The use of arbitration as a means of settling commercial disputes in Sweden is no new phenomenon. As early as 1359 statutory provisions relating to arbitration first appeared in Swedish legislation. The long history of arbitrations in Sweden has lead to the development of a positive arbitration culture both in the legal and the business communities. It has also facilitated the accumulation of valuable information in the form of court judgments and decisions leading to the development of certain standards of arbitral practice. It is common for commercial standard-form contracts in Sweden to provide for the resolution of disputes through arbitration.
The current Swedish arbitration statute is the Arbitration Act of 1999 (the Act). The Act came into force on 1 April 1999 and applies to any arbitration taking place in Sweden after that date, regardless of the nationality of the parties, the subject matter of the dispute and the date of the arbitration agreement. The Act is based on the UNCITRAL Model Law on International Commercial Arbitration (the Model Law) and deviates little therefrom. The reasons presented for the Act and the commentaries recorded in the legislative history of the Act – the so-called ‘travaux préparatoires’ – provide guidelines for the application of the Act by arbitrators and the courts alike.
Although Sweden is considered a civil law jurisdiction, judicial decisions of the Swedish Supreme Court also operate as a source of arbitration law in Sweden. However, the doctrine of precedent as recognised and applied in common law jurisdictions is not relevant in Sweden.
Sweden has fully ratified the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (the New York Convention), which entered into force in Sweden in 1972, and has also ratified the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States (the Washington Convention) with effect in Sweden from 1967.
* The authors wish to acknowledge the assistance and input of Dilina Östborn and Klara Håstad.
Sweden boasts an arbitration institution recognised as standing alongside the most important arbitration institutions in the world, The Arbitration Institute of the Stockholm Chamber of Commerce (the SCC Institute). The SCC Institute was established in 1917, 15 years after the foundation of the Stockholm Chamber of Commerce itself.
The SCC Institute gained much of the acclaim that is today associated with it during the 1960s and 1970s. It was during this period, at the height of the Cold War, that the SCC Institute became popular as a centre for resolving disputes between parties from the US and the Soviet Union. The American Arbitration Association (AAA) and the USSR Chamber of Commerce and Industry conducted a joint study to evaluate whether or not Sweden was suited to such commercial disputes. The study established Sweden as a neutral place to hold East/West arbitrations. The study also resulted in the formulation of a special arbitration clause, the Optional Arbitration Clause for Use in Contracts in USA-USSR Trade 1977, which provided for arbitration in Stockholm under the administration of the SCC Institute. As a result, the SCC Institute was often engaged in such proceedings. The clause also became a hot topic of discussion for scholars and professionals, adding to the SCC Institute’s fame.
The SCC Institute first adopted rules for international arbitrations in 1976. The current Rules of the Arbitration Institute of the Stockholm Chamber of Commerce (the SCC Rules) were adopted in 1999 – the year in which the Act also came into force.
The SCC Institute is based in Stockholm, Sweden.
The contact details of the SCC Institute are as follows:
The Arbitration Institute of the Stockholm Chamber of Commerce
PO Box 16050
SE- 103 21 Stockholm
Sweden
Tel: +46 08 555 100 50
Fax: +46 08 566 316 50
Email: arbitration@chamber.se
Website: www.sccinstitute.com
Parties who chose to arbitrate under the SCC Rules come from all over the world. The majority of the cases involve Swedish parties, but of the approximately one hundred and thirty cases referred to the SCC Institute in 2004, approximately half were international. East/West arbitrations continue to play a dominant role, with an increasing incidence of parties from China.
When arbitrating under the SCC Rules, the parties are free to choose the place where the arbitration will be held. This does not have to be in Sweden. The SCC Institute has previously administered arbitrations under the SCC Rules, eg in Hong Kong and in England.
In 2004, approximately one hundred and thirty cases were referred to the SCC. The most common kind of arbitration proceedings handled by the SCC Institute are governed either by the SCC Rules or the SCC’s Rules for Expedited Arbitrations. There are also a number of ad hoc proceedings including proceedings governed by the UNCITRAL Arbitration Rules in which the SCC Institute acts as an appointing authority. The SCC Institute’s work covers a broad range of subject matters.
The SCC Institute is an independent entity within the Stockholm Chamber of Commerce. Its objectives are to:1
The SCC Institute does not settle disputes itself, but arranges for parties to have their disputes settled by arbitrators under its administration. The day-today business of the SCC Institute is handled by the Secretariat. Major decisions of the SCC Institute are taken by its Board.
1 The SCC Institute’s objectives are set out in art 1 of the SCC Rules.
The SCC Institute has a Board, which as from 1 January 2006, is composed of six members from Sweden and six members from other countries. All members are appointed by the Board of the Stockholm Chamber of Commerce. The Board is responsible for making all of the major decisions of the SCC Institute. For example, it makes prima facie decisions on jurisdiction, appoints the chairman of the arbitral tribunal and decides on the advance on costs for the arbitration. If the parties have not made a choice regarding the place of the arbitration, it is also the Board that will make this decision.
In some cases, the Board will also make a decision regarding the number of arbitrators. The SCC Rules provide that where the parties have not agreed the number of arbitrators, the tribunal shall consist of three arbitrators.2 However, the Board has a discretion to decide that the dispute shall be resolved by a sole arbitrator, regard being given to the complexity of the case, the amount in dispute and other relevant circumstances. In such a case the Board will first ask for the parties’ opinions and, more often than not, it will base its decision on those opinions.
The Chairman of the Board of the SCC Institute is currently Mr Leif Thorsson, Justice of the Supreme Court of Sweden.
2 See SCC Rules, art 16(1).
The Secretariat of the SCC Institute is headed by the Secretary General and consists of an Assistant Secretary General, three legal counsel (Counsel) and four assistants. Each Counsel heads his own division with an individual caseload of approximately fifty cases.
