In this article, we highlight some of the key arbitration-related developments and cases in 2014. The year started with the release by the London Court of International Arbitration (LCIA) of a draft of its revised arbitration rules, which kicked off another round of rule revisions by other institutions.

The European Union's (EU) negotiations for new trade and investment agreements, and specifically the provisions on investor-state dispute settlement (ISDS) to be included in those agreements, took centre stage. With the EU committing to more transparency in its negotiations, the debate looks set to continue well into 2015 and beyond.

The issue of arbitrator selection always provides a rich vein of debate and 2014 was no exception, with the spotlight on diversity, the launch of the Arbitrator Intelligence website, and two high profile decisions of the French courts. The year ended with the publication of revised IBA guidelines on conflicts of interest.

2014 took up where 2013 left off, and was another busy year for the international arbitral institutions, with many revising their arbitration rules.

The arbitral institutions and centres have also been busy this year with various initiatives and projects.

HKIAC. The Hong Kong International Arbitration Centre (HKIAC) has had an especially active year, with an updated model clause including express provision for the law of the arbitration agreement (see Legal update, HKIAC model clause now encompasses law of arbitration agreement), as well as a new practice note on arbitrator challenges and a new tribunal secretary service (see Legal updates, New HKIAC practice note on challenge of an arbitrator and HKIAC offers tribunal secretary service).

DIFC. Of particular note is the Dubai International Financial Centre's (DIFC's) proposal of a unique mechanism to convert DIFC Court judgments into DIFC-LCIA arbitral awards, which would be enforceable under the New York Convention (Legal update, DIFC consults on mechanism to permit conversion of DIFC Court judgments into DIFC-LCIA arbitral awards). In 2014, DIFC also established a new arbitration institute (see Article, New Arbitration Institute established in the DIFC).

Other centres. Other new arbitral centres were established this year in India, Saudi Arabia and the Russian Federation (see Legal updates, New Mumbai International Arbitration Centre, New commercial arbitration centre for Saudi Arabia and Russian Arbitration Association becomes operational.

On 23 October 2014, the International Bar Association (IBA) approved revised IBA Guidelines on Conflicts of Interest in International Arbitration.

The 2014 guidelines retain the same general format as their 2004 predecessor, with general standards followed by non-exhaustive lists of common situations, organised in a traffic light system (Red, Orange and Green lists). However, they have been updated to deal with certain issues that have received attention in international arbitration practice since 2004. These include parties' duty to disclose information about their counsel (for example, any relationship between their counsel and an arbitrator, including membership of the same chambers).

For further discussion, see Legal update, IBA publishes revised guidelines on conflicts of interest).

On 17 September 2014, the Regulation establishing a framework for managing financial responsibility linked to investor-state dispute settlement (ISDS) tribunals, established by international agreements to which the EU is party, came into force (see Legal update, EU publishes Regulation on allocation of financial responsibility for costs in investor-state disputes).

The Regulation establishes rules for managing the financial consequences of investor-state disputes. The rules will only be applied once actual investor-state disputes under EU agreements with an ISDS mechanism arise.

The issue of investor-state dispute settlement (ISDS) provisions in investment agreements being negotiated by the EU has been very much on the agenda. Those agreements include the Comprehensive Economic Trade Agreement (CETA) with Canada, the Transatlantic Trade and Investment Agreement with the US, and the EU Singapore Free Trade Agreement.

On 26 September 2014, the text of the CETA, including the ISDS provisions, was officially released (see Legal update, ISDS provisions in EU/Canada trade agreement). The EU and Singapore concluded their negotiations in October 2014 and the European Commission (EC) published a fact sheet on the ISDS provisions in that agreement. The EU/US Transatlantic Trade and Investment Partnership (TTIP) negotiations are still underway.

In each case, one of the most hotly debated issues is that of ISDS, so much so that in April 2014, the EC launched a public consultation on the ISDS provisions in the TTIP. The aim of the consultation was to define the EU's approach to investor protection and ISDS in the TTIP negotiations and make ISDS in the TTIP more transparent and accountable. The EC is expected to publish a report summarising the responses to the consultation in mid-January 2015. It will then discuss the results with EU member states, the European Parliament and stakeholders.

We will continue to monitor developments. To keep on top of the TTIP negotiations specifically, see Transatlantic Trade and Investment Partnership (TTIP): tracker.

In Diag Human SE v Czech Republic [2014] EWHC 1639 (Comm), the Commercial Court refused enforcement of a New York Convention award, finding that a previous Austrian judgment refusing enforcement created an issue estoppel, or alternatively, the award was not binding under section 103(2)(f) of the Arbitration Act 1996.

