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THE KISHANGANGA CONUNDRUM

November 18, 2018

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Courtesy GIS
Courtesy GIS

I magine a case involving the most sensitive issues of national security possible. Imagine that Pakistan wins a conclusive victory in that case. Now imagine that Pakistan wastes that victory and spends 5 years blundering about in a dead end. Kishanganga is that case.

To restate the above paragraph in less dramatic terms, Pakistan’s dispute with India over the design of the Kishanganga Project involves vital aspects of national security. Whatever conclusion is reached will affect not just the Kishanganga Project but every subsequent project designed by India on the Western Rivers. Given the importance of water to our economy and our security, it is hard to imagine a more vital issue. Unfortunately, there is both good news and bad news to report.

The good news is that Pakistan did well in the first round of the Kishanganga dispute and received a favourable award from a seven-member Court of Arbitration. The bad news is that Pakistan has not taken advantage of this victory.

After winning its legal case in 2013, Pakistan should have referred the technical aspects of the Kishanganga dispute to a Neutral Expert. Indeed, that had been the plan. However, Pakistan made an ill-advised u-turn and sought to take all remaining questions to a different court of arbitration. As a consequence, no progress has been made for the past five years. Pakistan is today in the same position as it was in December 2013. Meanwhile, India has completed the Kishanganga project.

Pakistan won a significant legal victory in its dispute with India over the Kishanganga Project five years ago. But it has squandered the advantage. A legal expert suggests how to save the day

Origin Stories

The roots of the water dispute with India go back, like many such disputes, to Partition. The development of the canal irrigation network in the Indus river basin was one of the finest achievements of the British Empire. However, when the British left in 1947, they had yet to ensure its continued operation.

The consequence of this failure became evident on 1 April, 1948, when India cut off the flows of certain canals into Pakistan. While flows were restored after a few weeks, trust between India and Pakistan was destroyed. Pakistan and India then negotiated for many years on a comprehensive agreement regarding water flows. In 1951, the World Bank became formally involved in those negotiations. And in 1960, those efforts resulted in the Indus Waters Treaty, 1960.

The substantive provisions of the treaty can be summarised as follows:

a. The waters of the Western Rivers (Indus, Jhelum, and Chenab) would be reserved for Pakistan and India would be under an obligation to “let flow” their waters (subject to certain specified rights and exceptions).

b. The waters of the Eastern Rivers (Ravi, Sutlej, and Beas) would be reserved for India exclusively.

c. India would be free to construct hydroelectric projects on the Western Rivers (subject to various design constraints intended to limit India’s capacity to manipulate water flows).

Between 1960 and 2002, the treaty was rarely in dispute between India and Pakistan. Issues did arise, but they tended to subside after both parties had stated their respective positions. However, starting from 2002, the treaty became a “hot zone” as India started pushing ahead aggressively with the Kishanganga and Baglihar projects.

Under the treaty, all “questions” are first required to be addressed bilaterally by the Indus Waters Commission. If the two sides cannot resolve these questions, then they are referred — depending on the nature of the question — to either a Neutral Expert or a Court of Arbitration. For example, technical or engineering differences are referred to a Neutral Expert. Other disputes are referred to a Court of Arbitration.

Disputes under the Treaty

Source: GIS
Source: GIS

The first questions to be formally litigated under the treaty related to the Baglihar Project and were taken before a Neutral Expert. The most important question related to India’s usage of low-level outlets. In simple terms, the level of the outlet matters because it allows India to drain all water above the outlet. The lower the outlet, the greater India’s capability to interfere with Pakistan’s water flows and, consequently, the greater the threat to Pakistan’s security.

The treaty states in clear terms that outlets for sediment control are to be as small and as high as possible. Pakistan’s argument with regard to India’s design was therefore as follows:

a. Low-level outlets are only superior to higher outlets (in relation to reservoir sediment control) if the water level of the reservoir is lowered.

b. The treaty prohibits lowering of the reservoir water level except in the case of an “unforeseen emergency.”

c. Sediment control does not constitute an unforeseen emergency.

d. The low-level outlets provided by India were, therefore, contrary to the treaty.

Pakistan’s argument was ultimately rejected by the Neutral Expert. He admitted that Pakistan was correct in contending that unless the water level in the reservoir was lowered, low-level outlets provided no additional benefit as compared to high-level outlets. Nonetheless, he held, in February 2007, that the prohibition on drawdown applied only to “operation” of a project, not to its “maintenance.” And on that basis, India’s design was upheld.

