The revised Swedish Arbitration Act: four things you need to know

The Swedish Arbitration Act 1999 (the 1999 Act) has been revised (the Revised Act). The revisions are the outcome of a five-year process by which the Swedish government has sought to modernise the arbitration law and further boost Stockholm's status as a major arbitral centre. 

In this briefing we summarise the main changes. The changes can be broadly categorised as measures that aim to:

• make the supporting courts more accessible to non-Swedish users;
• minimise delay;
• promote enforceability; and
• modernise the text of the 1999 Act.

The changes apply to all arbitrations commenced on or after 1 March 2019.

Increasing accessibility

Perhaps the most significant change to the 1999 Act is the inclusion of a new provision (Section 45a) which makes clear that the Court of Appeal may, upon the request of a party, accept oral evidence in English in both jurisdiction and set aside proceedings, without translation into Swedish. The Supreme Court is also permitted to accept oral evidence in English. This provision applies to proceedings before the Court of Appeal or Supreme Court commenced after 1 March 2019, even if the related arbitration proceedings were commenced prior to adoption of the Revised Act. 

Reducing delay

Limiting the scope for jurisdiction challenges

The 1999 Act allowed parties to challenge the tribunal's jurisdiction before the Swedish District Court at any stage before or after commencement of an arbitration.¹ The Revised Act has changed this. The court may no longer deal with the question of jurisdiction once the arbitration has commenced.² In addition, although the tribunal's own decision as to its jurisdiction can still be challenged before the Court of Appeal, a 30-day time limit now applies.³ Both measures reduce the extent to which recalcitrant parties can raise jurisdictional issues as a means of causing delay.

Permitting consolidation

 Accounting for the rise in multi-party, and multi-dispute arbitration, the 1999 Act has been amended expressly to permit consolidation if:

• the parties agree to such consolidation;
• consolidation would benefit the administration of the arbitration; and
• the same arbitrators have been appointed in both cases.⁴

While consolidation is permitted under most institutional rules, the amendments helpfully clarify the position in ad hoc proceedings, and should help to reduce the costs of and delay caused by duplicative concurrent proceedings. Consistent with the position in institutional arbitration, parties keen to consolidate ad hoc proceedings should seek consolidation at the earliest stage possible and take steps to ensure that the same arbitrators are appointed in all disputes. 

Unlike most institutional rules, the Revised Act also permits the court to separate out consolidated arbitrations "if there are reasons for it".⁵ It is presently unclear what could justify such a separation, but this may provide parties faced with proposals to consolidate with a measure of comfort that consolidation can be reversed should it become unworkable.

Appointment of arbitrators in multiparty proceedings

The revisions also provide a mechanism for appointment of the tribunal in circumstances where multiple claimants or multiple respondents are unable jointly to appoint an arbitrator. In those circumstances, the District Court can appoint arbitrators on behalf of all parties, and discharge any arbitrator already appointed.⁶ Parties to ad hoc proceedings, where there is more than one claimant or respondent, should therefore be aware of the potential for the District Court to undo appointments where one side fails to agree on their nominee. 

Promoting enforceability

Shortening the time limit for challenge

The time limit for seeking to set aside an award has been shortened from three to two months and parties are precluded from introducing new grounds of challenge once the two month deadline has expired.⁷ Parties will therefore have to raise all potential grounds on which they seek to have the award set aside within the shortened time limit.

Limiting the grounds upon which awards can be challenged

The 1999 Act permitted parties to seek to set aside an award if the tribunal had exceeded its mandate.⁸ The Revised Act imposes an additional requirement – the tribunal must have exceeded its mandate in a manner that "probably influenced the outcome".⁹ As such, even if the tribunal exceeds its mandate, its award will not be susceptible to set aside unless this also affected the outcome of the arbitration. These revisions would appear to go a long way to addressing a criticism made of Swedish arbitration to the effect that the threshold for court intervention was lower than under some other curial laws.

Modernising the text

Express independence requirements

The 1999 Act contained an express requirement that arbitrators be impartial.¹⁰ This requirement has for some time been regarded as including a requirement of independence. The Revised Act now includes an express requirement of independence, consistent with other arbitration laws and institutional rules.¹¹

Notably, the Revised Act retains the guidance that was set out in the 1999 Act as to when circumstances which diminish confidence in the arbitrators' impartiality arise, and applies it equally as regards independence. Such circumstances shall always be deemed to exist where:

• the arbitrator or a person closely associated with the arbitrator is a party, or otherwise may expect noteworthy benefit or detriment as a result of the outcome of the dispute;
• the arbitrator or a person closely associated with the arbitrator is the director of a company or any other association which is a party, or otherwise represents a party or any other person who may expect noteworthy benefit or detriment as a result of the outcome of the dispute;
• the arbitrator, in their capacity as expert or otherwise, has taken a position in the dispute, or has assisted a party in the preparation or conduct of its case in the dispute; or
• the arbitrator has received or demanded compensation in violation of section 39, second paragraph of the Revised Act (that provision requires a joint agreement by the parties regarding the arbitrator's compensation).

This guidance can be helpful, particularly given the occasional unwillingness (in the authors' experience) of Scandinavian parties to agree for tribunals to be guided by established arbitral practice as reflected in the IBA Guidelines on Conflicts of Interest in International Arbitration.

Ability to determine the governing law

The 1999 Act is silent as to the governing law to be applied by the tribunal (and how the tribunal should go about determining it). The Revised Act states that the tribunal is to apply the law or rules agreed by the parties and, in the absence of agreement, is empowered to determine the applicable law.¹² The Revised Act also makes it clear that the tribunal cannot determine a matter ex aequo et bono (i.e. by reference to what is fair as opposed to any legal principles) unless the parties have expressly authorised it to do so.¹³

Comment

The Revised Act builds on the solid foundations that were laid in 1999. The changes are likely to be welcomed by users of Swedish arbitration, and will provide a measure of comfort to those who have previously been 'put–off' using Stockholm as a seat by reason of the scope for lengthy set aside proceedings which can significantly delay enforcement and result in a process that may lack transparency for non-Swedish speakers (who may be expected to form a large proportion of the users of Stockholm arbitration). 

However, the changes do not address many of the nuances of Swedish arbitral procedure and practice which we highlighted in our previous article, and which can come as a surprise to parties unfamiliar with arbitrating in Scandinavia. These remain something which users should be aware of, while recognising the many advantages of arbitrating in the region. Perhaps most striking of all is that pressure to improve the curial law and to be seen to respond to the changing requirements of users has led to revisions relatively (in a legislative timeframe) soon after the 1999 Act. That is both a testament to the Stockholm arbitration community's determination not to "rest on their laurels" and is something – the authors tentatively suggest – from which other leading arbitral centres might well learn.

Authors: Emma Johnson and Harsh Hari Haran

1. 1999 Act, section 2.
2. Revised Act, section 4a.
3. Revised Act, section 2.
4. Revised Act, section 23a.
5. Revised Act, section 23a.
6. Revised Act, section 14.
7. Revised Act, section 34.
8. 1999 Act, section 34(2).
9. Revised Act, section 34(2).
10. 1999 Act, section 8.
11. Swedish Arbitration Act, section 8.
12. Revised Act, section 27a.
13. Revised Act, section 27a.