INTERNATIONAL COMMERCIAL ARBITRATION IN SWEDEN

INTERNATIONAL COMMERCIAL ARBITRATION IN SWEDEN PROF. DR KAJ HOBER Partner, Mannheimer SwartlingAdvokatbyra OXPORD UNIVERSITY PRESS

CONTENTS Table of Cases Table of Legislation XV xxiii 1 Introduction 1.1 History of Arbitration in Sweden 1.2 The Swedish Legal System 1.2.1 General 1.2.2 The courts and the judiciary 1.2.2.1 The courts 1.2.2.2 The judiciary 1.2.3 The legal profession 1.3 The Arbitration Institute of the Stockholm Chamber of Commerce 1.4 Sovereign Immunity and International Commercial Arbitration in Sweden 1.4.1 Sovereign immunity in general 1.4.1.1 Introduction 1.4.2 National legislation 1.4.3 The UN Convention 1.4.3.1 Immunity from jurisdiction 1.4.3.2 Arbitration 1.4.4 Sovereign immunity and Swedish law 1.5 Sovereign Immunity, and Arbitration 1.5.1 General observations 1.5.2 Sovereign immunity and arbitration under Swedish law 2 Applicable Law 2.1 Introduction 2.2 LexArbitri The Law Governing the Arbitration 2.3 Party Autonomy Choice of Law by the Parties 2.3.1 Introduction 2.3.2 The content of party autonomy 2.3.3 Exercising parry autonomy 2.3.4 Restrictions on parry autonomy 2.3.4.1 General comments 1 1.01 1.18 1.18 1.21 1.21 1.29 1.35 1.46 1.52 1.52 1.52 1.57 1.75 1.80 1.85 ' 1.94 1.122 1.122 1.131 33 2.01 2.05 2.14 2.14 2.24 2.42 2.51 2.51 Vll

2.3.4.2 No reasonable connection 2.55 2.3.4.3 National public policy 2.59 2.3.4.4 Mandatory rules of municipal law 2.71 2.3.4.5 International public policy 2.89 2.3.4.6 The function of international public policy 2.92 2.3.4.7 The content of international public policy 2.93 2.4 No Choice of Law by the Parties 2.97 2.4.1 Introduction 2.97 2.4.2 Swedish conflict of laws rules 2.103 2.4.2.1 The 1964 Act on the Law Applicable to International Sales of Goods 2.106 2.4.2.2 The centre of gravity test 2.118 2.4.2.3 The 1980 Rome Convention 2.144 2.4.2.4 The Rome I Regulation 2.163 2.5 Issues Not Covered by the Lex Contractus 2.173 2.5.1 Lex corporationis 2.174 2.5.2 Agency 2.181 2.5.3 Negotiable instruments 2.185 2.5.4 Torts 2.186 2.5.5 Property 2.192 2.6 Classification Rules -2.198 2.7 The Law Governing the Arbitration Agreement 2.201 3 The Arbitration Agreement 89 3.1 Introduction 3.01 3.2 The Validity of an Arbitration Agreement 3.04 3.2.1 General remarks 3.04 3.2.2 Requisites of a valid arbitration agreement 3.05 3.3 Concluding the Arbitration Agreement / 3.06 3.3.1 Arbitration agreement in writing 3.06 3.3.2 Oral arbitration agreement 3.12 3.3.3 Arbitration agreement by conduct 3.14 3.3.3.1 Arbitration agreement as a result of parry usage 3.23 3.3-3.2 Arbitration agreement by 'inactivity' 3.28 3.4 Interpretation of Arbitration Agreement 3.31 3.5 Unenforceability of Arbitration Agreements due to the Swedish Contracts Act 3.37 3.6 The Doctrine of Separability 3.42 3.6.1 Introduction 3.42 3.6.2 Application of doctrine of separability 3.48 3.6.3 Should the application of the doctrine of separability be limited? 3.53 3.6.3.1 No agreement in the first place 3.55 vin

