To Bifurcate or Not To Bifurcate?

That is
the (Ambiguous) Question

by M A S S I M O V. B E N E D E T T E L L I *

ABSTRACT
Commentators and practitioners hold different views about 'bifurcation', i.e. the procedural
technique of splitting the arbitral proceedings in distinct phases with a view of reaching
decisions on discrete matters. The discussion mostly focuses on whether bifurcation is a source
of efficiency or rather of useless additional costs and delays. This article argues that the debate
is somewhat misled by a certain ambiguity, intrinsic to the three apparently intuitive notions of
bifurcation, decision and efficiency, which has blurred the need for a flexible and balanced
approach. It is submitted that the virtues and the pitfalls of bifurcation cannot be assessed in
abstracto, but must be tailored to the peculiarities of each situation, in particular by
considering: (i) the matter (a claim, an issue, an interim measure, a question of procedure) on
which an early decision by the arbitral tribunal is sought, (ii) the form (a partial award, an
interim award, an order) in which such decision is to be taken and (Hi) the interests (of the
parties, of the arbitral tribunal, of the States whose laws are at stake) that b furcation may
serve orjeopardise. Consideration of thesefactors shows that in different cases bifurcation may
generate different effects (inter alia, in terms of res judicata, risks of additional grounds for
challenges to the award, interventions of State courts, impact on the timing of the
arbitration). Therefore, arbitral tribunalsfaced with requests for bifurcation shouldfirst assess
what such effects are and then balance them in light of the peculiar circumstances of the relevant
proceedings. By so doing, their decision on bifurcation would acquire more legitimacy, while the
conditions for recourse to this procedural tool would become more predictable to the parties.

I. FOREWORD
In the jargon of the international arbitration community 'bifurcation' indicates the
split of the arbitral proceedings in distinct phases, each contemplating ad hoc
pleadings, possibly hearings, and ending with a decision on a discrete matter.

Freshfields Bruckhaus Deringer, partner; Universita degli Studi Aldo Mora, Bari, professor of International Law.
The views expressed herebelow are personal to the author. This article develops a presentation made at the XI
Congress of the Comite Brasileiro de Arbitrage, organized in Porto Alegre on 13-15 Sep. 2012 on the 'Economic
Aspects ofArbitration'.

ARBITRATION INTERNATIONAL, Vol. 29, No. 3

©LCIA, 2013

493
494 Arbitration International, Volume 29 Issue 3

Merits and demerits of this procedural technique have been discussed at length
among the authors, 1 and heatedly addressed by counsel,2 the respective arguments
mosdy focusing on whether bifurcation is a source of efficiency or rather of useless
additional costs and delays.
This article argues that the debate has been somewhat misled so far by a certain
ambiguity which is intrinsic to the three apparentiy intuitive notions of bifurcation,
decision and efficiency. This ambiguity has blurred the need for a flexible and
balanced approach, as if the question whether or not to bifurcate could have a
single answer in all given situations. To the contrary, the virtues and the pitfalls of
bifurcation cannot be assessed in abstracto, but must be tailored to the peculiarities
of each situation.
In particular, three main factors need to be considered: (i) the matter on which
an early decision by the arbitral tribunal is sought, (ii) the form in which such
decision is to be taken at the end of the bifurcated phase pursuant to the applicable
law or rules and (iii) the interests that bifurcation may serve or jeopardise.
Consideration of these factors shows that the effects of bifurcation may differ
from case to case. This implies that arbitral tribunals faced with requests for
bifurcation should first assess what such effects are and then balance them in light
of the peculiar circumstances of the relevant proceedings. By so doing, their
decision on bifurcation would acquire more legitimacy, while the conditions for
recourse to this procedural tool would become more predictable to the parties.

1
Cf. L. GREENWOOD, Does Bifurcation Really Promote Efficiency?, 28 J. Int'l Arb. 105 (2011), N. ULMER, The Cost
Conundrum, 26 Arb. Int'l 221, at 234 f. (2010), B.S. VASANI, Bi-Trifurcation of Investment Disputes, in K. YANNACA-
SMALL, Arbitration Under International Investment Agreements: A Guide to Key Issues, Oxford, 2010, 121, T.H.WEBSTER,
Efficiency in Investment Arbitration: Recent Decisions on Preliminary and Costs Issues, 25 Arb. Int'l 469 (2009), T.
GIOVANNTNI, Comments on Judith Jill's Report on Applications for the Early Disposition of Arbitral Proceedings, in A.J. VAN
DEN BERG (ed.), 50 Years of the New York Convention, I C C A Congress Series, T h e Hague-Boston-London, 2009,
526, J J . COE JR., Pre-Hearing Techniques to Promote Speed and Cost-Effectiveness — Some Thoughts Concerning Arbitral
Process Design, 2 Pepperdine Dispute Resolution L.J.53 (2002), A. RAU, Contracting Out of the Arbitration Act, 8 Am. Rev.
Int'l Arb. 225, at 251 (1997). Cf. also G.B. BORN, International Commercial Arbitration, Alphen aan den Rijn, 2009,
1815 f, C. SCHREUER (ed.), The ICSID Convention: A Commentary, Cambridge, 2009 (II ed.), 545 ff., N. BLACKABY,
C. PARTASIDES, A. REDFERN, M. HUNTER, Redfern and Hunter on International Arbitration, Oxford, 2009, 374 ff., 522
ff., E. GAILLARD,J. SAVAGE, Fouchard Gaillard Goldman on International Commercial Arbitration, The Hague-Boston-
London, 1999, 741 ff, M.N. KINNEAR, A. K. BJORKLUND,J.F.G. HANNAFORD, Investment Disputes under NAFTA: An
Annotated Guide to Chapter 11, T h e Hague-Boston-London, 2006, 1135-8 ff., M . KANTOR, Valuation for Arbitration,
T h e Hague-Boston-London, 2008, 281 ff., M. MCILLWRATH, J. SAVAGE, International Arbitration and Mediation: A
Practical Guide, The Hague-Boston-London, 2010, 275 ff.
In particular, this transpires from decisions of arbitral tribunals in investment treaty arbitrations: cf, inter alia,
International Thunderbird Gaming Co. v. Mexico, Award, 26 J a n . 2006, available at http://www.italaw.com/sites/
default/iiles/case-documents/ita0431 .pdf, Glamis Gold v. U.S.A., Procedural Order, 31 May 2005, available at
http://www.italaw.com/sites/default/fiUes/case-documents/ita0362.pdf, LG&E v. Argentina, Decision on
Jurisdiction, 30 Apr. 2004, available at http://www.italaw.com/sites/default/files/case-documents/
ita0458.pdf, Mondev International Ltd. v. U.S.A., Award, 11 Oct. 2002, available at http://www.italaw.com/sites/
default/files/case-documents/ital076.pdf, Methanex v. U.S.A., Preliminary Award on Jurisdiction and
Admissibility, 7 Aug. 2002, available at http://www.italaw.com/sites/default/files/case-documents/
ita0518.pdf, United Parcel Services ofAmerica Inc. v. Canada, Decision on the Filing of a Statement of Defence, 17
Oct. 2001, available at http://www.italaw.com/sites/default/files/case-documents/ita0883.pdf. Cf. also
Libananco Holdings Co. Ltd v. Turkey, Procedural Order, 17 Dec. 2008, Canfor Co. v. USA., Decision on the Place
of Arbitration, Filing of a Statement of Defence and Bifurcation of the Proceedings, 23 Jan. 2004, and
Fireman's Fund Ins. Co. v. Mexico, Summary of the First session of the Tribunal, 22 Jul. 2002, all quoted by B.S.
VASANI, Bi-Trifurcation of Investment Disputes, supra n. 1.
 To Bifurcate or Not To Bifurcate? 495

