Swedish Arbitration Portal: Recent Court Decisions
20 August 2012
The Swedish courts have been busy deciding a number of complex questions in cases involving arbitration disputes, including the application of the doctrines of assertion and group of companies, public policy grounds for setting aside an award, and the court’s role in assisting with taking evidence in an arbitration.
On 2 July 2012, the Svea Court of Appeal rejected a challenge to an arbitral award brought under Sections 33(2) and 34 of the Swedish Arbitration Act. The underlying dispute involved a contract for the sale of gas between an Italian company and a Ukrainian state-owned entity. The Italian company sought damages for the Ukrainian company’s failure to deliver gas as contractually required. The arbitral tribunal decided in a separate award that the agreement is valid and in force, that the Ukrainian company is obligated to deliver gas in accordance with the contract and that a penalty may be awarded for requested but not fulfilled deliveries. The Ukrainian company challenged the arbitral award to the Svea Court of Appeal, alleging that it violated basic principles of Swedish and Ukrainian law by ordering it to deliver gas, in violation of Ukrainian law.
The Svea Court of Appeal noted that the international principles on public policy applicable in international arbitration are narrower than the domestic equivalent. The court agreed with the Italian company’s argument that the arbitral tribunal had only found a contractual obligation for the Ukrainian company to deliver gas but did not specifically order the company to deliver gas. The court found that under the existing gas export regulations in Ukraine, finding such a contractual obligation did not violate international or Swedish national public policy standards.
The court also rejected arguments that the award should be set aside on the grounds of either failure to determine a claim or excess of mandate. In conclusion, the Svea Court of Appeal dismissed the claim in its entirety.
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On 10 May 2012, the Supreme Court of Sweden issued a decision, ordering the disclosure of documents in a pending arbitration under Section 26 of the Swedish Arbitration Act. Under Section 26, a party to an arbitration may request the court’s assistance in obtaining evidence from the counterparty, after requesting leave from the arbitral tribunal. In this case, the counterparty alleged that the material that the tribunal granted leave to obtain with court assistance lacked evidentiary value and contained protected trade secrets.
The Supreme Court explained that under the Swedish Arbitration Act, the evidentiary value of requested material is exclusively a question to be determined by the tribunal. Once a tribunal decides that material has such value, the court cannot review the evidentiary value. The court’s review in deciding whether to order the production of evidence in an arbitration is limited to the legality of the disclosure order and to whether an exception for disclosure exists. The court found no legal impediments to disclosure and no extraordinary circumstances to prevent disclosure. The Supreme Court, therefore, ordered the counterparty to produce the evidence, as requested.
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The doctrines of assertion and group of companies
On 5 April 2012, the Supreme Court of Sweden applied the doctrine of assertion to reject a motion to dismiss a party’s suit filed in court. The claimant filed an action against the defendant, seeking repayment on a loan. Citing a “cooperation agreement” signed between the claimant and the defendant’s parent company, the defendant asserted that the parties had agreed to arbitrate the dispute. The Supreme Court of Sweden rejected the defendant’s motion, explaining that the decision on whether the courts or an arbitral tribunal have jurisdiction over a dispute depends on what the claimant party asserts its claim is based on. In this case, the claimant asserted that its claim for repayment was based on a legal relationship separate from the cooperation agreement. The court concluded that there was no agreement to arbitrate the loan dispute. The Supreme Court’s decision reversed the Svea Court of Appeal’s decision and affirmed the District Court of Södertörn’s dismissal of the motion.
The District Court of Södertörn had also found the cooperation agreement inapplicable to the dispute, but for the reason that it found no intention between any of the parties to bind the defendant to the cooperation agreement. The Svea Court of Appeal, on the other hand, had found that the scope of the cooperation agreement was broad enough to encompass the loan dispute and had dismissed the dispute.
Vinge assisted in providing translations of the Svea Court of Appeal and District Court of Södertörn decisions.
Read the Supreme Court of Sweden’s decision
Read the Svea Court of Appeal’s decision
Read the District Court of Södertörn’s decision
Unofficial English translations of the cases, as well as the Swedish originals, are available on the Swedish Arbitration Portal at www.arbitration.sccinstitute.com. The Swedish Arbitration Portal is a free service offered by the SCC to provide English translations of Swedish court decisions on arbitration issues. The site launched in May 2012 with the mission of increasing transparency in arbitration by making Swedish case law more accessible to the international community.
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