This country-specific Q&A provides an overview of litigation in Sweden.
It will cover methods of resolving disputes, details of the process and the proceedings, the court and their jurisdiction, costs and appeals and opinions on future developments.
This Q&A is part of the global guide to Litigation. For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/practice-areas/litigation-dispute-resolution/
What are the main methods of resolving commercial disputes?
Court litigation and arbitration are the most common methods of resolving commercial disputes in Sweden, with arbitration being the preferred method for major commercial disputes. Mediation is a method which has gained some popularity in recent years but it still remains a rarity.
What are the main procedural rules governing commercial litigation?
The procedural statutory legislation governing commercial litigation is almost exclusively found in the Swedish Code of Judicial Procedure (Sw. rättegångsbalken). Certain legal areas (e.g. employment law and competition law) also have specific procedural rules found in other legislation.
What is the structure and organisation of local courts dealing with commercial claims? What is the final court of appeal?
Commercial disputes are administered by general courts, which are organised in a three-tier system; district courts, courts of appeal and the Supreme Court. The Supreme Court is the ultimate national court to which a commercial case can be appealed. Some commercial disputes have specific fora; most importantly those relating to maritime matters and patent or trademark matters. The former are administered by seven of the approximately 50 district courts and the latter exclusively by the Stockholm District Court. Finally, the Swedish Labour Court is the exclusive forum in matters governed by the Swedish Labour Disputes (Judicial Procedure) Act (Sw. lag om rättegång i arbetstvister).
How long does it typically take from commencing proceedings to get to trial?
The timeline from commencing of proceedings to award varies considerably between the different courts. The district courts in Sweden’s major cities, and in particular the Stockholm District Court, have a greater number of commercial disputes than other district courts. While this means that those courts are more experienced in dealing with such cases, the court proceedings are often lengthier. The length of the proceedings is also to some extent dependent on whether the award is to be rendered by one or three judges, which depends on the nature and size of the case. Roughly estimated, it takes approximately one to two years from the commencing of proceedings to the award if the award is to be rendered by three judges and less if rendered by a sole judge. Large cases may, however, well exceed two years in the first instance.
Are hearings held in public and are documents filed at court available to the public? Are there any exceptions?
Sweden employs the principle of public access; documents sent to and by courts are made official in the sense that the general public has access to the documents and are able to attend hearings. There are, however, exceptions to this principle. Secrecy can apply under the Swedish Public Access to Information and Secrecy Act (Sw. offentlighets- och sekretesslagen) to information that concerns a private party’s business or operations if it can be assumed that disclosure of the information would cause harm to that party. In practice, this means that the general public is unable to take part of such information and that, if any such information is to be presented during a hearing, that particular part of the hearing will be held without public access.
What, if any, are the relevant limitation periods?
Limitation is a part of Swedish substantive law. The general limitation period is ten years from the occurrence of a claim unless otherwise agreed upon by the parties or specifically regulated elsewhere, according to the Swedish Limitations Act (Sw. preskriptionslagen). For claims on consumers, the general limitation period is three years. Some areas of law are subject to specific limitation periods, in particular insurance law. The limitation period can be interrupted if the debtor offers payment, pays interest or instalment(s) or otherwise acknowledges the claim. The creditor may also interrupt the limitation period by presenting a written demand to the debtor or commencing legal proceedings. If the limitation period is interrupted a new limitation period begins from that day. As concerns interruptions due to legal proceedings specifically, the new limitation period begins when the legal proceedings are concluded.
What, if any, are the pre-action conduct requirements in your jurisdiction and what, if any, are the consequences of non-compliance?
There are generally no pre-action conduct requirements in commercial disputes. One notable exception is, however, employment matters which are governed by the Labour Disputes (Judicial Procedure) Act. A party may not, according to this act, commence court proceedings unless the party has negotiated with his or her counterparty. The court will dismiss the claim if such negotiation has not been attempted. Also, lawyers being members of the Swedish Bar Association must not take legal action unless the counterparty is given reasonable time to consider the client’s claim and to reach an amicable settlement, although legal action may be taken without prior notice if a delay would entail a risk of loss of the legal rights or other harm, or if there are other special reasons for taking such action.