II. T H R E E A P P A R E N T L Y I N T U I T I V E N O T I O N S I N N E E D
OF CLARIFICATION
As it often happens in the world of international arbitration, words used by
scholars and practitioners may be polysemic. 3 This may negatively affect the
rationality of legal discourse if participants to the debate are not fully aware of the
different possible meanings of the words they are using.
This applies also to the specific question whether or not it is efficient to bifurcate
arbitral proceedings in view of earlier decisions on some discrete matters.

(a) 'Bifurcation'
According to the most reputable English dictionaries, to bifurcate means to divide
something in two parts, said of a road, a river, a branch. 4
When applied to the procedural technique of splitting arbitral proceedings in
separate phases the expression is misleading in two different respects.
First, it seems to imply that the phases to be carried out separately can be just
two. Indeed, this was the case when bifurcation started becoming a common
feature both in commercial arbitration (where the split mostly concerned
determinations on the an and on the quantum of damage claims) and in investment
treaty arbitration (where the split was made between issues relating to the
jurisdiction and issues relating to the merits). Current practice, however, shows that
many other matters can be singled-out in one set of arbitral proceedings for being
decided prior to the final award. 5 Then, in order to reflect the true state-of-the-art,
one should perhaps use the, indeed cacophonic, neologism of'multi-furcation.' 6
Second, when roads, rivers or trees bifurcate, the relevant parts of what
originally constituted a single entity normally remain separate and do not
intermingle with each other. To the contrary, early decisions handed down by the
arbitral tribunal generally 7 have a direct or indirect impact on other decisions that
the same tribunal may render in the subsequent phases of the proceedings. As it
will be pointed out below, not to be aware of such an impact may lead to
dangerous results, even by putting at risk the validity or enforceability of the final
award in the competent jurisdictions.

This is often the reflection of different 'philosophies' about the very foundations and working of arbitration as
a legal phenomenon to which, more or less consciously, the relevant author or practitioner subscribes: cf. E.
GAILLARD, Aspects philosophique du droit de ['arbitrage international, in Recueil des Corns, 2007, t. 329, 53.
4
Cf. Cambridge's British English Dictionary, Cambridge Univ. Press, OED Online available at http://
dictionary.cambridge.org./dictionary/british/bifurcate?q=bifurcate (accessed 17 Dec. 2012), Oxford's
English Dictionary, Oxford Univ. Press, OED Online available at http://oxforddictionaries.com/definition/
english/bifurcate?q=bifurcate (accessed 17 Dec. 2012).
5
Cf. infra, sub § III.
6
Drafts of 'Topic Sheets', recently discussed within the ICC Commission on Arbitration in the context of an
on-going project on The Role of the Parties and their In-House Counsel in International Dispute Resolution, use the
different expression of 'early determination of issues', which seems to be preferable.
7
The only exception is when the bifurcation leads to a final decision, by way of a partial award, on a claim or
counterclaim which is fully autonomous from the other claims or counterclaims still to be decided by the
arbitral tribunal.
496 Arbitration International, Volume 29 Issue 3

(b) 'Decision'
The award is the measure through which the arbitral tribunal exercises its
adjudicating powers by deciding on the dispute submitted to it.
Although correct, this definition is quite vague, to the extent that it does not take
into account that: (i) in order to perform its mandate and come to a final settlement
of the dispute referred to arbitration, the arbitral tribunal normally needs to decide
on many different matters relating both to the procedure and to the merits, (ii) such
decisions can be issued in the form of awards or procedural orders, and (iii) awards
can be 'final', 'partial' or 'interim'/'provisional'/'interlocutory', the meaning of this
taxonomy varying among the authors and in the different sources of arbitration
law.8
Indeed, most legislative, treaty or institutional instruments do not expressly
define what an award is,9 nor indicate in which specific cases a decision must be
taken through procedural orders rather than through awards, nor differentiate
among different types of awards. 10
It is not just a question of labels. In fact, different effects may ensue from the
form of the decision taken by the arbitral tribunal.
In contrast to procedural orders, awards have the distinct features of being
challengeable before State courts, recognizable and enforceable in foreign States
under the 1958 New York Convention (or other international instruments) and not
revocable by the arbitral tribunal, which becomes functus officio after having handed
down its decision.11
Moreover, if a decision is taken through a non-final award, rather than through
a procedural order, such award could be challengeable through set aside actions
prior to the rendering of the final award, 12 such actions could trigger the

