Kishenganga Arbitration And Viability Of Arbitration In Resolving State-To-State Disputes

Author:Mr Prakash Pillai
Profession:Clyde & Co

International arbitration has been widely recognized as an efficient process for resolving State-to-State disputes. Factors such as procedural flexibility and party autonomy, which contribute to general appeal of international arbitration, play out to render arbitration as the preferable option for settlement of complex disputes between States.

More importantly, however, the success and broader acceptance of arbitration in resolving State-to-State disputes lie in providing carefully balanced solutions. Jerome A Cohen, an expert on East Asian law at the New York University, in a speech on South China Sea maritime disputes, summed up the benefits of resolving State-to-State disputes through international adjudication or arbitration in these words:

"Often, however, political leaders fear that an impartial tribunal might reject their blustery boasts that international law totally supports their nation's position. To them the domestic and international political risks of a fair decision seem unacceptable. Yet a third-party decision need not result in an "all or nothing" conclusion. The kinds of issues that elude negotiated solutions between neighbors but are taken to impartial determination frequently yield not 100 percent victory for one side or the other but nuanced decisions that are in effect carefully-balanced compromises that reflect the complexity of the claims considered." (Jerome A Cohen, Lawfare or Warfare? Let Impartial Tribunals Cool Asia's Maritime Disputes, The Diplomat, 29 May 2014)

The recent arbitration between Pakistan and India, two rival South Asian states, over the Kishenganga Hydro-electric Project ("KHEP") (being constructed in Jammu and Kashmir) is a good example of the approach outlined above. The Kishenganga arbitration has been discussed widely. Therefore, this post briefly highlights a few distinctive features of the Kishenganga arbitration proceedings and awards that support the acceptance and legitimacy of international arbitration as the mode for resolving State-to-State disputes.

By way of background, the Kishenganga arbitration related to the Indus Water Treaty ("the Treaty"), which was signed by Pakistan, India, and the World Bank, in 1960. The Treaty sets out the rights and obligations of India and Pakistan over the six rivers in the Indus basin. In brief, India has the right of unrestricted use on the Eastern Rivers (Sutlej, Ravi, and Beas) and Pakistan has the right of unrestricted use on the Western Rivers...

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