The dispute over the Indus Waters Treaty (IWT) between India and Pakistan is an important contemporary case study in the conflict between international obligations and domestic sovereignty. The controversy is particularly significant because it raises a fundamental question of international law: Can a State refuse to comply with an international adjudicatory decision when it considers the underlying tribunal to have no jurisdiction, particularly where national security and sovereign interests are involved?
The issue came into sharp focus after the Permanent Court of Arbitration (PCA)-administered Court of Arbitration, constituted under the IWT, ruled on August 31, 2026 that the Treaty remained in force and that India was required to continue observing its obligations under it. The Court also imposed interim restrictions concerning construction activity at the Ratle hydro-electric project in Jammu and Kashmir. India rejected the ruling and maintained that the Court had no jurisdiction over India’s sovereign decisions.
The issue, thus, provides a useful lens through which to examine pacta sunt servanda, treaty supremacy at the international level, state sovereignty, jurisdiction, non-participation in arbitration, domestic constitutional law and the limits of enforcement of international adjudicatory decisions.
Revisiting the Indus Waters Treaty
The Indus Waters Treaty was signed by India and Pakistan on September 19, 1960, with the World Bank playing a facilitator of sorts. The Treaty divided the six rivers of the Indus river system into two broad groups. India received principal rights over the eastern rivers- Ravi, Beas and Sutlej while Pakistan received principal rights over the western ones – Indus, Jhelum and Chenab, subject to specified rights of use available to India.
The Treaty was deliberately designed to survive geo-political tensions between the two countries. It contains its own dispute-resolution architecture. Article IX of the establishes a graded mechanism involving the Permanent Indus Commission, a Neutral Expert and, where the requirements are satisfied, a Court of Arbitration. Annexures F and G provide the detailed procedures governing these mechanisms. The Treaty therefore does not leave disputes entirely to ordinary diplomatic negotiations or to an external international court.
The Kishenganga-Ratle dispute
The present arbitration arose primarily from Pakistan’s objections to certain design features of India’s Kishenganga and Ratle hydro-electric projects. Pakistan invoked the arbitration mechanism under Article IX and Annexure G in 2016.
India, however, requested the World Bank to appoint a Neutral Expert to examine technical differences concerning the projects. This created the central procedural controversy: could a Court of Arbitration and a Neutral Expert simultaneously deal with overlapping aspects of the same dispute?
“India’s case is essentially that the Kishenganga and Ratle issues properly belonged before the Neutral Expert and that the Treaty did not contemplate parallel adjudication of substantially overlapping issues. The Neutral Expert’s finding that the questions referred to him fall within his competence gives that argument some weight,” Dr. Adv. Rishabh Gandhi, Former Judge, founder, Rishabh Gandhi and Advocates, said.
The difficulty for India, he added, is that Annexure G expressly empowers the Court of Arbitration to determine questions concerning its own competence, and the Court has already upheld its jurisdiction. ‘Kompetenz-kompetenz’, however, is not unlimited: a tribunal may decide its jurisdiction, but it cannot manufacture consent where none existed.
What are India’s jurisdictional objections?
India’s challenge was not simply an argument against the process of arbitration. It raised substantive jurisdictional objections concerning the interpretation of the Treaty.
1. The dispute-resolution mechanism had been improperly invoked
India argued that Pakistan had not demonstrated the existence of a “dispute” capable of being submitted to arbitration under Article IX. According to India’s interpretation, the Treaty distinguished between a technical “difference” falling within the Neutral Expert mechanism and a legal “dispute” capable of being referred to arbitration.
2. The Neutral Expert mechanism had priority
India relied heavily on Article IX(6), which provides that the arbitration provisions do not apply to a “difference” while it is being dealt with by a Neutral Expert. India therefore maintained that once the Neutral Expert mechanism was engaged, arbitration could not proceed simultaneously over substantially identical issues.
3. Parallel proceedings were contrary to the Treaty
India argued that simultaneous proceedings before two Treaty-created bodies could produce contradictory or mutually inconsistent decisions. India expressly described such parallel proceedings as inconsistent with the Treaty framework.
4. The Court was improperly constituted
India challenged the constitution of the Court of Arbitration itself, maintaining that its establishment did not comply with the Treaty. The Court rejected this objection and concluded that it had been properly constituted under Annexure G.
