Below is a guest post by Rishav Banerjee. He is a graduate of Gujarat National Law University and did his masters from University of Cambridge. The post discusses the partial award that was rendered by Permanent Court of Arbitration in India's favour in an arbitration between India and Pakistan. This article written by Shashank Kumar may also be of interest to the readers.
Factual Background:
The Kishanganga
dispute stems from the construction of a dam as planned by India on the
Kishangaga River which is a tributary of Jhelum (one of the Western Rivers
allocated to Pakistan under the Indus Water Treaty).
Legal Framework:
Article III(2)
of the Indus Water Treaty (IWT) is the provision of main concern in the dispute
which talks about India’s compliance
with its obligations to “let flow all waters of the Western Rivers” and
its limited exceptions. India strongly relies on the IWT provisions that
provides for inter-tributary diversions.
The other aspect
of the dispute arises out of the interpretation of Annexure D and its
restrictions on the design and operation of Run of River Plants, such as the
KHEP, including in particular the restrictions on dead and live storage, set
out in paragraphs 2(a), (b) & (g), 8, 14 and 15 of Annexure D of the IWT.
Paragraph 2(a) and (b) define the distinction between “Dead Storage” and “Live
Storage” respectively, while paragraph 2(g) sets out the criteria for a
‘Run-of-River Plant’. Paragraph 14 makes Paragraph 18 and 19 of the Annexure E
applicable to the filling of Dead Storage. Paragraph 8 sets out certain design
restrictions, whereas paragraph 15 imposes further operational restrictions.
Based on these provisions, Pakistan submitted that India’s proposal of drawdown
flushing as part of KHEP’s design and operation is disallowed under the IWT.
Dispute Resolution: Arbitration at the
Permanent Court of Arbitration
Pakistan
commenced the process for resolution of the dispute under Article IX (2), (3),
(4) and (5) of the Treaty. In May 2005, Pakistan raised the following six
objections:
1. “Whether
India’s proposed diversion of the Kishanganga (Neelum) into another tributary,
i.e. the Bonar-Madmati Nullah, being one central element of the Kishanganga
Plant, breaches the legal obligations India owes Pakistan under the Treaty, as
interpreted and applied in accordance with international law, including India’s
obligations under Article III(2) (let flow all the waters of the Western rivers
and not permit any interference with those waters”) and Article IV(6)
“maintenance of natural channels?”
2. Whether the
design of the plant is in conformity with Paragraph 8(a) of Annexure D to the
Treaty?
3. Whether the
design of the Kishanganga Plant is in conformity with Paragraph 8(c) and
Paragraph 8(f) of Annexure D to the Treaty?
4. Whether the
design of the plant is in conformity with Paragraph 8(d) of Annexure D to the
Treaty?
5. Whether the
design of the plant is in conformity with Paragraph 8(e) of Annexure D to the
Treaty?
6. Whether under
the Treaty, India may deplete or bring the reservoir level of a
run-of-the-river plant below dead storage level in any circumstances except in
the case of an unforeseen emergency?[1]
It is the second
time Pakistan sought resolution of a dispute through the dispute settlement
mechanism contained in the IWT and the first time through the International
Court of Arbitration. In the Kishanganga case, both "difference" and
"dispute" has come into play.[2]
Pakistan had proposed the reference of certain technical issues to the Neutral
Expert and had sought legal interpretation on two major parameters concerning
the diversion of Kishanganga water for a power project from the Court of
Arbitration. Although the two countries have rejected each other’s nominees for
the Court of Arbitration, they have decided to set up a panel comprising a
chairman, a legal member and an engineer to select the umpires, by drawing
lots.[3]
The court comprised of six members and was presided over by a chairman
which was Judge Stephen Schwebel in this case. It is important to reiterate
that the Court of Arbitration route is taken only when the issue does not
pertain to technicalities and concerns a legal dispute over the interpretation
of the IWT.