The Secretariat is responsible for preparing any documentation that is needed by the Board in reaching its decisions. Counsel prepares a summary of the case at hand in the form of a memorandum to the Board and then presents the case to the Board at a Board meeting.
The Secretariat is also responsible for executing decisions of the Board, adjustment of the advance on costs, extending the time for rendering the award and final determination of costs.
One of the Secretariat’s main assignments is to assist the parties with their questions regarding arbitration in general and the SCC Institute. It also assists both parties and the arbitrator(s) with practical details such as finding hearings rooms or hiring interpreters.
The current Secretary General of the SCC Institute is Mr Ulf Franke. Mr Franke has held this position for over 25 years.
One of the SCC Institute’s primary objectives is to provide information on matters relating to arbitration around the world. To this end, the SCC Institute regularly hosts seminars and lectures and the Secretariat answers inquiries about arbitration in general.
The SCC Institute publishes both a newsletter and a book. The book is published three times a year and with effect from the first issue of 2005, the publication was renamed the Stockholm International Arbitration Review (previously The Stockholm Arbitration Report). The book contains articles written by both scholars and professionals addressing current issues in international arbitration. It also contains reviews of international arbitration arbitral awards and court cases.
A major concern for any party in a dispute is the cost of the proceeding. The costs of an arbitration under the SCC Rules consist of the arbitrators’ fees and the administrative fee, as well as the compensation for the SCC Institute’s and the arbitrators’ expenses, and the fees and expenses of any expert appointed by the tribunal pursuant to the Rules.3
At the time of filing the Request for Arbitration with the SCC Institute, the claimant is required to pay a registration fee,4 presently in the amount of €1,500, or €1,000 for expedited arbitrations. Thereafter, the SCC Institute’s fees and the arbitrators’ fees are determined by the Institute itself by reference to the Regulation for Arbitration Costs.5 No distinction is made between domestic and non-domestic arbitrations, either in respect of the SCC Institute’s fees or the arbitrators’ fees.
Both the Institute’s fee and the arbitrators’ fees are based on the amount in dispute, including the amounts claimed by way of any counterclaim or set-off. Where the amount in dispute is not specified, the SCC Institute may fix these sums by making an estimation of the size of the case. The parties are required to furnish such information as is deemed necessary to enable the Institute to make such an estimation. The Institute also has the discretion to deviate from the amounts stated in the Regulation if the case has involved substantially more or less work than would be considered normal.
The maximum amount payable as the administrative fee of the SCC Institute presently stands at €60,000. Co-arbitrators’ fees are fixed at 60% of the chairman of the tribunal’s fee, unless the Institute decides otherwise.
On the SCC Institute website (www.sccinstitute.com/uk/calculator), there is a calculator providing an estimate of the costs of a proceeding, (excluding VAT and expenses if applicable).
Administrative fees of the SCC Institute
| Amount in dispute (€) | Administrative fee of the SCC Institute (€) |
| Up to 25,000 | 1,500 |
| From 25,001 to 50,000 | 1,500 + 4% on the amount above 25,000 |
| From 50,001 to 100,000 | 2,500 + 2% on the amount above 50,000 |
| From 100,001 to 500,000 | 3,500 + 1.25% on the amount above 100,000 |
| From 500,001 to 1,000,000 | 8,500 + 0.8% on the amount above 500,000 |
| From 1,000,001 to 2,000,000 | 12,500 + 0.4% on the amount above 1,000,000 |
| From 2,000,001 to 5,000,000 | 16,500 + 0.1% on the amount above 2,000,000 |
| From 5,000,001 to 10,000,000 | 19,500 + 0.08% on the amount above 5,000,000 |
| From 10,000,001 to 50,000,000 | 23,500 + 0.02% on the amount above10,000,000 |
| From 50,000,001 to 75,000,000 | 31,500 + 0.02% on the amount above 50,000,000 |
| From 75,000,001 | 36,500 + 0.01% on the amount above 75,000,000 |
| Maximum 60,000 |
Amount in dispute (€) Chairman of the tribunal/sole arbitrator (€)
Minimum Maximum
Up to 25,000 2,500 5,500
From 25,001 to 50,000 2,500 + 2% on the amount 5,500 + 14% on the amount above 25,000 above 25,000
From 50,001 to 100,000 3,000 + 2% on the amount 9,000 + 4% on the amount above 50,000 above 50,000
From 100,001 to 500,000 4,000 + 1% on the amount 11,000 + 5% on the amount above 100,000 above 100,000
From 500,001 to 1,000,000 8,000 + 0.8% on the amount 31,000 + 2.4% on the amount above 500,000 above 500,000
From 1,000,001 to 2,000,000 12,000 + 0.5% on the amount 43,000 + 2.5% on the amount above 1,000,000 above 1,000,000
From 2,000,001 to 5,000,000 17,000 + 0.2% on the amount 68,000 + 0.8% on the amount above 2,000,000 above 2,000,000
From 5,000,001 to 10,000,000 23,000 + 0.1% on the amount 92,000 + 0.68% on the amount above 5,000,000 above 5,000,000
From 10,000,001 to 50,000,000 28,000 + 0.03% on the amount 126,000 + 0.1% on the amount above 10,000,000 above 10,000,000
From 50,000,001 to 75,000,000 40,000 + 0.02% on the amount 166,000 + 0.12% on the above 50,000,000 amount above 50,000,000
From 75,000,001 to 100,000,000 45,000 +0.012% on the amount 196,000 + 0.02% on the above 75,000,000 amount above 75,000,000
From 100,000,001 48,000 + 0.01% on the amount 201,000 + 0.045% on the above 100,000,000 amount above 100,000,000
The SCC Institute also sets the amount of the advance on costs to be paid by the parties.6 This is equal to the estimated costs of the arbitration and is payable by the parties in equal shares. However, to avoid obstruction of the proceedings, if a party fails to make payment of its share of the advance on costs, the opposite party shall be given the opportunity to pay this amount. If the outstanding sum in respect of the advance of costs still remains unpaid, the Institute may dismiss the claim in whole or in part as it deems appropriate.7
The parties remain jointly and severally liable for the costs of the arbitration after the award has been rendered. However, the tribunal may apportion the costs of the arbitration as between the parties. In so doing, the tribunal shall give regard to all relevant circumstances, the most important being the outcome of the case.8
Also under the Act the parties shall be jointly and severally liable to pay compensation to the arbitrators for work and expenses. As to the amount of compensation, no detailed provision has been included in the Act which only states that the compensation should be ‘reasonable’.9 In addition to this, the Act provides that an agreement in respect of the arbitrators’ fees which is made with only one of the parties is void.10 This is in furtherance of the requirement under the Act that the arbitrators are impartial and independent. It is also to be noted that under the Act, the arbitrators may not withhold the award pending payment of their fees, in contrast to some other jurisdictions.11 Unless the parties have agreed otherwise, under the Act the arbitrators are authorised to order an apportionment of the parties’ costs as well as of the arbitrators’ compensation.12
