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Investment Treaty Arbitration: Bifurcation

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In the world of investor-state dispute settlement (ISDS), the issue of bifurcation has been a topic of increasing discussion and divergence among tribunals. Before the International Centre for Settlement of Investment Disputes (ICSID) amendments in 2022, most tribunals followed the three-stage test established in Glamis Gold;2 however, the level of adherence required was not always clear, leading to differing approaches among tribunals.

In the chapter on bifurcation in the previous eighth edition, it was observed that in 2020 there was a significant increase in the number of decisions made in relation to bifurcation. These decisions were analysed carefully, and the approaches employed by the tribunals were thoroughly scrutinised. This exercise included comparing decisions where the tribunals opted for a case-by-case approach and those that judiciously applied the Glamis Gold test. This chapter provides a comprehensive exposition of the analysis conducted for the eighth edition and evaluates the publicly available decisions on bifurcation for the 2022–2024 period.

Bifurcation under the new 2022 ICSID Arbitration Rules3

In the past, Article 41 of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the ICSID Convention) and Rule 41 of the 2006 Arbitration Rules of the International Centre for Settlement of Investment Disputes (the 2006 ICSID Arbitration Rules) expressly provided for bifurcation; however, the 2006 ICSID Arbitration Rules went through some changes, and these updates led to the 2022 ICSID Arbitration Rules (the 2022 ICSID Arbitration Rules). As of 1 July 2022, the updated 2022 ICSID Arbitration Rules have been implemented, bringing two new procedures on bifurcation that were not present in the 2006 ICSID Arbitration Rules. Rule 42 pertains to a general request for bifurcation, while Rule 44 is specifically for requests concerning preliminary objections. The new rules aim to provide clarity on the topic of bifurcation, which was previously open to interpretation. As a result, practitioners and arbitrators in cases under the 2022 ICSID Arbitration Rules now have amore defined understanding of the process.

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  1. Glamis Gold Ltd v. The United States of America, UNCITRAL (Glamis Gold), Procedural Order No. 2 (Revised), 31 May 2005, Paragraph 12 (Young, Caron, Morgan) (1976 UNCITRAL Arbitration Rules). The Glamis Gold test comprises the following criteria, which the tribunal applies to decide whether to bifurcate the proceedings: (1) the jurisdictional objection is substantial and not frivolous; (2) granting bifurcation would result in a substantial reduction of the next phase in the proceedings; and (3) the jurisdictional objection is so intertwined with the merits of the case, rendering bifurcation impractical.
  2. To obtain a thorough understanding of bifurcation rules, the legal framework and their development, consult the chapter on bifurcation in previous editions 7 and 8 of this title for a more detailed explanation.