How are commercial proceedings commenced? Is service necessary and, if so, is this done by the court (or its agent) or by the parties?
Commercial disputes are initiated by the lodging of a statement of claim to the district court and payment of the registration fee, SEK 2,800 for the year of 2018. Service is necessary in litigation and it is essentially the court’s responsibility to serve the defendant. Courts have efficient serving possibilities and are generally expedient at serving. However, a party is permitted to serve its counterparty where permission has been granted by the court (which it normally is upon request).
How does the court determine whether it has jurisdiction over a claim?
The court will ex officio determine whether it has jurisdiction as soon as the administrative fee is paid. Generally, the court will examine the statement of claim to establish if anything therein indicates that the court does not have jurisdiction. If in doubt, the court would normally issue a remedial injunction to the claimant to provide opportunity to argue on the jurisdiction issue. Eventually, the court will rule on its jurisdiction based on international legislation or treaties applicable or, in the absence thereof, national sources of law.
How does the court determine what law will apply to the claims?
Issues regarding applicable law are questions pertaining to substantive law and consequently the court will not ex officio inquire what law is applicable in a commercial dispute. Normally, the court will render an intermediate award regarding what law is applicable if the issue is at dispute. The court will rule on the choice of law based on the international legislation or treaties applicable or, in the absence thereof, national sources of law.
In what circumstances, if any, can claims be disposed of without a full trial?
Claims can be disposed of pre-trial in several ways. There are various procedural impediments such as the court lacking jurisdiction or the claim being time-barred/precluded (res judicata). Procedural impediments shall be considered ex officio by the court unless specifically regulated otherwise. Other methods of disposing a claim are, inter alia;
- if the parties reach a settlement and request court confirmation of the settlement in an award;
- if the defendant concedes the claim;
- if the claim is manifestly unfounded; or
- by default award (which applies inter alia where the defendant is served but fails to lodge a statement of defence).
What, if any, are the main types of interim remedies available?
Various interim remedies are available. The main types include (i) measures for ensuring potential enforcement of an award, e.g. sequestration of assets; (ii) orders preventing the defendant from taking certain actions, e.g. committing trademark infringements, or less commonly, instructing the defendant to perform certain actions; or (iii) orders for the claimant to provide security for the defendant’s litigation costs.
After a claim has been commenced, what written documents must (or can) the parties submit and what is the usual timetable?
A court proceeding is commenced when the administrative fee has been paid and the court deems that the statement of claim is satisfactory as concerns the requirements of form and content. The court will serve a summons to the defendant ordering the defendant to file a written statement of defence, typically within three weeks. A default award may be rendered against a defendant who fails to respond to the claim after having been served. Once the statement of defence has been filed, the preparation of the case including the timetable for further written submissions is set by the court in consultation with the parties, typically during a preparatory session. There are no further mandatory written submissions but in virtually all cases the parties are required to submit statements of evidence, if it has not been submitted in prior submissions, prior to the main hearing.
What, if any, are the rules for disclosure of documents? Are there any exceptions (e.g. on grounds of privilege, confidentiality or public interest)?
There is no general obligation to disclose documents. However, a party may request the court to order the counterparty or a third party to disclose specific documents. In short, a request for document production will be granted if the documents can be clearly identified (fishing expeditions are not permitted), the party is in possession of the documents and they can be assumed to serve as evidence in the case. Certain documents are excluded. The rules on exclusion are complex but the main categories include privileged communication between a lawyer being member of the Swedish Bar Association (and certain other officials) and his client, trade secrets (unless there are extraordinary reasons for disclosure) and jottings or other personal notes (again, unless there are extraordinary reasons for disclosure).