In its Request
for Arbitration, Pakistan stated that the Parties had failed to resolve the
“Difference” concerning KHEP by
agreement pursuant to Article IX(4) of the Treaty. Pakistan identified “two
questions that are at the centre” of the dispute in the following manner:
1) Whether
India’s proposed diversion of the river Kishenganga (Neelum) into another
Tributary, i.e. the Bonar-Madmati Nallah, being one central element of the
Kishenganga Project, breaches India’s legal obligations owed to Pakistan under
the Treaty, as interpreted and applied in accordance with international law,
including India’s obligations under Article III(2) (let flow all the waters of
the Western rivers and not permit any interference with those waters) and
Article IV(6) (maintenance of natural channels)? (First dispute)
2) Whether under
the Treaty, India may deplete or bring the reservoir level of a run-of river
Plant below Dead Storage Level (DSL) in any circumstances except in the case of
an unforeseen emergency?[4]
(Second Dispute)
With regards to
the first dispute Pakistan submitted before the court that by making the
proposed diversion at KHEP India has breached its obligation under the IWT in
four manners:
1)
India
has violated its obligations under Articles III (1) and (2) to let flow all the
waters and not to permit any interference with these waters, as the tightly
constrained exceptions to these obligations, including the right to use the
waters of the Jhelum to generate hydroelectric power in accordance with
Annexure D, does not establish a right to operate a project that permanently
diverts the entirety of the waters of the Kishenganga to another Tributary of
the Jhelum.[5]
2)
Even
if Paragraph 15(iii) of Annexure D did establish some right to divert, such
right is limited by the express wording of Article III(2) of the IWT, restricted
in the case of the Jhelum ‘to the drainage basin thereof’.
3)
The
planned diversion is not in compliance with the strict criteria set out in
Paragraph 15(iii) of Annexure D, as it is not necessary and as it causes
adverse impact to ‘the then existing Agricultural Use or hydro-electric use’.
4)
By
the planned diversion India would also breach its obligation under Article IV (6)
of the IWT to ‘use its best endeavours to maintain the natural channels of the
Rivers’.[6]
With respect to
the second dispute, Pakistan submitted that India’s proposed design of the
KHEP, including its ability to drain the reservoir behind the Plant and then
halt the flow of water for as long as it takes to refill the reservoir is
prohibited under Annexure D, which sets out a series of restrictions on the
design and operation of Run-of-River Plants, including in particular with
respect to the height and size of the outlets, gates and water intakes, as well
as with respect to the water impounded behind the Plant.[7]
India in
response to Pakistan’s arguments submitted that KHEP fully complies with its
rights and obligations under the IWT and that the second dispute is
inadmissible as it constitutes a ‘difference’ which is subject to referral to a
Neutral Expert in accordance with Article IX(2) of the IWT before it can be
submitted to arbitration.[8]
With regards to the first dispute, India argued that it is expressly permitted
by Article III(2) and Annexure G to generate hydroelectric power and that this
right is limited only with respect to
the manner in which it can be exercised by Annexure D.[9]
India further submitted that that Annexure D contained enabling provisions
granting the right to construct Run-of-River Plants involving inter-tributary
transfers subject to the then existing agricultural or hydroelectric uses by
Pakistan not being adversely affected.[10]
According to India, these uses are to be assessed by reference to KHEP’s
purported conception in the 1950’s.[11]
India also argued that in any event, the areas that Pakistan claims would be
adversely affected by the operation of the KHEP are a part of Kashmir which
forms an integral part of India in accordance with its constitution.[12]
Order on Interim Measures:
Pakistan
submitted an application for the indication of provisional measures. It prayed
before the Court to pass an interim order restraining India from proceeding
further with the planned diversion of the river Kishenganga/Neelum until such
time as the legality of the diversion is finally determined by a Court of
Arbitration.[13]
The Court of Arbitration after a site visit in June 2011 issued its Order on
the Interim Measures Application on September 23, 2011. In paragraph 152, which
is the operative provisions of the order, the Court ordered that “It is open to
India to continue with all works relating to the Kishenganga Hydro-Electric
Project, except India shall not proceed with the construction of any permanent
works on or above Kishenganga/Neelum riverbed at the Guez site that may inhibit
the restoration of the full flow of that river to its natural channel”[14]
and that both the Parties “shall arrange for periodic joint inspections of the
dam site at Guez in order to monitor the implementation” of that order[15].
Partial Award:
On February 18,
2013 the Court of Arbitration rendered
the Partial Award in respect of the dispute between India and Pakistan under
the IWT concerning the two disputes as stated above.
In its Partial
Award, which is final with respect to the matters decided therein, without
appeal and binding on the Parties, the Court of Arbitration unanimously
decided:
1. The
Kishenganga Hydro-Electric Project (KHEP) constitutes a Run-of-River Plant
under the Treaty, and India may accordingly divert water from the
Kishenganga/Neelum River for power generation by the KHEP in the manner
envisaged. However, when operating the KHEP, India is under an obligation to
maintain a minimum flow of water in the Kishenganga/Neelum River, at a rate to
be determined by the Court in a Final Award.
