Arbitration is an alternative method of dispute resolution

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Arbitration is an alternative method of dispute resolution.


Arbitration is an alternative method of dispute resolution (ADR) that is the closest to the litigation process amongst all the ADR methods as it provides an adjudicatory method of dispute resolution, which involves the setting up of an arbitral tribunal, which gives a binding arbitral award. It is designed to provide an expeditious resolution of legal disputes with the application of procedure that is not as formal or rigid as litigation, while providing a legally binding award. These advantages of arbitration has made it a popular resolution method even in international commercial disputes. The admissibility of dispute to arbitration requires a prior arbitration agreement between the parties. The agreement is binding, whether contained in the main contract between parties, or a separate agreement. Even if the main agreement is void, the arbitration agreement is considered to be binding (doctrine of separability). However, public policy considerations may be used by the parties to contest successfully the admissibility of dispute to arbitration, even if the agreement is valid. This led an early scholar to say that there is only one limit on the doctrine of separability, and that is public policy.

In recent times, however, there has been a different trend that is being witnessed with respect to public policy. There are instances where courts have preferred to review the award on the basis of public policy considerations at the enforcement stage, rather than at the admissibility stage. The result of that is that despite the dispute being admitted to arbitration, the award is not enforced because its enforcement is contrary to public policy. On the other hand, objections on the basis of public policy are rarely successful at the admissibility stage.

This essay agrees that the trend shows that instead of ruling upon the non arbitrability of the issue in the jurisdiction stage of admissibility of dispute to arbitration, the question is being brought to the courts in the enforcement stage, when the arbitral proceedings have been successfully conducted and an award given. Arbitral awards are enforceable but public policy is an effective objection to enforceability of the award. This essay takes a critical position on this trend.

Arbitration agreement - Basis for admissibility & public policy considerations

The admissibility of dispute to arbitration, depends primarily on the existence of an arbitration agreement between the parties. The English Arbitration Act 1996 (EAA 1996), defines arbitration agreement as “an agreement to submit to arbitration present or future disputes”. 2 The legislation also requires the agreement to be in writing. 3 Similarly, the UNCITRAL Model Law on International Commercial Arbitration 198 4 , Article 7, also lays down the principal elements of arbitration agreement, wherein “arbitration agreement is an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship.” Therefore, it is first clear that for there to be an arbitration, there must be an arbitration agreement. The next question that arises in context of this essay is, whether the arbitration admissibility be refused despite there being a valid arbitration agreement. It is pertinent to mention here that public policy considerations provide important grounds wherein the admissibility of the arbitration may be disallowed despite arbitration agreement.

For the enforceability of an arbitration agreement, it is necessary for the arbitral tribunals to consider whether the subject matter of the dispute is arbitrable or not. Here considerations of public policy can be used to deny arbitrability of the dispute despite a valid agreement. However, lesser and lesser recourse is being made to this concept. Courts and tribunals consider that it is not appropriate to deny the tribunal an opportunity to arbitrate even if there are elements of public policy involved. 5 Emphasis is put on upholding the validity of the arbitration agreement, where it is clear and unambiguous as in Aughton Ltd v MF Kent Services Ltd. 6 Even if the main agreement is void due to public policy consideration, the arbitration clause survives because it has been held by the courts to be separable from the main agreement as was the case in El Nasharty v J Sainsbury PLC. 7 The case of Fiona Trust & Holding Corporation and ors v Privalov and ors 8 is relevant here. In this case, the House of Lords held that even if the contract has been concluded by fraud, misrepresentation or bribery, the validity of the arbitration agreement within the main contract, or as a separate contract, can only be considered by the arbitral tribunals. 9 In this case, the main contract was vitiated because of bribery allegations that ultimately were proved in the court. Despite the invalidity of the main contract due to public policy considerations, the court upheld the arbitral agreement. In Beijing Jianlong Heavy Industry Group v Golden Ocean Group Limited & Ors, 10 the Court upheld the arbitration agreement, despite the apparent illegality involved in the main contract making it contrary to public policy.