How is witness evidence dealt with in commercial litigation (and, in particular, do witnesses give oral and/or written evidence and what, if any, are the rules on cross-examination)? Are depositions permitted?
With few exceptions, giving testimony, under oath and orally, is mandatory for anyone who is summoned as witness. Depositions (Sw. vittnesattest) are rarely used, but permitted where the parties agree and it is not deemed to be manifestly inappropriate. A witness is never required to file a written statement before giving testimony. Expert witnesses are, however, expected to lodge a written statement prior to the main hearing. A witness examination is opened by the party that has invoked the witness unless the court decides otherwise. During this initial examination it is not permitted to lead the witness by asking questions inviting to a specific answer but during the counterparty’s cross-examination (or during re-examination) there are no such restrictions.
Is expert evidence permitted and how is it dealt with? Is the expert appointed by the court or the parties and what duties do they owe?
Expert witnesses are permitted. The purpose of an expert witness is to provide the court with observations based on the particular experience that the expert witness possesses. It is only the parties that can invoke expert witnesses in commercial disputes although they are formally appointed by the court, which may also suggest to the parties that an expert witness should be heard. Prior to the main hearing, an expert witness shall file a written statement to the court. An expert witness shall give oral testimony under the same conditions as a witness of fact, if any of the parties request it or if the court deems it necessary.
Can final and interim decisions be appealed? If so, to which court(s) and within what timescale?
A clear distinction is made between awards and decisions under Swedish law. An award is a court’s determination on the merits of the matter at issue. The determination of any other matter is a decision. A decision wherein the court disassociates itself from the matter at issue (i.e. without referring to the merits) is a final decision, e.g. when a case is dismissed because of res judicata. Any other decisions are known as interim decisions (Sw. beslut under rättegång), e.g. dismissal of evidence or an order to produce documents.
All awards and decisions rendered by a district court can be appealed to a court of appeal, but a leave to appeal is required. A leave to appeal will be granted if any of the following conditions apply;
(i) there is reason to believe that the district court has come to an erroneous conclusion;
(ii) it is not possible to assess the correctness of the district court’s award or decision;
(iii) it is of importance to establish an award that may provide guidance to Swedish courts; or
(iv) any other extraordinary reason.
Awards and decisions from a court of appeal can in turn be appealed to the Supreme Court but leave to appeal is granted in few cases since the conditions under items (i) and (ii) above do not apply.
The rules on deadlines for appeals are complex, but many appeals must be made within three weeks after the award or decision is rendered. Certain interim decisions can only be appealed when the court disassociates itself from the matter at issue (either by award or final decision) while others can be appealed immediately.
What are the rules governing enforcement of foreign judgments?
The enforcement of a foreign award in Sweden must be based on an international convention that Sweden has acceded to, or EU legislation permitting the enforcement in other member states. As a general rule, issues regarding the enforceability of foreign awards pertain to form and not merits of the award.
The basic prerequisites are that the debtor is a resident of Sweden and that the enforceability is based on international legislation or an international convention. Enforceability is possible even if permission to enforce a foreign award is not granted in a treaty, convention or other legislation, assuming the parties have an agreement that the claim which the award is based upon was to be subject to litigation in a specific country. Accordingly, a defendant cannot ‘escape’ enforceability in Sweden if it is established that the defendant and the claimant had an agreement (a forum litigation clause) that litigation was to be performed in a specific country.
Foreign awards in commercial matters rendered in EU or EFTA states require little formalities and a request is submitted to the Swedish Enforcement Authority. Other awards may be more complex to enforce and require a declaration of enforceability from a Swedish district court.
A foreign award that contradicts Swedish public policy, i.e. ordre public, can never be enforced.
Can the costs of litigation (e.g. court costs, as well as the parties’ costs of instructing lawyers, experts and other professionals) be recovered from the other side?
