On 27 June 2025, the Court of Arbitration in The Hague issued a Supplemental Award on its competence in a case initiated by Pakistan against India to address the interpretation and application of the 1960 Indus Waters Treaty (IWT) to certain design elements of Indian hydroelectric projects constructed on tributaries of the Indus River. The ruling arrives against the backdrop of India’s decision to keep the IWT in “abeyance” as a retaliatory measure against Pakistan-sponsored cross-border terrorism. The court ruled that India’s suspension of the treaty does not affect its jurisdiction to hear the case.
India swiftly rejected the ruling, asserting that no court has the authority to scrutinise its sovereign decision to suspend the treaty. The Ministry of External Affairs reiterated that India never recognised the jurisdiction of the so-called Court of Arbitration, as it considers the constitution of such a body a violation of the IWT.
As the IWT and India-Pakistan tensions return to the spotlight, this explainer breaks down some key questions: What exactly is this ruling by the Court of Arbitration? Why does India oppose this court? And more importantly, does the ruling carry any real-world impact?
What is the Court of Arbitration, and how was it constituted in this case?
The Court of Arbitration (CoA) in this case is a special ad-hoc arbitral tribunal specifically constituted under the provisions of the IWT to resolve a particular dispute between India and Pakistan. The dispute has emerged in the context of India’s construction of two hydroelectric projects, the Kishenganga Hydroelectric Plant (KHEP) on the Kishenganga River and the Ratle Hydroelectric Plant (RHEP) on the Chenab River.
In 2016, Pakistan initiated arbitration by invoking Article IX and Annexure G of the IWT. The tribunal was constituted with the administrative support of the Permanent Court of Arbitration (PCA) in The Hague, which acts as the secretariat.
The Indus Waters Treaty outlines a tiered system for resolving disputes: first through the Permanent Indus Commission, then through a Neutral Expert for resolving differences over technical issues, and finally, through a Court of Arbitration for more complex disputes or unresolved differences.
In this instance, Pakistan initially approached the World Bank in 2015, requesting the appointment of a Neutral Expert, but later unilaterally withdrew that request and opted for arbitration. India objected, arguing that the treaty’s mechanism should be followed sequentially and that both processes cannot run at the same time for the same issues. Considering this dispute, the World Bank paused the processes in December 2016 to protect IWT and allow both India and Pakistan to resolve the dispute through alternative means.
Despite India’s objections, the World Bank, acting as a facilitator under the treaty, revived the process in 2022, enabling the parallel constitution of both a Neutral Expert and a Court of Arbitration to address the concerns of both parties.
Why does India reject the jurisdiction of this Court?
India rejects the jurisdiction of the CoA on both procedural and political grounds, maintaining that the tribunal was unilaterally and illegally constituted by violating the spirit and procedures outlined in the IWT. India asserts that the dispute resolution mechanism of IWT must be followed sequentially, beginning with the Permanent Indus Commission, then moving to a Neutral Expert for technical matters, and finally to a CoA if necessary. Therefore, in India’s view, no party can initiate arbitration while a Neutral Expert process is underway.
Considering the formation of the CoA illegal, India has refused to participate in its proceedings from the beginning and has not nominated or approved any arbitrators. India emphasised that constituting the court without its consent breaches the Treaty’s provisions and makes the court illegitimate.
Beyond procedural concerns, in April 2025, India further escalated its position by declaring that the Treaty was being held in “abeyance” as a response to Pakistan’s continuing support for cross-border terrorism. Invoking the doctrine of ‘fundamental change of circumstances’, and asserting that Pakistan-sponsored cross-border terrorism jeopardises its national security, India justified its decision to put the treaty on hold. India asserted that under these exceptional circumstances, no international body has the authority to review or override its sovereign decision to suspend its obligations under the treaty.
India has declared its position unambiguously that the IWT will remain in abeyance until Pakistan completely eradicates its terror infrastructure and financing and puts a permanent end to Pakistan-sponsored cross-border terrorism.
What exactly is the dispute over the Kishenganga and Ratle hydroelectric projects?
The Indus River system is fed by both eastern and western tributaries. Under the IWT, India has exclusive rights to the waters of the three eastern rivers, namely Ravi, Beas, and Sutlej. Meanwhile, the three western rivers—Indus, Jhelum, and Chenab—are allocated to Pakistan, though India retains limited rights. The treaty permits India to construct run-of-the-river hydroelectric projects on the western rivers, with strict conditions on design, storage, and operation to ensure that Pakistan’s water share and agricultural interests are not adversely affected.
The present dispute stems from Pakistan’s objections to the design and operational parameters of two Indian hydroelectric projects: the 330 MW Kishenganga project on the Jhelum River and the 850 MW Ratle project on the Chenab River. Pakistan argues that the design of these projects violates the provisions of the IWT and gives India control over its vital water flows.
In the case of the Kishenganga project, Pakistan contends that India’s decision to divert water from the Kishenganga River to the Bonar Nallah, another tributary of Jhelum, violates the principle that prohibits altering the natural course of a river in a way that harms the other party. It asserts that this diversion threatens the viability of its downstream Neelum-Jhelum hydropower plant by affecting the constant flow of water. Pakistan is also concerned that the reduced water availability could adversely affect agricultural productivity in the region.
Regarding the Ratle project, Pakistan claims that the dam’s storage capacity exceeds the limits prescribed in Annexure D of the IWT. It raised objections to the placement of power intakes and low-level outlets below the Dead Storage Level, arguing that they could enable India to manipulate the flow of water during critical times. It has also expressed concern over the positioning and size of spillway gates, asserting that they could allow excessive drawdown of water. Briefly, Islamabad argues that certain features of this project could provide India with the technical capacity to withhold or release water at will, undermining the treaty’s principle of non-interference in the other party’s use of the western rivers.
India, however, maintains that both the Kishenganga and Ratle projects do not violate the technical parameters set by the IWT. It has consistently argued that all design features, including diversion structures, intakes, and outlet systems, are necessary for sediment control and operational safety, and they do not breach any treaty obligations. India also views these objections as part of Pakistan’s broader pattern of using treaty mechanisms to delay or block Indian infrastructure projects, rather than genuine concerns over treaty violations.
What did the Court of Arbitration rule on 27 June 2025?
In its Supplemental Award, the CoA ruled that India’s decision to place the IWT in “abeyance” does not affect the tribunal’s jurisdiction. Citing international legal norms and past precedents, it argued that once arbitration proceedings have been initiated, a unilateral withdrawal or suspension by one party cannot defeat the tribunal’s competence.
The court also noted that nothing in the text of the IWT gives either India or Pakistan the power to unilaterally suspend or place the agreement in abeyance. Therefore, it concluded that the tribunal remains legally competent to continue hearing the case, regardless of India’s position.
Does this ruling matter, and what happens next?
Legally, the CoA’s decision is binding and final within the framework of the arbitration process. However, enforcing that decision is a challenge, especially when either of the parties refuses to cooperate. In this context, India has refused to take part in the proceedings, called the tribunal’s formation illegal, and dismissed its rulings as having no legitimacy.
In practical terms, this ruling may not have an impact on India’s current position on IWT. However, the ruling can carry symbolic value and strengthen Pakistan’s narrative in the international arena, possibly influencing global opinion or multilateral institutions. Ultimately, the court’s decision adds another chapter to the history of water disputes between the two nuclear-armed neighbours.