R. TRITTMANN, When Should Arbitrators Issue Interim or Partial Awards and/or Procedural Orders?, 20 J. Int'l Arb. 255
(2003), A. CARLEVARIS, La qualificazione delle decisioni arbitrali, Riv. arb. 2002, 469, F. CORSINI, in M.V.
BENEDETTELLI, C. CONSOLO, L.G. RADICATI DI BROZOLO, Commentario breve al diritto dell'arbitrato, Padova, 2010, 893,
at 903,J.D.M. LEW, L.A. MISTEUS, S.M. KROLL, Comparative International Commercial Arbitration, Alphen aan den
Rijn, 2003, 632 ff., E. GAILLARD, J. SAVAGE, Fouchard Gaillard Goldman on International Commercial Arbitration, supra
n. 1, at 741, M.N. KINNEAR, A. K. BJORKLUND,J.F.G. HANNAFORD, Investment Disputes under NAFTA: An Annotated
Guide to Chapter 11, supra n. 1, at 1135-1 ff.
Tellingly, a proposal was made in the context of the negotiations of the U N C I T R A L Model Law but was
abandoned due to conflicting and not reconcilable views among the drafters: cf. D.D. CARON, M. PELLONPAA,
L.M. CAPLAN, The UNCITRAL Arbitration Rules: A Commentary, Oxford, 2006, 796.
Cf, however, Arts 816 his (3), 820(4)(c) and 827(2), of the Italian code of civil procedure distinguishing interim
awards (lodi non dejinitivi), which solve some controversial issues without settling the dispute, from partial
awards (lodiparziali), which contain a partial decision on the merits, and final awards, which settle the dispute
(lodi dejinitivi).
Cf. A. MOURRE, IS there life after the award?, in Les Cahiers de I'Arbitrage, 2010, 1 ff. Cf. also the English Court of
Appeal decision in Fidelitas Shipping Cp Lit v. V/O Exportchleb, [1965] 1 Lloyd's Rep. 13 (CA).
E.g., under Art. 827(2) of the Italian code of civil procedure awards which decide partially on the merits can be
immediately challenged (within fixed deadlines), while awards which decide on issues without settling the
dispute can be challenged only together with the final award (lodo definitive). For the distinction under U.S. law
between 'final' partial or interim awards, which can be judicially confirmed or vacated, and 'interlocutory
orders', which are not subject to immediate judicial review, cf. A.S. RAU, Provisional Relief in Arbitration: How
Things Stand in the United States, 22 J. Int'l Arb. 1 (2005).
 To Bifurcate or Not To Bifurcate? 497

suspension of the arbitral proceedings and their filing could be subject to

peremptory deadlines.
Moreover, non-final awards may produce res judicata effects, and such effects
may vary depending on the applicable law.13 Indeed, State laws sensibly differ on:
(i) the scope of res judicata (in particular, whether it also covers: (a) arguments or
claims which were not raised, but could have been raised, in the proceedings 14 and
(b) the reasoning of the decision, in addition to its dispositive part 15 ), (ii) whether
res judicata should be recognized only to awards which have decided on a claim/
counterclaim or also to awards which have settled a factual or legal issue when its
determination is preliminary for the adjudication of the dispute 16 and (iii) whether
the res judicata effects can be invoked only in the same arbitral proceedings or also
in new arbitral or judicial proceedings which are pending, or which are
subsequendy commenced in the State of the seat of the arbitration or in a foreign
State.

(c) 'Efficiency'
A procedural measure is normally considered efficient when it reduces the time
and costs of the proceedings. Bifurcation may then be a source of efficiency if the
earlier determination of a matter by the arbitral tribunal: (i) eliminates the need for
the parties to address certain issues which become moot as a result of the earlier
decision, and/or (ii) clarifies the scope of other issues which may be relevant for the
subsequent deliberation on the claims and counterclaims and/or (iii) settles the
entire dispute by finding in favour of a defence raised by a party on a point of
procedure or on the merits.

Cf., inter alia, D. HASCHER, L'autorite de chose jugee des sentences arbitrates, in Travaux du Comite francais de droit
international prive, 2002-2004, Paris, 2004, 17, V.V. VEEDER, Issue estoppel, reasons for awards and transnational
arbitration, in ICC Bulletin, Special Supplement, 2003, 78, A. SHEPPARD, Res Judicata and Estoppel, in Parallel State and
Arbitral Procedures in International Arbitration, Dossiers, I C C Institute of World Business Law, 2005, 232, L.G.
RADICATI DI BROZOLO, Res Judicata, in Post Award Issues, ASA Special Series No. 38, 2011, 127. See also A.
SHEPPARD, F. D E LY,International Law Association, Committee on International Arbitration, Final Report and
Recommendations on Res Judicata in International Commercial Arbitration, in Arbitration International, 2009, 67, and A.
SHEPPARD, F. D E LY, International Law Association, Committee on International Arbitration, Interim Report and
Recommendations on Res Judicata in International Commercial Arbitration, available at www.ila-hq.org.
As it happens under the French law principle of 'concentration', the common law principle of 'issue estoppel or
'issuepreclusion' and the Italian law principle oi'dedotto and deducibile': cf. A. SHEPPARD, F. D E LY, International Law
Association, Committee on International Arbitration, Interim Report supra n. 13, L.G. RADICATI DI BROZOLO, Res Judicata,
supra n. 13, at 130,140 ff. O n the way ICSID arbitral tribunals have dealt with jurisdictional objections which
were raised after a decision on jurisdiction was handed down at the end of a bifurcated procedure cf. C.
SCHREUER, BelatedJurisdictional Objections in ICSID Arbitration, in M.A. FERNANDEZ-BALLESTEROS, D. ARIAS (ed.), Liber
Amicorum Bernardo Cremades, Madrid, 2010, 1081, at 1085.
Cf. A. SHEPPARD, F. D E LY, International Law Association, Committee on International Arbitration, Final Report, supra n. 13,
at 76 (with reference to the Recommendation No. 4 set out in the Report) and I C C Award No. 3267/1984, in
Yearbook of Commercial Arbitration, 1987, 87. Cf. also V.V. VEEDER, Issue estoppel, cit. n. 13, at 73.
Cf. A. SHEPPARD, F. D E LY,International Law Association, Committee on International Arbitration, Final Report, supra n. 13,
at 78 ff. If awards on issues have res judicata effects, then 'doubly relevant facts', i.e. facts that may be relevant
for the assessment of other issues, or claims, left to the remainder of the arbitration, should not pose
particular problems, in the sense that the determination of such facts in an interim or partial award would
bind the arbitral tribunal in its subsequent deliberations.
498 Arbitration International, Volume 29 Issue 3

