Client Alerts

Indus Waters Kishenganga Arbitration: International arbitral tribunal accedes in part to Pakistan’s application for interim measures against India

Volterra Fietta Client Alert
10 October 2011

On 23 September 2011, the international arbitral tribunal (the “Tribunal”) constituted under the terms of the Indus Waters Treaty between the Government of India and the Government of Pakistan (the “Treaty”) issued a unanimous decision on the interim measures application of Pakistan in the Indus Waters Kishenganga Arbitration (the “Arbitration”). The Tribunal acceded to the application in part, prohibiting India from constructing any permanent structures that might permanently inhibit the river’s full flow. However, the interim order does not prohibit India from undertaking works which will divert the river only temporarily and permits certain construction activities to continue.

Background

The Treaty was signed by India and Pakistan on 19 September 1960. Following ratification, it entered into force retroactively as of 1 April 1960. The Treaty’s objective is to agree upon an equitable allocation of the flow of the Indus River and its tributaries and to develop a cohesive plan for integrated watershed development.

Article IX of the Treaty provides a mechanism for the settlement of differences and disputes that may arise in relation to the Treaty. Following the procedures specified in that Article, the Tribunal was constituted following Pakistan’s submission of a Request for Arbitration (the “Request”) on 17 May 2010. Pakistan’s reason for submitting the Request was that the Parties had failed to resolve an ongoing dispute concerning India’s Kishenganga Hydro-Electric Project (the “Project”).

The first meeting of the Tribunal was held on 14 January 2011. Pakistan, despite having indicated in the Request that it would seek interim measures at that meeting, decided against doing so, noting that it reserved its right to seek interim measures at any point in the future.
The application for interim measures

Pakistan’s application for interim measures was subsequently made on 6 June 2011, following, in Pakistan’s opinion, important developments since the first meeting of the Tribunal. The application requested an order for interim measures ordering that:

India cease work on the Project until such time as the Tribunal renders its award on merits in the proceedings;

India inform the Tribunal and Pakistan of any actual or imminent developments or steps in relation to the Project that may have a significant adverse effect upon restoring the status quo ante or that may in any other way seriously jeopardise Pakistan’s rights and interests under the Treaty; and
any steps taken by India relating to the Project are taken at India’s own risk and without prejudice to the Tribunal’s rights to order works to stop or be modified or be dismantled.

India’s assurances and representations

The Tribunal initially determined in its decision on interim measures that, during the course of the proceedings, key assurances and representations had been made by India which reduced the need for the Tribunal to pass judgment upon some of Pakistan’s claims. Specifically, these assurances encompassed:

India’s acceptance of the “proceed at own risk” principle;
India’s acceptance that it would inform the Tribunal and Pakistan of any actual or imminent steps in relation to the Project that may have a significant adverse effect upon restoring the status quo ante or that may in
any other way seriously jeopardise Pakistan’s rights and interests under the Treaty;

India’s assurances that the planned date of diversion would not be before 2015;

India’s acceptance that Pakistan could request interim measures at any time (which, due to certain peculiarities in the wording of the Treaty, was discussed at some length during the proceedings); and
India’s unequivocal assurance that it would comply with any final award rendered by the Tribunal.

The Tribunal’s ruling on its powers to specify interim measures

The Tribunal then addressed in its decision the scope of its own jurisdiction to specify interim measures.

The Tribunal’s analysis centred primarily on a difference between the Parties as to the meaning of Paragraph 28, Annexure G to the Treaty, the essence of that difference being whether, to be “necessary” (as stipulated by Paragraph 28, Annexure G), interim measures must be required urgently and so as to avoid irreparable injury to the interests of the Party seeking those measures. These requirements for “urgency” and “irreparable injury” were argued by India to be essential requirements as they reflected the established case-law of the International Court of Justice on provisional measures.

The Tribunal rejected this interpretation of Paragraph 28, Annexure G, which, it reasoned, set out its own three distinct, specific grounds on which the meaning of “necessary” could be ascertained. Paragraph 28, Annexure G thus functioned as a kind of lex specialis requiring no further interpretation.
Continuing with this reasoning, the Tribunal determined that it was empowered (and, indeed, obliged) to order interim measures if it concluded that those measures were necessary:

to safeguard the interests of the requesting Party with respect to the matter in dispute; or

to avoid prejudice to the final solution of the dispute; or

to avoid aggravation or extension of the dispute.

The Tribunal emphasised that only one of these measures would have to be met in order for interim measures to be granted. It also emphasised that interim measures under the Treaty remained an extraordinary recourse requiring that, without prejudice to the Tribunal’s ultimate ruling on merits, the claims set forth by the Party seeking those measures appeared at least “plausible”. It determined that the facts underlying the Request satisfied this requirement.

The Tribunal’s order for interim measures

The Tribunal found that the second criteria for ordering interim measures – namely, that they would be “necessary…to avoid prejudice to the final solution of the dispute” – bore most relevance to Pakistan’s application. Indeed, this provision was interpreted to be one intended to protect the Tribunal’s own position rather than the rights or interests of either Party, i.e., where, in the absence of an order for interim measures, ongoing work on the Project might otherwise compromise either the liberty of the Tribunal to render an award or the Parties’ ability to implement an award without prohibitive delay or costs.

Pursuant to this provision, the Tribunal ordered that India could not therefore proceed with any permanent works on or above the riverbed which might inhibit the restoration of the full flow of the river to its natural channel. This included a stop to works which India had originally intended to begin in November. However, India was permitted to proceed with other key components of the Project, including plans to divert the river temporarily using a by-pass tunnel and to build sub-surface foundations for the dam.

The Tribunal also ordered that Pakistan and India arrange for periodic joint inspections of the dam site in order to monitor compliance with the Tribunal’s order, with a joint report to be submitted to the Tribunal by no later than 19 December 2011.

Analysis

The Tribunal is the first ever to be formed under the dispute resolution provisions of the Treaty, although not the first attempt by Pakistan to challenge India’s hydropower activities in the region. In 2005 a “difference” relating to India’s Baglihar project on the Chenab river was resolved by a neutral expert under a separate provision of the Treaty (a determination that itself became a point of contention between the Parties in the present proceedings).

As it is a sui generis Tribunal constituted under the Treaty, the Tribunal’s findings on Pakistan’s interim measures application are not reflective of custom in international law. Indeed, the Tribunal was at pains to differentiate its role in determining whether the Request complied with the provisions of the Treaty from the jurisprudence of the International Court of Justice on interim measures, which it specifically distinguished.
The Tribunal’s decision seeks to find middle ground between the demands of Pakistan that its long-term rights – should it win on merits – not be put in jeopardy by a fait accompli on the ground and the demands of India that it be allowed to continue with important works affecting the jobs and livelihoods of many of its citizens.

More broadly, the Tribunal took a relatively positive view of the proceedings: despite Pakistan invoking historic grievances dating back to 1948, the Tribunal noted that it was “important at the outset…to record that key matters of agreement have emerged in the course of this arbitration…[which] bode well for the continuing vitality of the Treaty”. An award on merits, which will provide a further significant test of the Treaty’s vitality, is expected in late 2012 or early 2013.