At the time of the Neutral Expert’s decision, this issue was not generally recognised as a major national security concern because India had, till then, shown no broad intent to build hydroelectric projects on the Western Rivers. However, it emerged shortly thereafter that India was planning hundreds of new projects on the Western Rivers, including a number of large projects in excess of 600 MW. The issue related to reservoir control, therefore, was not just a minor question related to the “maintenance” of one project on one river but a life-or-death issue for Pakistan.

Pakistan decided to try and contain the fallout of the Baglihar decision not by directly challenging it but by trying to quarantine it. Since India’s design for the Kishanganga Project had a similar design (to Baglihar), featuring low-level outlets, Pakistan had already challenged the Kishanganga Project on similar grounds. Pakistan, therefore, framed a purely legal question as to whether or not India was entitled to drawdown the water level of a reservoir except on the basis of an unforeseen emergency. This was a high-stakes gamble in some ways because the decision of the Court of Arbitration would not be restricted to one project (like a Neutral Expert) but would apply to every project. At the same time, Pakistan was confident that the legal conclusion of the Neutral Expert regarding drawdown flushing was unsustainable.

The second important question which arose in the context of Kishanganga (and which was taken to the Court of Arbitration) was not a general question but one which was unique to that project. More specifically, Para 15 of Annexure D to the Treaty provides that the water received upstream of a project has to be released in its entirety so that, at least on a week-to-week basis, the river flows remain constant. However, sub-para (iii) of Para 15 provides for an exception in the following terms:

“Where a plant is located on a tributary of the Jhelum on which Pakistan has any agricultural use or hydroelectric use, the water released below the plant may be delivered, if necessary, into another tributary but only to the extent that the then existing agricultural use or hydroelectric use by Pakistan on the former tributary would not be adversely affected.”

This specific para applies to the Kishanganga project because it is located on a tributary of the Jhelum and because the water it diverts for the purpose of power generation is not returned to the Kishanganga but to the Bonar-Madmati Nullah which is a different tributary of the Jhelum. The Bonar-Madmati Nullah, in turn, flows into Wullar Lake and, thence, into the Jhelum which rejoins the Kishanganga river at Muzaffarabad (where it is known as the Neelum).

Pakistan’s challenge to the diversionary aspect of the Kishanganga project focused on the argument that it would adversely affect the Neelum-Jhelum Project being constructed by Pakistan near Muzaffarabad. In this regard, it was not seriously disputed by India that the construction of the Kishanganga Project would adversely affect the Neelum-Jhelum Project. However, India instead argued that the Neelum-Jhelum project could not be considered as “the then existing … hydro-electric use” by Pakistan, not only because it was still under construction by Pakistan, but because Pakistan had committed to the Neelum-Jhelum Project after India had committed to the Kishanganga project.

In December 2013, the Court of Arbitration decided the drawdown question in favor of Pakistan and held that India was not entitled to drawdown the water level of a reservoir for “maintenance” purposes. The Court further specifically held that sediment control could not be construed as an “unforeseen emergency.” To this extent, the Kishanganga decision represents an unqualified triumph for Pakistan.

If Pakistan reverts back to a Court of Arbitration, there is a significant danger that the judgment already given in favour of Pakistan may be diluted. This is not a risk worth taking.

On the diversion front, Pakistan had more mixed success. The Court of Arbitration held that even though Pakistan had a superior right to the flows of the Kishanganga/Neelum river, it had waited too long to exercise those rights. It therefore declared that India was indeed entitled to divert water for the Kishanganga Project. This decision was however mitigated to a certain extent by the Court of Arbitration’s conclusion that notwithstanding the absence of environmental provisions in the Treaty, India was required (on the basis of environmental concerns) to release certain minimum flows. As a consequence of the release of these minimum flows, the average annual energy loss at the Neelum-Jhelum Project will be reduced from 16% to 10%.

Notwithstanding the split decision handed down by the Court of Arbitration, the Kishanganga award is regarded by experts as a victory for Pakistan. As already noted, the diversion question is unique to the Kishanganga project and there is no other possible location where Para 15(iii) could come into play. Even if it did, such diversion would likely be blocked by virtue of the now operational Neelum-Jhelum Project. Finally, to the extent the Neelum-Jhelum Project generates less electricity as a consequence of reduced flows, the diverted water can be exploited by Pakistan through the Kohala project (land acquisition for which is currently under way).

