Sweden: Arbitration

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This country-specific Q&A provides an overview of the legal framework and key issues surrounding arbitration law in Sweden including arbitration agreements, tribunals, proceedings as well as costs, awards and the hot topics concerning this country at present.

This Q&A is part of the global guide to Arbitration.

For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/index.php/practice-areas/arbitration/

  1. What legislation applies to arbitration in your country? Are there any mandatory laws?

    The Swedish Arbitration Act of 1999 governs both domestic and international arbitration, as well as the enforcement of arbitral awards. However, there is a new draft of the Arbitration Act which most likely will enter into force during 2017.

  2. Is your country a signatory to the New York Convention? Are there any reservations to the general obligations of the Convention?

    Sweden is a signatory to the New York Convention and has ratified the Convention in 1972 without either the “reciprocity” reservation or the “commercial nature” reservation available for the signatories.

  3. What other arbitration-related treaties and conventions is your country a party to?

    The Arbitration Act is not directly based on the UNCITRAL Model Law. However, the Model law was considered in the preparation of the Arbitration Act enacted in 1999. No major differences exist. The draftsmen of the new Arbitration Act have pointed out that it was seen urgent that the provisions of the Model Act should be considered in the drafting of every part of the new Arbitration Act (not yet in force).

  4. Is the law governing international arbitration in your country based on the UNCITRAL Model Law? Are there significant differences between the two?

    The Arbitration Act is not directly based on the UNCITRAL Model Law. However, the Model law was considered in the preparation of the Arbitration Act enacted in 1999. No major differences exist. The draftsmen of the new Arbitration Act have pointed out that it was seen urgent that the provisions of the Model Act should be considered in the drafting of every part of the new Arbitration Act (not yet in force).

  5. Are there any impending plans to reform the arbitration laws in your country?

    The Arbitration Act is currently under review.

    Several of the suggested revisions are designed to clarify and improve the procedures for setting aside an arbitral award in court. Reflecting the increasing number of international arbitrations in Sweden, the committee proposes that proceedings for setting aside awards may be conducted in English if a party so requests. Moreover, revisions regarding multi-party disputes, provisions governing the determination of applicable law, consolidation of arbitrations and court intervention regarding arbitral jurisdiction are proposed.

  6. What arbitral institutions (if any) exist in your country?

    The Arbitration Institute of the Stockholm Chamber of Commerce (the “SCC”) was established in 1917 and is today one of the world’s leading forums for dispute resolution. The SCC handles around 200 cases a year, whereof more than 50 percent are international cases.

  7. What are the validity requirements for an arbitration agreement under the laws of your country?

    The Arbitration Act provides that the arbitration agreement must be an agreement between two and more parties and that it must provide for resolution of the dispute by arbitration. An arbitration agreement providing for arbitration of a future dispute must also relate to an identified legal relationship, e.g. a contract, in order to be valid.

    There are no requirements that an arbitration agreement be made in a particular form. Oral arbitration agreements are thus valid or even arbitration agreements “implied” by virtue of the parties’ conduct or trade customs.

  8. Are arbitration clauses considered separable from the main contract?

    Sweden recognizes the doctrine of separability.

  9. Can claims under more than one contract be brought in the one arbitral proceeding? Can an arbitral tribunal with its seat in your country consolidate separate arbitral proceedings under one or more contracts, and, if so, in what circumstances?

    Different arbitration proceedings may be consolidated with the consent of the parties. However, a court cannot order consolidation of arbitration proceedings.

    In case of necessary joinder, where several parties’ legal rights and obligations are inseparable, one arbitrator must be appointed for all such joint parties. If the joint appointment fails, the district court, or where applicable the arbitration institute, will make the appointment upon request of the other party.

    Furthermore, in case a dispute is pending under the SCC Rules, the SCC may under certain circumstances consolidate the pending dispute with a new dispute between the same parties.

  10. How is the law applicable to the substance determined?

    Under the Arbitration Act, the starting point is that the law of the arbitration agreement is the law chosen by the parties to govern the arbitration agreement.

    If there is no choice of law, the modern view in Sweden is that the arbitrators must not go through a conflict of laws system to find the applicable law. The Arbitration Act has no such requirements. Rather, the arbitrators may directly determine the law applicable to the substance of the dispute. For example, the SCC Rules stipulate that the tribunal “shall apply the law or rules of law which it considers to be most appropriate” (cf. the UNCITRAL Model Law). It is, however, fair to say that the Swedish conflict of laws rules will often serve as a point of departure in the search for the applicable substantive law.

  11. Are any types of dispute considered non-arbitrable? What is the approach used in determining whether or not a dispute is arbitrable?