6 SCC Rules, art 13(iv).
7 SCC Rules, art 14.
8 SCC Rules, art 40.
9 See s 37 of the Act.
10 Section 39(2) of the Act.
11 Section 40 of the Act.
12 Section 42 of the Act.
The SCC Rules presuppose that an agreement to arbitrate under the Rules is made in writing. Thus the Rules require that a copy of the arbitration agreement, or of the clause under which the dispute is to be settled, is submitted together with the Request for Arbitration.13
If the parties wish to have disputes settled under the administration of the SCC Institute, their intention should be stated as clearly as possible in the arbitration clause. It is also important that the clause makes clear that the parties intend for the dispute to be resolved by arbitration as opposed to any other kind of dispute resolution procedure.
There is no requirement under the Act that the parties’ agreement to arbitrate is in writing. Verbal agreements to arbitrate are acceptable. However, parties are advised to agree their intentions in writing. This will not only eliminate problems associated with having to prove the existence of a verbal arbitration agreement, but will also allow enforcement of the arbitral award under the New York Convention, should this be necessary.
The Swedish courts have traditionally adopted a pro-arbitration stance. The Act reflects this approach by recognising the existence of an arbitration agreement as a bar to judicial proceedings.14 However, the court is not required to dismiss the proceedings by reference to the arbitration agreement of its own accord. The Act requires that an objection is raised requesting the court dismiss the action due to the existence of the arbitration agreement at the first opportunity to do so. Failing this, the party seeking to rely on the arbitration agreement as a bar to judicial proceedings will be deemed to have lost its right to do so.
13 See SCC Rules, art 5(iv).
14 See s4 of the Act.
The SCC Institute recommends the use of a model arbitration clause in the following form:
‘Any dispute, controversy or claim arising out of or in connection with this contract, or the breach, termination or invalidity thereof, shall be settled by arbitration in accordance with the Rules of the Arbitration Institute of the Stockholm Chamber of Commerce.’
The SCC Institute also recommends that the parties agree on the language of the proceedings as well as the law to be applied to the substance of the dispute. The parties are also free to choose the place where the arbitration is to be held.
The SCC Rules do not address the issue of arbitrability. Under the Act, the parties are able to arbitrate any matter on which they are entitled to reach settlement as well as the existence of a particular fact and the civil law effects – as between the parties – of competition laws.15 On the other hand, matters of criminal law, family law, some employment law and certain tenancy rights are generally not arbitrable in Sweden. Also, where the parties agree to resolve future disputes by arbitration, such agreement may not relate to future consumer disputes. An agreement to arbitrate consumer disputes may only be validly entered into at the time the dispute arises.16
15 Section 1 of the Act.
16 Section 6 of the Act.
Under the SCC Rules the arbitral proceedings are initiated when the claimant files a Request for Arbitration. The proceedings are deemed to have commenced on the date that the SCC Institute receives the Request for Arbitration. Under the SCC Rules the Request for Arbitration shall include the contact information of the parties and of the parties’ legal counsel, a summary of the dispute, a preliminary statement of relief sought and a copy of the arbitration agreement.17 The Request must also be accompanied by the necessary registration fee.18
Under the Act,19 the arbitral proceedings are initiated when a party receives a Request for Arbitration in the appropriate form. Unlike the parties’ agreement to arbitrate itself, under the Act the Request for Arbitration must be made in writing. The Request must include an express and unconditional request for arbitration, a statement of the issue which is covered by the arbitration agreement and which is to be resolved by the arbitrators and a statement of the party’s choice of arbitrator where the party is required to appoint an arbitrator.
The Request for Arbitration shall be communicated to the respondent by the SCC Institute.20 The SCC Institute usually delivers the Request by courier in order to ensure that the documents are received.
In rare cases where the respondent cannot be found at the address provided, the SCC Institute will contact the claimant for clarification or for an alternate address. If, after repeated attempts to deliver the Request, the SCC Institute is still unable to locate the respondent, the claimant may be left to effect service of the Request for Arbitration. However, this is unusual.
There are no specific service requirements under the Act.
17 See art 5 of the SCC Rules.
18 SCC Rules, art 6.
19 See s 19 of the Act.
20 See SCC Rules, art 10(1).
Under the SCC Rules the parties may agree on the number of arbitrators. In the absence of such an agreement there are three arbitrators. Each party shall appoint one of the arbitrators. The SCC Institute appoints the third arbitrator and chairman of the tribunal, unless the parties have agreed otherwise. However, the SCC Institute is given the discretion to decide that the dispute will be determined by a sole arbitrator, having regard to all the circumstances of the case, including the amount in dispute and the complexity of the case.21 In any situation where the tribunal is to consist of a sole arbitrator, the SCC Institute shall make the appointment unless the parties agree otherwise.22 There are no restrictions as to nationality or otherwise on the identity of the arbitrators and there is no official list from which the arbitrators must be selected.