In general, the winning party is entitled to full compensation from the losing party for reasonable litigation costs (counsel costs, compensation for the party’s own costs, costs for experts and witnesses, etc.) and interest but there are exceptions to this loser-pays principle.
What, if any, are the collective redress (e.g. class action) mechanisms?
Class action is permitted and governed by the Swedish Group Proceedings Act (Sw. lag om grupprättegång). For environmental law, the Swedish Environmental Act (Sw. miljöbalken) contains specific provisions regarding class actions. Anyone who wishes to participate as a member of a class action must give written notice to the court. As a general rule, the group must be represented by a lawyer being a member of the Swedish Bar Association.
What, if any, are the mechanisms for joining third parties to ongoing proceedings and/or consolidating two sets of proceedings?
Anyone who can make it probable to the court that a dispute matter at issue has an impact on his or her legal rights or obligations may intervene in a court proceeding.
The rules on consolidation are complex and there are several ways in which two or more court proceedings can be consolidated, some of which are mandatory. Mandatory consolidations are normally applied if the same claimant initiates more than one court proceeding against the same defendant or if one or more claimants initiate proceedings against one or more defendants, if, under all these circumstances, the claims are based on essentially the same legal ground (e.g. the same contract or negligent act). The most common reason for consolidation in other situations is that a consolidation would benefit the handling of the court proceedings, but this type of consolidation is not mandatory. Court proceedings may also be separated for the same reason at a later stage.
Are third parties allowed to fund litigation? If so, are there any restrictions on this and can third party funders be made liable for the costs incurred by the other side?
There are no restrictions to third party-funding with the exception that a counsel is in practice prohibited from funding a party’s litigation if the counsel is a member of the Swedish Bar Association. Third party-funding for court litigation is very rare in Sweden, although it is gaining increased attention in the wake of successful examples of third-party arbitration funding.
As for potential risks for a funder, the following deserves mentioning. Owners and board members of special purpose vehicles may be held liable for the counterparty’s litigation costs where the SPV arrangement is made solely for the purposes of circumventing the loser-pays principle established in the Code of Judicial Procedure. This is one of the rare situations under Swedish law where the corporate veil can be pierced. It is uncertain if this liability could apply for third party-funders as well.
What, in your opinion, is the main advantage and the main disadvantage of litigating international commercial disputes?
Court litigation in Sweden is safe, predictable and ensures a high level of compliance with Swedish substantive law. The judges maintain high integrity and, at least in the district courts of Sweden’s largest cities and in the courts of appeal, possess the competence to deal with large and complex commercial disputes. In addition, in medium-sized disputes, court litigation is a viable alternative in terms of how fast they are adjudicated. In addition, enforcement actions based on an award are usually quick and efficient. The main disadvantages are that the proceedings can be slow in larger disputes and that Swedish judges are typically generalists; the adjudication of very complex commercial disputes sometimes suffers from a lack of specialisation, especially in terms of business acumen.
What, in your opinion, is the most likely growth area for disputes for the next five years?
A trend in recent years has been the increasing numbers of major professional negligence claims brought before the Swedish courts. This trend is expected to continue, especially in relation to financial and legal advisors in M&A transactions, and we also expect to see more post M&A disputes. Construction disputes are also expected to increase as a result of extensive production during the last few years in combination with falling real estate prices on the Swedish market and a potential recession. Furthermore, a recession or higher interest rates would most likely result in an increased number of disputes concerning distressed debt. Regulatory disputes are expected to increase as well, especially as regards banks and other financial institutions, as a result of increased activity from the Swedish regulator within these fields and additional compliance frameworks taking form.
What, in your opinion, will be the impact of technology on commercial litigation in the next five years?
Swedish authorities, including courts, are in general keen to adopt new technology. As of the time of the writing of this article, Stockholm District Court is digitalising virtually all of its internal file management as well as updating all the technology of its courtrooms. The use of participation in court trials by phone or video conference is very common and witnesses are often allowed to give testimony by such means.