Public policy considerations at enforcement stage

Public policy has become a popular and common ground for resisting and challenging the award’s enforcement. In international arbitrations, this leads to complications, because the arbitral award may be made by an international tribunal, while the national courts may have different views about the enforceability of the award due to considerations of public policy. It is pertinent to note that the courts are usually the last source of appeal against the enforcement of the award, on the grounds of public policy. Complications in international arbitrations are compounded by the fact that perceptions of criminality and legality may be varied in different states.

In the UK, enforcement of awards can be challenged on public policy grounds where it is shown that perjury or fraud was used for the obtaining of the award; the award being illegal; natural justice principles not being followed for the making of the award or in the arbitral process; award being ambiguous or unclear. 12 Here, the complication may arise because of the differing perceptions of these issue in the seat of the arbitral proceedings, where certain aspect may not involve public policy considerations and the UK, where public policy gets engaged. In such situations, UK courts may refuse to enforce the arbitral award.

Differences in arbitrability are seen in Intellectual Property disputes that are sought to be resolved through arbitration. This is taken as an example in the essay to demonstrate how differing perceptions on public policy are seen in different jurisdictions. In France, those matters that relate to public policy are not arbitrable, therefore even if the arbitration agreement is valid, the invalidity go the main contract due to public policy will lead to the rejection of admissibility of dispute. 13 In France IP matters come within public policy domain and therefore are considered unarbitrable. In Germany, infringement issues are arbitrable, but validity issues are not arbitrable on public policy grounds. 14 The contrast between the UK on one hand and France and Germany on the other, is clearly discernible. Where in the latter states, public policy issues will lead to inadmissibility of dispute to arbitration, in the UK, the matter is left to the arbitral tribunal’s discretion.

Ironically, at the enforcement stage, the courts may refuse enforcement of the award on the grounds of its being contrary to public policy. However, the court may put the onus on the alleging party that the enforcement of the award is contrary to the principles of public policy. This is seen in the case of Deutsche Schachtbau-und Tiefbohrgesellschafl MB.H (D.S.T.) v. Ras Al Khaimah Nat'l Oil Co. (Rakoil), 15 where the court held that the burden of proof is on the party claiming that the enforcement of the award is contrary to public good or public policy.

In Soleimany v Soleimany 17 the Court of Appeal refused to enforce the arbitral award. The case concerned smuggling of careless from Iran. The court held that because of the illegality of the award in Iran, it would be non enforceable in the UK on account of the principle of public policy. In Westacre Investment Inc V Jugoimport-SPDR Holding Co Ltd 18 it was held that the defence of public policy for non enforcement of award can be applicable only when the award was contrary to the public policy of the state where the contract was to be performed.

It is important to note that arbitral award are legally enforceable. There is an exception to this rule in the form of non enforcement on grounds of public policy. Here, the power is given to the courts to decide upon enforcement issues, even in cases that involve international arbitration awards. The practical implications of this is that the arbitral tribunal may decide to admit the matter and ultimately give an award. Later the award may be challenged on grounds of being violative of public policy, leading the courts to refuse to allow the enforcement of award, despite the validity of the arbitral proceedings.

This is an undesirable trend, which leads to confusing and unnecessary results. It is an obvious waste of time for the parties as well as the tribunal to arbitrate a matter, where the award of the process is non enforceable. In France, matters involving public policy are non-arbitrable, as compared to the UK, where the matter may be arbitrated upon, because of the reluctance of the courts to intervene in what they view as the jurisdictional issue for the tribunal to decide.