2. Except in the
case of an unforeseen emergency, the Treaty does not permit India’s reduction
below “Dead Storage Level” of the water level in the reservoirs of Run-of-River
Plants located on the rivers allocated to Pakistan under the Treaty. This
ruling does not apply to Plants already in operation or under construction
(whose designs have been communicated by India and not objected to by Pakistan).[16]
While adjudicating
the first dispute and coming to the conclusion that the IWT expressly permits
the transfer of water by India from one tributary of the Jhelum to another for
the purpose of generating hydro-electric power, subject to certain conditions,
the Court of Arbitration found that this right is not circumscribed by the
Treaty’s restriction of Indian uses on the Western Rivers to the drainage basin
of those rivers but the restriction relates to where water may be used, and is
not violated by the use outside of the drainage basin of electricity generated
from the water.[17]
Thereafter the Court scrutinized the provisions under the IWT which requires
the Parties to maintain the natural channels of the rivers and its effect on
inter-tributary transfers wherefore the Court observed that this obligation
involves maintaining the river channels’ physical capacity to carry water, and
does not require maintaining the timing or volume of the flow in the river and
thus accordingly, this obligation does not limit India’s right to transfer
water for the purpose of generating hydro-electricity.[18]
On deciding whether the KHEP meets the express condition of such transfers as
mentioned in the IWT, the Court observed that the KHEP is a Run-of-River Plant
within the definition of “Run-of-River Plant” under the IWT and which is also a
requirement under Annexure D.[19]
Finally, the Court found that the KHEP’s inter-tributary transfer is
“necessary,”[20]
as required by the Treaty, for the generation of hydroelectric power, as power
can be generated on the scale contemplated by India in this location only by
using the 665 metre difference in elevation between the dam site on the Kishanganga/Neelum
and the place where the water is released into the Bonar Nallah.[21]
The Court
thereafter went to discuss another requirement of Paragraph 15(iii) which is
“then existing Agricultural Use or hydroelectric use by Pakistan” on the
downstream reaches of the Kishanganga/Neelum should not be affected by the
inter-tributary transfer required for KHEP. The Court while determining the
fact referred to Article 31(1) of the Vienna Convention on the Law of Treaties
and observed that the provisions focus on the operation of hydro-electric
plants and the implication that the determination of “then existing” uses should
take place on an ongoing basis throughout the operational life of the plant.[22]
After examining the object and purpose of the IWT, the court observed that the
IWT gives Pakistan a priority to use the waters of the Western Rivers as well
gives India the right to generate hydro-electric power on the Western Rivers.[23]
Coming to the
question of application of the IWT to KHEP, the Court rejected both the
“ambulatory approach” as suggested by Pakistan and the “critical period”
approach as suggested by India and noted that the proper interpretation of the
treaty combines elements of both the approaches.[24]
The Court considered the critical period of the KHEP and the NJHEP i.e. the
period in which the parties not only planned the projects but also took major
steps to realize the projects. After reviewing the evidence provided by the
Parties, the Court found that the critical period of KHEP was in 2004-2006 in
comparison to NJHEP which was in 2007-2008 and thus the Court decided that
India’s right to divert waters of the Kishenganga by KHEP is protected by the
Treaty.[25]
However according to the Court India’s right to divert the Kishenganga/Neelum
is not absolute as it is subject to the restrictions specified in the IWT and
by the relevant principles of customary international law.[26]
Paragraph 15(iii) obliges India to operate its projects in such a way as to
avoid adversely affecting Pakistan’s then existing agricultural and
hydro-electric uses. The Court thus observed that Pakistan retains the right to
receive a minimum flow of water from India in the Kishenganga/Neelum riverbed
at all times.[27]
The Court found that this right also stems from customary international
environmental law, and that it considered that the IWT must be applied in light
of contemporary international environmental law principles.[28]
With regards to
the determination of the minimum flow of water downstream, the Court deferred
it till the Final Award as the data provided by the Parties were insufficient.