Neelum River in Turbat | Photo by Ayesha Villani/White Star
Neelum River in Turbat | Photo by Ayesha Villani/White Star

By comparison, the decision regarding drawdown flushing affects the design of every single project being planned by India. In simple terms, India now has two options. It can either change the design of its projects so as to avoid sedimentation concerns. Or it can stick with the same designs and watch the reservoirs get filled with mud. Either way, Pakistan’s security concerns will be alleviated.

The problem though is that the Kishanganga award is not self-executing. In order to change the design of the Kishanganga Project, Pakistan had to have the remaining technical questions actually decided as well.

When Pakistan had originally challenged the Kishanganga Project, the idea had been to implement a favourable arbitration award through a Neutral Expert and, more specifically, to have the low-level outlets in the Kishanganga design be declared illegal. However, at some point after the final award was rendered in December 2013, Pakistan decided that it would take this issue to a Court of Arbitration as well. Since the question regarding the legality of the Kishanganga design had been earlier framed as a question for the Neutral Expert, Pakistan had to revert back to the Indus Waters Commission for the framing of fresh questions rather than proceed straight to a Court of Arbitration.

Not surprisingly, the Indus Water Commission failed to agree on how to proceed. Consequently, both countries approached the World Bank. Pakistan sought the appointment of a Court of Arbitration, while India insisted that the questions be examined by a Neutral Expert. Therefore, two parallel appointment processes were underway till the World Bank declared a “pause” in December 2016 and asked the two countries to examine the possibility of a mutual agreement on how to proceed. In the interim period, the World Bank refused to proceed further with either option. And since then, there has been no movement despite multiple appeals by Pakistan to the World Bank.

The Case For ‘Neutral Expert’ Rather Than Arbitration

The net result of all this is that five years after a favourable award, Pakistan has made no progress towards actually getting that award implemented. Meanwhile, India has completed the Kishanganga project and is planning hundreds more of the same design. Pakistan is continuing to insist that the World Bank set up a Court of Arbitration even though the World Bank has made it crystal clear that it will only do so if India consents. And India has made it equally clear that it will never consent.

It is also worth noting that even if the World Bank allows the Court of Arbitration appointment process to continue, India’s refusal to participate will badly affect the legitimacy of the proceedings. And if ex parte proceedings are held without India, the Court of Arbitration will be under immense pressure to bend over backwards in favour of India. Finally, wholly apart from the self-evident problems with delay, legitimacy and bias, it does not make sense for Pakistan to approach a Court of Arbitration rather than a Neutral Expert. The Kishanganga Award represents a very strong victory for Pakistan. If Pakistan reverts back to a Court of Arbitration, there is a significant danger that the judgment already given in favour of Pakistan may be diluted. This is not a risk worth taking.

By comparison, if Pakistan accepts India’s position and allows the questions to be referred to a Neutral Expert, that Neutral Expert will be bound by the earlier award in Kishanganga. A Neutral Expert appointed for Kishanganga will, therefore, not be able to repeat the mistake made by the Neutral Expert for Baglihar. Finally, even if a Neutral Expert reaches an unfavourable conclusion, that finding will be limited to Kishanganga alone. Pakistan will also have the opportunity to challenge such an adverse finding before a Court of Arbitration (to the extent such finding is based on legal issues, rather than technical issues).

It is also better for Pakistan to argue before a Neutral Expert rather than a Court of Arbitration. A Neutral Expert will examine the narrow question of whether a low-level outlet can be justified at Kishanganga on grounds of sediment control. A Court of Arbitration will examine the broader and more general question as to whether or not low-level outlets can ever be justified on grounds of sediment control. This factual background is important because the sediment load at Kishanganga is very low. As per estimates earlier prepared by Pakistan, the Kishanganga Project can operate for a minimum period of 80 years (and possibly indefinitely) without sediment control issues. Thus, when India argues that it requires low-level sediment control outlets at Kishanganga, it is arguing not only contrary to the treaty but also contrary to the facts. By comparison, projects on the Chenab and the Jhelum have massive sediment control issues. At Baglihar, for example, it was conceded by India that the reservoir would silt up in less than a decade in the absence of effective sediment control.

From a purely legal perspective, this factual background is irrelevant. But judges and experts are human. It is far better for Pakistan to argue that India’s position is both factually unwarranted and legally incorrect rather than arguing that India’s projects should not be able to take advantage of effective sediment control techniques (i.e., drawdown flushing) because of Pakistan’s security concerns.

