The World Bank asked India and Pakistan to "agree to mediation" in order to settle on a mechanism for how the Indus Waters Treaty should be used to resolve issues regarding two dams under construction along the Indus river system.
The World Bank's move came as it told the two countries that it was responding to their separate proceedings initiated under the Indus Waters Treaty 1960.
Simultaneously, the World Bank held a draw of lots to determine who will appoint three umpires to sit on the Court of Arbitration that Pakistan has requested.
The draw of lots was held at the World Bank headquarters here.
"The World Bank Group has a strictly procedural role under the Indus Waters Treaty and the treaty does not allow it to choose whether the one procedure should take precedence over the other. This is why we drew the lots and proposed potential candidates for the Neutral Expert today," said Senior Vice President and World Bank Group General Counsel Anne-MarieLeroy.
"What is clear, though, is that pursuing two concurrent processes under the treaty could make it unworkable over time and we, therefore, urge both parties to agree to mediation that the World Bank Group can help arrange.
"The two countries can also agree to suspend the two processes during the mediation process or at any time until the processes are concluded," Leroy said.
The Bank said the Indus Waters Treaty 1960 is seen as one of the most successful international treaties and has withstood frequent tensions between India and Pakistan, including conflict.
The Bank is a signatory to the Treaty.
The Treaty sets out a mechanism for cooperation and information exchange between the two countries regarding their use of the rivers, known as the Permanent Indus Commission which includes a commissioner from each of the two countries.
It also sets out a process for resolving so-called "questions", "differences" and "disputes" that may arise between the parties.
The current proceedings under the treaty concern the Kishenganga (330 megawatts) and Ratle (850 megawatts) hydroelectric power plants.
The power plants are being built by India on Kishenganga and Chenab Rivers.
Neither of the two plants are being financed by the World Bank Group.