From Conflict To Compensation: India's Strategic Path To Ensuring Pakistan's Accountability Through An International Claims Commission

Receiving adequate compensation for victims of cross-border terrorism in India should be on the agenda.

India's push to add Pakistan back on the FATF 'grey list' is aimed at ensuring economic repercussions. A case for establishing an international compensation mechanism, based on the 'due diligence' obligation under international law, further enhances that strategy.

Holding Pakistan accountable for cross-border terrorism appears to be challenging through international adjudication.

After the conclusion of the recent Shanghai Cooperation Organisation (SCO) Defence Ministers' meeting in Qingdao on the 26^th of June 2025, a joint statement could not be adopted as 'certain member countries could not reach consensus on certain issues'. It is believed that India refused to endorse the draft statement as there was no direct reference to the attacks on civilians in Pahalgam (Kashmir) on the 22^nd of April 2025.

While the Indian government has succeeded in sending a clear message that it would not dilute its position on critical issues, particularly concerning terrorism, it is yet to address the concerns of the civil society in India, which has started to deliberate on the prospects of fixing Pakistan's accountability for cross-border terrorism. This article analyses how international adjudication could be less appealing to India from a strategic standpoint. Instead, the emphasis should be on exploring additional options offered by the international legal order, where political and diplomatic efforts are directed towards establishing an international compensation mechanism.

The implausibility of international adjudication under multilateral conventions

There are two relevant multilateral instruments addressing terrorism-related issues (excluding a few regional ones, which do not contain dispute settlement clauses). First is the International Convention for the Suppression of Terrorist Bombings, 1997 (ICSTB). The Convention aims to enhance international cooperation in preventing terrorist bombings and prosecuting those responsible for it. In specific, Article 2 of the Convention makes it an offence for any person if that person unlawfully and intentionally delivers, places, discharges or detonates an 'explosive or other lethal device' in, into or against a place of public use. Moreover, Article 7 of the said Convention puts an obligation on the State Party, in whose territory the offender is present, to take appropriate measures 'under its domestic law' to prosecute or extradite.

Both India and Pakistan are Parties to the Convention, but India's reservation regarding the acceptance of the jurisdiction of the International Court of Justice (ICJ) for matters covered under the Convention acts as a technical barrier to dragging Pakistan before the Court. Assuming that India withdraws the reservation and approaches the ICJ, the case would be about establishing Pakistan's responsibility for prosecuting the offenders present in its territory by taking appropriate actions 'under its own domestic law.' It remains doubtful if international adjudication in this regard would serve India's broader strategic interests, but if India decides to pursue the case and ultimately succeeds, a judicial pronouncement would certainly go a long way in establishing Pakistan's obligation under international law to prosecute terrorists on its territory. So far, though references are being made to several resolutions passed by the United Nations Security Council (UNSC) such as Resolutions 1267 (1999) and 1373 (2001), and to the decision of the Financial Action Task Force (FATF) to include Pakistan in the 'grey list' (removed from the list in 2022), there is no specific action taken by the global community that puts a 'legal obligation' on Pakistan to prosecute terrorists operating from its territory.

Now, we refer to the other instrument – which is the International Convention for the Suppression of the Financing of Terrorism , 1999 (ICSFT). This instrument aims to criminalise the financing of terrorist activities, and puts an obligation on States to take measures 'under its domestic law' to prevent, investigate, and prosecute individuals or entities involved in funding terrorism (combined reading of Articles 2 and 7). Both India and Pakistan are Parties to the Convention, but in this case, Pakistan has made, amongst other reservations, a reservation regarding the acceptance of the ICJ's jurisdiction for matters covered under the Convention. Thus, it would be difficult to fix Pakistan's obligation under this treaty due to jurisdictional hurdles.

