Two variable fragment of Term Modal Logic

Term modal logics (TML) are modal logics with unboundedly many modalities, with quantification over modal indices, so that we can have formulas of the form exists y. forall x. (Boxx P(x,y) supsetDiamondy P(y,x)). Like First order modal logic, TML is also "notoriously" undecidable, in the sense that even very simple fragments are undecidable. In this paper, we show the decidability of one interesting fragment, that of two variable TML. This is in contrast to two-variable First order modal logic, which is undecidable.