Tribunal says the 1960 water sharing pact remains legally in force and temporarily restricts work on India’s Ratle hydroelectric project. India says the arbitration body was improperly constituted, has no jurisdiction over its sovereign decisions and insists the treaty remains in abeyance.
NEW DELHI / ISLAMABAD: One of the most consequential disputes between India and Pakistan has moved deeper into international arbitration after a tribunal in The Hague ruled that India must continue observing the Indus Waters Treaty and imposed temporary restrictions on parts of a major Indian hydroelectric project in Kashmir. India immediately rejected the decision, setting up an extraordinary situation in which the arbitration tribunal says the treaty remains fully binding while New Delhi maintains that it has placed the agreement in abeyance.
The August 31 ruling comes from the Court of Arbitration constituted under the Indus Waters Treaty, with proceedings administered by the Permanent Court of Arbitration in The Hague. It should not be confused with the International Court of Justice, even though the institutions are associated with The Hague and the Peace Palace. The case is formally known as the Indus Waters Western Rivers Arbitration, Pakistan v. India.
The tribunal concluded that the Indus Waters Treaty continues to operate despite India’s April 2025 decision to hold it in abeyance. The court said India must continue observing treaty obligations governing the design and operation of hydroelectric projects on the western rivers. It also ordered India not to build portions of the dam wall and power intake structure at the Ratle Hydroelectric Plant above specified levels while another treaty proceeding examines the project’s technical compliance.
India rejects the ruling
India has categorically rejected the decision. India’s Ministry of External Affairs argues that the Court of Arbitration itself was improperly constituted and that the parallel arbitration process violates the treaty. New Delhi says it has never recognized this particular tribunal as legally valid and has declined to participate in its proceedings.
The ministry said the tribunal has “no jurisdiction whatsoever” over India’s sovereign decisions and insisted that its pronouncements will not alter India’s actions regarding its water projects. New Delhi also reiterated on Monday that its decision to hold the Indus Waters Treaty in abeyance remains in force.
That objection has a history. Pakistan asked for a Court of Arbitration to examine its concerns over the Kishenganga and Ratle hydroelectric projects, while India requested that the issues be handled by a Neutral Expert. The World Bank eventually moved ahead with both mechanisms in 2022, appointing French engineer Michel Lino as Neutral Expert and American international law professor Sean Murphy as chairman of the Court of Arbitration. The World Bank says its own role is procedural and that the two mechanisms are independent.
India argues that running the two procedures simultaneously is inconsistent with the treaty and says the Neutral Expert process is the legitimate mechanism for resolving the technical questions. Pakistan and the Court of Arbitration reject that interpretation, with the tribunal having previously ruled that it has jurisdiction to consider Pakistan’s claims.
Why the Indus Waters Treaty is so important
The dispute concerns far more than two dams. The Indus Waters Treaty, signed in Karachi on September 19, 1960, created one of the world’s most important transboundary water sharing systems. The agreement broadly allocated the Ravi, Beas and Sutlej eastern rivers for India’s unrestricted use while giving Pakistan rights over the waters of the Indus, Jhelum and Chenab western rivers, subject to specified Indian uses.
India is permitted to construct hydroelectric projects on the western rivers, including run of river projects, but their designs must comply with detailed treaty restrictions governing features such as water storage, pondage, spillways and outlets. That is why the argument is not simply about whether India may build dams. The central legal question is how those projects can be designed and operated without giving India a degree of water control that Pakistan says the treaty was specifically designed to prevent.
The two projects at the centre of the dispute illustrate the scale involved. The Kishenganga hydroelectric plant has approximately 330 megawatts of capacity and entered operation in 2018. Ratle is an 850 megawatt project being constructed on the Chenab River. Pakistan has challenged technical aspects of both projects, while India maintains that its hydroelectric development rights are permitted under the treaty.
Why Pakistan considers the issue existential
Pakistan’s dependence on the Indus basin makes the dispute particularly sensitive. Reuters reports that the river system provides water supporting roughly 80 percent of Pakistani agriculture. Pakistan’s government has repeatedly described the treaty as fundamental to the country’s water, food and economic security.
That dependence explains why changes to reservoir operations, storage capacity or the timing of water releases generate such intense concern in Islamabad. Pakistan is the downstream country, meaning substantial infrastructure upstream in India can potentially affect how quickly water passes downstream even if India cannot simply eliminate the river itself. The practical argument therefore involves not only the total volume of water reaching Pakistan over time, but also India’s capacity to regulate its timing through dams, reservoirs and hydroelectric infrastructure.