5. The World Bank’s appointment process could not override the Treaty
India also questioned the legal consequences of the World Bank facilitating both processes simultaneously. The Bank had initially paused the parallel appointments because of concerns about overlapping proceedings but subsequently allowed both mechanisms to proceed. The Court ultimately concluded that this did not deprive it of jurisdiction.
6. India’s non-participation
India declined to participate in the arbitration. The Court held that non-participation did not deprive it of competence. It emphasised that India had been informed of the proceedings and had been given opportunities to participate.
These objections demonstrate that India’s position was fundamentally jurisdictional: if the tribunal itself was unlawfully constituted, its award could not automatically bind India merely because the tribunal declared itself competent.
“The dispute exposes a more fundamental tension in international adjudication: the authority of an international tribunal rests upon State consent, but the interpretation of the boundaries of that consent may itself be entrusted to the tribunal. India’s case therefore turns less upon an assertion of sovereignty in the abstract and more upon whether the Court of Arbitration was constituted consistently with the particular jurisdictional bargain embodied in the IWT”, Adv. Tushar Kumar, Supreme Court of India, said.
He pointed out that this distinction is important because a challenge to jurisdiction is conceptually different from asserting a general sovereign entitlement to disregard an otherwise valid and binding international obligation”.
The 2025 and 2026 developments
The controversy became more complicated after India announced in April 2025 that the Indus Waters Treaty would be held in “abeyance” after the Pahalgam attack. The Court subsequently examined whether India’s decision affected its own jurisdiction and the continued operation of the Treaty.
In June 2025, the Court concluded that the Treaty did not provide for unilateral “abeyance” or suspension. Article XII(4) states that the Treaty continues in force until terminated by a duly ratified treaty between the two Governments. The Court therefore concluded that India’s unilateral action could not extinguish the Treaty or remove the Court’s jurisdiction.
On August 31, 2026, the Court went further and ruled that the Treaty remained fully operative. It required India to continue observing its obligations concerning the Western Rivers and imposed interim restrictions on specified construction activity at the Ratle hydro-electric project pending the Neutral Expert’s assessment.
India rejected the ruling, reiterating that it did not recognise the authority of the Court and that its decisions could not affect India’s sovereign decisions or ongoing projects.
The International law position: Pacta Sunt Servanda
The central international-law principle is pacta sunt servanda — agreements must be kept.
Article 26 of the Vienna Convention on the Law of Treaties provides that every treaty in force is binding upon the parties and must be performed in good faith. Article 27 further states that a State cannot invoke its internal law as justification for failing to perform a treaty. Although India is not a party to the Vienna Convention, Articles 26 and 27 broadly reflect customary international law and therefore remain relevant to analysing India’s international obligations.
The principle creates an important distinction: a State may challenge the jurisdiction of an international tribunal, but it cannot simply convert its domestic law into a general defence against an international obligation.
The doctrine was strongly reflected in Gabcikovo-Nagymaros Project, where the International Court of Justice emphasised the continuing importance of treaty obligations and the requirement of good-faith performance. The Vienna Convention’s Articles 31 and 32 also establish the framework for interpreting treaties according to their ordinary meaning, context, object and purpose. The ICJ has recognised these interpretative rules as reflecting customary international law.
Can International law override Indian Domestic Law?
Under the Indian constitutional framework, an international treaty does not automatically become enforceable domestic law merely because India has signed or ratified it.
Article 73 of the Constitution gives the Union executive power in respect of matters concerning which Parliament has legislative competence. Article 253 empowers Parliament to make laws for implementing treaties, agreements and conventions with other countries.
The Supreme Court’s jurisprudence makes the distinction particularly clear.
In Maganbhai Ishwarbhai Patel v. Union of India (1970), the Supreme Court distinguished between the power to enter into a treaty and the domestic implementation of treaty obligations. A treaty may bind India internationally without automatically creating enforceable domestic rights and obligations in municipal law.
Similarly, in Gramophone Company of India Ltd. v. Birendra Bahadur Pandey (1984), the Supreme Court recognised the relevance of international law in Indian courts but held that municipal law would prevail where there is a conflict with an Act of Parliament.
The same broad approach appears in Jolly George Varghese v. Bank of Cochin (1980), where international conventions were treated as important interpretative aids, particularly where there was no conflict with domestic law.
