In White Industries Australia Ltd v Republic of India (UNCITRAL) (published in early 2012), an UNCITRAL tribunal held that extensive judicial delays in the enforcement of an International Chamber of Commerce (ICC) arbitration award amounted to a breach of the Australia-India BIT (see Legal update, India liable under BIT for extensive judicial delays). White Industries had spent nine years attempting to enforce the award in India, and successfully relied on the BIT's most favoured nation clause to take advantage of investor protections in the India-Kuwait BIT. The award adds to the developing jurisprudence suggesting that an arbitral award may be treated as a continuation of an investment and, as such, may be subject to such protections afforded to investments by a BIT. For further discussion, see Article, India faces heat from foreign investors following White Industries award).

In Bureau Veritas, Inspection, Valuation, Assessment and Control BIVAC BV v The Republic of Paraguay (ICSID Case No ARB/07/9), an ICSID tribunal stayed proceedings in order to give the claimant an opportunity to commence local court proceedings under the relevant contract (see Legal update, Tribunal stays arbitration pending local court proceedings (ICSID)). The decision is particularly noteworthy for the supervisory role the tribunal effectively adopted in respect of the conduct of local court proceedings. Even though it found the claims unsuccessful, the tribunal stayed rather than dismissed them, and retained jurisdiction to allow for the possibility of the claims reviving in the future.

The issue of the application of most-favoured nation (MFN) clauses to dispute resolution provisions has been one of the most hotly debated topics in international investment law in recent years. 2012 saw four more awards demonstrating the continued divergence of approach to the application and scope of MFN clauses (for further discussion, see Article, Most favoured nation clauses: no favoured view on how they should be interpreted).

In ICS Inspection and Control Services Ltd (United Kingdom) v Argentine Republic (PCA Case No 2010-9) (Award on Jurisdiction), a tribunal at the Permanent Court of Arbitration (PCA) concluded that the claimant could not use an MFN clause in the Argentina-UK BIT to import a more favourable dispute resolution mechanism from another BIT (the Argentina-Lithuania BIT ) (see Legal update, Third time lucky for Argentina as tribunal rules MFN clause does not extend to dispute resolution). The tribunal's reasoning was similar to that of the dissenting opinions in Impregilo SpA v Argentina (ICSID Case no ARB/07/17) and Hochtief AG v Argentina (ICSID Case no ARB/07/31) (see Legal updates, Stern dissent renews debate on whether MFN clauses extend to dispute resolution provisions and MFN clauses extending to dispute resolution - putting the cart before the horse?).

In EDF International SA and others v Argentine Republic (ICSID Case No ARB/03/23), an ICSID tribunal permitted the claimants to invoke the MFN clause in the France-Argentina BIT to allow them to rely on the umbrella clauses in two other BITs. The tribunal concluded that, if it did not give effect to the MFN clause and allow reliance on the umbrella clauses, it would effectively be "reading the MFN language out of the treaty". Further, the tribunal considered that the wording of the umbrella clauses was broad enough to cover the claimants' claims in respect of breach of specific commitments (see Legal update, ICSID tribunal enforces MFN clause to allow reliance on umbrella clauses in other BITs). This case adds to the line of awards advocating a broad approach to the interpretation of both MFN and umbrella clauses.

In Daimler Financial Services AG v Argentine Republic (ICSID Case No. ARB/05/1) (Award on Jurisdiction), an ICSID tribunal held that it did not have jurisdiction to hear the claim, on the basis that the investor had failed to first submit the dispute to the Argentine courts for 18 months, as required by the Argentina-Germany BIT. However, the tribunal also ruled that the MFN clause in the Argentina-Germany BIT did not extend to dispute resolution provisions. The claimant investors therefore could not take advantage of arbitration clauses from Argentina's other BITs (see Legal update, Consistently inconsistent: another MFN case, another split decision, another contrasting decision (ICSID)). However, in a strongly worded dissenting opinion, Judge Charles Brower described the majority stance as "unconvincing" and "profoundly wrong".

In Teinver SA and others v Argentine Republic (ICSID Case No. ARB/09/1), an ICSID tribunal held that the claimants had satisfied the pre-conditions to arbitration contained in the Spain-Argentina BIT. The majority also held that, if those pre-conditions were not satisfied, the claimants could rely on the MFN clause in the BIT, to benefit from the dispute settlement provisions in the Australia-Argentina BIT, which did not contain those pre-conditions (see Legal update, Claimants satisfied pre-conditions to arbitration in BIT (ICSID)). The majority effectively endorsed the line taken in Maffezini v Spain (ICSID Case no ARB/97/7).

A Regulation establishing transitional arrangements for bilateral investment agreements between member states and third countries was adopted by the European Parliament and the Council and published in the Official Journal on 20 December 2012 (see Legal update, Bilateral investment treaties: Regulation establishing transitional arrangements published in Official Journal). The Regulation, which entered into force on 10 January 2013, establishes the terms, conditions and procedure under which member states are authorised to maintain in force, amend or conclude bilateral investment treaties (BITs) with third countries. For more information, see Intra-EU bilateral investment treaties: tracker.

Issues of jurisdiction in respect of disputes involving EU law were considered by the German courts in 2012. In Eureko BV v Slovak Republic (Docket No. 26 SchH 11/10), the Higher Regional Court of Frankfurt am Main confirmed an interim award on jurisdiction, finding that the arbitration clause in the BIT between the Netherlands and the Slovak Republic did not breach EU law (see Legal update, Higher Regional Court of Frankfurt confirms validity of arbitration clause in dispute between investor and EU member state). The Slovak Republic has appealed (see Anticipated Developments of 2013 below).

The German Federal Supreme Court decision in Eureko BV v Slovak Republic (Docket No. 26 SchH 11/10) is expected in 2013 (see Top developments of 2012 above) .

2013 is likely to see the progress of a draft Regulation providing a mechanism for allocating financial responsibility for the costs of investor-state dispute settlement between the EU and the member states. The new mechanism allocates responsibility depending on whether it was the member state or the EU whose actions caused the investor to bring a claim (see Legal update, Foreign direct investment: European Commission adopts proposal for Regulation on financial responsibility for investor-state dispute settlement).

According to the European Parliament's Legislative Observatory, the draft Regulation is due to be voted on by the European Parliament's International Trade Committee at a meeting currently scheduled for 21 March 2013. This will be followed by a first reading by the European Parliament (EP) in plenary session. The first reading by the EP is currently scheduled for 16 April 2013, but that is an indicative date and is likely to change.

The UNCITRAL Working Group II (Arbitration and Conciliation) II continued its discussions on transparency in treaty-based investor-state arbitration in 2012. At its 57th session, which took place in Vienna in October 2012, the working group focused on the latest version of Articles 3 to 9 of the draft rules on transparency in investment treaty arbitration, prepared by the Secretariat (see Legal update, UNCITRAL working group continues review of transparency rules).The draft rules and reports of the working group are all available on the UNCITRAL website.

The working group will resumes its discussions on the draft rules at its 58th session in New York in February 2013 (see Annotated Provisional Agenda). For a table setting out all Working Group meetings, with links to the relevant UNCITRAL reports and legal updates published by PLC Arbitration, see UNCITRAL Working Group II: tracker.