India sees the issue very differently. New Delhi argues that the existing arrangement has constrained development opportunities in Jammu and Kashmir and prevented India from making fuller use of rivers passing through its own territory. Prime Minister Narendra Modi has repeatedly linked the water issue to India’s national security position toward Pakistan and has argued that India should obtain greater developmental benefit from these waters.
The Pahalgam attack changed everything
The treaty crisis intensified dramatically following the April 22, 2025 terrorist attack in Pahalgam that killed 26 civilians. India said the attack had cross border linkages and subsequently announced that the Indus Waters Treaty would be held in abeyance until Pakistan “credibly and irrevocably” ended its support for cross border terrorism. Pakistan denied involvement in the Pahalgam attack and rejected India’s water decision.
Pakistan argued that India could not unilaterally suspend the treaty. The text of the agreement provides Pakistan with a powerful argument on this point. Article XII states that the treaty’s provisions continue in force until terminated through a duly ratified treaty concluded between both governments. It does not expressly provide a mechanism allowing one party simply to place the entire agreement in abeyance.
The Court of Arbitration has now adopted essentially that interpretation, concluding that India’s decision does not extinguish the treaty or the tribunal’s authority. Earlier arbitration decisions in 2025 had already reached similar conclusions about the court’s continuing competence and the treaty’s status.
India, however, rejects the premise because it does not accept this Court of Arbitration as legitimately constituted in the first place. That distinction is critical. The fight is therefore no longer merely over the interpretation of a water treaty. India and Pakistan now disagree about which treaty dispute resolution institution has authority to interpret the treaty at all.
Ratle construction now becomes the immediate test
The most immediate issue is the Ratle project. The latest order says India cannot advance the dam wall and power intake structure beyond specified levels until 90 days after the Neutral Expert gives his decision. Reuters reports that the Neutral Expert is expected to determine by July 2027 whether disputed elements of the hydroelectric projects comply with the treaty.
That creates an unusual legal situation. Pakistan is relying on the Court of Arbitration for restrictions on Indian construction while the underlying technical questions are also being examined through the Neutral Expert process that India originally requested. The tribunal’s interim measures are therefore designed to prevent construction from moving so far ahead that the Neutral Expert’s eventual ruling could become practically meaningless.
The World Bank itself is not deciding whether India or Pakistan is correct on the technical merits. Its official explanation stresses that its responsibilities under the treaty are limited and largely procedural, including making appointments required for dispute settlement. The Neutral Expert and Court of Arbitration determine their own jurisdiction and conduct their proceedings independently.
Does this mean India will immediately restore the treaty?
Not necessarily.
The ruling significantly strengthens Pakistan’s legal position before the arbitration tribunal, but international arbitration does not function like a domestic court with police capable of physically stopping construction. India has already declared that it will disregard the decision. The next phase is therefore likely to involve a mixture of international law, engineering decisions, diplomacy and political pressure rather than an immediate restoration of normal India Pakistan water cooperation.
The distinction between the legal position declared by the tribunal and the political position being implemented by India is important. According to the Court of Arbitration, the treaty remains in force and India remains bound by it. According to New Delhi, the court lacks authority to make that determination and India’s decision to keep the treaty in abeyance continues.
This leaves the Neutral Expert’s expected 2027 decision particularly important. If that process reaches conclusions on Kishenganga and Ratle while India continues rejecting the Court of Arbitration, the two treaty mechanisms could become the centre of an even larger battle over what India may build on the western rivers and how much operational control it may exercise.
A treaty that survived wars now faces perhaps its hardest test
The Indus Waters Treaty survived the 1965 war, the 1971 war, the Kargil conflict and decades of hostility between two nuclear armed neighbours. That history helped transform it into an internationally cited example of water cooperation surviving political conflict.
The current confrontation is different because the treaty itself has become part of the conflict.
India argues that relations created in 1960 cannot be separated indefinitely from terrorism and national security concerns. Pakistan argues that allowing an upstream country to suspend a permanent water allocation treaty during a political crisis would undermine both its water security and the credibility of international agreements more broadly. Both positions now reach far beyond engineering disagreements over individual dams.
For Pakistan, the stakes involve the water supply underpinning vast areas of agriculture and a population of more than 240 million people. For India, the dispute involves sovereignty, national security, development in Jammu and Kashmir and what New Delhi considers its legitimate ability to use rivers originating or flowing through Indian territory.
The August 31 ruling therefore does not settle the Indus dispute. It sharpens it. The arbitration tribunal has declared that the treaty cannot simply be switched off by one side. India has responded that the tribunal itself has no authority to tell India what it can do. With major hydroelectric projects continuing to develop in the Himalayas and the Neutral Expert decision still ahead, the struggle over the Indus is moving from a decades old water sharing dispute into a broader confrontation over sovereignty, international law and the limits of using shared natural resources during periods of geopolitical conflict.