    A dispute is considered non-arbitrable if the subject matter is not capable of being settled by agreement between the parties. This is the case e.g. if the relief requested would be illegal, criminal, or constitute pactum turpe. A dispute is also likely non-arbitrable in cases where third party’s consent is required and in some aspects as far as it concerns rights in rem. Furthermore, a claim for relief, which can exclusively be granted by a court or a state authority, is non-arbitrable. Such cases include declaration of bankruptcy, taxation, existence and validity of patents, certain competition law disputes such imposition of fines, ordering a company to cease and desist activities harmful to competition, and granting clearance for acquisitions of businesses.

  12. In your country, are there any restrictions in the appointment of arbitrators?

    Under the Arbitration Act, anyone who enjoys full legal capacity in regard to his actions and his property are capable of being an arbitrator, i.e. you must be at least 18 years old and you cannot have a trustee or be bankrupt. In addition, the arbitrator must be independent of the parties. No other restrictions apply, e.g. sitting judges of the Swedish courts may be appointed as arbitrators.

    Under the SCC Rules, when the parties are of different nationalities, the SCC must appoint an arbitrator who is of a different nationality than the parties, unless the parties have agreed otherwise. No such restrictions are found under the Arbitration Act.

    Swedish courts have recognized the IBA Guidelines on Conflict of Interest in International Arbitration and it is fair to say that these guidelines serve as a general restriction in the appointment of arbitrators.

  13. Are there any default requirements as to the selection of a tribunal?

    The main rule under the Arbitration Act is that the tribunal shall consist of three arbitrators; one each appointed by the parties and one chairman appointed by the party appointed arbitrators. However, freedom of contract applies and the parties may agree on other set ups for the tribunal, e.g. a sole arbitrator.

    The default rule under the SCC Rules is that the tribunal shall consist of three arbitrators.

  14. Can the local courts intervene in the selection of arbitrators? If so, how?

    The district court has an overall obligation to assist the parties in any matters regarding the appointment of arbitrators under the Arbitration Act.

    Should respondent omit to appoint its arbitrator within the 30 days’ notice period under the Arbitration Act, the district court shall, on claimant’s request, appoint the arbitrator on behalf of respondent. The same applies should the party appointed arbitrators fail to appoint the chairman.

    In the event that one of the arbitrators resigns or is disqualified, the district court shall appoint a new arbitrator. The same applies should an arbitrator unduly delay the proceedings.

  15. Can the appointment of an arbitrator be challenged? Can an arbitrator be disqualified? What is the procedure for such challenge?

    The appointment of an arbitrator can be challenged based on lack of impartiality, and in rare circumstances, for unduly delaying the proceedings. Unless the parties have agreed otherwise, e.g. to apply institutional rules, requests for removal of an arbitrator will, in the first place, be tried by the tribunal. If the tribunal denies the request, a party may apply to a district court for removal of the arbitrator.

  16. Are arbitrators immune from liability?

    Whereas the SCC Rules provide for a general exclusion of liability for arbitrators, the Arbitration Act does not contain any provision concerning immunity from liability for arbitrators. Hence, arbitrators can be held liable for damages under general contract liability, unless a separate agreement between the parties and the arbitrators exists.

  17. Is the principle of competence-competence recognised in your country? What is the approach of local courts towards a party commencing arbitration in apparent breach of an arbitration agreement?

    Under the Arbitration Act, the tribunal has the power to rule on its own jurisdiction.

    If the tribunal finds that it lacks jurisdiction, it shall dismiss the dispute in an arbitral award. Such award becomes final unless challenged by a party.

    In contrast, if the tribunal finds that it has jurisdiction, the ruling shall be in the form of a decision. Such decision may not be appealed.

    However, in parallel proceedings, the district courts may also rule on the tribunal’s jurisdiction, which will overrule any decision of the tribunal.

  18. How are arbitral proceedings commenced in your country? Are there any key provisions under the arbitration laws relating to limitation periods of which the parties should be aware?

    Under the Arbitration Act, the parties may agree on how the arbitral proceedings shall be commenced. In absence of such agreement, the Arbitration Act provides that the proceedings are commenced when the respondent receives a written request for arbitration from the claimant (including an express and unconditional request for arbitration, a statement of the issue covered by the arbitration agreement which is to be resolved by the arbitrators and a statement of the party’s choice of arbitrator).

    Subsequently, the respondent has 30 days from the request for arbitration to appoint its arbitrator, failing which the claimant may request that the respondent’s arbitrator be appointed by the district court.

    Any other limitation periods are governed by the applicable substantive law.

  19. What is the applicable law (and prevailing practice) where a respondent fails to participate in the arbitration? Can the local courts compel parties to arbitrate? Can they order third parties to participate in arbitration proceedings?

