Most international negotiations involve asymmetrical parties, and raise issues of justice and fairness at different stages. This article is an empirical analysis of the role played by ethical conceptions and stark power inequalities in the Israel-PLO interim talks from 1993 to 1997. It focuses on the negotiations over water resources and economic relations. Israel's superior bargaining strength ensured that the country's security interests and notions of fairness influenced the process substantially. However, the negotiations cannot be understood merely in terms of the distribution of power between the two sides. The costs of failing to reach an agreement meant that Israeli negotiators had to concede to certain Palestinian demands and conceptions of fairness. The serious charges of injustice and unfairness have emerged in the implementation phase, owing more to developments on the ground than dissatisfaction with the terms of the interim agreements per se.This case challenges two dominant approaches to justice and fairness in negotiation: the idea that parties define negotiated agreements as just irrespective of their power relations and the notion that there can be no role for ethical considerations when the weak must confront the strong. It demonstrates moreover that conceptions of justice and fairness can serve as both external referents which guide the negotiations and be subject to bargaining themselves.