Forum Prorogatum as an additional basis for international adjudication before the Court

There could be another basis for invoking the jurisdiction of the ICJ to hold Pakistan accountable under the ICSFT. The notion of forum prorogatum provides that a State that has not accepted the jurisdiction of an international adjudicating body at the time when an application instituting proceedings against it is filed may subsequently consent to such jurisdiction, ultimately enabling the adjudicating body to entertain the case. India can proceed with filing a case before the ICJ and expect Pakistan to subsequently accept the Court's jurisdiction. However, following this path could open a Pandora's box, in the sense that several cases could be filed against India (with varying subject-matter), and the global community would then expect India to practice what it preaches.

The implausibility of international adjudication based on customary international law

It is possible to invoke the 'compulsory jurisdiction' of the Court under Article 36(2) of the ICJ Statute, and bring a case against Pakistan for the violation of its obligation of 'non-intervention' in the affairs of another State under customary international law (as Pakistan is accused of violating these obligations through funding and harbouring terrorists). While this is a possibility (depending on the interpretation of the Declaration submitted by Pakistan regarding the acceptance of the Court's compulsory jurisdiction as it contains several reservations), it might not be appealing for India to pursue such a case, as the jurisprudence on 'attribution', as developed by the Court, provides for a higher threshold. Though, the Draft Articles on State Responsibility (Article 8) provides that 'the conduct of a person or group of persons shall be considered an act of a State under international law if the person or group of persons is in fact acting on the instructions of or under the direction or control of that State', the ICJ, in the case of Nicaragua v. United States of America (1986), held that control must mean 'effective control.' Considering this test, even if India succeeds in establishing that Pakistan is aiding and harbouring terrorists for attacks against India, including killing Indian citizens, it may not be able to convince the Court that such actions by terrorists are legally attributable to Pakistan. In other words, the Court may not find Pakistan, as a State, liable for the acts committed by terrorists it supports. The maximum that India can get out of this case is a ruling that Pakistan breached its obligation of 'non-intervention' under customary international law, arising out of its own conduct in supporting the terrorists, provided that India presents irrefutable evidence that shows Pakistan's involvement in training, arming, equipping, and financing those terrorists.

An international compensation mechanism to ensure Pakistan's accountability for cross-border terrorism

India's renewed demand to put Pakistan back on the Financial Action Task Force (FATF) 'grey list' is aimed at ensuring economic repercussions. Attempts towards establishing an international compensation mechanism would further enhance that strategy.

Compensation mechanisms, in particular international claims commissions, are mechanisms usually created through international agreements. Such claims commissions encompass unique and important forms of mechanisms, established to consider claims resulting from, inter alia, traumatic events. The primary objective of such commissions is to determine compensation owed to a variety of actors, such as individuals, corporations, and States for specific losses and injuries they suffered. These commissions often fix the liability of a State as a sovereign entity for violations of international law. It must also be noted that claims commissions are not conciliation or mediation mechanisms, and do not serve as advisory or review bodies. The instruments establishing these commissions generally provide for the 'binding' nature of their decisions, obliging relevant parties to respect and enforce them under international law. Moreover, as claims commissions are ad hoc bodies, there is flexibility in terms of how exactly a particular commission would look as far as its structure, jurisdiction, and procedure is concerned.

Several claims commissions have been established in the past–the first recorded instance was under the Jay Treaty of 1794 between the United States and the United Kingdom, where two separate commissions were established to resolve the claims of British merchants against the United States, and American ship-owners against the United Kingdom. In contemporary times, claims commissions such as the Iran–United States Claims Tribunal (IUSCT) of 1981, the United Nations Compensation Commission (UNCC) of 1991, and the Eritrea–Ethiopia Claims Commission (EECC) of 2000, are suitable examples for informing discussions about any future proposal for a compensation mechanism. The IUSCT (established for deciding claims of nationals of the United States against Iran and claims of nationals of Iran against the United States, and claims of the United States and Iran against each other in the backdrop of the hostage crisis of 1979), and the EECC (established for deciding all claims for loss, damage or injury by one government against the other in the backdrop of the armed conflict), were established through a bilateral agreement. The UNCC is a classic example where multilateralism was at play, as it was established through a resolution of the UNSC as a result of Iraq's unlawful invasion and occupation of Kuwait–Resolution 687 (1991).

