Bifurcation in investment arbitration has traditionally been a complex issue. The 2022 ICSID Rules bring clarity. Rule 42 introduces defined criteria for bifurcation requests, while Rule 44 sets strict timelines, particularly for preliminary objections, to enhance efficiency. This shift promotes greater predictability and consistency, offering a clearer framework while allowing flexibility for case-specific nuances.

In this 9th edition of Lexology’s In-Depth: Investment Treaty Arbitration, we discuss what strategic considerations should parties keep in mind when requesting or resisting bifurcation under the new ICSID rules: 

Timeline: Given the stricter time limits, parties must promptly identify and articulate preliminary objections to align with procedural deadlines.

Merit of Jurisdictional Objections: Ensure that any jurisdictional or preliminary objections are substantial, well-founded, and clearly presented to meet the threshold for bifurcation. Always review the language in the applicable treaty, as modern TPAs often include provisions for preliminary objections.  Refer, for instances, to Article 10.20.4 of the US-Peru and US-Panama Trade Promotion Agreements.

Impact on proceedings: Assess how bifurcation could affect the overall strategy, including potential benefits in terms of efficiency and cost savings versus possible delays or complexities introduced by separating issues. See, for example, Huawei Technologies Co., Ltd. v. Kingdom of Sweden, where the tribunal determined that procedure efficiency would be most effectively maintained by rejecting Sweden’s request for bifurcation.

Interconnectedness of issues: Assess whether the jurisdictional issue is too intertwined with the merits of the case. If the issues are closely connected, the tribunal is more likely to deny the request for bifurcation. See, for example, EMS Shipping & Trading GmbH v. Republic of Albania, where the tribunal rejected Albania’s request for bifurcation, concluding that Albania’s objections were too closely linked to the merits, making bifurcation impractical.

This post was co-authored by Gautam Bhattacharyya.