Under the Act, there are three arbitrators unless the parties decide otherwise. Each party shall appoint one arbitrator, and the arbitrators so appointed shall appoint the third.23 In addition, the Act provides that any person of any nationality or profession who possesses full legal capacity with regard to his actions and his property may act as an arbitrator as long as he fulfils the requirements of independence and impartiality.24
Where the parties are required to appoint arbitrators, the Act requires that the claimant state its choice of arbitrator in the Request for Arbitration.25 The respondent is then required to notify the claimant in writing of its choice of arbitrator within 30 days of receipt of the Request for Arbitration.26 Similarly, where the party-appointed arbitrators are required to appoint the chairman of the tribunal, this must take place within 30 days of the date on which the last party-appointed arbitrator was appointed.27 Should either of these procedures fail, or in the case where an arbitrator is to be appointed by a third party (ie neither a party or a party-appointed arbitrator) and this has not happened within 30 days of the request that the third party appoint an arbitrator, a party may request that the district Court make such appointment.28
As stated above, in the case of a sole arbitrator, the chairman of a three (or more) person tribunal or where a party fails to appoint an arbitrator within the time allowed, the SCC Institute shall make such appointment.29 Appointment of the arbitrator is made by the SCC Institute’s Board. If the parties are of different nationalities, the SCC Institute shall appoint a sole arbitrator or a chairman of a nationality other than of the parties.30
When an arbitrator has been appointed, the SCC Institute will contact that arbitrator and ask him to fill out a standard form confirming his independence and impartiality. Where the arbitrator writes any additional comments on the form, copies of the form will be immediately forwarded to the parties. The parties may then decide whether or not to take any action, such as raising a challenge to the appointment of the arbitrator.
The SCC Rules stipulate that arbitrators must be impartial and independent.31 If an arbitrator knows of any circumstances that could lead to him being deemed partial and dependent, he must immediately disclose these circumstances. Should any disqualifying circumstances become known to an arbitrator during the proceedings he must immediately inform the parties and his co-arbitrators thereof in writing. The same requirements are stated in the Act.32
The SCC Rules do not provide a list of circumstances which would lead to an arbitrator being deemed partial and/or dependent. It follows from the Act that such circumstances include:33
A party wishing to challenge the appointment of an arbitrator in an arbitration governed by the SCC Rules must send a written statement of its reasons for the challenge to the SCC Institute within 15 days of the date on which the disqualifying circumstance was made known to that party.34 Should a party fail to challenge an arbitrator within 15 days after the disqualifying circumstance was made known to that party, the party shall be deemed to have waived the right to challenge the appointment of the arbitrator on those grounds.
The SCC Institute must give both parties and arbitrators an opportunity to comment on the challenge. Thereafter, the SCC Institute will reach a decision on the challenge. Where the SCC Institute finds the challenged arbitrator to be disqualified, it shall remove that arbitrator from the tribunal. Even without a challenge, the SCC Institute may remove an arbitrator from his post if the arbitrator is prevented from de facto fulfilling his duties or if he fails to perform his functions in an adequate manner.35 The decision of the SCC Institute is final and cannot be appealed.
Under the Act a challenge to an arbitrator must also be made by a party within 15 days commencing on the date on which the party became aware both of the appointment of the arbitrator and of the existence of the circumstance. Unless the parties have decided otherwise, the challenge will be decided by the tribunal. There is no appeal against a successful challenge. However, where the challenge is dismissed or denied due to the challenge having been made too late, within 30 days of having received the decision, the party raising the challenge may file an appeal to the district Court. While the challenge is pending before the district Court, the tribunal is not prevented from continuing with the proceedings.36
Another possibility is open to the parties under the Act. They may agree that a claim to remove an arbitrator shall be determined by an arbitration institution. The decision of such institution will be final and cannot be appealed.37
In addition to the rules regarding challenge to arbitrators, the Act allows the district Court, upon request by a party, to remove an arbitrator if the arbitrator has caused a delay to the proceedings.38 Also in this case, the parties are free to replace the district Court by an arbitration institution.
If an arbitrator resigns or is removed from his assignment, the SCC Institute will appoint a new arbitrator in his place. This applies regardless of who originally appointed the arbitrator. If the arbitrator was appointed by one of the parties, the SCC must consult that party prior to the appointment of the new arbitrator.39
Under the Act, where an arbitrator has been removed from his post due to the existence of disqualifying circumstances, the party or body who was originally required to make the appointment shall appoint a replacement arbitrator within 30 days of the date on which the person responsible for appointing that arbitrator became aware of the existence of the disqualifying circumstance. However, if the disqualifying circumstances have arisen before the arbitrator is appointed, the district Court shall appoint the new arbitrator.40
21 SCC Rules, art 16(1).
22 SCC Rules, art 16(1) and (5).
23 See ss 12 and 13 of the Act.
24 Section 7 of the Act.
25 Section 19 of the Act.
26 Section 14 of the Act.
27 Section 15 of the Act.
28 Sections 14 and 15 of the Act.
29 See art 16 of the SCC Rules.
30 SCC Rules, art 16(8).
31 SCC Rules, art 17.
32 See s9 of the Act.
33 Section 8 of the Act.
34 See art 18 of the SCC Rules.
35 See art 19 of the SCC Rules.
36 See s 10 of the Act.
37 Section 11 of the Act.
38 Section 17 of the Act.
39 See art 16(7) of the SCC Rules.
40 See s 16 of the Act.
Unlike the ICC and London Court of International Arbitration (LCIA) Rules, the SCC Rules are silent on by whom the parties may be represented.
No particular qualifications are required for party representatives under the Act.
The SCC Rules do not deal with the issue of separability. The doctrine of separability has been codified in the Act41 according to which an arbitration agreement shall be deemed to constitute a separate agreement from the main agreement when assessing the arbitrators’ jurisdiction.
