A 66-year-old water-sharing treaty between India and Pakistan is now at the centre of a direct legal dispute between New Delhi and a Hague-based arbitration panel.
On August 31, 2026, the Court of Arbitration constituted under the Indus Waters Treaty ruled that the agreement remains fully in force and that India had no legal basis, under the treaty, to place it in abeyance. India rejected the ruling, saying the tribunal itself has no jurisdiction.
The disagreement now puts the treaty’s dispute-resolution system and hydroelectric projects on the Western Rivers under renewed scrutiny.
Why The Indus Water Treaty Matters
Signed on September 19, 1960, the Indus Waters Treaty divided the six major rivers of the Indus system into two groups. The Eastern Rivers, Ravi, Beas and Sutlej, were allocated for India’s unrestricted use, subject to treaty provisions.
The Western Rivers, Indus, Jhelum and Chenab, were largely allocated to Pakistan, while India retained specific rights, including certain agricultural and non-consumptive uses such as hydropower generation.
The treaty also established a framework for information sharing and dispute resolution. The World Bank helped broker the agreement and is a signatory, but its institutional role under the treaty is limited. The treaty provides separate mechanisms involving a Permanent Indus Commission, a Neutral Expert and a Court of Arbitration.
The arrangement has remained in place since 1960 despite repeated periods of conflict and tension between the two countries, making the current dispute particularly significant for the treaty’s future.
How The Dispute Escalated
India announced on April 23, 2025 that it would hold the Indus Waters Treaty in abeyance, a day after a militant attack in Jammu and Kashmir killed 26 people. India linked the attack to Pakistan and took several measures against Islamabad. Pakistan denied involvement in the attack.
The water treaty subsequently became intertwined with disputes over India’s hydroelectric projects on the Western Rivers. Pakistan had already challenged aspects of India’s Kishenganga and Ratle projects under the treaty’s dispute-resolution framework.
The latest proceedings therefore concern two separate but connected questions. One is whether India could place the treaty in abeyance. The other involves technical questions concerning the design of hydroelectric projects that India is permitted to build under the treaty.
What The Hague Court Decided
On August 31, 2026, the Court of Arbitration ruled that the Indus Waters Treaty had neither been terminated nor suspended and therefore remained fully in force.
It rejected the grounds advanced by India for suspending or terminating the agreement. The Court said India must continue observing treaty obligations concerning the design and operation of hydroelectric projects on the Western Rivers.
The ruling did not, however, finally determine whether the disputed designs of India’s Kishenganga and Ratle projects comply with every technical requirement of the treaty.
Those questions remain part of separate proceedings before a Neutral Expert. The latest work programme envisages circulation of the expert’s final decision around July 16, 2027.
The Court also issued interim measures concerning the Ratle Hydroelectric Plant on the Chenab. It prohibited India from concreting the dam wall and power-intake structure above specified levels until 90 days after the Neutral Expert’s final decision. A separate reporting requirement concerning Ratle’s construction schedule was also imposed.
Why India Rejected The Ruling
New Delhi has not accepted the tribunal’s authority. India’s Ministry of External Affairs said the Court of Arbitration was illegally constituted and maintained that India has never recognised its jurisdiction. It said the tribunal’s pronouncements have no effect on India’s sovereign decisions or its ongoing projects.
This creates an important distinction in understanding the latest development. The Court of Arbitration says the treaty remains binding and that India must comply with its obligations. India, meanwhile, says the court has no jurisdiction and that its decision does not affect India’s actions.
The disagreement is also not new. India had objected to the Court of Arbitration process before, arguing that the treaty-consistent Neutral Expert mechanism should deal with the differences concerning Kishenganga and Ratle. In 2023, India publicly described the arbitration tribunal as illegally constituted and said it would not participate in what it considered parallel proceedings.
What Happens From Here
The immediate focus will be on the separate Neutral Expert process and the technical questions surrounding the Kishenganga and Ratle projects. Its final decision is currently expected around July 2027.
The larger issue is whether the Indus Waters Treaty can continue functioning when India disputes the legitimacy of one of its dispute-resolution mechanisms.
The treaty itself remains the central framework governing the two countries’ use of the Indus river system, but the latest ruling has exposed a widening gap between the tribunal’s interpretation and India’s position.
For now, there is no verified basis to say that the Hague ruling will immediately change water flows, halt all Indian hydropower construction, or alter Pakistan’s water availability.
What is clear is narrower but consequential: the Court has reaffirmed the treaty’s continuing force, imposed limited interim measures at Ratle, and India has rejected the ruling altogether. The next major legal marker is the Neutral Expert’s expected decision in July 2027.
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