initiatives, with the relevant legal standard hinging on whether the matter is viewed as a general Treaty interpretation or a plant-specific technical difference.
The Legal Framework of the Evolving Indus Waters Treaty
The first argument arises from the distinctive structure of the IWT agreement. Article III provides for (a) Pakistan’s unrestricted use of the Western Rivers and (b) India’s limited use of those waters, including for the generation of hydroelectric power, subject to the limitations set out in Annexure D. The result is a carefully negotiated agreement: Pakistan is given the primary rights over the Western Rivers, while India retains a limited right to use those rivers for specific purposes.
The technical design of hydroelectric projects is therefore inseparable from the allocation of sovereign rights under the Treaty. Questions concerning pondage, spillways, freeboard, turbine intakes, sediment management and drawdown flushing are not merely matters of engineering preference. They determine the practical extent of India’s permitted use of the waters and, consequently, the extent to which Pakistan’s entitlements are protected.
The ongoing arbitration is important because Pakistan has sought findings that go beyond the particular project. The 2023 Statement on Coordination and Division of Competence described the dispute as concerning important questions regarding the interpretation of paragraph 8 of Annexure D and sought to set standards relevant to future run-of-river projects on the Western Rivers, extending beyond KHEP and RHEP.
Mapping the Development of Indus Waters Jurisprudence
The divergence between the Baglihar Determination and the Kishenganga Arbitration is crucial for understanding the present dispute.
In the Baglihar case, the Neutral Expert adopted a methodology that stressed modern scientific and engineering standards. The assessment was carried out on the assumption that the Treaty could be reviewed in the light of scientific and technological progress and modern practices. The Neutral Expert remarked that the Treaty allows for drawdown flushing.
But then Kishenganga went a different way. The Court recognised the binding effect of the Baglihar Determination on the Baglihar project, but rejected the claim that the Neutral Expert’s decision had overriding precedential authority. It also rejected the notion of “best practices” as an independent standard for judging the legality of project design, emphasising the regulatory constraints laid down in the Treaty. The distinction is critical. Kishenganga was not merely a reversal of Baglihar. This created a jurisprudential distinction between the two approaches. Accordingly, Baglihar remained binding in relation to the specific project, but Kishenganga’s reading of the Treaty may be relevant to the broader legal issue now before the Court.
The issue is far more intricate than simply debating which case is “correct”. It concerns which institution has authority to determine the substance of the dispute.
The 2025 Award on Issues of General Interpretation clarifies this distinction. The Court concluded that an Award satisfying the requirements of paragraph 23 of Annexure G is final and binding on the Parties regarding the dispute, including jurisdictional questions, factual issues, Treaty interpretation, and Treaty execution. Conversely, a Neutral Expert’s determination is binding only within the scope of the Neutral Expert’s jurisdiction. Treaty interpretation falls outside that authority.
This categorisation is rationally coherent, although it poses a practical difficulty. Many disputes concerning dam design involve both legal and technical dimensions. Determining if a particular level of pondage is permissible would require engineering proof, whereas interpreting the provisions of the Treaty is a question of interpretation. In practice, however, distinguishing between these two elements is more difficult than the Treaty’s framework suggests.
Competing Forums and the Architecture of Dispute Settlement
The outcome is institutionally atypical: two treaty-based frameworks have been required to function about intersecting elements of the identical foundational tasks.
India has consistently challenged the Court’s jurisdiction and has refrained from engaging in the arbitration. The PCA concluded in its 2023 Award on Competence that the Court was appropriately established and was competent to consider and determine the disputes set out in Pakistan’s Request for Arbitration, and that India’s absence did not undermine the Court’s jurisdiction.
This objection cannot be easily disregarded.
It indeed reveals a fundamental flaw in the IWT.
The Treaty was formulated in 1960, during a period when the primary focus was establishing an effective framework for addressing disputes between India and Pakistan on the utilisation of the Indus River system. It did not expressly address a scenario in which:
One State calls upon the Court of Arbitration; the other calls upon the Neutral Expert mechanism; both procedures are established; both pertain to elements of the same hydropower projects; and one State later declines to engage in the arbitration.
The PCA has consequently been tasked with executing a nearly constitutional role: allocating institutional authority between two treaty-established mechanisms established by the Treaty.
Interim Measures and the Preservation of the Dispute
The 2026 Order on Interim Measures enhances the Court’s function.
Pakistan requested limitations on building at RHEP until the Neutral Expert assesses the project’s adherence to the Treaty. The Court approved three of the proposed restrictions, with changes, which include forbidding India from reinforcing sections of the dam wall and power intake structure beyond designated thresholds. The regulations will stay in force until 90 days following the Neutral Expert’s final decision, currently anticipated in July 2027.
The importance of these measures lies in their preservative rather than definitive character.
The Court did not determine that RHEP is inconsistent with the Treaty. It aimed to avert construction from progressing to a point where a subsequent determination of non-compliance would be virtually inconsequential or excessively difficult or costly to remedy.
The Court ruled that the power to impose interim measures included protection of the Neutral Expert procedures. This is especially significant because it demonstrates that the Court does not view the two methods as entirely separate processes but rather as components of a broader Treaty-based dispute resolution system.
Conclusion: The Continuity of the Arbitration and Indus Waters Jurisprudence
This development should be read alongside Baglihar, Kishenganga, South China Sea and Chagos.
The cases of Baglihar and Kishenganga show the difficulty of dissociating technical competence from Treaty interpretation and reveal the limited precedential impact of Neutral Expert decisions. The South China Sea case illustrates the capacity of an international tribunal to operate without engagement, as well as the limits of legal power when there is no political backing. Chagos emphasises the necessity of safeguarding rights arising under treaties in complex State-to-State disputes.
The current situation brings these strands together.
Ultimately, the arbitrator’s main contribution may be procedural, not substantive. The PCA is trying to keep the functional integrity of two separate dispute-resolution processes intact without undermining the role of either and to avoid allowing unilateral political decisions to invalidate an already-concluded agreement or render proceedings underway meaningless.
The 2026 Treaty Status Award and Interim Measures Order mark a shift towards preserving the conditions necessary for effective dispute resolution. The Court has not yet made a final decision on the technical controversy of the RHEP. Instead, it has aimed to maintain the legal and factual circumstances essential for that dispute to be effectively addressed by the appropriate process.
That distinction could emerge as the most lasting insight from the arbitration. International adjudication cannot guarantee compliance with political decisions. It is incapable of reinstating confidence among nations. However, it can maintain a legal structure that allows for the resolution of disputes.
In the context of Indus Waters, this may represent the paramount role that the PCA can fulfil.
