India may find itself in a diplomatic quagmire after rejecting an international court’s ruling that New Delhi must allow the unimpeded flow of western rivers for Pakistan’s “unrestricted use”.

The binding decision issued last week by the Permanent Court of Arbitration (PCA) came after Islamabad approached The Hague-based forum, seeking clarity on how the construction of two hydroelectric projects by India would affect the flow of water to Pakistan.

India, however, refused to recognise the court’s jurisdiction over its hydroelectric projects, escalating tensions between the neighbours and threatening the stability of the decades-old Indus Waters Treaty (IWT).

New Delhi escalated the water wars in April by unilaterally suspending the 1960 IWT, accusing Pakistan of backing the Pahalgam terror attack that killed 26 people in India-administered Kashmir. Pakistan has denied any involvement. 

Islamabad and New Delhi walked back from the brink of a nuclear catastrophe in May after four days of intense military stand-off, which included the largest dogfight since World War II.

The unanimous court ruling clarified last week that the treaty applies to hydroelectric projects that India is building on the western rivers, namely the Indus, Jhelum, and Chenab. 

Pakistan has hailed the court decision as a “vindication” of its stance.

“The award explains that decisions of the court of arbitration and neutral experts are final and binding on both parties,” Abid Suleri, executive director of Islamabad-based Sustainable Development Policy Institute, tells TRT World.

“India’s refusal does not nullify the ruling. It only places India in breach of its treaty obligations if it acts inconsistently,” he adds.

Shafiqul Islam, director of the Water Diplomacy Programme at Tufts University, echoes this view, saying India’s refusal will have significant legal and geopolitical risks for the country.

“India would face reputational damage as a treaty violator, especially when it’s actively seeking global leadership roles,” Islam tells TRT World.

The IWT, brokered by the World Bank in 1960, allocates the use of the Indus River system between India and Pakistan. It grants India limited rights to develop hydroelectric power projects on the western rivers, while ensuring Pakistan’s unrestricted access to their waters.

Disputes over the under-construction Kishenganga and Ratle hydroelectric projects in India-administered Kashmir prompted Pakistan to initiate arbitration in 2016. 

But India boycotted the proceedings after objecting to the court’s competence. 

Despite New Delhi’s absence, the court upheld its jurisdiction, ensuring procedural fairness by incorporating India’s views from prior correspondence and public records.

The court has asserted that arbitration awards are binding on both nations and have a “controlling effect” on future dispute resolution. 

The court underscored the treaty’s purpose, which is to balance India’s hydroelectric ambitions with Pakistan’s downstream water rights, mandating strict compliance with design specifications and robust cooperation through notification and information-sharing.

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A treaty under strain

The IWT has long been a rare success story in India-Pakistan relations, surviving multiple wars and diplomatic freezes. The treaty assigns the eastern rivers – Sutlej, Beas, and Ravi – to India and the western rivers to Pakistan, with exceptions for India’s limited hydroelectric development.

The treaty’s dispute resolution mechanisms historically resolved tensions. But India’s refusal to engage with the PCA and its unilateral suspension of the treaty have raised alarms.

Suleri emphasises the award’s legal weight, noting that non-compliance could carry “political, diplomatic, and financial” consequences, including reputational damage and scrutiny from financiers of India’s hydropower projects.

He urges Islamabad to leverage the treaty’s notification and objection processes, building a meticulous record of India’s non-compliance on specific projects. He also suggests pressing the World Bank, the treaty’s facilitator, to impose stringent conditions on India for availing hydropower financing.

“Pakistan should internationalise reputational and financing costs of non-compliance, while avoiding steps that could invite reciprocal derogations from the treaty,” he says.

India’s calculated risk

India’s rejection of the PCA’s jurisdiction reflects frustration with what it perceives as Pakistan’s “politicisation” of the treaty to stall key infrastructure projects.

Uttam Kumar Sinha, a senior fellow at the Manohar Parrikar Institute for Defence Studies and Analyses in New Delhi, tells TRT World that India’s stance is a “calculated political move” rather than a legal misstep.

“The move is rooted in the belief that Pakistan has politicised dispute mechanisms to stall Indian projects,” he says.

He predicts that India will accelerate construction on the western rivers, align designs with its own treaty interpretations, and selectively engage with Pakistan on a case-by-case basis.

“New Delhi may also push for a renegotiation or reinterpretation of the treaty’s terms to align with contemporary realities – climate variability, energy needs, and security concerns,” he adds.

Sinha acknowledges the diplomatic risks. “India is willing to risk being painted as a treaty-breaker and has given Pakistan a readymade talking point in international forums,” he says.

This could strain cooperative water management across other shared rivers and invite mediation by actors like the US or China, which India has historically resisted.

Still, Sinha argues that India’s assertiveness signals that “treaty goodwill is finite,” particularly amid security concerns in Kashmir, which is part of the wider Himalayan region that both New Delhi and Islamabad claim in full but administer in part.

Any construction delays will stem more from engineering or funding challenges than legal rulings, he adds.

The dispute’s ripple effects extend beyond bilateral relations.

Unilateral action could strengthen Pakistan’s position in international arbitration or mediation and set precedents that complicate India’s other water-sharing agreements, such as the Ganges Treaty with Bangladesh or Teesta dispute, Islam noted.

Geopolitically, the dispute could escalate tensions, particularly if Pakistan mounts a public international campaign or seeks third-party intervention.

“It may invite involvement from China as an upper riparian, which India has traditionally opposed,” Islam says.

The PCA’s award leaves the specific compliance of Kishenganga and Ratle hydroelectric projects for future phases of the arbitration process.

“Pakistan’s strongest pathway is law-plus-politics,” Suleri says, advocating a strategy that locks in the award’s interpretations, while engaging the World Bank and international forums.