(i) Conferderation is a loose arrangement, Federation is a complete union:
A confederation is a loose union in which each member state retains its sovereign independent entity.
A Federation is a complete and full union. In it the member states merge to form a big single sovereign state and they lose their separate sovereignties.
(ii) Conferderation comes into existence by a treaty among sovereign states, Federation comes into existence by an agreement or a constitution:
A Confederation always comes into being through an international treaty/agreement through which the sovereign states decide to have a common confederal government, along with their individual national governments. A Federation comes into being either when some sovereign states decide to merge into a single state and lose their individual sovereignties or when a big state decides to have a division of powers between one central government and several governments of states/provinces.
(iii) Confederal Government has fixed powers, A Federation involves a definite Division of Powers between one central and several state governments:
In a confederation, the central or the con-federal government is given specified functions which are to be performed for securing the specified objectives. In a federation, the central or federal government is allocated for governance all subjects of national importance.
In contemporary times, in every federation working in different parts of the world the central government has tended to be more powerful than the government of the parts of federation. A confederal government on the other hand has limited, defined and specific power for securing the defined objective/objectives.
(iv) Federation has a Dual Administration Not in a Conferderation:
In a confederation, the confederal government is formed by the delegates of the member states. The laws and rules of the confederal government do not directly bind the citizens of the member states. These get operationalised into the territory of each state only when these are adopted by the government of each member state. In a Federation, each citizen is continuously under a dual administration. He has to obey simultaneously the laws of the federation as well as of the state in which he resides.
(v) Supremacy of the national constitution in a Federation, in a Conferderation each state has its own supreme constitution:
A federation comes into being through a constitution which is regarded as the supreme law of the land and which binds both the central government as well as the governments of the federating units. A confederation comes into existence through an international treaty among the sovereign states who decide to have a common confederal government alongwith their respective governments and constitutions.
(vi) Federation a Permanent Union, Confederation a Loose Arrangement:
A federation is a permanent and perpetual union. The states joining a federation do not have the right to secede. As against it, a confederation is a loose organisation in which each member state retains its sovereign independent character. Because of being a loose union, a confederation has always a short-life. Any member state can withdraw from the confederation at any time.
(vii) People of Federation form one Nation, Confederation has several Nations:
A federation builds a new nation, while a confederation is and continues to remain a group of separate nations.
(viii) Common Citizenship of Federation and Separate Citizenships of a Confederation:
A federation has a citizenship of its own. All the people enjoy single uniform citizenship of the federation which is a single big sovereign state. The citizens can enjoy, along with this single uniform citizenship of the federation, citizenship of their respective federating units/provinces/states. However, this citizenship has legal status under international law.
International law recognises only the citizenship of the federation as the real citizenship. Citizenships of each federating unit is only a courtesy arrangement devoid of any real legal significance. In a conferderation people of each state enjoy the citizenship of their own state.
Thus Federation and Confederation are two distinct and different forms of government. We can clarify this distinction by giving an hypothetical example. Today India and Pakistan are two sovereign independent states and each has a federal system of government.
Suppose both India and Pakistan decide to cooperate in respect of their defence and foreign affairs needs, they can organise a confederation by organising common confederal government and entrust to it the responsibility of securing these goals. In this case India and Pakistan will continue to remain two sovereigns independent states and yet will have a common government for securing the define objectives of defence and foreign relations. Such an Indo-Pakistan arrangement will a Confederation—a loose and limited common organisation of two sovereign states made for a defined, limited and specific purpose.