    If a party without valid cause fails to appear at a hearing or otherwise fails to comply with an order of the tribunal, such failure shall not prevent the continuation of the proceedings and a resolution of the dispute. However, the dispute must be adjudicated on the merits, i.e. “default awards” are not available for the tribunal.

    The local courts cannot compel parties to arbitrate, and cannot order third parties to participate in the arbitration proceedings.

  20. In what instances can third parties or non-signatories be bound by an arbitration agreement or award (e.g. by joinder)?

    Generally, the arbitration agreement is only binding between the parties. However, a third party or a non-signatory may be bound by an arbitration agreement in case of universal succession. Moreover, following a Supreme Court Case in 1997 (the Emja case), it is now generally accepted that an arbitration agreement may be transferred with binding effect also in case of singular succession.

    The issue whether a guarantor of any of the parties to the main contract also should be bound by the arbitration clause in the main contract has been deliberately left open for case law to decide and it is fair to say that yet there is no precedence. Rather, case law shows that tribunals and the courts have taken a pragmatic stance and the outcome is very much dependent on the particular circumstances of the case.

    Under Swedish law, the approach is generally sceptical towards the so-called 'group of companies' doctrine and the possibility to pierce the corporate veil is very limited. The same goes for binding third parties to an arbitration agreement by so-called third party beneficiary agreements.

  21. What interim measures are available? Will local courts issue interim measures pending the constitution of the tribunal?

    A tribunal may grant interim measures to (i) maintain or restore the status quo pending determination of the dispute, (ii) take action that would prevent, or refrain from taking action that is likely to cause current imminent harm or prejudice to the arbitral process, (iii) provide means or preserving assets out of which a subsequent award may be satisfied or (iv) preserve evidence that may be relevant and material to the resolution of the dispute. However, the tribunal’s decision on interim measures is not enforceable.

    A court can grant interim measures prior to or during the arbitration proceedings, including sequestration of assets.

  22. Are there particular rules governing evidentiary matters in arbitration? Will the local courts in your jurisdiction play any role in the obtaining of evidence?

    The parties are free to agree on the rules of evidence in arbitration and they may present any and all evidence on which they wish to rely.

    On the request of a party, the tribunal may order the opposing party to produce documents. Such order is not enforceable.

    A party may also, subject to a leave from the tribunal, request that a district court orders the production of documents, including documents held by third parties. Such court order is enforceable and may be sanctioned by fines.

    A party can also, with the consent of the tribunal, apply to a district court for the examination of a witness or an expert under oath.

    Even without an agreement between the parties to apply the IBA Rules on the Taking of Evidence in International Commercial Arbitration, these rules often serve as guidance in international arbitrations.

  23. What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your country?

    Swedish counsels and arbitrators admitted to the Swedish Bar Association must observe the Bar Association’s Code of Conduct.

    No specific ethical code on arbitrators exists. However, the Swedish Supreme Court has explicitly recognised the IBA Guidelines on the Conflict of Interest in International Arbitration.

    The SCC Rules provide that the arbitrators must be and remain independent and impartial.

  24. How are the costs of arbitration proceedings estimated and allocated?

    Generally, the costs of arbitration proceedings are allocated based on the outcome of the case. The relative success of the parties on the principal issues is determinative. Typically, the outcome of procedural issues is also taken into account. Costs for counsel must be reasonable. In relation to the tribunal, the parties are jointly and severally liable for its costs, but these costs are also allocated as between the parties based on the outcome of the case.

    Whereas the Arbitration Act is silent on the compensation of the arbitrators, the SCC Rules have an ad valorem based schedule for the arbitrators’ fees and the administrative costs for the SCC.

  25. Can interest be included on the principal claim and costs incurred?

    Interest on the principal claim will be included on request of a party.

    Interest may also be included on a party’s costs from the date of the award until payment is made.

  26. Does the law impose limits on the available remedies? Are some remedies not enforceable by the local courts?

    The limitations with respect to available remedies to a far extent go hand in hand with the issue of arbitrability. Hence, the remedy cannot include non-arbitrable measures, such as penalties or fines. Apart from these limitations, the tribunal is free to award any remedy, however, within the scope of the parties’ pleadings.

    Enforcement of an award can be refused on basis of the defenses available under the New York Convention. In addition, enforcement will only be accepted with respect to specific obligations imposed on a party, e.g. payment, restitution, etc. Declaratory awards cannot be enforced.

  27. What legal requirements are there in your country for the recognition of an award?

    A domestic arbitral award can be enforced directly with the Swedish Enforcement Authority. This requires that the award is in written form and duly signed. The opposing party will be heard before the enforcement is carried out.