41 Section 3 of the Act.
The jurisdiction of the tribunal to determine the dispute and for the SCC Institute to administer the dispute derives solely from the parties’ agreement to arbitrate.
After the initial exchange of briefs, the SCC Institute will make a prima facie decision on jurisdiction. The SCC Institute shall dismiss a Request for Arbitration if it is ‘clear’ that the Institute lacks jurisdiction.42 This threshold is fairly low and it is rare for the SCC Institute to decline to administer a dispute on this grounds. If the Request for Arbitration is not dismissed, the case will be referred to the arbitral tribunal.
As noted above, the SCC Institute will only make a prima facie decision. The arbitral tribunal will not be bound by this decision and has to make its own determination on jurisdiction. Whist the SCC Rules do not deal with the doctrine of ‘kompetenz-kompetenz’, ie the ability of the tribunal to rule on its own jurisdiction, the Act specifically provides that the arbitrators may rule on their own jurisdiction to determine the dispute.43
However, while recognising the doctrine of kompetenz-kompetenz, the Act also recognises that no man should be a judge in his own cause. Thus, under the Act a decision by the tribunal regarding its jurisdiction to determine the dispute shall not prevent a court from making the final determination on this question, following a request from either party.44 The corollary of this is that should a tribunal decide that it lacks jurisdiction over a dispute, a party can refer the question of the tribunal’s jurisdiction to the court for final determination.
It is to be noted that a party wishing for the court to make the final determination on the jurisdiction of the tribunal to determine the dispute need not request that the court take this decision immediately following the decision of the tribunal on this point. The party may choose to make this request to the court at a later stage in the arbitration and even after the final award has been rendered.45 However, that party must not continue in the arbitration without continued objection against the jurisdiction of the tribunal or it will be deemed to have waived the right to have this matter determined by the court.
Stockholm Arbitration Institute
42 See art 7 of the SCC Rules.
43 See s 2 of the Act.
44 Section 2 of the Act.
45 Sections 2 and 36 of the Act cxxxii
Both the SCC Rules and the Act embrace the principle of ‘party autonomy’ over the conduct of the proceedings and contain few mandatory procedural rules and instead leave considerable room for the parties and arbitrators to fashion an approach which is suitable for the particular dispute. However, there are certain limits to the tribunal’s duty to comply with the procedural agreements of the parties. Under both the SCC Rules46 and the Act47 the tribunal has an obligation to ensure that the dispute is handled in an impartial, practical and speedy manner.
Under the SCC Rules, following communication of the Request for Arbitration to the respondent, the respondent is required to file a Reply thereto within the time specified by the SCC Institute.48 The Reply should include comments concerning the respondent’s position in relation to the claims made in the Request for Arbitration; a statement identifying the arbitrator appointed by the respondent, if applicable; objections concerning the validity or applicability of the arbitration agreement, if any; and any counterclaim or setoff, if any.
Once duly constituted and all preliminary matters have been resolved (especially the payment of the advance on costs), the SCC Institute will transfer the case to the arbitral tribunal. The tribunal will then set down a timetable for the exchange of written submissions. In accordance with this timetable, the claimant then submits a statement of claim. This will include the material facts and the circumstances on which the claimant relies, a preliminary statement of evidence and shall state the relief sought. Thereafter, the respondent must submit a statement of defence in reply to the statements put forward by the claimant in the statement of claim and in accordance with the timetable set down by the tribunal.49 If they have not already done so, the tribunal may decide that the parties should submit additional written statements thereafter and set down a timetable for this accordingly.
If the tribunal does not consider it inappropriate, regard being had to the stage in the proceedings and to the potential prejudice that the opposing party might suffer, a party may amend its claim or defence at any stage of the proceedings, provided such amended claim or defence remains within the scope of the arbitration agreement.50
Under the Act, provided that the parties have not agreed otherwise, the tribunal shall decide a suitable timetable for the proceedings, including the timetable for the parties to submit their respective statements of case. Within the time stated by the arbitrators, the claimant shall state its claims in respect of the issues stated in the Request for Arbitration as well as the circumstances invoked in support thereof. Thereafter the respondent shall state its position in relation to the claims and shall state the circumstances invoked in support of its position within the period of time determined by the arbitrators.51 In setting the timetable and in determining whether additional statements should be submitted, the tribunal must be careful to ensure that the parties are afforded an opportunity to present their respective cases. However, the tribunal is only required to afford each party an opportunity to present its case ‘to the extent necessary’. This marks a change from the UNCITRAL Model Law which requires that the parties are given a ‘full’ opportunity to present their respective cases. This deviation is a pragmatic attempt to ensure that while the proceedings are fair, they are also efficient and speedy, as also provided in the Act. However, both parties must be given an opportunity to review all documentation and other materials supplied by the opposing party to the tribunal.52
The Act also enables the tribunal to permit the parties to amend their cases during the proceedings provided that the amended case remains within the scope of the arbitration agreement and the tribunal does not consider it inappropriate for the proposed amendment to be made. In reaching a decision on whether to permit a party to amend its case during the proceedings, the tribunal is required to take into consideration the stage in the proceedings at which the amendment is proposed and any other relevant circumstances.53
46 See art 20(3) of the SCC Rules.
47 See s 21 of the Act.
48 See art 10 of the SCC Rules.
49 SCC Rules, art 21.
50 SCC Rules, art 22.
51 See s 23 of the Act.
52 Section 24 of the Act.
53 Section 23 of the Act.
The principal object of the oral hearings is to give the parties an opportunity to present their cases in a satisfactory manner. The parties shall be granted the possibility of introducing the evidence they have invoked, to plead their case and to hear the opposite party do the same.
Under the SCC Rules, the tribunal is required to hold an oral hearing if requested to do so by one of the parties. Otherwise, it is for the tribunal to determine the need for oral hearings and when such hearings shall be held.54 There are no formal rules regarding the manner in which hearings should be conducted and this is to be decided by the tribunal, taking into account the wishes of the parties.
