‘Procedural Order No. 2 …

...........

I. Procedural Background

1. The Tribunal issued Procedural Order No. 1 ... ("PO1"), which set out two alternative procedural timetables, one envisaging the potential future bifurcation of the proceedings ("Track 2"), and the other envisaging no such bifurcation ("Track 1").

2. Paragraphs 1 and 2 of PO1 provide for the following timetable for the preliminary proceedings in this case:

- Claimant’s Statement of Claim (dealing with issues of jurisdiction, merits and quantum), together with witness statements, expert reports (if any) and supporting documentation: [within six weeks of PO1].

- Respondent’s Request for bifurcation of the proceedings on the issue of jurisdiction: [within the following two weeks].

3. The Claimant filed its Statement of Claim ... ("Statement of Claim").

4. ... the Respondent filed a Request for Bifurcation, in accordance with paragraph 2 of PO1. The Request set forth two objections to jurisdiction and sought bifurcation so each of these issues could be addressed as a preliminary question, prior to proceeding to any examination of the merits ("Request").

5. ... the Claimant responded to the Request arguing that, pursuant to paragraph 2 of PO1, "Respondent’s Application fell significantly short of the requirement to give reasons for its request to bifurcate the proceedings" ("Response to Request") ...

6. ... the Respondent filed further observations on the Request highlighting that it was not required at this stage to set out detailed arguments and evidence challenging the Tribunal’s jurisdiction. It stated that the Request was simply filed to confirm and provide reasons for its renewed application for bifurcation pursuant to PO1.

7. This Procedural Order No. 2 addresses the Respondent’s aforementioned Request ...

II. Position of the Parties

8. The Parties’ positions may be summarized as follows:

A. The Respondent’s position

9. First, the Respondent submits, that "there is a well-established practice in international arbitration of resolving challenges to jurisdiction on a preliminary basis"?

10. Second, the Respondent considers that, if the tribunal was to decline jurisdiction on a preliminary basis, there would be "potentially a significant saving of time, cast and effort" ...

11. Third, the Respondent emphasizes that the consensual nature of arbitration requires the Tribunal to answer first the question as to whether a respondent has agreed to jurisdiction before the latter is required to participate in a merits phase ...

12. The Respondent adds that in the present case, issues of jurisdiction and issues of merits can be separated and that the Tribunal is not bound to consider them together ...

13. To support its bifurcation request, the Respondent flags two separate jurisdictional objections. The first jurisdictional objection is that the correct party to this arbitration is [X] as opposed to the Respondent ... The Respondent argues that the fact that it is not a signatory to any of the arbitration agreements clearly raises a strong prima facie case against jurisdiction ...

14. The Respondent contends that the arguments relating to this first jurisdictional objection are all entirely separate from the issues of performance, breach and damages and that the evidence relied upon to support them is very limited …

15. The Respondent’s second jurisdictional objection is that some of the claims are "matters which specifically involve the Mark and so are expressly excluded from the arbitration agreements under article 14 of the Franchise Development Agreement and article 26 of the Franchise Outlet Agreements" ...

16. The Respondent underlines that this second jurisdictional objection simply requires the Tribunal to interpret the wording of the arbitration agreements without considering the merits of those claims …

17. As such, the Respondent considers these two objections to be separate from the factual merits of this case. Accordingly, it argues these objections warrant bifurcation.

B. The Claimant’s position

18. On the Claimant s analysis, the Respondent’s Request lacks sufficient reasoning and well­founded objections to warrant a preliminary hearing on jurisdiction …

19. Additionally, the Claimant maintains that Respondent’s jurisdictional objections are closely related to substantive issues in dispute that need to be addressed to make a final determination on the Respondent’s objections to jurisdiction. These issues are notably relating to the performance of the Franchise Agreements, in particular the degree of the Respondent’s involvement therein …

20. Therefore, the Claimant argues that bifurcating the proceedings would unduly delay the arbitral process and excessively increase the related costs.

III. Analysis

21. The Tribunal has carefully considered both Parties’ submissions on the specific question of bifurcation. It recognizes that there are weighty arguments on each side.

22. The Tribunal does not agree with the Claimant that the Request fell short of the requirements set out in PO1 to state reasons for the Respondent’s bifurcation application. The Tribunal, therefore, considers that it has sufficient material before it to determine the bifurcation application.

23. The Tribunal agrees with the Respondent that it is not bound to consider issues of jurisdiction and issues of merits together ... but additionally states that it is equally not bound to consider them separately. To that effect, the Tribunal does not agree with the Respondent that there is an overarching well-established practice in international arbitration of resolving challenges to jurisdiction on a preliminary basis. Each case ought to be considered on its factual matrix and specificities to consider the appropriateness of bifurcating jurisdiction and merits.

24. That said, the decision to bifurcate the proceedings requires consideration of whether the particular jurisdictional objections presented are sufficiently discrete from the factual and legal issues relating to the merits so that those objections may be resolved expeditiously as a preliminary question, without the parties being put to the burden and expense of potentially duplicative submissions.

25. In addition, the Tribunal notes that the Parties appear to be in dispute on a number of issues, amongst which is the determination of the law and/or rules of law governing the issue of jurisdiction. These rules may likely give rise to a different range of factual inquiries.

26. In this case, the Tribunal is of the view that the issue of jurisdiction would likely require detailed examination of the same type of evidence that would need to be examined later, should the claims continue to the next phase.

27. Furthermore, the Tribunal takes the view that while the fairness of the proceedings is of paramount concern, cost and efficiency are also important considerations; and it has sought to assess on the basis of the existing pleadings the possible benefits that might result in the present case from a successful jurisdictional challenge and the possible costs and delays that might result from an unsuccessful jurisdictional challenge.

28. In this respect, the Tribunal believes that the non-bifurcation Track 1 Procedural Timetable set forth in paragraphs 3, 4, 5, 6, 7 and 8 of PO1 will allow the Tribunal to proceed expeditiously and efficiently. By contrast, bifurcation could extend the dispute significantly if the Respondent failed in its objections, in whole or in part. Therefore, bifurcation would not likely lead to a material saving of time, effort, or costs for the Parties, while the non­bifurcation proceedings would likely not cause any undue prejudice to the Respondent.

IV. Decision

29. In light of the above, the Tribunal decides as follows:

i) The Request for Bifurcation is denied and the Tribunal decides to join the issue of jurisdiction to the merits of this case. For the avoidance of doubt, no inference of any kind should be taken as to the Tribunal’s view of the merits of the jurisdictional objections and this remains to be decided together with the merits of this case.

ii) The Track 1 Procedural Timetable provided for in paragraphs 3, 4, 5, 6, 7 and 8 of PO1 ... shall apply in this arbitration.

iii) The Parties shall, therefore, continue as provided for in the Track 1 Procedural Timetable to set out their full cases, on the merits and jurisdiction, in accordance with the specific rules of law applicable to each of these issues.’