    A foreign award can be recognised and enforced by the Svea Court of Appeal in Stockholm. The application must include the original award or a certified copy.

  28. Can arbitration proceedings and awards be appealed or challenged in local courts? What are the grounds and procedure?

    Arbitration proceedings and awards cannot be appealed. However, an award may be challenged in the Court of Appeal.

    Moreover, an award can be declared invalid if the subject matter was non-arbitrable, violates public policy, or the award was not in writing or signed by the majority of the arbitrators.

    An award rendered in Sweden can be set aside, as a whole or partly, if (i) the arbitration agreement is invalid, (ii) the arbitrators have exceeded their mandate, (iii) Sweden was not the proper place of arbitration (iv) an arbitrator was appointed contrary to the parties’ agreement, (v) an arbitrator failed to meet the impartiality standard or did not possess full legal capacity, or (vi) a procedural irregularity exists which likely affected the outcome of the case.

    Hearings will be held, if a party so requests and the court does not find it inappropriate.
    The judgment of the Court of Appeal may be appealed to the Supreme Court, but only if leave to appeal is granted by the Court of Appeal.

  29. Can the parties waive any rights of appeal or challenge to an award by agreement before the dispute arises (such as in the arbitration clause)?

    The right to declare an award invalid may not be waived by agreement.

    If neither party is domiciled in Sweden or has its place of business here, the parties may waive the right to set aside an award or limit the scope of a potential challenge. Such right is not available for parties to arbitrations with at least one of the parties domiciled or having its place of business in Sweden.

  30. To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?

    The state or a state entity enjoys immunity only with respect to sovereign activities, but not to activities of commercial nature.

  31. Are there rules or restrictions on third-party funders in your country?

    Swedish law does not restrict third-party funding.

  32. Is there a concept in your country providing for class-action or group arbitration? If so, are there any limitations to the arbitrability of such claims or requirements that must be met before such claims may be arbitrated?

    Class-action or group arbitration is not established under Swedish law.

  33. Is diversity in the choice of arbitrators (e.g. gender, age, origin) actively promoted in your country? If so, how?

    The SCC is actively promoting diversity in the choice of arbitrators. For example, the SCC is seeking to appoint younger arbitrators in less complex disputes in order to safeguard the coming generation of arbitrators. Moreover, it should be noted that, during 2015, the SCC appointed a woman as arbitrator in almost 27% of the cases. This should be compared to cases where the parties themselves appointed an arbitrator, in which a woman was appointed in only 6.5% of the cases.

    In close connection to the SCC, the organizations Young Arbitrators Sweden (YAS) and Swedish Women in Arbitration Network (SWAN) are actively trying to influence the SCC and the market with respect to, inter alia, the choice of arbitrators.

  34. Is emergency arbitrator relief available in your country? Is this actively used?

  35. Have measures been taken by arbitral institutions in your country to promote transparency in arbitration?

    To increase transparency in arbitration, the SCC provides the Swedish Arbitration Portal since 2012. This database offers free access to English translations of decisions from all instances of the Swedish courts on issues related to international and domestic arbitration.

  36. Are efforts being made by arbitration institutions or local courts to impose strict deadlines for the rendering of awards?

    The Swedish Arbitration Act stipulates no time limit for rendering the award.
    Under the SCC Rules, an arbitral award shall be rendered within six months of the date when the case was referred to the tribunal, unless the SCC extends this time limit. In SCC administered cases, the average time from referral of the case to the arbitrators until the award is rendered is less than 10 months.

  37. Have steps been taken in your country to publish reasoned decisions on arbitrator challenges and provide more insight into the drivers behind arbitrator selection by institutions?

    The SCC provides rules for expedited arbitration, a fast-track procedure for smaller and medium sized claims in less complex cases. There are no value based limitations for the expedited rules to be used.

    Under the expedited rules, a sole arbitrator will decide the dispute. Certain restrictions with respect to the number of written submission and the time available therefor also exist. Moreover, a hearing will only be held on request of a party and if the arbitrator does find a hearing appropriate. A final award is to be rendered within three months from referral of the case to the arbitrator.

  38. Are there arbitral laws or arbitration institutional rules in your country providing for simplified procedures for claims under a certain value?

    The SCC provides rules for expedited arbitration, a fast-track procedure for smaller and medium sized claims in less complex cases. There are no value based limitations for the expedited rules to be used.

    Under the expedited rules, a sole arbitrator will decide the dispute. Certain restrictions with respect to the number of written submission and the time available therefor also exist. Moreover, a hearing will only be held on request of a party and if the arbitrator does find a hearing appropriate. A final award is to be rendered within three months from referral of the case to the arbitrator.