This produces a crucial distinction for the Indus Waters controversy: Domestic law may determine whether a treaty is directly enforceable inside India but it does not necessarily determine whether India remains internationally responsible for its treaty obligations.
Thus, if Parliament enacted a law inconsistent with an international treaty, an Indian court could ordinarily be required to apply the domestic statute.
Article 51(c) of the Constitution directs the State to foster respect for international law and treaty obligations, while Article 51(d) encourages settlement of international disputes through arbitration.
These provisions are part of the Directive Principles and are not independently enforceable. Nevertheless, they demonstrate that the Constitution does not treat international law as irrelevant.
The Supreme Court has repeatedly attempted to harmonise domestic law with international obligations wherever possible. However, where an express statutory conflict exists, domestic legislation prevails within the municipal legal order.
Can India legally refuse to follow the award?
The answer requires separating jurisdictional validity from political enforcement.
India can maintain that the Court lacked jurisdiction and refuse to recognise the award on the basis of that jurisdictional objection. That is different from claiming that an ordinary domestic statute automatically nullifies an international obligation.
The IWT itself is significant because Annexure G expressly provides for a Court of Arbitration and makes its awards binding and without appeal. The PCA has also stated that awards under the Treaty have binding legal effect.
Consequently, India’s strongest legal argument is not simply “Indian sovereignty overrides international law.” Rather, it is: the tribunal never possessed lawful jurisdiction, and therefore its determination cannot create binding obligations against India.
That argument is substantially stronger in international law than a general claim that domestic law can override a treaty.
As Adv. Rishabh Gandhi points out, an arbitral award stands on a slightly different footing: its binding character depends upon the tribunal possessing jurisdiction derived from State consent. Pacta sunt servanda requires a State to honour the bargain it made; it does not create jurisdiction which was never conferred. “Sovereignty gives a State the power to enter into international commitments; it does not ordinarily give it a unilateral right to escape them”.
Instances when major States rejected International decisions
International law has no single global police mechanism capable of physically compelling every sovereign State to comply with every international judgment or arbitral award.
State practice demonstrates that powerful States have, at times, rejected international decisions.
In military and paramilitary activities in and against Nicaragua (Nicaragua v. United States), the International Court of Justice ruled against the US, which subsequently refused to participate any further in the proceedings and did not accept the judgment in the manner Nicaragua sought.
Another example is the South China Sea Arbitration, where China rejected the 2016 arbitral award and described it as legally invalid. This demonstrates that rejection of an international adjudicatory decision is not unprecedented.
The distinction between legal validity and practical enforceability is therefore critical. An award may be legally binding under the instrument establishing jurisdiction while lacking an effective coercive mechanism to force compliance.
This is particularly relevant to the IWT because the PCA itself does not possess an independent enforcement arm. The consequences of non-compliance are likely to be diplomatic, political and potentially legal rather than equivalent to domestic court enforcement.
Which law ultimately prevails?
The Indus Waters dispute demonstrates that the question is not simply whether “international law prevails over domestic law.” There are actually two different legal orders operating simultaneously.
Within India, the Constitution and legislation determine the domestic legal consequences of a treaty. Internationally, however, India is judged by the international obligations it has undertaken.
Therefore, if India’s objection is that the Court of Arbitration lacks jurisdiction, the dispute becomes one of international adjudicatory authority, not merely domestic law versus international law.
India’s position is legally strongest if it can establish that the Court was constituted contrary to the IWT’s mandatory dispute-resolution structure. Conversely, if the Court’s interpretation of Article IX and Annexure G is accepted, India’s unilateral reliance on sovereignty, national security or domestic authority becomes much more difficult to sustain under the international law principle of pacta sunt servanda.
To sum up, the Indus Waters controversy illustrates one of the central tensions of contemporary international law: international law depends upon sovereign consent, but once that consent has been given through a binding treaty, sovereignty also becomes the basis for honouring the resulting obligation.
India’s rejection of the 2026 arbitration ruling does not necessarily establish that international law has been defeated by domestic law. Rather, it demonstrates the difference between jurisdictional disagreement and the matter of sovereignty.
The more difficult legal question is therefore not whether India is sovereign enough to ignore international law. It is whether the international body issuing the decision acquired jurisdiction under the very treaty to which India consented.
