Approaching its twentieth anniversary, the modernization of the Swedish Arbitration Act (“SAA”) is closer than ever. Although the general perception is that the SAA is effective, the long-prepared reform aims to make it even more responsive to the needs of its users.
The development of the reform to date
The first steps towards modernizing the SAA were taken in February 2014, when the Swedish Government appointed a parliamentary committee to review the SAA, identify any flaws and propose amendments to the existing legislation. Among the issues identified were the absence of provisions on multi-party disputes, the necessity of measures to further enhance efficiency in setting aside proceedings, the possibility of conducting the latter in English and the need for new provisions for determination of the substantive law of the dispute.
In April 2015, the committee released a report addressing those issues and proposing new 02provisions to be adopted. A short while ago, after consulting with scholars and practitioners from Swedish universities and institutions the report was redrafted and on 1 March 2018 a proposal with potential amendments, entitled “A Modernization of the Arbitration Act” was sent to the Swedish Council on Legislation. The Government’s proposal to a certain extent constitutes a redrafted version of the report of the parliamentary committee, however, some of the proposals for amendments were abandoned.
The amendments proposed by the Swedish Government
Some of the more significant amendments proposed are as follows:
1) Appeal of the arbitral tribunal’s decision on jurisdiction before the Court of Appeal
Currently, an arbitral tribunal’s decision on its own jurisdiction may be subject to appeal before the District Court. However, when a party challenges an arbitral award on the ground that the arbitral tribunal lacked jurisdiction, the competent court to decide on the appeal is the Svea Court of Appeal. In order to avoid two concurrent court proceedings deciding on the same issue, it is proposed that an arbitral tribunal’s positive decision on jurisdiction also be appealed to the Svea Court of Appeal.
2) Multi-party arbitrations
It is proposed that if an arbitration is commenced against two or more respondents and they cannot agree on the appointment of an arbitrator, the latter should be appointed by the District Court. If a respondent has already appointed an arbitrator, the latter shall be released.
3) Consolidation of two or more arbitrations into single arbitration proceedings
In its current form the SAA does not contain any provisions governing consolidation. However, it is proposed that under the new SAA two or more arbitrations may be consolidated if the same arbitrators are appointed in all arbitral proceedings, the arbitrators decide that consolidation is beneficial to the arbitrations and the parties do not object.
4) Determination of the applicable substantive law by the arbitral tribunal in case of absence of an agreement between the parties
The SAA does not regulate how the arbitral tribunal is going to determine the applicable substantive law in the absence of an agreement between the parties in this respect. It is proposed that in case of absence of the agreement between the parties on the applicable substantive law to the dispute, the arbitral tribunal is to determine the law at its discretion. Moreover, the arbitral tribunal may decide the dispute ex aequo et bono if the parties have so agreed.
5) The excess of mandate ground for setting aside only when it has probably affected the outcome of the dispute
Other proposed amendment is the introduction of a provision, requiring the party trying to set aside the award on the grounds of excess of mandate to prove that the outcome of the dispute has been affected by the excess.
6) Shorter term for setting aside the arbitral award
It is proposed the time limit for setting aside of the arbitral award to be shortened from three to two months.
7) Using English during challenge proceedings
Another proposal is for challenge proceedings to be to some extent conducted in English. For instance, witnesses to be allowed to give testimony in English without the need for simultaneous translation. Nevertheless, the court will continue rendering its decisions in Swedish.
The Swedish Law Council furthermore expressed its view that the requirement for independence of arbitrators should be clearly stated in the SAA, as it is different from the requirement for impartiality.
In summary, the proposed amendments aim to meet the expectations of the international business community and will further strengthen the leading position of Sweden as a seat for international arbitration. However, it remains to be seen what will be the final result of the reform and which proposals will actually be adopted. The amended act is expected to enter into force 1 March 2019.