Arbitration is a result of an arbitration agreement, which creates a binding obligation on the parties to submit their dispute to arbitration. However, the admissibility of the dispute to arbitration may be questioned despite there being a binding arbitration agreement. The ground of public policy may be used to deny admissibility of the dispute. However, in recent times, the trend of the courts is to allow the arbitral tribunal alone to make the decision regarding admissibility, despite the main agreement being invalid on the grounds of public policy. As the decision of the court in Fiona Trust & Holding Corporation and ors v Privalov and ors indicates, the court may declare the main agreement or contract to be void, yet the arbitration agreement to be valid, under the doctrine of separability. This means that very few objections to admissibility are successful. For a greater part, the courts leave the matter to the arbitral tribunals. The practical implications of this is that the arbitral tribunal may decide to admit the matter and ultimately give an award. Now the award by itself can be challenged on grounds of being violative of public policy. Here, the courts refuse to allow the enforcement of award, despite the validity of the arbitral proceedings. This trend is undesirable. It is an obvious waste of time for the parties as well as the tribunal to arbitrate a matter, where the award of the process is non enforceable. It would be infinitely better and less confusing if the matter is not admitted to arbitration in the first place if there are principles of public policy, which vitiate the main contract. In France, matters involving public policy are non-arbitrable, as compared to the UK, where the matter may be arbitrated upon, because of the reluctance of the courts to intervene in what they view as the jurisdictional issue for the tribunal to decide.


  • Anusornsena V, ‘Arbitrability and Public Policy in Regard to the Recognition and Enforcement of Arbitral Award in International Arbitration : the United States, Europe, Africa, Middle East and Asia’, Theses and Dissertations. Paper 33
  • Curtilman SA, Lutzker J, ‘Arbitrability of Intellectual Property Disputes’ in Thomas Halket (ed), Arbitration of International Intellectual Property Disputes (Juris Publishing Inc. 2012 ) Merkin R, Flannery L, Arbitration Act 1996 (CRC Press 2014)
  • Moses ML, The Principles and Practice of International Commercial Arbitration (Cambridge University Press 2012)
  • Mustafayeva A,‘Doctrine of separability in International Commercial Arbitration’, (2015) 1 Baku St. U.L. Rev. 93
  • Nussbaum A, ‘The Separability Doctrine" In American And Foreign Arbitration’ (1940) 17 N.Y.U. L. Q. Rev. 609
  • Sattar S, ‘Enforcement Of Arbitral Awards And Public Policy: Same Concept, Different Approach?’, accessed <>.


A prominent area of conflict between water sharing states is hydroelectric power projects (HPPs), that are increasingly seen as a solution by states to meet their energy needs. However, these projects pose conflicts when the HPP is unilaterally sought to be established on an international watercourse. The reason for the conflict may be the non participating state’s fears or concerns about negative effects caused by the HPP on shared waters. 2 An example of such a conflict was seen during the Indus Waters Arbitration (Kishenganga) between India and Pakistan. This case is discussed at length in this paper.

It is pertinent to note at this point that there may be two approaches to shared watercourses. The first approach relates to water sharing, in which case, disputes are bound to arise where one state unilaterally wants to make an hydroelectric project over its side. The other approach is benefit sharing, where the hydroelectric project may actually become a common source of benefits for both states, thus reducing the scope for dispute.

The basic argument that this paper presents is that in the international law domain, bilateral arrangements, such as the Indus Waters Treaty, have been more successful in resolving conflicts related to hydroelectric projects. Multilateral conventions such as the UN Watercourses Convention is more in the nature of framework convention that lays down general rules. But bilateral arrangements have a greater potential in resolving such conflicts. The paper uses the case study of the India-Pakistan conflict over their shared waters and the Indus Waters Arbitration.

The paper first discusses the important and landmark developments in the international law in context of international watercourses. Here the paper also

examines the principles of international law that have had some impact on the evolution of these developments. Then the paper deals with the particular rules related to the hydroelectric projects. The paper then considers the Indus Waters Treaty and the disputes or their resolutions under the treaty. In particular, regard is given to the Kishanganga arbitration case. As mentioned above, the bilateral arrangements appear to have been more successful in maintaining the co-riparian states’ interests in shared waters in an equitable manner. The Indus Waters Treaty and arbitration bears testimony to that fact.