As a bilateral agreement with Pakistan for establishing a compensation mechanism is unrealistic, it is this path of multilateralism that India must explore to fix Pakistan's accountability and to seek compensation on behalf of the victims of cross-border terrorism in India. The key aspect of the UNCC was that it allowed for seeking compensation for any direct loss, damage, including environmental damage and the depletion of natural resources, or injury to foreign governments, nationals and corporations. The claims were put in different categories, according to the loss suffered. Drawing inspiration from the UNCC, India must seek compensation from Pakistan (based on the breach of the obligation of 'due diligence' under international law, explained below), and such compensation claims may be divided into the following categories:

• Category I–compensation for claims by individuals who had to depart from their dwelling places due to cross-border terrorism, and by individuals who suffered serious personal injury or whose spouse, child or parent died due to cross-border terrorism;
• Category II–compensation for claims by individuals who suffered mental pain and anguish, loss of personal property, loss of income, and related matters;
• Category III–compensation for claims by corporations and other private entities for  losses relating to the destruction of business assets, loss of profits, and related matters;
• Category IV–compensation for claims by India for losses incurred in evacuating and providing relief to its citizens, and for loss of and damage to government property, and damage to the environment.

As far as the jurisdiction ratione temporis (the temporal scope) of the proposed claims commission is concerned, it should decide all cross-border terrorism related claims since 1947. Instead of individuals approaching the proposed commission in their own capacity, India can 'espouse' their claims.

Potential hurdles before the Security Council to establish a compensation mechanism for the victims of cross-border terrorism in India

As we understand, for a resolution to be adopted by the UNSC, the five permanent members must agree. Geopolitical factors indicate that it might be difficult to establish a UN-backed compensation mechanism as China may veto such a proposal. However, the terror attack at Pahalgam has been condemned globally, and a united front has emerged which has explicitly supported India's Operation SINDOOR (includes countries and intergovernmental organisations such as the United Kingdom, Russia, Israel, United States, France, Netherlands, Japan, Saudi Arabia, United Arab Emirates, Iran, Qatar, Panama, Sri Lanka, Maldives, and the European Union). If an attempt at the UNSC does not fetch the desired results, India can collaborate with other like-minded countries and establish a compensation mechanism. This would significantly help to convey a strong message to nations that harbour and support terrorists that appropriate retaliation would be both military and financial in nature.

As the establishment of a claims commission would be, per se, a political act, the evidentiary threshold should be lower than what is required before the ICJ (as discussed above) for attributing responsibility to Pakistan. India has compiled sufficient evidence (combined with the fact that the Sanctions Committee of the UNSC also targets some of the terrorists operating in the territory of Pakistan) to show that Pakistan has, on several occasions, violated the customary international law of 'non-intervention' by aiding and harbouring terrorists, and that actions by terrorists can be attributed to Pakistan.

Alternatively, India can argue that a claims commission can be established as Pakistan has violated the obligation of 'due diligence' in international law. The obligation of 'due diligence' establishes the legal responsibility of a State in connection with the behaviour of non-State actors, that cannot be attributed directly to the State. In this context, Pakistan, by failing to take necessary actions, including prosecuting terrorists who operate on its territory, certainly failed to abide by the said obligation. This argument receives further support from the decision of the ICJ in the Corfu Channel case, where the Court clarified that every State has an obligation not to allow knowingly its territory to be used for acts contrary to the rights of other States. Moreover, recent evidence gathered by India (after the Pahalgam attack) clearly indicates that Pakistan had knowingly allowed terrorists to operate from its territory.

Author is an Associate Professor of Law at Jindal Global Law School, O.P. Jindal Global University, Sonipat, India. Views Are Personal.