Pakistan is heavily dependent on rivers flowing from Indian Kashmir for its hydropower and irrigation needs.
Lafitte, a professor at the Swiss Federal Institute of Technology in Lausanne, was given the task of bridging differences over the Baglihar dam in 2005 and both sides have said they will comply with his findings.
Among the contentious issues, Pakistan said the study called for the dam's height to be lowered by 1.5 metres. India responded it had agreed to this before Lafitte took up his post.
Saifuddin Soz, India's water minister said: "India's point of view has been completely upheld. The overall design of the dam remains intact."
But in Islamabad an official also welcomed the report.
Liaqat Ali Jato, Pakistan's water and power minister, said: "The neutral expert has in his verdict today clearly said that the design of the project is [a] violation of the treaty so this is good news for Pakistan."
"The expert decided that India should modify its design."
The Indus Waters Treaty of 1960 divided the Indus river - into which the Chenab flows - between the two countries and bars India from interfering with the flow into Pakistan while allowing it to generate electricity.
The Baglihar dam disagreement is the first time in 47 years that the provisions regarding the settlement of differences and disputes in the treaty have been invoked.
Source: Al Jazeera and agencies