This notion of efficiency, however, is somewhat simplistic. Indeed, efficiency is a

three-dimensional concept. The time and costs triggered by a certain action
cannot be evaluated in the abstract, but only by reference to the interests pursued
in the circumstances by the subjects on which the action produces its effects. Only
by identifying what such interests are, and by determining what their relative
weight is, 17 a judgement of efficiency can be rationally made.
When it has to be decided whether or nor to split the arbitral proceedings in two
(or more) phases, relevant interests are certainly those of the parties between which
the arbitration is pending. It would be a mistake, however, not to consider also the
interests of the arbitrators, as well as the interests which belie, so to speak, the
arbitration laws which come into play for regulating both the procedure and the
effects of the decisions taken by the arbitral tribunal.
These interests may not coincide or may even clash, as demonstrated by the fact
that recourse to bifurcation is often asked by one party and challenged by the other
party, or that the parties and the arbitral tribunal may hold different views as to its
convenience. 18

III. D I F F E R E N T D I S P U T E D M A T T E R S W H I C H M A Y
TRIGGER BIFURCATION
The need for bifurcation (in light of efficiency or other considerations) varies
substantially with the type of matters on which an earlier decision by the arbitral
tribunal is sought.
In some cases bifurcation might be considered as an almost inevitable step.
This is true, first of all, when issues that are essential for the 'foundation' of the
arbitral proceedings need to be determined. I refer to the case in which the
arbitration agreement is silent, or unclear, on aspects such as the seat of the
arbitration, the law applicable to the merits, the language of the procedure, as well
as when requests have been made to extend the arbitration to parties which are not
signatories of the arbitration agreement (also by way of joinders) or to consolidate
separate but connected proceedings. It is quite obvious that all these issues must be
defined as soon as possible, and in any event before the arbitral proceedings enter
into motion. To do otherwise would likely cause the waste of procedural resources,
since in the absence of a decision on where the arbitration is seated and/or on
which law governs the disputed relationship, the parties' counsel could be forced to
plead under all laws which may possibly apply or by reference to all the leges arbitri
under which the arbitration may possibly take place. It would also create risks on
the validity and enforceability of the award, as would happen if new parties joined
the proceedings at an advanced stage, with consequent possible breaches of their
due process rights.

Cf. N. ULMER, The Cost Conundrum, supra n. 1, at 247, stressing that once the dispute has started 'one person's
efficiency becomes the other's infringement of due process'.
For the reasons indicated below, sub § VI, the arbitral tribunal is not necessarily bound by a common position
that the parties, or their counsel, may take on whether or not to bifurcate the proceedings.
 To Bifurcate or Not To Bifurcate? 499

This is also true when bifurcation is functional to a decision on the grant of an

interim measure, in all cases in which, as it often happens, the measure is requested
as a matter of urgency so as to avoid irreparable harm to the substantive or
procedural interests of one of the parties.
Bifurcation appears to be necessary also in another quite peculiar circumstance,
i.e. when the law governing the proceedings, or the rules set out by the arbitral
tribunal, allow that the costs of the arbitration be allocated on the basis of the
common law mechanism of the 'sealed/Calderbank offer'19 and the party that has
made use of this technique by proposing to its counterparty a settlement 'without
prejudice, save for costs' asks the arbitral tribunal to decide on the costs only after
having deposited its award on quantum?®
In other cases, bifurcation is not a mandatory path. This is true when the
arbitral tribunal is asked to decide: (i) on preliminary issues of procedure (such as
those on jurisdiction, arbitrability, standing of the parties, admissibility of the
claims), (ii) on one or more discrete claims out of those submitted to arbitration and
(iii) on preliminary issues relating to the merits (such as issues of liability versus
issues of quantum, and vice versa 21 ; criteria for the determination of the quantum
or of the relevant valuation date; type of recoverable damages versus calculation of
the same; controversial facts which are key to the dispute).
The risk with bifurcation in all these cases is threefold.
First, the subject matter of earlier determination by the arbitral tribunal may be
strictly intermingled with other matters whose decision is left to the further course
of the proceedings and such connection may appear with all its implications only
afterwards, i.e. when the arbitral tribunal has already decided. 22 This may result in
the arbitral tribunal missing important links between the different elements that
give rise to the dispute, or even may cause some of the claims or counterclaims to
remain undecided.
Second, it may be that the matter to be determined earlier requires an intensive
fact-finding exercise so that the arbitral tribunal either is forced to deliberate after
having carried out a full evidentiary phase (what may deprive bifurcation of its
efficiency function), or takes its decision when the matter is not yet ripe for being
deliberated.