Thus the Court also ordered the Parties to provide additional data concerning
the impacts of a range of minimum flows at the KHEP dam on, (for India), (a)
power generation at the KHEP; and (b) environmental concerns from the dam site
at Gurez to the Line of Control; and, (for Pakistan), (a) power generation at
the NJHEP; (b) agricultural uses of water downstream of the Line of Control to
Nauseri; and (c) environmental concerns at and downstream of the Line of
Control to Nauseri.[29]
While
adjudicating the second dispute, where India raised two objections to the
admissibility of the Second Dispute, the Court while dismissing India’s
objections ruled that the Second Dispute is admissible as according to the
Court, the IWT provides for disagreements between the Parties to be resolved
either by a seven-member court of arbitration[30]
or by a neutral expert and once constituted, a court of arbitration has power
to consider any question arising out of the IWT which also includes technical
questions.[31]
On the issue of
the permissibility of the Depletion of Reservoirs for Drawdown Flushing, the
Court after examining three aspects of the context of the IWT with respect to
drawdown flushing, concluded that the IWT prohibits depletion below Dead
Storage Level of the reservoirs of Run-of-River Plant (and, correspondingly,
drawdown flushing)[32]
by referring to a provision of the Treaty Annexure dealing with storage works,
which states that “the Dead Storage shall not be depleted except in an
unforeseen emergency”.[33]
After critically reviewing the technical documents submitted by the Parties and
the testimony of the experts presented during the arbitration, the Court
observed that drawdown flushing is only one means of sediment control and that
hydroelectricity may be generated without flushing.[34]
Concluding Remarks:
The need for high
level and sustained political leadership is required for joint benefits of both
countries. In the author’s opinion, it will be desirable to think ahead and
conceptualize building on the IWT, 1960. The use of reset terms by PCA for both
India and Pakistan and the use of enhanced diplomatic methodology for mutual
sustenance would be a good approach in troubled times to settle the disputes
peacefully.
[1] Dr. Shaheen Akhtar, “Emerging Challenges to IWT: Issues of compliance & transboundary
impacts of Indian hydroprojects on the Western Rivers”, p. 45, available at <http://www.irs.org.pk/f310.pdf>
accessed on January 5, 2013 at 4 p.m. p.46-47.
[2] Supra 1, p. 50.
[3] Ibid.
[4] Pakistan’s Request for
Arbitration, para. 4.
[5] Pakistan’s Request for
Arbitration, para. 4(a) ; Pakistan’s Memorial, para. 1.12.
[6] Ibid.
[7] Hearing Tr., (Day 4), 23 August
2012, at 190:18-20.
[8] India’s Counter-Memorial, para.
7.2; India’s Rejoinder, paras. 4.2, 4.4.
[9] India’s Counter-Memorial, para.
4.39.
[10] India’s
Counter-Memorial, para. 4.78, referring to Record of the 93rd Meeting of the
Commission, New Delhi, 9-13 February 2005, (Annex PK-29), para. 38.
[11] India’s
Counter-Memorial, para. 4.23. According to India, Paragraph 15(iii) was
intentionally inserted in the Treaty on the basis of a 1954 hydro-electric
survey of the Indus basin carried out by India’s CWPC, which identified the
possibility of building a hydro-electric scheme on the Kishenganga. See India’s
Counter- Memorial, para. 4.70.
[12] India’s Counter-Memorial, para.
6.49.
[13] Pakistan’s Request for
Arbitration, para. 54(a).
[14] Paragraph 152(1) of the Order on
Interim Measures.
[15] Paragraph 151(2) of the Order on
Interim Measures.
[16] PCA Press Release Indus Waters
Kishenganga Arbitration (Pakistan v. India), Court of Arbitration issues
Partial Award (“Partial Award”) available at <http://www.pca-cpa.org/shownews.asp?nws_id=351&pag_id=1261&ac=view>.
[17] Ibid., para.369.
[18] Ibid., para.373.
[19] Ibid., para.383.
[20] Ibid, paragraph 396 and 398.
[21] Ibid p. 369.
[22] Partial Award, supra 16, para
404.
[23] Ibid, para 410 and 411.
[24] Ibid, para 433.
[25] Ibid, para 442.
[26] Ibid, para 445.
[27] Ibid.
[28] Partial Award, supra 16, para
447- 453.
[29] Supra 16.
[30] IWT, Art. IX(1).
[31] Partial Award, supra 16, para
487.
[32] Partial Award, supra 16, para
514-515.
[33] IWT, paragraphs 18 and 19 of
Annexure E.
[34] Partial Award, Supra 16, para
520.
