Summary

Source: icsid.worldbank.org

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8. On 7 January 2026 Respondent submitted its Request for Bifurcation [the "Request"], asking the Tribunal to hear and decide certain preliminary objections on jurisdiction as a separate, preliminary phase, prior to the merits.

9. On 18 February 2026 Claimants filed their Observations on Respondent's Request [the "Observations"], opposing the Request in its entirety.

10. In view of the above, the Tribunal issues the following Procedural Order No. 6, with its decision on Respondent's Request.

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4. TRIBUNAL'S ANALYSIS

22. The Tribunal will first confirm the relevant criteria to bifurcate the proceedings, on

which the Parties largely agree (A.). Then, the Tribunal will apply such criteria and conclude that the Objections do not warrant bifurcation (B.).

A. Standard for bifurcation

23. One of the major improvements introduced by the 2022 version of the ICSID Rules is that they now provide extensive guidance to arbitral tribunals and parties on bifurcation. Particularly relevant to this decision, ICSID Rule 44(2) identifies certain circumstances that tribunals must consider when determining whether to bifurcate the proceedings in order to address preliminary objections first. These circumstances are the following:

"(a) bifurcation would materially reduce the time and cost of the proceeding;

(b) determination of the preliminary objection would dispose of all or a substantial portion of the dispute; and

(c) the preliminary objection and the merits are so intertwined as to make bifurcation impractical"15.

24. Both Parties agree on the standard set out in ICSID Rules 42(4) and 44(2), which reflects the long-standing practice of ICSID tribunals. The only disagreement concerning this standard relates to two criteria that may affect its implementation16; however, in light of the Tribunal's conclusions below, this disagreement is not material to the Tribunal's decision.

B. Application of the relevant criteria

25. The Tribunal finds that the Objections - considered both individually and collectively - do not merit bifurcation.

a. Objection 1

26. In Objection 1, Respondent invokes its essential security interest under Article 21(2)(b) of DR-CAFTA, arguing that this principle deprives the Tribunal of jurisdiction over the entirety of the claims.

27. Without any prejudgment, the Tribunal tends to agree, prima facie and subject to hearing the Parties more fully on this issue in due course, with Claimants' contention that this is not a matter of jurisdiction, but rather of merits. It is therefore doubtful whether this Objection qualifies as a "preliminary objection" within the meaning given in ICSID Rule 4317, and, accordingly, whether it may be bifurcated at this stage pursuant to ICSID Rule 44, as invoked by Respondent.

28. More importantly, the Tribunal notes that, as pointed out by Claimants:

- Objection 1 might not dispose of Claimants' claims under the LSA; in fact, Respondent makes no reference to the LSA claims in its preliminary description of this Objection; and,

- in any event, the question of whether Honduras' essential security interests are affected will likely require an in-depth analysis of the merits of the case.

29. Accordingly, Objection 1 does not warrant bifurcation.

b. Objection 2

30. In Objection 2, Respondent argues that Próspera ZEDE was not established in accordance with the ZEDE Legal Framework and that the investors do not have an investment in accordance with Honduran law.

31. Respondent submits that this Objection involves only a legal analysis of whether Próspera ZEDE was established in accordance with the applicable legal framework.

32. The Tribunal is not persuaded that such analysis can be isolated from other questions going to the very merits of the dispute, such as the requirements for the establishment of a ZEDE and the relevance of Honduras' conduct at the material time. As Respondent itself concedes, "the analysis of the Respondent's objections may, in certain cases, require the review of some facts"18; this appears to be one such case, and the facts that may be relevant to the assessment of this Objection do not appear to differ significantly from those that will also be relevant to the merits of the case.

33. Since this Objection seems to be intertwined with the merits of the case, bifurcation would be impractical.

c. Objections 3 to 6

34. Respondent acknowledges that Objections 3 to 6 would not dispose of all of Claimants' claims. Therefore, even if the Tribunal were to uphold these Objections in a bifurcated phase, the remainder of Claimants' claims would still need to be addressed in a merits phase. There would therefore be no meaningful efficiency gain in bifurcating the proceedings.

d. An additional argument applicable to all Objections

35. A further argument of efficiency and justice also weighs against bifurcation. As noted above, this case has been ongoing for three years. Respondent already submitted a Preliminary Objection under Article 10.20.5 of DR-CAFTA, which the Tribunal rejected. Respondent now reserves its right "to raise additional jurisdictional objections in the future"19, as it is indeed entitled to do.

36. This background, together with Respondent's reservation of rights, does not support Respondent's contention that bifurcating would favour efficiency. In fact, if bifurcation were granted, the Parties and the Tribunal could face an unduly lengthy proceeding involving an unreasonable number of phases, namely:

- Procedure on the Preliminary Objection under Article 10.20.5 of DR-CAFTA
- Tribunal's decision on the Preliminary Objection (dismissing them)
- Procedure on bifurcated Objections
- Tribunal's decision on bifurcated Objections (which would not dispose of the totality of the claims)
- Procedure on the merits and, potentially, on new jurisdictional objections submitted by Respondent
- Decision on the merits and on any new jurisdictional objection.

37. A proceeding of this nature would be inefficient and would undermine the deeper purpose of investment arbitration. Justice delayed is justice denied, regardless of the ultimate outcome of the proceedings.

C. Decision

38. In view of the above, the Tribunal rejects Respondent's Request for bifurcation.

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39. The arbitration shall continue in accordance with Scenario 3 of the Procedural

Timetable, unless the Parties agree otherwise. The Tribunal will instruct the Parties separately regarding the conditions for any modification of the Procedural Timetable.

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Footnotes omitted