This is a settlement proposal made during the arbitral proceedings 'without prejudice save as to costs', which
means that if the award condemns the proposing party to pay an amount lower than that offered, the
counterparty who refused the proposal must reimburse all costs thereafter incurred by the proposing party in
the conduction of the arbitration: cf. Calderbank v. Calierbank, [1975] 3 ALL ER 333.
In fact, the sealed offer mechanism can properly work only if it does not influence the determinations of the
arbitral tribunal, who has then to be informed about the content of the settlement proposal only after its
decision on the merits of the dispute has been taken: cf. P. ANJOMSHOAA, Costs awards in international arbitration and
the use of 'sealed offers' to limit liability for costs, 38 Int'l Arb. L. Rev.(2007).
A 'reverse bifurcation', whereby the arbitral tribunal determines whether a damage has occurred prior than
determining whether there is any liability for indemnification, may be considered in situations where the
claimant seems unable to prove the alleged damages and the arbitral tribunal is not entitled under applicable
law to grant relief on equitable grounds.
Cf. E. GAILLARD,J. SAVAGE, Bouchard Gaillard Goldman on International Commercial Arbitration, supra n. 1, 743.
500 Arbitration International, Volume 29 Issue 3

Third, if the bifurcation has been resolved for the purpose of deciding on an
issue which can be dispositive of the whole arbitration or conclusive as to the
denial of a certain relief, time and costs of the proceedings will increase, rather
than decrease, if the arbitral tribunal finds against the relevant defence and the
arbitration continues. 23
This means that in all these cases the arbitral tribunal will have to assess to what
extent the matter to be decided can be considered in isolation from other matters,
if it requires extensive gathering of evidence and what forecasts can be made as to
the outcome of the decision.

IV. D I F F E R E N T F O R M S O F D E C I S I O N S E N D I N G A
BIFURCATED PHASE
It seems possible to single out six different categories of matters which may be
subject to early determination by an arbitral tribunal and to which different forms
of decisions typically correspond.
Indeed, one can distinguish between: (i) decisions which settle the whole dispute
submitted to arbitration, by granting or denying the relief requested or by finding
in favour of a procedural or substantive defence which is dispositive of the case 24 ;
(ii) decisions which settle one (or more) of the multiple claims or counterclaims referred to
arbitration; (iii) decisions on issues2-'relating to the interpretation or application of the
arbitration agreement (e.g., the determination of the seat of the arbitration, the law
applicable to the merits and/or to the procedure, the language of the proceedings,
the subjective and objective scope of the agreement, the possibility of joinders or
consolidations)26; (iv) decisions on other issues of law and/or of fact which are
preliminary to the adjudication on the merits'2-1; (v) decisions on interim measures; and (vi)

For an empirical analysis of the ICSID case law supporting the view that in the average bifurcation does not
limit the duration of the dispute, cf. L. GREENWOOD, Does Bifurcation Really Promote Efficiency?, supra n. 1, at 106.
For the consideration that in the context of investment treaty arbitrations jurisdictional objections normally
cause considerable delays to the proceedings cf. P. BERNARDINI, ICSID Versus Non-ICSID Investment Treaty
Arbitration, in M.A. FERNANDEZ-BALLESTEROS, D. ARIAS (ed.), Liber Amicorum Bernardo Cremades, supra n. 14, 171.
E.g., this may happen when defences are raised on grounds of lack of jurisdiction, standing or admissibility,
expiration of statutes of limitation, nullity of the contract in dispute, contractual limitations of liability,
set-offs, res judicata.
Admittedly, the distinction between issues and claims is not an easy one: cf. with respect to the English
common law doctrine of estoppel, P. BARNETT, Res Judicata, Estoppel and Foreign Judgments, 87 ff. and 134 If.
(Oxford, 2001).
These issues may also be characterized as procedural, but obviously have a different nature from issues
relating to the mere organization of the proceedings or the collection of evidence since they pertain to the
very 'foundations' of a given arbitration. Moreover, to the extent that they relate to the interpretation or
application of a contract, the arbitration agreement, they could also be deemed as merits issues and be the
subject of an autonomous claim or counterclaim: indeed, the parties may have an interest in obtaining a res
judicata decision about the meaning of their agreement to arbitrate since such decision could become
relevant in connection with other disputes that may arise in the future under the same contractual
relationship.
Of course, these issues could become a claim or a counterclaim too, should a party seek a decision with res
judicata effects and should the lex arbitri allow for declaratory judgments.
 To Bifurcate or Not To Bifurcate? 501

decisions on matters relating to the organization of the proceedings (including the

collection of evidence).
At risk of being too generic, it seems fair to say that under most arbitration laws,
and consistendy with what happens in the practice of arbitral tribunals: (a)
decisions sub (i) will be taken through a final award; (b) decisions sub (ii), as well as
decisions which reject a defence which could have been dispositive of the case, 28
will be taken through partial or interim awards; (c) decisions sub (iii) and (iv) would
most likely be taken through partial or interim awards, but recourse to procedural
orders cannot be excluded; (d) decisions sub (v) may be taken either through partial
or interim awards or through procedural orders; and (e) decisions sub (vi) will
normally 29 be taken through procedural orders.
As mentioned, the form of the decision through which the arbitral tribunal
resolves earlier on a discrete matter may trigger different and important effects.
The assessment of which such form is, and what it implies under the applicable lex
arbitri, appears then as a prior analytical step which is advisable be taken before
choosing whether or not to bifurcate the proceedings.