International Law on International Watercourses - Important Developments and Principles

The earliest important international treaty related to international waters is the 1815 Act of the Congress of Vienna, which contained 10 Articles on navigation on international rivers. At that point, the non-navigational uses of international waters (irrigation, hydro power, etc) were at a nascent stage, and were to become relevant with the onset of industrial revolution and the development of techniques that would put international waters to non-navigational purposes. 3 Later, with the relevance of international waters decreasing for navigation purposes, but increasing for non- navigational purposes, international efforts were made to evolve rules for water sharing states. An example is of International Institute of Law Madrid Declaration 1911, which stated that riparian states with a common stream are in a position of permanent physical dependence on each other. 4 Another example is the 1919 Treaty of Versailles, which contained provisions on non-navigational uses of international watercourses, including hydropower, fishing, irrigation and water supply. 5 The Salzburg Resolution,

1961, provided that disputes between riparian states were to be decided on the basis of equity and after taking into consideration the respective needs of the states. 6 The Helsinki Rules on the Uses of Waters of International Rivers by the International Law Association in 1966, constitute an important landmark in the international law on non-navigational uses of international watercourses. The approach used by the rules, that is, the drainage basin approach, goes much beyond the prior approach on focussing on rivers and lakes. Therefore, the rights of states to shared watercourses is much wider under the Helsinki Rules. 7 It also makes it easier to apply the ‘community of interest’ principle for co-riparian states, first articulated in the River Oder case. 8 Although in the River Oder case, the principle was articulated for navigational uses of watercourses, the International Court of Justice, in The Case Concerning The Gabcikovo-Nagymaros Project (Hungary/Slovakia), 9 has expanded on this principle and used it for the non-navigational uses of watercourses, such as for hydro-electric projects.

An important point to consider here is that shared waters do involve or invoke conflicting interests between riparian states. International law efforts have been in the context of resolving or balancing these conflicts. An example can be found in the 1957 arbitration in the Lake Lanoux case between France and Spain. In this case, France wanted to use the Lake Lanoux waters for hydroelectric works. The Spanish

government protested that this would lead to adverse effects for them. The Tribunal held that while France had the right to deal with the waters on their side, it could not do so to the detriment of Spanish interests. 10 Thus, the equitable interests of both the co- riparian states were sought to be protected by the Tribunal. No one state should have the right to appropriate the benefits or uses of the shared waters, while depriving the other riparian states of the benefits and uses of such waters.

The Harmon Doctrine is relevant here as one of the first principles having bearing on a state’s use of shared watercourses. The doctrine is derived from an opinion given by Mr. Harmon, Attorney General of US in 1985, stating that a state has the right to dispose of its territorial waters as it thought fit without consideration for any other state that may be affected by it. The Lake Lanoux case demonstrates that the doctrine, which related to the absolute territorial sovereignty, was obviously no longer acceptable in international law during the 1950s and already there was a sense of responsibility felt or sought to be imposed on states, that they should not use their territorial waters to the disadvantage of other states. Moreover, by this time international efforts were already underway to develop jurisprudence with respect to flow of waters from one riparian state to another. In other words, upper riparian state should not hamper the flow of water from its territory to a lower riparian state and the lower riparian state could demand the use of such waters so long as it did not deny a similar right to riparian states lower than itself (absolute territorial integrity principle).

Related to both principles mentioned above, but limiting both, is the third principle that provides that a riparian state may use its territorial waters as it liked so long it did not significantly harm other riparian states. 11 This is derived from equitable principles that are sought to be applied to how states use or derive benefits from their shared watercourses.

In the Case Relating to the Territorial Jurisdiction of the International Commission of the River Oder 12 , the Permanent Court of International Justice (PCIJ) observed that the “community of interest in a navigable river becomes the basis of a common legal right, the essential features of which are the perfect equality of all riparian states in the use of the whole of the course of the river and the exclusion of any preferential privileges of any one riparian state in relation to the others.” Today, the community of co-riparian states is a well recognised principle in international law. The River Oder case has been influential and has guided other cases in this area.