It is practice that in arbitrations according to the SCC Rules, at least one oral hearing is held. Should any of the arbitrators be replaced during the course of the proceedings, the tribunal shall decide whether or not to repeat the oral hearing. In practice, when this happens, oral hearings are seldom repeated. If there is more than one hearing, these will often be divided into preparatory hearings and a main hearing. The preparatory hearings might be used to clarify the parties’ positions, to iron out any procedural matters and to try to establish any possibility for conciliation.
The Act gives the parties the right to agree to dispense with the need to hold oral hearings. This might be done in less complex cases which can be resolved on the parties’ written submissions and witness statements. In cases where the parties have not so agreed, the tribunal is again required to hold oral hearings upon the request of one of the parties, or if the arbitral tribunal itself deems this to be necessary.55
54 See SCC Rules, art 25.
55 See s 24 of the Act.
Under the SCC Rules and at the request of the tribunal, the parties shall state the evidence on which they intend to rely and what they intend to prove by such evidence.56 Similarly, the Act states that it is for the parties to supply the evidence.57 The principle of free evidence applies in Sweden. This means that, in principle, there are no restrictions as to the kind of evidence a party may adduce. However, the Rules allow the tribunal to refuse to admit evidence that it considers to be irrelevant or non-essential or if the proof sought can be established in another, more efficient way.58 The Act provides stricter restrictions on when the tribunal may refuse to admit evidence put forward by the parties. The tribunal is only able to refuse to admit evidence under the Act where such evidence is manifestly irrelevant to the case or where such refusal is justified having regard to the time at which the evidence is offered.59
Both the Act and the SCC Rules allow the tribunal to appoint experts to give evidence on certain issues, where the parties are not opposed to this.60
Neither the Act nor the SCC Rules explicitly provide for disclosure of documents by the parties. However, the existence of this power is not contested in Sweden. Upon request of a party, the tribunal may call upon another party or even a third party to disclose certain specified documents or documents falling within a specified category. The documents covered by the request must be detailed sufficiently to enable the arbitrators to make necessary assumptions regarding the evidential value of the documents. A request for disclosure should not be granted if the documents cannot be presumed to have probative value. When considering whether to make an order for production of documents, the tribunal should also give consideration to whether the request for production of documents should be refused on the grounds of protection of trade secrets.61
The tribunal is not empowered to charge fines or impose penalties should the person ordered to produce the requested documentation refuse to do so.62 To compound this, the Act prohibits the tribunal from administering oaths or truth affirmations. It is also unclear whether, and if so to what extent, the tribunal may draw adverse inferences from a party’s failure to comply with an order of the tribunal for production of documents.
On the other hand, if requested to do so, in making an order for the production of documents, the tribunal may wish to note that if the demand is not complied with voluntarily, the courts are empowered to issue a subpoena.
The SCC Rules do not address the issue of court assistance in taking evidence. The Act allows a party to apply to the district Court where that party wishes for an opposing party or a third person to be ordered to produce as evidence a document or an object. A party may also apply to the district Court where that party wishes a witness or an expert to give evidence under oath or truth affirmation.63 Orders of the district Court may be enforced and sanctions may follow from a failure to comply with any such order.
Before making any such application to the district Court, the consent of the tribunal must first be obtained. However, the tribunal must give its consent to the application if it considers such a measure to be justified having regard to the evidence in the case.64
Evidently, these provisions on applications to the district Court for production of evidence do not apply to proceedings held outside Sweden and where the party towards whom the production order is to be directed is domiciled outside Sweden.
56 See SCC Rules, art 26.
57 See the Act section 25.
58 See SCC Rules, art 26(2).
59 See s 25 of the Act.
60 See SCC Rules, art 27 and s 25 of the Act.
61 The Act does not contain any rules concerning trade secrets. However, it generally assumed that the rules in respect of trade secrets in the Swedish Code of Judicial Procedure are also to be observed by arbitrators.
62 See s 25(3) of the Act.
63 Section 26(2) of the Act.
64 Section 26(1) of the Act.
Both the SCC Rules and the Act allow the tribunal to order a party to undertake certain interim measures during the proceedings on the request of a party. The party requesting the tribunal make such an order may be required to provide security for the damage which might be suffered by the other party as a result of conducting the order.65
However, both under the Act and the SCC Rules the tribunal is only empowered to make such interim orders to secure the claim being adjudicated by the tribunal. Further, the tribunal’s interim orders cannot be enforced.
Where a party wishes for the other party to undertake an interim measure which is not necessary to secure the claim before the tribunal, or where the requesting party anticipates that steps may need to be taken to ensure that the measure ordered is performed, or if a party wishes to obtain an interim measure before the tribunal has been constituted, the only option is for that party to submit an application to the district Court. The Act explicitly recognises the right of a party to apply to the court for such security measures that the court has jurisdiction to issue.66 Such measures include attachment orders and orders to undertake a certain course of conduct. The arbitration agreement does not operate as grounds for the court to dismiss such applications.
It is to be noted that where the court has granted an interim order before the initiation of arbitration proceedings, the party requesting the order must initiate arbitration proceedings within one month of the date of the order. Failure to do this will result in the immediate rescission of the interim order.67
The SCC Rules and the Act have been drafted to promote the speed and efficiency of the arbitral proceedings which necessarily involves preventing obstruction of the proceedings by a party. Thus, if a party fails to appear at a hearing or fails to comply with an order of the tribunal, eg if the respondent fails to submit its statement of defence, the tribunal may continue with the proceedings and even render a final award.68 However, in furtherance of the principle that the parties must be given an opportunity to present their respective cases and in recognition of the principle that the proceedings must be fair, if the party in default shows valid cause for its conduct, this rule does not apply.