V. D I F F E R E N T I N T E R E S T S W H I C H M A Y BE A F F E C T E D
BY B I F U R C A T I O N
Traditionally, bifurcation has been justified on the ground of'procedural economy',
i.e. as a measure which may avoid useless procedural acts and so lead to a quicker
and less costly setdement of the dispute. 30 This argument appears on its face
unchallengeable: should bifurcation really achieve this result, its benefits for all the
entities involved in the proceedings should be an a priori, it being difficult to
conceive any legitimate 31 interest which could be negatively affected by the split of
the proceedings.
The problem with this approach, however, is that, in many (but not all32)
instances whether or not bifurcation can really play as an efficiency factor will be
assessable only ex post since it will depend on the content of the decision taken by
the arbitral tribunal at the end of the bifurcated first phase. Indeed, if bifurcation
has been devised for the purpose of addressing a defence which could dispose of
the entire dispute and the defence is rejected by the arbitral tribunal, then

Cf. N. BLACKABY, C. PARTASIDES, A. REDFERN, M. HUNTER, Redfern and Hunter on International Arbitration, supra n. 1,
353.
There is US case law holding that orders for discovery can be characterized as awards: cf. Publicis Comm. v.
True North Comm., Inc., 206 F.3d 725 (7th Circuit 2000).
Cf. the 2007 Report of the I C C Commission on Arbitration on Techniques for Controlling Time and Costs in
Arbitration, § 4 1 , and Appendix IV of the I C C Rules of Arbitration (2012 ed.).
Professionals involved in the arbitration may have an opposite interest to prolong the proceedings if their
remuneration is based on the time spent, while parties may use bifurcation as a mere dilatory tactic: of
course, these are not interests worth of protection.
As indicated above, bifurcation seems to be an unavoidable step when the subject to be early determined by
the arbitral tribunal is one which relates to the 'foundations' of the arbitration, or is an interim measure to be
granted urgently, or is the final decisions on the merits prior to the allocation of the costs in the context of a
'sealed offer' mechanism.
502 Arbitration International, Volume 29 Issue 3

bifurcation will produce the opposite result of increasing the time and costs of the
proceedings.
On the other hand, as already mentioned, the efficiency argument is also
somewhat simplistic to the extent that the 'value' of resorting to this procedural
technique (and consequently the legitimacy of the additional time and costs that it
may sometimes entail) may be differently appreciated by reference to different sets
of interests which can be directly or indirectly affected by it.
Starting with the interests of the parties in dispute, various scenarios could be
considered.
First, an earlier decision on a discrete monetary claim, i.e. on a claim the merits
of which can be assessed in isolation from other claims or counterclaims filed in the
same arbitration, could help a party in financial distress (if the claim is awarded,
but also if the claim is denied, to the extent that this may bring an element of
certainty in connection with restructuring plans that the party may be discussing
with its creditors). Of course, the relevant counterparty could resist to bifurcation
on the ground that the earlier decision (if taken by a partial, and enforceable,
award) would deprive it of set-off defences that could be available if the arbitral
tribunal finds later on in favour of its counterclaims. But there may be situations in
which no such counterclaims exist, or in which, even if they exist, the arbitral
tribunal does not consider the relevant risk substantive enough to counter the
claimant's request to bifurcate.
Second, an earlier decision on jurisdiction may be essential for a party with
respect to parallel or connected actions that it may be entitled to bring before State
courts. This is the case, e.g., under 'fork-in-the-road' provisions contained in
various investment treaties, according to which the filing of the claim before the
courts of the State hosting the investment precludes the filing of the same claim
before an arbitral tribunal, and vice versa. 33 Quite often, challenges to measures
enacted by a State to the detriment of the foreign investors can be brought before
State administrative courts only within strict deadlines, so that the investor may
risk a denial of justice if it decides to resort to international arbitration and an
award declining the arbitral tribunal's jurisdiction is rendered after such domestic
law deadlines have already expired. This risk is particularly sensitive given the
uncertain status of the case law as to meaning of'same claim' in the context of the
application of'fork-in-the-road' provisions. 34

Cf., e.g., Energy Charter Treaty, Art. 26(3){b).

Compare the restrictive interpretation followed by the arbitral tribunals in Eudoro A. Olguin v. Paraguay,
Decision on Jurisdiction, 8 Aug. 2008, 18 ICSID Rev. 133 (2003), Compania de Aguas Jrl Aconquija SA. &
Compagnie Generate des Eaux (Vivendi) v. Argentina, Award, 21 Nov. 2000, 40 I.L.M. 426 (2001), A. Genin, Eastern
Credit Ltd, Inc. and A.S. Baltoil v. Estonia, Award, 25 Jun. 2001, 17 ICSID Rev. 395 (2002), R.S. Lauder v. Czech
Republic, Final Award, 3 Sep. 2001, available at www.mfcr.cz/Arbitraz/en/FinalAward.doc, Middle East
Cement Shipping and handling Co. SA. v. Egypt, Award, 12 Apr. 2002, available at www.worldbank.org/icsid/
cases/me_cement-award.pdf, CMS Gas Transmission Co. v. Argentina, Decision on Jurisdiction, 17 Jul. 2003, 42
I.L.M. 788 (2003), Azurix v. Argentina, Decision on Jurisdiction, 8 Dec. 2003, available at www.asil.org/ilib/
azurix.pdf, Enron Corp. and Ponderosa Assets, LP. v. Argentina, Decision on Jurisdiction, 14 Jan. 2004, available at
www.asil.org/ilib/Enron.pdf, with the wider notion of 'same claim' adopted in Compania de AguasJrl Aconquija
SA. & Compagnie Generate des Eaux (Vivendi) v. Argentina, Decision on Annulment, 3 Jul. 2002, 41 I.L.M. 1135
 To Bifurcate or Not To Bifurcate? 503

