Permanent Court of Arbitration Rules Indus Waters Treaty Remains in Force

The Permanent Court of Arbitration in The Hague has stated that the Indus Waters Treaty remains fully in force and that India must uphold the water-sharing agreement. The ruling follows India's suspension of the treaty in April last year after an attack in Kashmir, and subsequent work to boost reservoir holding capacity at two hydroelectric projects in the region.

Pakistan had denied any role in the attack and initiated legal action after India began work on the projects. This development was viewed as a tangible step by India to operate outside agreements covered by the Indus Waters Treaty, which has been honored by both nations since 1960 despite previous conflicts and wars.

According to the Permanent Court of Arbitration, India had no justification for ending or suspending the agreement. The intergovernmental court stated that India must observe its obligations under the treaty, particularly those concerning the design and operation of hydroelectric projects on the Western Rivers.

In response, India's Ministry of Foreign Affairs issued a statement rejecting the verdict. India, which is officially a member of the court, stated that it does not recognize the court and that the body has no jurisdiction to pronounce on India's sovereign decisions. The ministry added that the pronouncements will have no effect on India's actions regarding the ongoing projects.

The court further announced that a neutral expert appointed by the World Bank will judge by July 2027 whether the construction of the hydroelectric plants in the Himalayan region aligns with the treaty. Agreeing with a demand by Pakistan, the court ruled that India is not permitted to build the dam wall and power intake structure at the Ratle Hydro-Electric Plant above certain levels until 90 days after the neutral expert delivers its decision.

"Cross-border regulatory frameworks and long-standing international agreements play a critical role in regional stability and infrastructure planning. When long-standing treaties face legal disputes or suspensions, it creates operational uncertainty for large-scale infrastructure and energy projects. Businesses and policymakers operating in regions with cross-border resource dependencies must carefully evaluate geopolitical risks and regulatory developments, as international legal rulings can directly impact project timelines, capital allocation, and compliance requirements." — Dr. Shishir Gupta, Founder & CEO, StartupLanes