Under the SCC Rules, if a party fails to invoke deviations from the arbitration agreement, the Rules themselves or other rules of procedure applicable to the proceedings within due time, it will be deemed to have waived its right to raise an objection on that basis.69 Similarly, under the Act, a party is not entitled to rely on a circumstance which, through participation in the proceedings without objection or otherwise, it may be deemed to have waived.70 However, the Act specifically provides that a party shall not be considered as having accepted the tribunal’s jurisdiction to hear the dispute, solely by having appointed an arbitrator. This recognises the importance to the parties of being able to select an arbitrator of their choosing. It is the tribunal that shall determine its own jurisdiction (at least in the first instance), and the tribunal may only reach a decision on its jurisdiction once fully constituted.
65 Section 25(4) of the Act and art 31 of the SCC Rules
66 See s4 of the Act.
67 See Ch 15, s 7 of the Swedish Code of Judicial Procedure.
68 See art 28 of the SCC Rules and s 24(3) of the Act.
69 SCC Rules, art 29.
70 See s 34 of the Act.
The SCC Institute does not scrutinise the awards rendered under its Rules nor does it have the right to prior approval of the award.
Under the SCC Rules the award must be rendered within six months from the date when the case was referred to the arbitral tribunal.71 However, if necessary the SCC Institute may extend the period of time for rendering an award. It will only usually grant such extensions for two months at a time, unless the parties agree to a longer extension.
The award must state the date on which it has been rendered, must contain an order or a declaration and state the reasons for it. The award must also be signed by the arbitrators, or by a majority of the arbitrators. Where the award has been signed by a majority of the arbitrators only, it must contain a statement verifying that the arbitrator who has not signed the award has participated in deciding the dispute. However, where an arbitrator has refused to participate in the deliberations without valid cause, the remaining arbitrators may continue to determine the dispute and render an award. Where the parties have agreed, it is possible for the chairman alone to sign the award. Finally, the award may also set out the arbitrators’ decision on the apportionment of the costs of the proceeding between the parties, although this may also be set out in a separate award or in an order by which the proceedings are terminated. The award must be sent to the parties immediately.72
Similarly, under the Act73 the award is also to be made in writing and signed by the arbitrators or a majority of the arbitrators provided that the reasons why all of the arbitrators have not signed the award is stated in the award. Again, the parties may decide that the chairman of the tribunal alone may sign the award. The award must state the place of the arbitration, the date on which the award was made and must be delivered to the parties immediately. However, unlike under the SCC Rules, there is no requirement under the Act that the award states the reasons for it, but an omission to state the reasons would be very unusual. It is important to note that if the award does not fulfil the requirements as to written form or if the award is not appropriately signed, it will be of no effect and is invalid under the Act.74
For an award to be deemed ‘rendered’ by the arbitral tribunal, it must have been made available to the parties. There is no time limit in which the award must be rendered under the Act.
The right of an arbitrator to attach a dissenting opinion to the award is expressly recognised in the SCC Rules.75 The arbitrator holding the dissenting opinion will usually also express the reasons for his dissent. The Act is silent on an arbitrator’s right to attach a dissenting opinion to the award. However, it is generally considered that an arbitrator is entitled to do so.
The SCC Rules permit the tribunal to correct obvious errors in the award and, on request from a party, decide a matter which should have been dealt with in the award, but was not, within 30 days of receiving the award. Similarly, upon request of a party, the tribunal may provide a written interpretation of the award.76
Similar provisions apply under the Act. The Act also provides for the tribunal to issue a supplemental award.77 This might be necessary where, due to an oversight, the arbitrators have failed to deal with an issue which should have been dealt with in the award, or simply to correct typographical errors. However, supplemental awards must be rendered within 60 days of the date of the original award.
Once rendered, the award is final and binding on the parties under the SCC Rules and under the Act. There is no provision for appeals under the SCC Rules.
Under the Act there can be no appeal on the merits of the award. An award can only be challenged as a result of procedural irregularities. The Act distinguishes between circumstances resulting in the award being invalid78 and circumstances rendering an award challengeable as a result of which the award might be set aside, in whole or in part.79 An award is invalid if it decides an issue which is non-arbitrable, if the award or the way in which it has been rendered violates Swedish public policy or if it does not fulfil the requirements with regard to written form and signature by the arbitrators.
An award may only be challenged and set aside on prescribed procedural grounds. These are if the award is not covered by a valid arbitration agreement between the parties; if the arbitrators have made the award after the time limit agreed by the parties or where the arbitrators have otherwise exceeded their mandate; if the proceedings should not have taken place in Sweden; if the appointment of an arbitrator was not in accordance with the parties’ agreement or the provisions of the Act; if an arbitrator was not able to act due to a lack of legal capacity or because the arbitrator was not impartial and independent; and finally, if an irregularity occurred during the course of the proceedings which probably influenced the outcome of the case, where the party is not at fault in respect of the irregularity.
A challenge must be brought within three months from the date of receipt of the award by the party bringing the challenge. A party will be deemed to have waived its right to challenge the award if it seeks to rely on a circumstance in support of the challenge which it did not previously object to during the proceedings and which it should have done.
Under the SCC Rules, an arbitrator is liable only if shown to have caused damage by wilful misconduct or gross negligence.80
The Act does not contain any rules on the liability of arbitrators for acts related to their decision-making functions. However, in the legal doctrine it is argued that an arbitrator who causes a party damages through negligence in the performance of his engagement may be liable in damages under general civil law principles.
80 See art 42 of the SCC Rules
The SCC Rules do not deal with the issue of enforcement of awards, this being a matter for the courts of the place in which the award is sought to be enforced.
