February 11 2010
On December 9 2009 the Stockholm Chamber of Commerce (SCC) board of directors adopted a new set of rules for the appointment of what is commonly referred to as an 'emergency arbitrator' – the individual empowered to make decisions regarding interim measures. The rules are stipulated in an appendix to the Arbitration Rules of the Arbitration Institute of the Stockholm Chamber of Commerce. The new rules entered into force on January 1 2010 and will automatically apply provided that the parties have not contracted otherwise. Accordingly, lawyers involved in the negotiation of agreements would be well advised to become familiar with the new rules and regulations and the opportunities and risks they present. The rules will also apply to old agreements in which the parties have incorporated the SCC rules on dispute resolution – that is, the new rules apply retroactively.
By means of these rules, the SCC wishes to make it easier for parties that have opted for the SCC's dispute resolution rules to obtain a decision regarding interim measures both before a party invokes arbitration and before an arbitration tribunal is appointed.
The interim measures which are typically employed are orders enjoining the respondent from taking certain actions or conducting certain activities. The measures may also involve orders compelling the respondent to deliver a particular product. Naturally, interim measures must be administered quickly, but the new rules allow measures to be administered so quickly that the applicant enjoys a procedural advantage unless the respondent's counsel is an experienced and well-prepared litigator. Thus, although interim measures are not intended to determine the ultimate resolution of a dispute, this is nonetheless often the outcome. Accordingly, it serves to be well prepared.
The new rules aim to provide both parties with the opportunity to pursue their claims on a level playing field. However, the rules' provisions inadvertently allow for a different result. Where a party has applied for the appointment of an emergency arbitrator and requested interim measures, the SCC has 24 hours to appoint an arbitrator. Thereafter, the emergency arbitrator must issue a decision regarding the interim measures within five calendar days. Within this timeframe, the opposing party – the respondent – must be given the opportunity to analyze the applicant's request and its grounds. In addition, the respondent must formulate a persuasive reply. The reply must also be submitted in sufficient time prior to the expiry of the five-day limit in order to allow the emergency arbitrator to digest the respondent's arguments. It is evident that, given the brief period of time afforded to the respondent, it is burdened by a significant disadvantage in the proceedings, especially since the applicant often has a much longer period in which to prepare its request. Furthermore, the applicant chooses the point in time at which to commence the proceedings.
The new rules should be analyzed carefully by any party that has incorporated the SCC's dispute resolution provisions into an agreement. Parties that are already involved in a contentious matter would be well-advised to attempt to anticipate whether the new rules are to their advantage. It is highly probable that the new rules will be used only occasionally, but where they are applied there is a risk that a dispute significant to the company will be determined by the interim measures. It is prudent to be well prepared for this eventuality.
For further information on this topic please contact Björn Tude at Gernandt & Danielsson Advokatbyrå by telephone (+46 8 670 66 00), fax (+46 8 662 61 01) or email (firstname.lastname@example.org).
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