Given the current impasse, a graceful way out for Pakistan is to propose that the Neutral Expert first determine his own jurisdiction. Not only would this be in accordance with the Treaty (as per Para 7 of Annexure F) but it would allow Pakistan to present its position before an independent third party (rather than wasting time in getting the Indians to change their mind).

If Pakistan wins, India will no longer have any basis for not participating before a Court of Arbitration. If the Neutral Expert decides that he can hear all the questions involved, Pakistan will then have a face-saving basis for appearing before him. In any event, as already noted, proceeding before a Neutral Expert is preferable.

Moving forward

The Baglihar Dam is similar in design to India’s design for the Kishanganga Project featuring low-level outlets | ICIMOD
The Baglihar Dam is similar in design to India’s design for the Kishanganga Project featuring low-level outlets | ICIMOD

The one thing that Pakistan should not do is waste time in bilateral discussions with India. India has every incentive to delay and no incentive to compromise. Pakistan’s consistent aim has always been to have its disputes with India adjudicated by a neutral and independent third party. India’s aim has consistently been the opposite. A referral by consent to a Neutral Expert represents a triumph for Pakistan’s goals. Even if it is assumed that a Court of Arbitration is preferable (which assumption is incorrect), one should not let the best be the enemy of the good.

One argument which has been raised in reply to the above contention is that Pakistan has already staked out its position and that its rights under the treaty will be permanently compromised if it now changes its position. This argument is a textbook illustration of the “sunken cost” fallacy. The fact that Pakistan has wasted almost five years as the consequence of a bad decision is no basis to argue that Pakistan should continue to perpetuate a folly. Ego is no basis for deciding questions of national security. Beyond that, the contention that Pakistan will henceforth be permanently barred in all case from approaching a Court of Arbitration without first approaching a Neutral Expert is also false.

The World Bank is refusing to empanel a Court of Arbitration because it thinks certain specific questions arising out of one specific project are technical questions which clearly belong before a Neutral Expert and not a Court of Arbitration. Indeed, nobody can insist that approaching a Neutral Expert is always mandatory. First, the text of the treaty is crystal clear that the Neutral Expert and the Court of Arbitration represent two distinct and parallel dispute resolution mechanisms. The practice of the parties supports this interpretation in that the Court of Arbitration which earlier decided two questions regarding the Kishanganga Project was directly seized of the matter (i.e., without any prior examination of those questions by a Neutral Expert). Furthermore, even if India maintains this position in relation to other potential disputes pending before the Indus Waters Commission, Pakistan can always frame this question regarding the interpretation of the treaty as a separate question and then take that particular question to a Court of Arbitration.

It is also worth remembering that the issue of project design and sediment control is the single most important issue requiring adjudication under the treaty. It is, therefore, worth taking a risk regarding future problems in order to ensure the proper adjudication of this issue.

One possible response to the above contention is that in addition to sediment control and design concerns, there is a separate issue regarding the interpretation of the term “pondage” which should go to the Court of Arbitration. That contention is not without merit. There is, indeed, a genuine lack of clarity regarding the meaning of the term “pondage” as used in the treaty.

But the problem is that pondage is a minor concern compared to the issue of low-level gates. It makes no sense to compromise the adjudication of low-level gates in order to obtain a definitive interpretation of pondage. One should not allow the tail to wag the dog. Instead, Pakistan should accept India’s offer to take all remaining Kishanganga issues before a Neutral Expert. If the Neutral Expert’s decision on pondage is unacceptable, Pakistan can then frame a separate legal question on pondage and escalate that dispute to a Court of Arbitration.

The final point is that this is possibly Pakistan’s last chance to have the Kishanganga issues adjudicated. The Kishanganga Project has already been completed. At the same time, India cannot argue that it is too late to have the design of the Kishanganga Project changed because it has recently repeated its offer to have the dispute resolved through a Neutral Expert. However, as time goes by, it will be increasingly difficult for Pakistan to insist that India should demolish the Kishanganga Project and change its design. At some point, Pakistan’s insistence on barking up the wrong tree could disentitle it to any relief — if not legally, then equitably.

The writer is an advocate of the Supreme Court of Pakistan. He has been counsel for the Government of Pakistan in relation to the Baglihar and Kishanganga disputes

Published in Dawn, EOS, November 18th, 2018

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