A. LEGISLATION AND RULES
A.1 Legislation
The Swedish Arbitration Act (SAA) continues to be the primary source of arbitration law in Sweden which governs both domestic and international arbitral proceedings. The SAA does not differentiate between domestic and foreign proceedings with the exception of the enforcement and recognition of foreign awards and proceedings. There have been no legislative amendments in 2021.
A.2 Institutions, rules and infrastructure
A.2.1 The SCC Institute and the SCC Rules
The Arbitration Institute of the Stockholm Chamber of Commerce (SCC) is the main arbitration institute in Sweden that administers domestic and international arbitrations. The SCC maintains two sets of rules, the Arbitration Rules and the Rules for Expedited Arbitrations which together stipulate the SCC Rules. Moreover, the SCC has mediation rules and procedures for the administration of cases as well as procedures for appointing authority under the 2010 UNICITRAL Arbitration Rules. On 1 January 2017, the current SCC Arbitration rules entered into force, with availability in various languages such as Swedish, English, Chinese, Russian, German and Arabic. The SCC continues to reflect a well-established national policy that strongly favors arbitration as an alternate means of dispute resolution and has maintained its position as one of the leading international arbitration institutes in the world.[1]
A.2.2 Publication of SCC awards
In an effort to provide more transparency and to further increase efficiency, the SCC has adopted changes to its practice by publishing a number of SCC arbitration awards. This initiative was first launched in 2020, and, in 2021, additional SCC awards were published. The published awards relate to, for example, third-party funding, gross negligence and termination of a license agreement. All of the published awards have been anonymized to maintain the confidentiality of the parties. The publication is considered important as it provides practitioners with information on how tribunals treat claims and the increased focus on transparency.
The initiative is in association with the International Council of Commercial Arbitration (ICCA) and the awards are published on the Kluwer Arbitration database.
A.2.3 SCC Express
In May 2021, the SCC launched the SCC Express – a new expedited consent-based form of dispute resolution for parties to quickly resolve a contentious matter. The process is consent-based, confidential and provides the parties with a legal assessment of their dispute in three weeks, for a fixed fee of EUR 29 000. A neutral legal expert conducts the assessment, which the parties can contractually agree to make binding or use the non-binding findings to move forward. In contrast to the mutually acceptable compromise reached in mediation or a binding and enforceable arbitration award, the SCC Express will thus only result in a legal assessment.
The neutral legal expert, which is appointed by the SCC, conducts the assessment by actively engaging with the parties compared to the tribunal in arbitration. These features make the SCC Express a unique tool within dispute resolution. The process is governed by a new set of rules – the SCC Rules for Express Dispute Assessment.
B. CASES
B.1 Foreign state is not immune to seizure of listed shares
Following a dispute between a group of companies and investors and the Republic of Kazakhstan, an SCC arbitral award was issued according to which Kazakhstan was ordered to pay approximately USD 500 million plus interest. Kazakhstan subsequently brought an action for annulment of the award on the grounds of grave procedural error and applied for relief. The Swedish Supreme Court rejected the appeal.[2] Consequently, the Swedish District Court allowed a freezing order in respect of property belonging to Kazakhstan’s government, including shares in listed Swedish companies. Kazakhstan appealed the district court’s decision with the objection that the property was covered and protected by state immunity and therefore that the enforcement to freeze the property would be in violation of ordre public.
The Supreme Court granted leave to appeal on the question of whether property seized by the Swedish Enforcement Authority was subject to immunity from enforcement. In its judgment, the Supreme Court considered that the shares in question, by the time of the freezing order, were a part of a savings portfolio. This established that there was a commercial element to possessing the shares. Even if the aim with the possession of the shares would be regarded as a long-term contribution to increasing Kazakhstan’s future assets, that purpose would not stipulate as sufficiently qualified to be seen as an expression of official acts.
Accordingly, the Supreme Court’s decision, in contrast to the Court of Appeal’s decision, was that the purpose of the possession of the property is not covered by any state immunity.
B.2 Jurisdiction and validity of arbitration agreement
In the Svea Court of Appeal case T 5129-21[3], the Court of Appeal considered the fundamental question of whether two companies had entered a valid arbitration agreement and whether or not an arbitral tribunal had jurisdiction to resolve the dispute.
After arbitration proceedings had been initiated by one of the parties, the counterparty rejected the existence of a valid arbitration agreement. The Court of Appeal was requested to determine the validity of the arbitration agreement.
The parties had entered into a contract with a dispute resolution clause that referred to specific general conditions which required the parties to submit the dispute to arbitration if certain conditions were met. The clause also referred disputes to be resolved through litigation in the second paragraph. Given the uncertainty of the application of the dispute resolution clause, no agreement could be reached between the parties on how to resolve the ongoing dispute.
The Court of Appeal stated that unless a common understanding between the parties was evident, an intention could not be inferred. It was, however, held that the interpretation of the contractual terms should be decided on the wording set out in the contractual terms as well as the structure of the contract. Given that the contract referenced the specific general conditions which required arbitration, it was held that the parties intended to resolve disputes through arbitration. Accordingly, the Court of Appeal ruled that the arbitral tribunal had jurisdiction to settle the dispute between the parties.
B.3 The legal capacity of a non-profit association
The Göta Court of Appeal[4] had to consider the grounds for the dismissal of an arbitrational award. Two parties entered an agreement in November 2016. Three years later, one party requested arbitration, wanting compensation in accordance with the agreement. According to the agreement, an eventual dispute was to be resolved by arbitration. However, the other party responded to the request with the objection that the first party did not have legal capacity to request arbitration, as it did not constitute a non-profit association.
The question the Court of Appeal had to judge on was thus whether the party had legal capacity to request arbitration; more specifically if it constituted a non-profit association or an economic organization. The Court of Appeal began stating that neither of these types of associations has legal capacity to enter arbitration.
After considering the circumstances and conditions of the association, the court held that it constituted an economic organization. The grounds for this decision was that its operations had exclusively been managed in a way characteristically known for how an economic organization is operated. Moreover, the aim of the operations had continuously been to provide the members with economic gain. The court concluded that, because of this, the association did not have legal capacity to request arbitration.
The Supreme Court has announced that it has granted leave to appeal regarding the question of if a non-profit association has legal capacity to enter an agreement stating arbitration as the mean of dispute resolution.
[1] About the SCC – The Arbitration Institute of the Stockholm Chamber of Commerce (sccinstitute.com).
[2] Judgment by the Supreme Court, 18 November 2021, Case no. Ö 3828-20.
[3] Judgment by the Svea Court of Appeal, 21 December 2021, Case no. T 5129-21.
[4] Judgment of the Göta Court of Appeal, 2 November 2021, Case no. T 2236-20.
