New Delhi: The Permanent Court of Arbitration (PCA) in the Hague, the Netherlands, Thursday ruled that it is competent to decide the proceedings initiated by Pakistan against India over the Kishanganga and Ratle hydropower projects in Kashmir.
Pakistan and India have locked horns several times over hydroelectric projects on the shared Indus River and its tributaries for decades. While Pakistan has sought an adjudication by a Court of Arbitration to resolve the matter, India favours a resolution by a highly-qualified engineer — called a neutral expert — under the treaty.
The Court of Arbitration is chaired by Professor Sean D. Murphy of the US. The other members are Professor Wouter Buytaert of Belgium, Jeffrey P. Minear of the US, Judge Awn Shawkat Al-Khasawneh of Jordan, and Dr Donald Blackmore of Australia.
The meetings of the court on the question of competence took place at the Peace Palace, the PCA headquarters, over three days last month.
However, India has refused to participate in or take recourse to the arbitration proceedings so far. In response to Thursday’s decision, India said it cannot be compelled to participate in “illegal” proceedings at the PCA.
External Affairs Ministry spokesperson Arindam Bagchi was quoted as saying, “India cannot be compelled to recognise or participate in illegal and parallel proceedings not envisaged by the treaty.”
What is the Permanent Court of Arbitration? How does it carry out an arbitration and is its award binding? ThePrint explains.
Also read: India proposes 15 July meeting to renegotiate Indus Waters Treaty, Pakistan yet to respond
A misnomer
The Permanent Court of Arbitration was established in 1899 by the Convention for the Pacific Settlement of International Disputes concluded at The Hague, during the first Hague Peace Conference.
This conference was 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.”
At the Second Hague Peace Conference in 1907, the 1899 Convention was revised by the adoption of a second “Convention for the Pacific Settlement of International Disputes”. Currently, PCA has 122 contracting states which have acceded to one or both of the conventions.
According to PCA’s website, it was the first permanent intergovernmental organisation to provide a forum for the resolution of international disputes through arbitration and other “peaceful means”.
The conventions provide for different dispute resolution mechanisms, including mediation, inquiry and arbitration. The PCA facilitates these dispute resolution mechanisms among a combination of States, state entities, intergovernmental organisations, and private parties.
However, the name, “Permanent Court of Arbitration” is a misnomer. It isn’t actually a permanent court with fixed judges permanently in residence. Instead, a permanent secretariat, known as the ‘International Bureau’ and headed by the secretary-general, assists the parties by establishing and administering an ad hoc tribunal for each case.
What is the current dispute about
The current proceedings before the PCA were initiated by Pakistan against India, under the Indus Waters Treaty 1960.
Under this treaty, the waters of the eastern rivers — the Sutlej, Beas and Ravi — belong to India, while the three western rivers — the Indus, Jhelum and Chenab — go to Pakistan, barring certain non-consumptive uses.
The disputes between the two countries have arisen specifically in context of two hydro-electric projects: the Kishenganga Hydro-Electric Plant on the Kishenganga/Neelum River (a tributary of the Jhelum); and the Ratle Hydro-Electric Plant on the Chenab.
The treaty provides for settlement of all questions that may arise on its interpretation or application. It says that when questions cannot be resolved by the parties themselves, certain technical questions can be placed before a highly-qualified engineer, called a ‘neutral expert, or any question can be placed before an arbitral panel consisting of highly-qualified lawyers and engineers, called a court of arbitration.
Pakistan initiated the current arbitration proceedings through a request in August 2016.
Meanwhile, on 4 October, 2016, India requested that the World Bank appoint a neutral expert under the treaty, to address certain design and operation questions that are essentially identical to some of the questions presented by Pakistan in its request for arbitration.
The World Bank brokered the 1960 water-sharing arrangement between India and Pakistan and continues to be an independent party under the treaty, with certain powers, especially on financial provisions and provisions related to dispute resolution. In December 2016, the World Bank decided to pause the process of appointing the chairman of the Court of Arbitration and the neutral expert. This ‘pause’ was lifted in 2022, following which the Court of Arbitration was empaneled and the neutral expert was appointed.
The PCA court of arbitration was empanelled in October last year. However, India has chosen not to communicate directly with or to appear before the court, nor has it appointed two arbitrators to the court, as it is permitted to do under the treaty. Among other things, India has maintained a stance that this court of arbitration is not competent to decide the questions before it, and that the dispute should instead be decided by a neutral expert.
India has also submitted that the treaty does not allow parallel proceedings before both, a court of arbitration and a neutral expert. India has also questioned the World Bank’s decision to appoint a court of arbitration and a neutral expert under two separate processes to resolve differences between the two countries.
Is the award final?
The final decision of the tribunal is given by a majority of the arbitrators. While the 1899 and 1907 conventions state that the awards would be made public, the PCA rules require agreement of the parties to make it public.
The award is final and binding on the parties. The Permanent Court of Arbitration Rules 2012 assert, “All awards shall be made in writing and shall be final and binding on the parties. The parties shall carry out all awards without delay.”
What next?
To clarify, Thursday’s decision is only on the point of the court’s competency to look into the disputes raised by Pakistan.
A press release issued by PCA said, “In a unanimous decision, which is binding on the Parties and without appeal, the Court rejected each of the objections raised by India and determined that the Court is competent to consider and determine the disputes set forth in Pakistan’s Request for Arbitration.”
As to what happens next, the court has decided to proceed in a phased manner. “In the next phase, the Court will address certain questions concerning the overall interpretation and application of the Treaty’s provisions on hydro-electric project design and operation, as well as the legal effect of past decisions of dispute resolution bodies under the Treaty,” the press release added. These questions are solely before the Court and do not overlap with the questions before the Neutral Expert, it said.
Meanwhile, India has sought modifications to the Indus Waters Treaty. The 1899 convention also says that “recourse to arbitration implies an engagement to submit in good faith to the Award”.
While the text of the two conventions do not talk expressly about a situation of non-compliance by parties, the PCA Rules say that if the parties agree on a settlement of the dispute before the award is made, the arbitral tribunal can issue an order terminating the arbitral proceedings. It also says that if requested by the parties, the tribunal can record the settlement in the form of an arbitral award on agreed terms.
Additionally, any dispute which may arise between the parties on the interpretation or execution of the award is to be submitted to the tribunal which pronounced the award. Therefore, in case India intends to dispute the interpretation or execution of any award by the court of arbitration, the convention may allow it to go back to the tribunal to raise the issue.
The 1960 treaty says that an award will have to be signed by four or more members of the court, and that it will be final and binding on the parties. However, at the request of either of the parties within three months, the court could reassemble to “clarify or reinterpret” its award.
(Edited by Zinnia Ray Chaudhuri)