These principles of international law- the principle of absolute territorial sovereignty, principle of absolute territorial integrity, and the principle of community of interest, are essential to understanding the development of the law on international watercourses. These principles are relevant to the discussion in hand because they are the basis for the further development of international law related to international watercourses. The most important work in this area at the multilateral level is done by the United Nations in the 1997 Convention. However, much before this Convention came into being, there were a number of bilateral arrangements that co-riparian states had entered into, wherein are reflected the principles of international law mentioned above. But the UN Convention remains important because it is the multilateral Convention in this area.

In 1997, more than one hundred nations adopted the United Nations Convention on the Law of the Non-Navigational uses of International Watercourses (UN Watercourses Convention). This is a framework Convention under the aegis of the United Nations (UN), the body that spent close to 25 years in negotiations over the adoption of international rules for shared waters.

The UN Watercourses Convention is important because it supports cooperation between riparian states in the event of environmental disaster; adapts their water- sharing and management strategies to the effects of climate change; and ensures that any measures governments may take under the UNFCCC (UN Framework Convention on Climate Change), such as hydropower development does not injure ecosystems or disregard the health and livelihoods of dependent communities.

The UN Watercourses Convention applies to the uses of international watercourses and their waters for the purposes other than navigation, as also for taking measures for protection, preservation and management of these watercourses. 13 As such this Convention is relevant to the hydroelectric projects that are established by states on international watercourses.

The UN Watercourses Convention provides that watercourse states may also enter into one or more watercourse agreements with other states. 14 Thus, the relevance of existing bilateral arrangements, such as the Indus Waters Treaty 1960, and future arrangements, is not impacted by the Convention. Article 11 is of significance to hydroelectric projects and it provides that watercourse states have to inform and consult with each other with respect to planned measures on the international watercourses. Not only that, if required, states must enter into negotiations regarding such planned measures. Where such planned measures may have some adverse effects for any watercourse state, then the state implementing such measures must give all the relevant information and intelligence to the states that would potentially get affected by the same. 15 The notified state has six months to study and evaluate the notification and reply to it under article 13 of the Convention. If there is some problem with the planned measures, that is, where the notified state has reason to believe that its interest is adversely affected, then the two states must enter into negotiations and there are a host of provisions in the Convention with respect to such negotiations.

It is clear that the Convention tries to go a long way in trying to find means by which conflicts relating to international watercourses can be minimised. Not only that, the Convention considers that international watercourses are worth protecting and preserving. Thus, article 20 provides that watercourse states shall collectively and individually “protect and preserve” the ecosystems of international watercourses. Watercourse face degradation due to pollution and introduction of alien or harmful species that can adversely impact the marine ecosystem. The Convention recognises that watercourses are of shared interest to states and therefore, they must be protected and preserved. As far as hydroelectric projects are concerned, these projects cannot be implemented, without understanding the environmental sustainability of the projects. Article 20 of the UN Watercourses Convention is particularly important because the term ‘ecosystems’ has been used and this is a wide term and is ‘dimensionless’. 16 Thus, the UN Watercourses Convention has recognised what is called as the ‘ecosystem approach’ for international watercourses. This approach seeks to balance ecosystem’s conservation and preservation with energy and non navigational needs of states. International watercourses are seen as an interconnected ecosystem. Thus there is always a need to ensure sufficient environmental flow, in accordance with an ecosystem approach. This is applicable to hydroelectric projects as well. Such projects cannot be allowed if their impact on the ecosystem will be negative. The ecosystem approach was also seen in The Matter of the Indus Waters Kishenganga Arbitration (The Islamic Republic of Pakistan v The Republic of India), where the Permanent Court of Arbitration took note of India’s commitment to ensure a constant minimum environmental flow downstream of the Kishenganga hydroelectric project. Moreover, the court held that all hydro-electric projects must be planned, built and operated with environmental sustainability in mind. 17 Thus, as far as the international regime on watercourses is concerned, the law is well stabilised in favour of the ecosystem approach and therefore, the hydroelectric projects must conform to the approach.

