The treaty gave the waters of the western rivers—the Indus, Jhelum, and Chenab—to Pakistan and those of the eastern rivers—the Ravi, Beas, and Sutlej—to India. It also provided for the funding and building of dams, link canals, barrages, and tube wells—notably the Tarbela Dam on the Indus River and the Mangla Dam on the Jhelum River. These helped provide water to Pakistan in the amounts that it had previously received from the rivers now assigned to India’s exclusive use. Much of the financing was contributed by member countries of the World Bank. The treaty required the creation of a Permanent Indus Commission, with a commissioner from each country, in order to maintain a channel for communication and to try to resolve questions about implementation of the treaty. In addition, a mechanism for resolving disputes was provided.The original treaty is available here.
The disagreement between India and Pakistan concerns the design features of the Kishenganga (330 megawatts) and Ratle (850 megawatts) hydroelectric power plants. The former was inaugurated in 2018 while the latter is under construction. The World Bank is not financing either project. The two countries disagree over whether the technical design features of these two hydroelectric plants contravene the Treaty. The plants are located in India on tributaries of the Jhelum and the Chenab Rivers, respectively. The Treaty designates these two rivers, as well as the Indus, as the “Western Rivers” to which Pakistan has unrestricted use with some exceptions. Under the Treaty, India is permitted to construct hydroelectric power facilities on these rivers, subject to constraints specified in Annexures to the Treaty.
In 2016, Pakistan asked the World Bank to facilitate the setting up of a Court of Arbitration to look into its concerns about the designs of the two hydroelectric power projects. India asked for the appointment of a Neutral Expert for the same purpose. These requests came after the Permanent Indus Commission had been engaged in discussions on the matter for a while. The World Bank sought to fulfill its procedural obligations with respect to both the Court of Arbitration and the Neutral Expert. The Treaty does not empower the World Bank to decide whether one procedure should take precedence over the other; rather it vests the determination of jurisdictional competence on each of the two mechanisms. At the same time, the World Bank actively encouraged both countries to agree amicably on a mechanism to address the issues.