Third, in multi-party arbitrations a party alleging that another party is not

bound by the arbitration agreement may have an interest in having this issue
decided from the very outset, rather than through the final award, so as to avoid
that by participating to the arbitral proceedings such other party gains access to
confidential information.
Fourth, an earlier decision on a discrete issue (e.g., validity of a clause providing
for a limitation of liability, type of recoverable damages, etc.) may be relevant in
the context of setdement negotiations that the parties may carry out in parallel to
the arbitral proceedings.
Fifth, an earlier decision on a specific aspect of a dispute (e.g., on alleged
shortcomings of a technical device, on ownership of an item of intellectual
property) could be relevant with respect to business relationships that a party may
entertain with third parties not involved in the arbitration, or more generally for
safeguarding such party's reputation on the market in which it is active.
Finally, defence tactics may justify an earlier trial of certain discrete issues or
claims. For instance, a party may find this convenient when it believes that the
counterparty has not yet completed the collection of the evidence necessary to
support its case and under applicable law the interim or partial award may become
res judicata and therefore may preclude a re-assessment by the arbitral tribunal of
the issues already decided. Moreover, a party may be confident that the decision on
the discrete issue or claim will be in its favour, and that this 'victory', though partial,
may strengthen its position in the dispute by influencing the arbitral tribunal
and/or its counterparty.
A decision to bifurcate the proceedings may also affect the arbitrators' own
interests. For instance, arbitrators may have an interest in respecting the
mandatory deadline set out by the applicable lex arbitri or institutional rules for the
deposit of the award, if an extension is not likely to be granted by the parties or by
the competent institution and the breach of the deadline exposes the arbitrators to
liability for damages. The arbitrators may also have a personal interest in having
the proceedings handled efficiently, since this may contribute to their reputation
and allow them to better manage their professional agenda. These interests are
legitimate and not necessarily second to those of the parties. This means also that
in special circumstances, and unless the applicable lex arbitri or institutional rules
provide for the contrary, the arbitral tribunal will be entitled to decide on
bifurcation disregarding a common position taken by counsel to both parties, be it
in favor or against the split of the proceedings.
Also the States whose laws are involved in a given arbitration - be it the State of
the seat, the State to the procedural law of which the parties have referred to in the
arbitration agreement, the State which is competent to hear set aside actions, the
State where the award may be recognized and enforced - may have their own
interests in regulating bifurcation. While it is quite rare for the laws of arbitration

(2002) and Pantechniki S.A. Contractors & Engineers v. Albania, Award, 29 Jul. 2009, available at h t t p : / /
ita.law.uvic.ca/documents/PantechnikiAward.pdf. Cf. also C. SCHREUER, Travelling the Bit Route - Of Waiting
Periods, Umbrella Clauses and Forks in the Road, 5 J. World Int. Trade 231 (2004).
504 Arbitration International, Volume 29 Issue 3

to provide specific rules on the power of the arbitral tribunal to bifurcate the
proceedings, 35 the effects of bifurcation may be regulated as regards (i) the right to
appeal the partial or interim decision, (ii) the res judicata effects of the decision and
(iii) the grounds for setting aside the award or for refusing its recognition.
In this last respect it should be noted that the risks are many and diverse. The
early determination of a disputed matter may lead to a breach of due process if it
results in compressing a party's right to fully prove its case. 36 Moreover, the
breaking-out of issues which the parties have addressed in their memorials in a
unitary way, if not properly carried out by the arbitral tribunal may lead to some
of the claims not being fully addressed in neither of the awards, so that the arbitral
tribunal decides infra petita. Moreover, the final award may contain statements
which are at odds with the contents of partial or interim awards rendered in prior
phases of the proceedings, and such inconsistency may be taken as evidence of a
lack of a rational motivation (this being in certain legal systems a ground per se for
challenging the award 37 ) or as a breach of res judicata (which in certain legal
systems is a principle of international public policy38).
Finally, under the applicable lex arbitri or institutional rules 39 bifurcation may
indirectly impact on the allocation of the costs of the arbitration, in the sense that
the party whose claims or defences prompted the need to split the proceedings at

But cf. Arts 186(3) and 188, Swiss Private International Law Act (whereby, in general, the arbitral tribunal
shall rule on its jurisdiction by means of an interlocutory decision and is entitled to make partial awards),
Sections 32 and 47, English 1996 Arbitration Act (allowing the determination by the arbitral tribunal of a
preliminary issue ofjurisdiction by way of an award and contemplating 'awards on different issues'), Art. 816
bis (3), Italian code of civil procedure (whereby all the issues which arise during the arbitral proceedings are
decided by the arbitral tribunal by way of a revocable procedural order or, alternatively, through an interim
award). Cf. also American Arbitration Association, International Rules of Arbitration, Art. 16(3) (granting to
the arbitral tribunal the power to 'bifurcate proceedings') and UNCITRAL Model Law, Art. 16(3) (whereby
the arbitral tribunal may rule on a plea of lack of jurisdiction either as a preliminary question or through an
award on the merits, provided that: (a) if it rules as a preliminary question that it has jurisdiction, a party may
request the court of the State of the seat to decide the matter by way of a decision not subject to appeal, and
(b) pending such judicial proceedings, the arbitral proceedings may continue and the arbitral tribunal can
make an award). As to investment treaty arbitrations, bifurcation is expressly contemplated in the ICSID
regime: while Art. 41 of the ICSID Arbitration Rules in force till 2006 provided that proceedings on the
merits had to be automatically suspended if the respondent State had raised an objection to jurisdiction until
the tribunal either ruled on the objection or ordered it to be joined to the merits, after the 2006 Amendments
Art. 41(2) of the ICSID Convention and Art. 41(4) of the ICSID Arbitration Rules leave to the arbitral
tribunal the discretion to decide on how to proceed in such a case, while Art. 41 (5) of the ICSID Arbitration
Rules regulates the issuance of preliminary decisions on claims which are 'manifestly without legal merit'.
Cf. T.H. WEBSTER, Efficiency in Investment Arbitration, cit. n. 1, at 471. It should be noted that commentators give
often for granted that the early decision should not be preceded by an extensive/full evidentiary trial, which
however is not a necessary implication of the bifurcation.
Cf, e.g., Arts 829(1)(5) and 823(2)(5), Italian code of civil procedure.
For example, in Switzerland (cf. Swiss Federal Tribunal, 20 Sep. 2000, Republik Polen v. Soar Papier, in ASA
Bull., 2000, 478) and in Spain (cf. Court of Appeal of Barcelona, 1 Sep. 2009, Win Petrol v. Total Espana, in
Paris Journal ofInternational Arbitration, 2010, 538). Cf. also T.D. BAER, Injunctions against the Prosecution ofLitigation
broad Towards a Transnational Approach, 37 Stanf. L. Rev. 155 (1984-1985), at 168 (arguing that public policy
commands US courts not to enforce a foreign judgment which contradicts a prior domestic judgment
between the same parties on the same cause of action).
Provisions of this kind may be also contained in institutional rules: cf. Art. 37(5) of the ICC Arbitration Rules,
which for such purpose requires the arbitral tribunal to consider whether the parties have conducted the
arbitration in an expedite and efficient manner.
 To Bifurcate or Not To Bifurcate? 505

the end may be charged with the additional costs which result from the bifurcated
phase, should the relevant claims or defences which have been the subject of
earlier determination be rejected. This 'sanction' for having caused an inefficiency
to the proceedings could be applied in general, or only when the arbitral tribunal
finds that the party acted in bad faith for mere dilatory reasons, and may be a good
deterrent to avoid bifurcation when it is not really necessary.

