‘Procedural Order No. 2

………

Whereas

1. ... the Respondents filed a motion for bifurcated arbitration (the "Motion") to determine, in a first stage, whether the Claimant had subrogated rights against the Respondents and, in a second stage, if necessary, liability and quantum derived from the Respondents’ alleged "basic design defects" or "faulty maintenance practices" ...

2. The Respondents argued that bifurcation was justified because they considered that: (i) whether the Claimant has subrogation rights is a legal issue resolved by analysis of the Contracts without need to take additional evidence concerning the alleged "basic design defects" or "faulty maintenance practices", and this could lead to an early dismissal or narrowing of the claim ... and (ii) Article 22 of the Rules directs the Parties and the Arbitral Tribunal to conduct the arbitration in a cost-effective manner and bifurcation would be an acceptable means to manage the case ...

3. ... the Claimant filed its answer to the Motion (the "Answer"), through which it asserted that bifurcation was not adequate because: (i) the matters of the subrogation of the Claimant to [X]’s rights could not be resolved solely by revision of the Contracts ... and (ii) a bifurcation of the arbitration would result neither in a more expeditious process nor in a less costly one for either of the Parties ... Further, the Claimant alleged that the Respondents preferred to bifurcate in order to avoid the discussion and the production of evidence that would demonstrate their gross negligence ...

4. By letter ... the Respondents provided the Arbitral Tribunal with their comments and suggestions to draft Procedural Order No. 1 and the procedural calendar and replied to the Answer.

5. ... the Claimant also provided the Arbitral Tribunal with its comments and suggestions to draft Procedural Order No. 1 and the procedural calendar.

6. On that same date, the Arbitral Tribunal and the Parties held the case management conference, in which the Parties were each given 10 minutes to advocate their position on the bifurcation of the proceedings. It was agreed that the Arbitral Tribunal would issue Procedural Order No. 1 defining the procedural rules of the arbitration at its earliest convenience and that a Procedural Order No. 2 would soon follow, deciding on the issue of the bifurcation of the proceedings.

7. ... the Arbitral Tribunal issued Procedural Order No. 1, in which it determined the rules applicable to the arbitration and decided that the procedural calendar would be established in Procedural Order No. 2 ...

8. Terms with initial capital letters which are not expressly defined in this Procedural Order No. 2 shall have the meaning ascribed to them in the Terms of Reference and in Procedural Order No. 1.

I. The issue of bifurcation

9. In accordance with Article 22(1) and (2) of the Rules, and as confirmed by the Parties themselves ... the Arbitral Tribunal has the power to adopt such procedural measures as it considers appropriate to conduct the arbitration in an expeditious and cost- effective manner:

1) The arbitral tribunal and the parties shall make every effort to conduct the arbitration in an expeditious and cost-effective manner, having regard to the complexity and value of the dispute.

2) In order to ensure effective case management, the arbitral tribunal, after consulting the parties, may adopt such procedural measures as it considers appropriate, provided that they are not contrary to any agreement of the parties.

10. The decision whether or not to bifurcate the proceedings is a matter subject to the Arbitral Tribunal’s discretion.

11. In that sense, it is a common view in international arbitration that bifurcating a dispute can promote efficiency and allows the Arbitral Tribunal to determine some discrete issues on a preliminary basis without engaging into extensive fact-finding. When such issues may be truly dispositive of part of the dispute or of the entire dispute, bifurcation can indeed ultimately save time and costs. 1

12. Bifurcation, however, may also result in protracted proceedings and significant additional costs and therefore only makes sense if the potential cost and efficiency gains justify deviating from the standard practice of resolving all controversial issues in a single stage.

13. As such, the Arbitral Tribunal considers that it all boils down to striking the right balance between probable cost and efficiency gains that could result from an early dismissal or narrowing of the claims, on the one side, and the possibility of extending the proceedings and increasing its costs, on the other. On that basis, the Arbitral Tribunal considers that the case for bifurcation is generally strong if it can result in a dismissal of the entire claim, and not so much if it may only result in its narrowing.

14. Taking into account the above mentioned standards, and after having reviewed the position of the Parties on this matter, the Arbitral Tribunal has decided not to bifurcate the present proceedings.

II. Procedural calendar

.........

III. Arbitral Tribunal’s decision

19. In light of the above, the Arbitral Tribunal unanimously:

(i) REJECTS the Respondents’ Motion.

(ii) ADOPTS the procedural calendar and related rules included in paras. 15 to 18 of this Procedural Order No. 2.

20. This Procedural Order No. 2 may be amended or supplemented, and the procedures for the conduct of this arbitration modified, pursuant to such further directions or Procedural Orders as the Arbitral Tribunal may issue from time to time.’

1
The Secretariat’s Guide to ICC Arbitration (ICC, 2012), para. 3-923.