New Delhi: Pakistan is bearing not only its own legal expenses but also India’s share of arbitration costs in the ongoing Indus Waters Treaty dispute after New Delhi suspended its participation in the proceedings and placed the treaty in abeyance. The unusual situation has added a financial burden on Islamabad as the international legal battle continues.
Under the dispute resolution mechanism of the Indus Waters Treaty, both India and Pakistan are required to equally share the costs of arbitration. However, after the April 2025 Pahalgam terror attack, India withdrew from all treaty related proceedings, stating that the agreement would remain in abeyance until Pakistan takes credible and irreversible action against cross border terrorism.
Despite India’s absence, Pakistan has continued pursuing the case before the Permanent Court of Arbitration. To prevent the proceedings from stopping, Islamabad has been paying both its own expenses and India’s share. Reports indicate that Pakistan has already spent more than 600,000 US dollars on the arbitration, with costs expected to increase as the case progresses.
The dispute centres on India’s Kishanganga and Ratle hydroelectric projects on the western rivers governed by the treaty. Pakistan argues that the design of the projects violates the agreement, while India maintains that such technical issues should be examined by a Neutral Expert rather than an arbitration tribunal. New Delhi has consistently rejected the jurisdiction of the Permanent Court of Arbitration, describing the tribunal as illegally constituted and stating that any rulings it delivers are not legally valid.
International arbitration rules allow proceedings to continue even if one party refuses to participate, provided the tribunal determines it has jurisdiction. The court has already ruled that it can hear Pakistan’s case despite India’s objections.
The financial burden comes at a challenging time for Pakistan’s economy, which remains under an International Monetary Fund support programme while implementing fiscal reforms to strengthen public finances. As long as Pakistan continues with the arbitration and India maintains its boycott, Islamabad is expected to bear the full cost of the proceedings while the diplomatic deadlock over the Indus Waters Treaty continues.
