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11 October 2018
In 2015 a commission of prominent Swedish arbitration experts issued a report to the government which proposed several amendments to the Arbitration Act. The review aimed to make Sweden an even more attractive place for international arbitration.
On 4 September 2018 a government bill for revising the Arbitration Act was presented to Parliament. If adopted, the proposed amendments would enter into force on 1 March 2019.
This article discusses some of the bill's most significant amendments.
The time limit for challenging an arbitration award before the Swedish courts would be shortened from three to two months. This was not suggested by the expert commission, but the government argues that one of the main advantages of arbitration is that it is swift and efficient.
To discourage challenges to arbitration awards, it is proposed that the grounds for setting aside an award when the arbitrators have exceeded their mandate be tightened, so that it is expressly stated in the provision that only irregularities that likely influenced the outcome can lead to an award being set aside. Currently, it not entirely clear whether an excess of mandate by the arbitrators always leads to the award being set aside, irrespective of whether the outcome has been affected.
The bill also includes a new provision on leave to appeal. The main rule is that judgments and decisions by the relevant court of appeal in challenge proceedings cannot be appealed. However, the courts of appeal may allow an appeal to the Supreme Court if they believe it may be of importance as a matter of precedence. Currently, a leave of appeal from the Supreme Court is not required; however, the proposed provision introduces an additional requirement for a leave to appeal, which also enables the Supreme Court to limit its re-examination to specific issues.
It is proposed that courts of appeal in challenge proceedings should be able to allow witnesses to be heard in English, without translation into Swedish.
In Sweden, a tribunal may rule on its own jurisdiction under the competence-competence principle. However, a court has the final say on this. Currently, court actions may be brought for a declaratory judgment regarding the validity of an arbitration agreement both before and after the initiation of arbitral proceedings, irrespective of the tribunal's decision. The expert commission tasked with reviewing the Arbitration Act pointed out that this right is something of an international anomaly. Therefore, the bill proposes to give dissatisfied parties 30 days to challenge a positive jurisdictional decision by a tribunal to a competent court of appeal. Other than that, it would no longer be possible to bring a separate action before a court regarding the tribunal's jurisdiction after the initiation of arbitral proceedings unless the other party so allows. However, this does not affect the possibility to challenge an arbitration award for lack of jurisdiction.
The bill also includes a provision on applicable substantive law, under which the tribunal would be bound by the parties' choice of law. In the absence of such agreement, the tribunal would decide on the applicable law. The proposed provision gives the tribunal wide discretion in regard to deciding on the applicable law if the parties do not. The current Arbitration Act contains no provision on this matter, which has been considered one of the act's unnecessary flaws. The established principle, however, has been what is now proposed – namely, that parties may agree on the applicable law, otherwise it is up to the tribunal to decide.
The revised act would also provide that arbitrators must not only be impartial, but also independent. However, this is seen mainly as a formal clarification, as the current requirement of impartiality is generally interpreted as including a requirement of independence.
New provisions on multi-party arbitration are also included. First, if the parties have not agreed on how to appoint the arbitrators and if the parties on either side cannot agree on an arbitrator, a district court would, at the request of any of the parties, appoint all of the members of the tribunal. This system is intended to guarantee that the principle of equal treatment is respected. Second, it would be possible to consolidate several arbitration proceedings, provided that:
Rather than a remodeling of the Arbitration Act, the government bill can be interpreted as a fine-tuning of the current version. The bill does not contain every amendment that the expert commission proposed in 2015. Most importantly, the government has not included the commission's proposal to abolish the provision on invalid awards in Section 33 of the act and include the ordre public (or 'public policy') ground in Section 34 on challengeable awards. This might be addressed in a future reform of the act.
The proposed amendments to the Arbitration Act concerning challenges of awards and jurisdictional decisions align with the ambition of restricting challenges and upholding the finality of awards.
The proposed provision on multi-party arbitrations aligns with many institutional rules and could, along with the provision on the use of English in challenge proceedings, strengthen Sweden's attractiveness as a place for international arbitration.
The proposed provisions on substantive law and the arbitrators' independence could be described as a codification of already established practice.
For further information on this topic please contact Fredrik Norburg or William Svärd at Norburg & Scherp Advokatbyrå by telephone (+46 8 420 035 00) or by email (email@example.com or firstname.lastname@example.org). The Norburg & Scherp Advokatbyrå website can be accessed at www.norburgscherp.se.
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