The ecosystem approach takes into cognisance the fact that the watercourses may be affected by processes related to natural elements that may be interconnected with the larger ecosystem. Climate change, soil degradation, desertification and deforestation are all impactful on the ecosystems, including the watercourses. Therefore, there is a greater need to control and manage activities that are impactful on the watercourses’ ecosystems, including the making of hydro-electric projects on international watercourses.

The principle of reasonable and equitable utilisation of watercourses is well established and was also recognised by the International Court of Justice in The Case Concerning The Gabcikovo-Nagymaros Project (Hungary/Slovakia). 18 Environmental sustainability of the hydropower projects is also important and the principles of environmental law are relevant to the issue. In The Case Concerning the Indus Waters (Kishenganga), the Permanent Court of Arbitration referred to the Trail Smelter 19 and Pulp Mill (Argentina v Uruguay) 20 cases. The court held that the hydroelectric projects must be planned, built and operated, keeping in mind environmental sustainability. 21

To summarise the important principles of international law having bearing on the building of hydroelectric projects on international watercourses, these are: principle of equitable utilisation of shared watercourses, principle of prevention of significant harm to another state through the construction of the hydroelectric projects and the principle of ecosystem preservation.

3. Hydro-Electric Power Projects: Shared Uses Versus Shared Benefits

The generation of hydro-power and the construction of dams are accompanied by various negative side effects for both navigation and fisheries. Moreover, as we have discussed earlier, there may be side effects for the ecosystem as well and the ecosystems are supposed to be preserved and protected. These are the reasons why there may be local, national, or international disagreements between nations when there are planned measures such as the construction of hydro-electric projects on international watercourses. 22 These disputes are fairly common and they are to be expected because hydroelectric projects are constructed on shared watercourses at times, and this does involve conflict of interests between riparian states.

International law has attempted to balance the conflicting interests of riparian states by evolving principles that are discussed in the previous section. At the same time, there are genuine environmental concerns that emanate from the fact that the ecosystems of the world deserve preservation. States that are not riparian states with respect to the watercourse, amy still have interest in the river basins as per the drainage basin approach discussed in the next section. Therefore, in the larger context, disputes with respect to hydroelectric projects, the conflicting interests of states, other than the riparian states are also seen from an environmental sustainability context. One way to ensure that there may not be disputes, or when there are disputes, these disputes will be managed effectively, is to establish River Basin Organisations, as between two or more states. The Permanent Indus Commission (PIC) in 1960 with a mandate to allocate water resources between India and Pakistan is an example of such an RBO. Where there is a dispute resolution mechanism in place, there RBOs have every chance of being effective. In the case of India and Pakistan, despite the establishment of the PIC, there are a number of disputes that did arise as between India and Pakistan. 23 However, the Indus Waters Treaty mechanism has been fairly successful in managing the conflicting interests between India and Pakistan over their shared watercourses. The accepted fact is that hydroelectric projects on shared waters or international watercourses do invite conflicts between co-riparian states. Part of the reason for this is that international watercourses are shared for use. There is a strong argument that instead of shared use, emphasis should be on shared benefits from the international watercourses. For example, hydroelectric projects have the potential to benefit the co- riparian states by taking caring of their energy needs. If the international watercourses are used for shared benefits by the co-riparian states, the incidence of conflict between the states will greatly decrease. This is one argument. However, despite the shared benefits’ potential for the co-riparian states, there are also challenges. Some of these challenges are highlighted by Hensengerth et al, who argue that the underlying structure of the hydro-political problem is an important factor influencing whether benefit sharing related to dam projects on shared rivers can be expected and what the actual benefit-sharing mechanism may look like. 24 The incentives for cooperation differ fundamentally for transboundary and border rivers, respectively. In the case of border rivers, co-riparian countries sharing the river usually have to collaborate if they want to construct a dam since no country can use a border river unilaterally. In the case of transboundary rivers, incentives to cooperate on dams exist if: (i) cooperation will enable economic or financial limits to unilateral action to be overcome; (ii) altering the design of a dam planned upstream will increase aggregate net benefits; (iii) locating a dam upstream instead of downstream will increase aggregate net benefits; or (iv) compensating for negative externalities which are directed upstream will preclude conflict. 25

