Nemesis
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On September 21, 1999, Pakistan lodged a compensation claim at the International Court of Justice (ICJ) in The Hague, accusing India of shooting down an unarmed aircraft. Pakistan sought about $60 million in reparations from India and compensation for the victims' families (The cost of the aircraft lost in the incident is put at >$35 million.) India's attorney general, Soli Sorabjee, argued that the court lacked jurisdiction,[17] citing an exemption it filed in 1974, to exclude disputes between India and other Commonwealth States, and disputes covered by multi-lateral treaties.[18] In the buildup to the case, India also contended that Pakistan had violated the 1991 bilateral agreement between Pakistan and India on air violations, which states "Combat aircraft (to include fighter, bomber, reconnaissance, jet military trainer, and armed helicopter aircraft) will not fly within 10 km of each other’s airspace including Air Defense Identification Zone."[19]
On June 21, 2000, the 15-judge Bench headed by Gilbert Guillaume of France ruled—with a 14–2 verdict—upholding India's submission that the court had no jurisdiction in the matter.[20] The court dropped Pakistan's claims, without recourse to appeal, the outcome seen as a decision highly favorable to India.[21] The ruling constituted a financial setback to the Pakistan government which had spent close to 25 million Pakistani rupees (approx. $400,000) preparing for the case, much higher than what India spent
You lost the case on a neutral setting. End of discussion. The plane was given a choice, even though it was in Indian airspace, it failed to respond after repeated warnings. India hence, was within rights to shoot it down.
It was a unfortunate incident and the loss of life is regretted. However, the IAF acted according to International Law and did nothing illegal.
PS - The incident also came just two months after Kargil. This obviously had a lot to do with it.