Diag obtained an arbitral award against the Czech Republic. However, the parties had agreed in their arbitration agreement to abide by an additional review process following the award. A dispute arose about whether the review procedure had been properly triggered. Diag sought to enforce the award in Austria, but the Austrian Supreme Court refused enforcement, finding that an arbitral award could neither be enforced nor rejected by a national court, as long as it could be challenged by a higher court of arbitration. In addition, both the Austrian Supreme Court and, in earlier proceedings, the Municipal Court of Prague, had determined that any issues as to the review process itself should be decided by the review tribunal.

In proceedings to enforce the award in England, the court refused enforcement. It held that, where a foreign court decides that an award is not binding, there was no reason, in principle, why that decision should not give rise to an issue estoppel between the parties, provided the other conditions necessary to show that there is an issue estoppel are satisfied.

This appears to be the first English case in which issue estoppel has applied to bar enforcement. It may well have significant practical implications, given that an early failure to enforce an award in one jurisdiction may have drastic consequences for enforcement of that award in another jurisdiction.

For further discussion, see Legal update, Issue estoppel bars enforcement of award under New York Convention (Commercial Court) and Article, Issue estoppel, enforcement, and Diag Human v Czech Republic).

In a somewhat controversial decision, Emirates Trading Agency Llc v Prime Mineral Exports Private Limited [2014] EWHC 2104 (Comm), the court held that an obligation on parties to enter into "friendly discussion" before embarking on arbitration, was an enforceable term of the contract. However, the court dismissed a challenge to the arbitrators' jurisdiction under section 67 of the Arbitration Act 1996. It concluded that the arbitrators did have jurisdiction to decide the dispute because friendly discussions had taken place. The judge considered that the courts should seek to give effect to parties' agreed dispute resolution clauses that purport to prevent them from arbitrating the dispute without first seeking to resolve the dispute by friendly discussion.

English law does not generally recognise an agreement to negotiate or an agreement to settle disputes amicably. Therefore, this case may mark a turning point in the enforcement of such clauses under English law. Certainly, the judge here took into account the approach of the Australian courts and some ICSID tribunals, which have held such clauses to be enforceable.

For detailed discussion on this case, see Legal update, Enforceability of agreement to resolve dispute by "friendly discussion" before arbitration.

On 4 December 2014, in Opinion of Advocate General Case C‑536/13 'Gazprom' OAO, Advocate General Wathelet of the Court of Justice of the European Union (ECJ) gave his opinion on the request by Lithuania for a preliminary ruling in the Gazprom case. The questions before the ECJ relate to whether or not the Lithuanian courts must refuse to recognise and enforce an arbitral award containing an anti-suit injunction, in light of the Brussels Regulation and the ECJ's judgment in Allianz SpA v West Tankers Inc (Case C-185/07).

Referring to the recast Brussels Regulation, which comes into force on 10 January 2015, the Advocate General concluded that the Brussels Regulation must be interpreted as not requiring an EU member state court to refuse to recognise and enforce an anti-suit injunction issued by an arbitral tribunal. In his view, recognition and enforcement falls exclusively within the scope of the New York Convention.

The Advocate General also considered that the recast Brussels Regulation effectively overturns the ECJ's judgment in West Tankers, such that it will no longer apply to prevent EU member state courts from granting anti-suit injunctions in respect of proceedings before other member state courts in support of arbitration.

The ECJ's decision is expected within three to six months time (see Legal update, ECJ Advocate General's opinion in Gazprom/Lithuania case).

There have been two high profile French court decisions on the subject of arbitrator challenges and arbitrators' duty of disclosure.

The French Cour de Cassation's decision in Avax v Tecnimont (Civ. 1ère, 25 June 2014, pourvoi n° 11-26.529) gave a salutary reminder of the need for parties to observe the time limits provided by arbitral rules to which they have agreed.

In Tecnimont, the court held that a party that fails to exercise its right to challenge an arbitrator within the time limit specified by the applicable arbitral rules is deemed to have waived its right to have the award set aside on the same ground. It set aside the Reims Court of Appeal's decision setting aside a partial award on the ground that the arbitrator had failed to comply with his duty of disclosure.

Having overturned the court of appeal's decision on the time limit issue, the Cour de Cassation did not deal with the arbitrator's disclosure obligations (see Legal update, New ruling of French Cour de cassation in Tecnimont judicial saga on challenge of arbitrator).

In SA Auto Guadeloupe Investissements (AGI) c/ Columbus Acquisitions Inc, Cour d'appel de Paris, Pôle 1 – Chambre 1, n° 13/13459, the Paris Court of Appeal overturned a judgment granting exequatur (order for enforcement) of an arbitral award as a result of the sole arbitrator's failure to disclose a potential conflict of interest.