3.6.3.2 The principal agreement is void ab initio, voidable, or has been declared invalid 3.60 3.7 Invalidity of the Arbitration Agreement 3.74 3.8 Arbitrabiliry 3.77 3.8.1 Disputes capable of settlement 3.81 3.8.2 The existence of factual circumstances 3.86 3.8.3 Filling gaps 3.92 3.8.4 Consumer and labour disputes 3.95 3.8.5 Civil law effects of competition law 3.98 3.9 Effects of Arbitration Agreement 3.111 3.9.1 Bar to court proceedings 3.112 3.9.1.1 Respondent has failed to cooperate in arbitration 3.118 3.9.1.2 Respondent has disregarded the agreement in previous court proceedings 3.121 3.9.1.3 The subject matter of the dispute is non-arbitrable 3.123 3-9.2 Assistance by courts 3.126 3.9.3 Rules of organization and procedure 3.127 3.9.4 Authority of arbitrators 3.128 3.9.5 Effect of arbitration agreement on third parties 3.130 3.9.5.1 Party substitution 3.131 3.9.5.2 Guarantee agreements 3.142 3.9.5.3 Conduct by third parties, including the 'group of companies' doctrine 3.146 3.9.6 Confidentiality 3.164 3.10 Termination of Arbitration Agreement 3.168 3.10.1 Introduction 3.168 3.10.2 Termination with respect to existing dispute 3.171 3.10.2.1 By understanding 3.171 3.10.2.2 Events during proceedings 3.172 3.10.2.3 Judgment 3.173 3.10.2.4 Expiration of award period 3.175 3.10.2.5 Award 3.176 3-10.3 Complete termination 3.178 3.11 Drafting of Arbitration Clauses 3.182 4 The Arbitrators 145 4.1 Appointment of Arbitrators 4.01 4.1.1 Introduction 4.01 4.1.2 Appointment of arbitrators under the SAA 4.04 4.1.2.1 Arbitrators not specifically named in agreement 4.06 4.1.2.2 Arbitrators specifically named in agreement 4.11 4.1.2.3 Arbitrators in multi-party arbitrations 4.13 4.1.3 Rules 4.18 4.1.3.1 SCC 4.18 4.1.3.2 Other rules 4.36 ix

4.2 Qualifications of Arbitrators 4.39 4.3 Powers and Duties of Arbitrators 4.46 4.4 Relation of Arbitrators to the Parties 4.52 4.5 Challenge and Replacement of Arbitrators 4.62 4.5.1 The SAA 4.62 4.5.1.1 Grounds for challenge. Disclosure 4.62 4.5.1.2 Procedure 4.85 4.5.1.3 Replacing arbitrators 4.87 4.5.2 Rules. 4.91 4.6 Compensation of Arbitrators 4.103 4.6.1 Fees and expenses 4.103 4.6.2 Value Added Tax (VAT) on arbitrators'compensation 4.126 4.6.3 Rules 4.130 5 Jurisdiction of the Arbitral Tribunal 183 5.1 Introduction 5.01 5.2 Issues Affecting the Jurisdiction of the Arbitrators 5.07 5.3 The Arbitrators'Determination of their Jurisdiction 5.13 5.4 Court Review of the Arbitrators'Jurisdiction ' 5.19 5.4.1 Situations in which a court may consider a declaratory action with respect to the jurisdiction of the arbitrators 5.21 5.4.1.1 Jurisdiction of the Swedish courts 5.21 5.4.1.2 Requirements with respect to declaratory judgments 5.34 5.4.2 Potential effects of a declaratory action with respect to the jurisdiction of the arbitrators 5.36 5.5 Anti-suit Injunctions 5.38 5.6 Rules 5.43 6 The Procedure before the Arbitral Tribunal 197 6.1 Introduction 6.01 6.2 General Principles of Swedish Judicial Procedure 6.16 6.3 Basic Principles of Arbitration Procedure 6.29 6.3.1 Party autonomy 6.30 6.3.2 Impartiality, practicality, speed 6.31 6.3.3 Audi alterampartem 6.32 6.4 Commencing the Arbitration Proceedings 6.35 6.4.1 Request for arbitration 6.35 6.4.1.1 SCC Rules 6.42 6.4.2 Service of the request for arbitration, the award, and other documents 6.44 6.4.2.1 Proof of notification and methods of service 6.48