VI. T H E NEED F O R A FLEXIBLE AND BALANCED

APPROACH
Most arbitration laws and institutional rules grant to the arbitral tribunal the
power to organize the arbitration as it deems proper in view of a fair and efficient
handling of the proceedings. Even where not expressly mentioned, the power to
split the proceedings in different phases, each finalized to the rendering of a
decision on a discrete matter, may be considered 'inherent' to the judicial function
performed by the arbitral tribunal. 40
Of course, parties may limit such power, by expressly contemplating, or to the
opposite prohibiting, bifurcation, be it in the arbitration agreement or in other acts
which precede the acceptance by the arbitrators of their mandate. 41 Thereafter,
the arbitral tribunal will not be necessarily bound by the position that the parties,
or their counsel, may share on the issue of bifurcation. The deference that the
arbitral tribunal has normally to pay to the will of the parties, given that its powers
derive from the parties' agreement to arbitrate, does not exclude that, in special
circumstances, the arbitral tribunal may refuse to adopt a rule of procedure
devised by the parties. This is true, in particular, if such rule is at odds with the
function that the arbitral tribunal has to perform pursuant to the mandate received
(e.g., because the suggested rule contradicts mandatory provisions of the lex arbitri
and may put at risk the validity of the award) or with legitimate interests of the
arbitrators in carrying out their activity (e.g., because the suggested rule would
certainly cause inefficiencies to the proceedings or jeopardize the deposit of the
award within the applicable deadline). 42
Then, in deciding whether or not to bifurcate proceedings, the arbitral tribunal
will normally enjoy a quite wide margin of discretion.

Contra, an old Swiss decision (mentioned in A J. VAN DEN BERG, Why Are Some Awards Mot Enforceable? in A J. VAN
DEN BERG (ed.), New Horizons in International Commercial Arbitration and Beyond, I C C A Congress Series, Vol. 12,
2005,291 ff., which refers to Court of Appeal of Basel, 6 Sep. 1968, Swiss Corporation XAG, buyer v. German Firm
T, seller) where an award rendered at the end of bifurcated proceedings was set aside on the ground, inter alia,
that the applicable arbitration rules did not expressly contemplate such procedural technique.
For a case in which an award was annulled on the ground that the arbitral tribunal had disregarded a
provision of the terms of reference which contemplated separate decisions on jurisdiction and merits cf Com
d'appel of Paris, 19 Dec. 1986, O.LA.E.T.I. v. SOFIDIF, in Rev. arb., 1987, 359, with a comment by E. GAILLARD,
Vaffaire SOFIDIF ou les difficulties de ['arbitrage multipartie (apropos de Varret rendu par la Com d'appel de Paris le 19
dkembre 1986), ibid., at 275.
This is reflected in those arbitration laws which recognize the right of the parties to determine the rules
applicable to the procedure but only until the time in which the arbitral tribunal has been constituted: cf. Art.
816 bis of the Italian code of civil procedure.
506 Arbitration International, Volume 29 Issue 3

This is consistent with the flexibility required, in general, in managing arbitral

proceedings. Flexibility, however, should not mean arbitrariness and criteria
should be devised in order to enhance both the legitimacy of the arbitral tribunal's
decision and the predictability of the proceedings.
Indeed, the analysis carried out in the preceding paragraphs shows that
bifurcation may or may not be a proper tool depending on the circumstances.
In order to make a rational (and reasoned) choice on whether or not to split the
proceedings, one might suggest that the arbitral tribunal should follow an
approach which identifies and balances all the different effects that may result.
This means that the arbitral tribunal will have first to determine: (i) which is the
disputed matter on which a separate decision is sought; (ii) the form in which the early
decision will have to be given under the applicable laws or arbitration rules and (iii)
the different interests affected by making recourse to this procedural device. On the
basis of all these elements, the arbitral tribunal will then have to assess the possible
effects of bifurcation in the specific case which is pending before it.
This may require a prima facie evaluation of factors such as the seriousness/
frivolousness of the parties' respective arguments on the issue to be determined
earlier, whether bifurcation can help the parties in reaching a settlement, whether
the bifurcated phase would reduce or increase the time and costs of the
proceedings (what may in turn depend on the number and type of legal or factual
issues to be addressed, the amount of documentary or witness evidence required,
the need for hearings and memorials), whether bifurcation satisfies a legitimate
interest of one party which is not countered by an equally legitimate interest of the
other party.
Moreover, and in any event, the arbitral tribunal will have to determine: (a)
whether the decision must be taken in form of a final award, partial or interim
award, or procedural order; (b) whether the decision can be challenged before the
final award is given, thereby giving rise to parallel court proceedings, and if such
proceedings may interfere with the remainder of the arbitration, e.g. by triggering
its suspension; (c) whether and to what extent the decision binds the arbitral
tribunal in the next phases of the arbitration and which res judicata effects the
decision may produce in other arbitral or judicial proceedings; (d) whether the
bifurcation may directly or indirectly affect the validity and the enforceability of
the award by providing for additional grounds on which set aside actions or
challenges to its recognition and enforcement may be based. Such analysis will
have to be conducted by reference to the applicable lex arbitri, but also to any other
arbitration laws or rules that could be of relevance, also in view of the jurisdictions
in which a party may have an actual interest to have the partial or interim award
and/or the final award recognized and enforced.