In a recent decision, the Supreme Court confirmed that Section 34(7) of the Arbitration Act – under which an arbitral award must be set aside if an irregularity occurred in the course of the proceedings and probably influenced the case's outcome – should be applied restrictively. This decision is a rare example of a Swedish court setting aside an award based on procedural irregularities under Section 34(7).
The Svea Court of Appeal has largely upheld two arbitral awards which Poland had challenged on the ground that the arbitration provision in the investment treaty between Poland, Luxembourg and Belgium was incompatible with EU law according to Achmea. However, the court granted leave to appeal to the Swedish Supreme Court, as it deemed the case to include issues of importance for the guidance of the application of law.
Although parties have the right to appeal arbitrators' compensation that has been decided by an arbitral institution and included in an arbitral award, a recent Svea Court of Appeal judgment suggests that strong reasons are required to adjust such a decision when it has been made in accordance with an arbitration agreement between said parties. Further, the existence of circumstances which could diminish confidence in an arbitrator's impartiality is insufficient to justify a reduction in compensation.
Often, the counsel representing a challenging party will also have acted as counsel in the arbitral proceedings and thus have personal and direct knowledge of the facts of the dispute (ie, what occurred during the arbitral proceedings). Therefore, a court may be less forgiving when a counsel makes an inaccurate statement of facts in challenge proceedings. Counsel representing parties challenging arbitral awards should be aware of this risk and are well advised to avoid potential grounds for personal liability.
A new government bill for revising the Arbitration Act was recently presented to Parliament. The proposed amendments concerning challenges of awards and jurisdictional decisions align with the ambition of restricting challenges and upholding the finality of awards. The proposed provision on multi-party arbitrations aligns with many institutional rules and could, along with the provision on the use of English in challenge proceedings, strengthen Sweden's attractiveness as a place for international arbitration.
The Supreme Court recently rendered a decision concerning an application for enforcement of a foreign arbitral award. The decision clarifies whether a party that is passive in arbitral proceedings forfeits its right to invoke circumstances which were known to the party in the arbitral proceedings as grounds for non-enforcement of a foreign arbitral award. Before this decision, it had been unclear whether such a passivity rule existed in relation to enforcement.
Two appeal courts recently ruled on two separate cases in which arbitral awards were challenged on the basis that the tribunals had departed from decisions made on issues of merits in procedural orders. Generally, procedural orders are not final and binding and a tribunal is free to amend previously issued procedural orders. However, procedural orders are sometimes used as a tool for making interim decisions on the merits of the case.
The Svea Court of Appeal recently rejected City Säkerhet's motion to set aside an arbitral award. The judgment clarifies whether an arbitrator's application of a legal rule to which neither party referred in the arbitration may constitute grounds to challenge the arbitration award. The principle of jura novit curia (ie, the court knows the law), which is applicable in court proceedings, should also apply in Swedish arbitration unless otherwise agreed by the parties.
The Supreme Court recently allowed for court proceedings despite a valid arbitration agreement between the parties, because the legal grounds invoked by the claimant were outside the scope of the arbitration agreement. The court confirmed the doctrine of assertion and clarified the doctrine of connection.
The Svea Court of Appeal recently rejected the Republic of Kazakhstan's request to declare invalid or set aside the arbitral award in Stati v Kazakhstan. In the award, a group of foreign investors was awarded substantial damages following the state's seizure of certain assets. The judgment indicates that it is possible to declare an arbitral award based on false evidence invalid due to public policy, provided that it is proven that the outcome of the case was influenced.
Sweden's arbitration-friendly approach has led the Swedish courts to deny only rarely an application for the recognition and enforcement of a foreign award. It was therefore noted with interest when the Svea Court of Appeal denied enforcement of a foreign award due to matters of public policy in Finants Collect v Heino Kumpula.
Although arbitral tribunals have wide discretion to decide on the conduct of arbitral proceedings, it has frequently been debated whether a procedural order can reflect an agreement between the parties and, therefore, that the arbitral tribunal cannot amend such an order without exceeding its mandate or otherwise committing a procedural error. Two recent Svea Court of Appeal judgments have clarified these issues.
The Arbitration Institute of the Stockholm Chamber of Commerce (SCC) has prepared a draft of the revised SCC Rules and the revised SCC Expedited Rules. The new rules have been distributed to the arbitration community worldwide and several hearings have been held to discuss them. The rules will address certain recurring issues in international arbitration, including multi-party and multi-contract situations, security for costs and administrative secretaries.
In order to ensure that arbitration in Sweden can maintain its position as a modern, effective and attractive form of dispute resolution, and to further enhance Sweden's position as an international forum for trade and investment-related disputes, the government has appointed an investigator to review the Arbitration Act and propose any necessary amendments.
In a recent case the Supreme Court considered the significance of a failure to make an objection regarding the invalidity of the arbitration agreement during arbitral proceedings and instead first raising the objection in a subsequent challenge. The decision confirms that parties to arbitration cannot bring such challenges as a last-ditch effort if the arbitration does not turn out as they had hoped.
A recent Supreme Court decision considered the implications where an application is made for a court order for the production of documents within the context of arbitration. The court stated that guidance can be obtained from the 2010 International Bar Association Rules on the Taking of Evidence in International Arbitration even in the case of domestic arbitration.
Concorp Scandinavia AB brought an action in the district court against Karelkamen Confectionary AB. Karelkamen argued that Concorp's action should be dismissed, claiming that the dispute should be resolved by arbitration in accordance with the Arbitration Act. The district court denied Karelkamen's motion and the decision was appealed to the Supreme Court.
The Svea Court of Appeal recently considered whether an arbitral award should be set aside on the grounds of the disputed substantive agreement not being arbitrable under the Arbitration Act due to its alleged violation of then-mandatory Soviet law and being punishable under Soviet criminal law. The court took an arbitration-friendly approach to arbitrability in an international context.
The Supreme Court has considered what is required for a foreign arbitral award to be recognised and enforced in Sweden by applying the Swedish Arbitration Act, which goes back to the New York Convention of 1958. The court had to determine whether the respondents had been duly notified of the arbitration proceedings against them.
The Supreme Court recently handed down judgment in a case involving arbitrator bias. The issue was whether the disputed award should be set aside due to alleged bias in the proceedings, on the basis that the arbitrator had previously been appointed in several disputes in which a party was represented by counsel from a particular law firm.