The Paris Court of Appeal found that parties are expected to consult public and easily accessible sources of information about the arbitrator before the commencement of the arbitration. However, they cannot reasonably be expected to continue their research after proceedings have begun. It is up to arbitrators to declare potential conflicts of interest as they arise, even if the information is publicly available (see Legal update, Paris Court of Appeal considers scope of arbitrator's obligation to disclose any potential conflicts of interest).

In Docket No. III ZB 89/13, the Federal Court of Justice clarified that a challenge to an interim award on jurisdiction is admissible where an award on the merits has been issued, provided that the tribunal has only issued a partial award on the merits.

This decision followed the court's earlier ruling in Slovakia v Achmea (Docket No. III ZB 37/12) that once an award on the merits is issued, a challenge to an interim award on jurisdiction is not permitted (see Legal update, German Federal Court of Justice rules on relationship between partial award on merits and request to determine validity of interim award on jurisdiction).

Arguably the most high profile investment treaty arbitration case of the year was the claim by the former majority Yukos shareholders against the Russian Federation. In July 2014, in three parallel awards (Hulley Enterprises Limited (Cyprus) v The Russian Federation (PCA Case No AA 226), Yukos Universal Limited (Isle of Man) v The Russian Federation (PCA Case No AA 227) and Veteran Petroleum Limited (Cyprus) v The Russian Federation (PCA Case No AA 228)), a tribunal awarded the claimant investors over US$50 billion in damages, apparently the largest arbitral award in history.

The claims were brought under the dispute settlement provisions contained in Article 26 of the Energy Charter Treaty (ECT) and the arbitration was heard under the UNCITRAL Arbitration Rules 1976. The tribunal determined that Russia had expropriated Yukos through a "full assault" on Yukos and its beneficial owners, in breach of Article 13(1) of the ECT, including the forced sale of Yukos' core production subsidiary through a rigged auction process for a sum significantly below its market price (see Legal update, Majority shareholders in Yukos awarded US$50 billion).

In AKM v AKN and another and other matters [2014] SGHC 148, the Singapore High Court's decision provided a useful reminder to tribunals that they must give fully reasoned awards or run the risk that their awards will be set aside.

In this case, the court granted an application to set aside an arbitral award on various grounds, including that the tribunal had breached the rules of natural justice by failing to engage with the parties' submissions on certain issues and that the tribunal had exceeded its jurisdiction by awarding damages for the loss of an opportunity, rather than the relief pleaded by the claimant.

The judgment demonstrates that, although generally reluctant to interfere in the arbitral process, the Singapore courts are prepared to conduct a detailed review of arbitral awards and the parties' pleadings where necessary (see Legal update, Singapore court grants application to set aside award).

In decision 4A_124/2014, the Swiss Supreme Court confirmed that alleged failures to comply with pre-arbitration dispute resolution provisions may be challenged on the basis of lack of jurisdiction ratione temporis under Article 190(2)(b) of the Swiss Private International Law Act (PILA). The court also held that Article 178(2) PILA applies to the interpretation of pre-arbitration dispute resolution provisions.

This was the first time that the Swiss Supreme Court considered whether a Dispute Adjudication Board (DAB) procedure under the FIDIC Conditions of Contract was a condition precedent to arbitration, and the jurisdiction of an arbitral tribunal to hear a dispute that had not gone through DAB procedure. The court found that, while the procedure is mandatory in principle, the parties do not have to go through the process if doing so would amount to an abuse of rights because it appeared futile to an efficient resolution of the dispute and where there had been inordinate delay in appointing the DAB (see Legal update, First decision on FIDIC Dispute Adjudication Boards (Swiss Supreme Court)).

In BG Group PLC v. Republic of Argentina, No. 12-138, (U.S. Mar. 5, 2014), the US Supreme Court reinstated a US$185 million arbitration award against the Republic of Argentina, reversing the US Court of Appeals for the District of Columbia's decision to vacate the award. The question before the Supreme Court was: "In disputes involving a multi-staged dispute resolution process, does a court or instead the arbitrator determine whether a pre-condition to arbitration has been satisfied?". The pre-condition to arbitration was a local litigation requirement in the arbitration clause of a bilateral investment treaty (BIT).

The Supreme Court ruled that the local litigation requirement in the arbitration clause of the BIT was a matter for the arbitrators, not the courts, to interpret and apply.

Although welcomed as the "right" result, the Supreme Court's approach to interpretation has been questioned. Rather than using recognised tools for treaty interpretation, such as the Vienna Convention on the Law of Treaties, the court approached the issue as if it were interpreting a commercial contract between private parties, finding that doing so did not make a critical difference in its decision.

See Legal update, Supreme Court: Arbitrators, Not Courts, to Interpret Investment Treaty's Conditions Precedent to Arbitration Clause and Article, The US Supreme Court decides BG v Argentina - right place, wrong road?.