Thus, whether these incentives are equalised as between the co-riparian states, may be relevant to the decision of cooperating on a hydroelectric project. If the benefits are equalised, the chances of cooperation on such projects increase and the chances of conflicts decrease. The principles of international law have been especially evolved to reduce conflicts between states with respect to shared resources. The principle of equitable utilisation of resources is important here. In the Case Concerning Gabcíkovo- Nagymaros Project mentioned above, the ICJ observed that equitable participation in the common utilisation of shared water resources was important for the achievement of the objectives of the 1977 treaty between Hungary and Czechoslovakia. Thus, equitable distribution of shared water sources must be seen to be done, otherwise, the possibility of conflict becomes greater.

4. India-Pakistan: Indus Waters Arbitration

After the partition of India and Pakistan, problems arose between India and Pakistan over the shared waters that were earlier part of the same British India, but were now international in character. This is due to the classic upstream and downstream conflicting claims between the two nations. India and Pakistan signed the Indus Waters Treaty in 1960 after 8 years of negotiations carried out under the auspices of the World Bank. The treaty is small with only 12 articles, but it has 8 annexes. A perpetual treaty, it is useful in both its normative and functional aspects. It also has an institutional mechanism. 26 The Permanent Indus Commission (PIC) is a joint body, with one commissioner from each state. It is the body that represents the opinions of its government to the other. In that way, it is a channel of communication between India and Pakistan with respect to its shared watercourses.

The Indus Waters Treaty, article IX provides a staged procedure to be followed in case of a dispute or a potential dispute between India and Pakistan over their shared watercourses. The treaty also provides for resolution of disputes by a Neutral Expert or in some cases through an Arbitral Commission. As it is a staged procedure, the first point of decision is with the PIC, which decides whether there is a difference between India and Pakistan, which can be negotiated at the level of the PIC. If the PIC finds that negotiations are not successful, then a Neutral Expert may be appointed for the resolution of the difference. The Neutral Expert needs to decide whether there is a ‘difference’ or a ‘dispute’. The matter is simplified for the Neutral Expert by the treaty itself. Annexure F, Part I contains a list of entries, related to which if the difference arises, than the Neutral Expert can decide the matter on merits. If the matter falls outside of this list, as determined by the Neutral Expert, then he may advice the PIC to treat the matter as a dispute. The PIC informs the two governments, who may use alternative methods of dispute resolution for the purpose of resolving the dispute.

In the case of the Baglihar project dispute that arose between India and Pakistan, the central problem is the structure of the project, which is a gated structure. The project was conceived in 1982 and Pakistan made its reservations against the project known to India in 1999. This was when the project work was finally commenced and Pakistan objected at this time, due to the design of the project, which as mentioned above was gated. Pakistan does not object to or question the right of India to make a hydro power project. Its basic objection stems from the design of the project. Thus far, the treaty is obviously successful in establishing the rights of the two riparian states to establish planned measures on the shared waters. The main contention of Pakistan is that the gated dam will allow India to manipulate the flow of the water to Pakistan’s disadvantage, especially during the months of December, January and February. India’s contention on the other hand is that the engineered structure of the dam, which requires the gates, is from a safety point of view and it is generally the structure required for such projects. If the gates are removed, this would essentially mean the end of the Baglihar hydro-power project. 28 Despite a number of attempts to find a solution to the conflict of interest, no solution was found and Pakistan requested appointment of a Neutral Expert in an application to the World Bank in 2005.

