Why in news?

Michel Lino, the World Bank-appointed Neutral Expert (NE), declared he is “competent” to decide differences on hydroelectric projects under the Indus Water Treaty (IWT), 1960.

India welcomed the decision, emphasizing that all seven technical disputes fall within the NE's jurisdiction.

The IWT allocates the three eastern rivers (Sutlej, Beas, Ravi) to India and the three western rivers (Indus, Jhelum, Chenab) to Pakistan. Signed in 1960, the treaty aimed at equitable water sharing between the two nations.

What’s in today’s article?

• Dispute Resolution Mechanism under the Indus Water Treaty (IWT)
• Background of the Dispute
• Neutral Expert's Decision

About Dispute Resolution Mechanism under the Indus Water Treaty (IWT)

• The IWT 1960 outlines a three-tiered dispute resolution process to address disagreements regarding projects on the Indus rivers.
• Article IX of the treaty defines this structured mechanism.
• Level 1: Permanent Indus Commission (PIC)
  • Initial Notification: Both parties must inform each other about any planned projects on the Indus rivers, sharing all relevant information.
  • Role of PIC: The Permanent Indus Commission (PIC), established under the IWT, is responsible for managing and overseeing the treaty's objectives.
  • Outcome: If the PIC fails to resolve the disagreement, the issue is escalated to the next level.
• Level 2: Neutral Expert Appointment
  • World Bank’s Role: If the PIC is unable to resolve the dispute, the World Bank appoints a neutral expert to mediate the issue.
  • Resolution Attempts: The neutral expert's goal is to resolve the dispute through technical assessments and recommendations.
  • Escalation: If the neutral expert cannot resolve the matter, it is considered a formal dispute and moves to the final level.
• Level 3: Court of Arbitration (CoA)
  • Final Step: When a dispute persists after the neutral expert's intervention, it is referred to the Court of Arbitration (CoA).
  • Chairperson: The chair of the CoA is appointed by the World Bank.
  • Final Decision: The CoA is the final body to adjudicate the dispute, with its decisions considered binding.
• This three-tiered structure ensures that disputes over the Indus waters are addressed in a graduated manner, with efforts focused first on cooperation and technical expertise before moving to formal arbitration.

Background of the Dispute

• The dispute between India and Pakistan centers on the Kishenganga and Ratle hydroelectric projects.
  • Kishenganga Project: On the Kishenganga River, a tributary of Jhelum.
  • Ratle Project: On the Chenab River.
• India advocates resolution through a neutral expert, as outlined in the Indus Waters Treaty (IWT) of 1960, while Pakistan supports the involvement of the Permanent Court of Arbitration (CoA) in The Hague.
  • Pakistan raised objections to these projects, initially seeking the appointment of a Neutral Expert in 2015.
  • However, in 2016, Pakistan unilaterally withdrew this request and sought adjudication by a Court of Arbitration, violating the dispute resolution mechanism outlined in Article IX of the treaty.
    • Pakistan bypassed the sequence mentioned in dispute redressal mechanism under IWT and sought arbitration directly in 2016.
  • India then requested the matter to be referred to a Neutral Expert.
• Parallel Mechanisms and Legal Challenges
  • Pakistan’s move for a CoA led to the World Bank facilitating both a Neutral Expert and a CoA in 2022.
  • India has refused to participate in the CoA, calling it "illegally constituted" and contrary to treaty provisions.
• Engagement on Treaty Review
  • India and Pakistan are also in contact under Article XII (3) of the IWT for the review and potential modification of the treaty.
  • India issued formal notices to Pakistan for review (August 30, 2024) and modification (January 2023) of the treaty.
    • Pakistan has not formally responded despite four letters from India.

Neutral Expert's Decision

• The World Bank-appointed neutral expert, Michel Lino, ruled in favor of India's stance, affirming his competence under Paragraph 7 of Annexure F of the IWT to resolve the differences.
• India's Response
  • India welcomed the decision.
    • Earlier, India had dismissed the legitimacy of the Court of Arbitration, calling it illegally constituted and reaffirmed that the treaty does not allow parallel proceedings on the same issues.
  • The Ministry of External Affairs stated that the ruling upholds India's consistent position that the neutral expert is the appropriate authority to address the seven issues concerning the two projects.
• Next Steps
  • The neutral expert will now proceed to evaluate the merits of each of the seven differences, culminating in a final decision.