Summary

Source: icsid.worldbank.org

THE RESPONDENT'S SUBMISSIONS ON THE CLAIMANT'S REQUEST FOR BIFURCATION OF LIABILITY AND DAMAGES

1. The Claimant has requested, pursuant to ICSID Arbitration Rule 42, that the question of damages be bifurcated and addressed in a separate phase of the proceeding: see paragraph 27.1 of draft Procedural Order No 1.

2. The Respondent resists the Claimant's request for bifurcation.

3. The Respondent's submissions are set out in the following sections:

I. Law on bifurcation
II. Summary of Respondent's case on bifurcation
III. Liability issues are "intertwined" with damages issues
IV. Bifurcation should not be allowed to mask a weak damages claim
V. Resolution of damages issues should not involve very substantial evidence or extensive documentation
VI. Respondent's non-bifurcated preliminary objections will require investigation of Claimant's damages claim in any event
VII. Conclusion

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VII. Conclusion

132. In consequence of the above, the Respondent contends that the Claimant's request that liability and damages be bifurcated should be declined.

133. The Respondent will not summarise the various matters raised above which, it is submitted, plainly point against bifurcation but will instead limit itself to making the following short points.

134. First, in light of the Respondent's substantive defences on questions of liability referred to above, the Respondent contends that given the intertwining of liability and quantum issues, it is impossible (or "impractical": Arbitration Rule 42(4)(c)) to try the liability and damages phases separately.

135. Secondly, fairness demands that the Respondent be allowed to present its defence fully and freely in the way it wishes. It would be against procedural fairness for the Respondent to be shut out from mounting its defence on the question of liability in the manner it wishes (RWE v Netherlands §§50-51).

Here, the Respondent's defence will necessarily raise the issue of damages, being the true amount of the contractual debt.

136. Thirdly, pursuant to Arbitration Rule 42(4)(a), it is plainly not the case that the bifurcation sought would materially reduce the time and cost of the proceeding.

137. It is clear from the above that the amount of the contractual debt at the very least obviously constitutes a closely linked fact between the phases of liability and quantum for all of the alleged breaches of the Treaty. This of itself is sufficient for the Tribunal to decline the Claimant's request for bifurcation (see Gavrilovi v Croatia §76).

138. Fourthly, regarding Rule 42(4)(a) and (b), as stated above, bifurcation puts the Claimant in the counterintuitive position of showing that it would not succeed on the question of liability, so that the dispute would be disposed of without advancing to the consideration of damages. By contrast with the present position, the bifurcation of liability and damages is normally sought by the respondent State, not the investor. In any event, this is a distinctively inappropriate case for there to be bifurcation, for all the reasons stated above.

Dated the 10th day of April 2024.

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