In 2010, Pakistan instituted another case against India under the Indus Waters Treaty. This relates to the hydropower project Kishanganga. India plans to construct a dam in the Kishanganga river in Jammu and Kashmir. The river Kishenganga is a tributary of the Jhelum, which is a shared watercourse between India and Pakistan. Pakistan’s concern is that India plans to divert the waters from one tributary of the Jhelum to another, which is prohibited under the Indus Waters Treaty. 29 The Court in its award of 2013, found that India’s project was not inconsistent with the provisions of the Indus Waters Treaty, but also specified the minimum downstream flows to be maintained by India.

Because Pakistan and India have entered into a bilateral treaty in the shape of Indus Waters Treaty, it is primarily under this treaty that any solution to their international watercourses is to be found. The UN Watercourses Convention is important because it lays down the generic principles with respect to international watercourses. Moreover, the customary law is also applicable to such situations. However, the principal law for the resolution of such conflicts remains for India and Pakistan, the Indus Waters Treaty. It is important to note that the Indus Waters Treaty is generally seen as a successful instance of two states resolving their issues on international watercourses. This is even more important because, there two states have otherwise been locked in territorial disputes that have even led to full fledged wars between the two. It is even more interesting that the Indus Waters Treaty concerns the shared waters related to the state of Jammu and Kashmir in India, which itself is part of a bitter territorial dispute between the two states. The reason may be that the treaty steers clear of these territorial dispute related issues and focuses on the regulation of the shared waters by the two states.

The success of the Indus Waters Treaty is also an example of how bilateral arrangements between riparian states can be useful in ensuring that conflicts arising from the use of the shared watercourses can be minimised. The UN Watercourses Convention came into existence only in 1997, 37 years after the Indus Waters Treaty was signed by India and Pakistan. In fact, even the first successful international attempts at making law for international watercourses, which were made by the International Law Association in 1966 (The Helsinki Rules), were made 6 years after the Indus Waters Treaty 1960.

The Indus Waters Treaty has seen India and Pakistan through two wars and one proxy war (Kargil Conflict) and yet the success of the treaty cannot be doubted. The UN Watercourses Convention had laid down general rules but the implementation procedure under the Convention is not effective enough. The Convention falls back on diplomatic measures to resolve disputes but does not provide for a compulsory adjudicatory process. The Convention is still important because it provides a generic framework for all riparian states of the world to follow. But, some of this framework and principles are seen in bilateral arrangements between states much before the Convention came into being.

At this point, it is also pertinent to mention that the UN Watercourses Convention does not create an adjudicatory method for dispute resolution under its provisions. Article 33 of the Convention provides a catalogue of dispute settlement measures, with more emphasis on diplomatic means. 32 This again puts the focus back on bilateral measures rather than under the multilateral Convention. As seen under the Indus Waters Treaty arbitration between India and Pakistan, the bilateral measures have had success in ensuring resolution of problems with respect to shared waters.


The international watercourses are shared waters of the co-riparian states. As such, no one state can appropriate all the resources that these waters have to offer. Moreover, international watercourses are part of the ecosystem and in that sense it is interconnected with other parts of the eco system. It is a well established fact that the all states are under an obligation to ensure that the ecosystem is preserved and protected as a shared heritage.

To the extent that the international watercourses have benefits to impart (such as energy) riparian states have the right to derive such benefits from the watercourse. However, co-riparian states have to ensure that such planned measures are not taken by the state so as to impair the right of the co-riparian state to derive similar benefits. Here there are two schools of thought, one that says that co-riparian states should share the use of the international watercourses. The other school of thought argues that instead of sharing uses, the co-riparian states should share benefits. This will enable them all to benefit from the watercourse and at the same time, it will ensure that there is increased cooperation between the co-riparian states and therefore least friction.

The international law has been evolved to treat the international watercourses as an ecosystem that needs to be preserved. At the same time, the 1997 UN Watercourses Convention has laid down generic rules with respect to the use and share of international watercourses. There are other measures, both before and after the multilateral 1997 Convention that has led to the development of the international law on this point. However, bilateral agreements such as the Indus Waters Treaty 1960, have proved to be more successful in managing the rights of co-riparian states and also in resolving disputes between them.


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