The manner in which an award will be enforced in Sweden depends upon whether the award is classified as a ‘Swedish award’ or as a ‘foreign award’. Under the Act, determination of whether an award will be considered as a ‘Swedish award’ or a ‘foreign award’ is made according to the place of the arbitration.81
Swedish arbitral awards are automatically recognised in Sweden. In contrast to a judgment rendered by a court though, a Swedish arbitral award cannot be immediately enforced. The Swedish Execution Authorities must perform a summary review before enforcement. However, this review is limited to checking that the arbitral award does not provide for a right of appeal and, if it does, that the time for appeal has expired and the award has not been appealed. In addition, the Execution Authority must check that the award complies with the requirements under s 31(1) of the Act that the award has been made in writing and has been signed by the arbitrators.
As to foreign awards, a party must first file an application for recognition and enforcement of the award with the Svea Court of Appeal. The grounds for refusing recognition and enforcement under the Act correspond to the grounds provided in art V of the New York Convention.82 Where application is granted by the Svea Court of Appeal, the award can be enforced as a final judgment of a Swedish court through the Swedish Execution Authorities.83
81 See s 52 of the Act.
82 Sections 54 and 55 of the Act.
83 Section 59 of the Act.
The SCC Rules do not impose confidentiality upon the parties although the SCC Institute itself is required to maintain the confidentiality of the arbitration,84 as are the arbitrators.85 Further, the Act makes no provision on confidentiality whatsoever and a general duty of confidentiality in respect of arbitral proceedings is not recognised in Sweden.
84 See art 9 of the SCC Rules.
85 SCC Rules, art 20(3).
The Swedish Supreme Court has recognised that it is generally accepted that arbitrators should maintain the confidentiality of the arbitration as part of their mandate. However, the Supreme Court held that the parties to an arbitration are not bound by a duty of confidentiality unless they have agreed to this, although as a result of the ‘private’ nature of arbitral proceedings, third parties are not entitled to be present during the proceedings or at hearings and nor may they read the pleadings in the dispute.86 Thus, whenever the parties in an arbitration taking place in Sweden wish for the arbitration to be confidential, they must enter into an agreement to this effect, which may be a part of the arbitration agreement itself or a separate agreement.
It appears to be undisputed that counsel for the parties in arbitral proceedings are under a duty of confidentiality by virtue of their office.
86 See NJA 2000 p 538 (Bulgarian Foreign Trade Bank Limited v Al Trade Finance Inc (the ‘Bulbank Case’)).
There are no particular rules in the Act deviating from international standards, the Act being based on the UNCITRAL Model Law. However, when agreeing to arbitrate under the Act, the following three matters should be kept in mind. First, a novelty in the Act is that where commercial parties are not domiciled in Sweden, the Act recognises the right of those parties to agree in an express written agreement to opt out of, or to limit, the court’s powers to set aside the award.87 Secondly, if the arbitrators find themselves to lack jurisdiction to hear the dispute, the Act leaves room for a positive finding on the jurisdiction of the tribunal to be made by the court, unlike eg the UNCITRAL Model Law.88 Thirdly, the Act allows arbitrators to continue to act as a truncated tribunal if an arbitrator absents himself without valid reason, so that the remaining arbitrators can render an award.89
87 See s 51 of the Act.
88 Section 36 of the Act.
89 Section 30 of the Act.
In addition to the SCC Rules, the SCC provides Rules for Expedited Arbitrations, Insurance Arbitration Rules and Rules on Procedure and Services under the UNCITRAL Arbitration Rules. Further, the SCC Mediation Institute offers dispute resolution in accordance with the SCC Mediation Rules.
Arbitration pursuant to the Rules for Expedited Arbitrations (the Expedited Rules) is conducted through the appointment by the SCC Institute of a sole arbitrator. The procedure is simplified and can be a preferred way of settling smaller disputes rather than disputes regarding larger amounts. Except for the statement of claim and the statement of defence, the parties may only submit one written statement each to the Institute. The documents must be brief and time limits for the submission of documents must not exceed ten days. An award under the Expedited Rules has to be rendered within three months from the time when the dispute has been referred to the sole arbitrator. However, if necessary the SCC Institute may extend the period of time for rendering an award.
The Insurance Arbitration Rules aim at rendering the effective settlement of insurance and reinsurance disputes. The parties to the dispute must have explicitly agreed the application of these Rules.
The Insurance Arbitration Rules incorporate both the SCC Rules and the Expedited Rules in order to achieve flexibility. However, if the parties have not agreed otherwise, the Expedited Rules shall apply, unless the SCC Institute considers it more appropriate for the SCC Rules to apply in view of the complexity of the case, the amount in dispute and the other circumstances of the case.
When appointing arbitrators in cases under the Insurance Arbitration Rules, the SCC Institute will designate individuals recognised for their experience and expertise in the insurance field.
The Mediation Centre of the Stockholm Chamber of Commerce was established in 1999 as a complement to the Arbitration Institute. It has its own Board and its own Secretariat. The procedure regarding mediation is governed by a special set of rules, the Rules of the Mediation Institute of the Stockholm Chamber of Commerce.
The time limit for mediation under the Mediation Rules of the Stockholm Chamber of Commerce is two months. Unless the parties agree otherwise, a sole mediator will be appointed. The parties can later agree to appoint the mediator arbitrator so that he can confirm the settling of the dispute through an arbitral award.
SCC arbitration strives at maximum flexibility for the arbitral tribunal to establish the procedure which it deems appropriate for the specific case, taking into account all relevant circumstances including the background of the parties and the arbitration agreement. The Swedish court system is most arbitration-friendly and supportive. The local infrastructure, if the arbitration is to be conducted in Sweden, is well qualified to assist.
The Act and the SCC Rules, being adopted in 1999, reflect the recent development in international commercial arbitration. The SCC Institute has adopted the ICC method for fixing the administrative costs and the arbitrators’ fees, the ad valorem basis, with its pros and cons. The SCC fees are lower than the ICC fees due to the fact that the SCC procedure will not require the fixing of terms of reference, the way it is made in an ICC context, nor will there be any quality control of the award like the scrutiny of the draft award conducted by the ICC Court. On the other hand, this will result in the award being made available to the parties at an earlier time.