6.4.2.2 'Notices' clauses 6.4.2.3 Persons authorized to accept service 6.4.2.4 Particular rules for service of documents outside Sweden 6.4.2.5 SCC Rules 6.5 Conduct of the Arbitration 6.5.1 General 6.5.2 Written submissions 6.5.2.1 Prayers for relief 6.5.2.2 Legal grounds 6.5-2.3 Facts and circumstances 6.5.3 Post-hearing briefs 6.5.4 Evidence 6.5.4.1 Introduction 6.5.4.2 Powers of the arbitrators 6.5.4.3 Admissibility of evidence 6.5.5 Documentary evidence and production of documents 6.5.5.1 Documentary evidence 6.5.5.2 Production of documents 6.5.6 Witnesses and experts 6.5-6.1 Hearing of witnesses 6.5.6.2 Written witness statements 6.5.6.3 Experts 6.5.6.4 Inspection of the subject matter of the dispute 6.5.6.5 Evaluation of evidence 6.5.7 Evidence taken with court assistance 6.5.8 Hearings 6.5.8.1 Introduction 6.5.8.2 The main hearing 7 The Award 7.1 Introduction 7.2 Principles of Decision ', 7.2.1 Decision according to law 7.2.2 Keeping within Authority 7.2.3 Dealing with all matters 7.3 Deliberations and Voting 7.4 Different Kinds of Awards and Decisions 7.4.1 Award or decision? 7.4.2 Separate awards 7.4.3 Interim awards 7-4.4 Consent awards 7-4.5 Default awards 7.5 Formalities 7.6 Reasons and Dissenting Opinions 6.52 6.54 6.57 6.58 6.64 6.64 6.71 6.73 6.76 6.77 6.87 6.89 6.89 6.97 6.101 6.109 6.109 6.112 6.122 6.122 6.145 6.150 6.160 6.162 6.170 6.184 6.184 6.218 255 7.01 7.02 7.04 7.08 7.09 7.10 7.22 7.22 7.27 7.36 7.38 7.42 7.43 7.57 XI

7.7 Interest and Costs 7.71 7.7.1 Interest 7.71 7.7.2 Costs 7.78 7.8 Rendering the Award 7.84 7.9 Effects of the Award 7.92 7.9.1 Execution 7.93 7.9.2 Time starts running 7.94 7-9.3 Termination of arbitration agreement 7.96 7.9.4 Resjudicata 7.104 7-9.4.1 Application of the principles of Uspendens and resjudicata in Swedish arbitration law 7.108 7.9.4.2 Resjudicata and lispendens in international arbitration 7.120 7.10 Correction and Interpretation of the Award 7.137 7.10.1 General 7.137 7-10.2 Correction of arbitral awards 7.140 7-10.3 Amendment of arbitral awards 7.146 7-10.4 Interpretation of arbitral awards 7-149 7-10.5 SCC Rules 7.152 Setting Aside Arbitral Awards 293 8.1 Invalid and Challengeable Awards 8.01 8.1.1 General remarks 8.01 8.1.2 Principle of in dubiopro validitate 8.09 8.1.3 Burden of proof 8.12 8.1.4 Other means of recourse 8.15 8.1.5 Jurisdiction of Swedish courts 8.19 8.2 Invalid Arbitral Awards 8.26 8.2.1 Grounds for invalidity 8.27 8.2.1.1 Non-arbitrability 8.29 8.2.1.2 Violation of public policy ' 8.33 8.2.1.3 Formal requirements of the arbitral award 8.47 8.2.2 Non-statutory grounds for invalidity 8.50 8.2.2.1 Situations where an 'award' may not be characterized as an arbitral award 8.51 8.2.2.2 The party against whom the award was made was not a party to the arbitration proceedings 8.53 8.2.2.3 An award too obscure to enforce 8.56 8.2.3 Invalidity of part of the award 8.57 8.3 Challenge of Arbitral Awatds 8.58 8.3.1 Grounds for challenging an award 8.58 8.3.2 No arbitration agreement 8.63 8.3-3 Excess of mandate 8.65 8.3.3.1 Award after the expiration of a time limit for rendering of the award 8.66 8.3.3.2 Excess of mandate 8.69 XII

8.3-4 The arbitration should not have taken place in Sweden 8.109 8.3.5 Improper appointment of arbitrators 8.112 8.3.6 One of the arbitrators should have been disqualified 8.114 8.3.7 Other procedural irregularities 8.118 8.3.7.1 The irregularities to which the general clause applies 8.118 8.3.7.2 Probable influence on the outcome of the dispute 8.176 8.3.7.3 The procedural irregularity must not have been caused by the fault of the challenging parry 8.182 8.4 Waiver of Right to Challenge 8.184 8.4.1 Impliedwaiver.... 8.185 8.4.2 Exclusion agreements 8.187 8.5 Remission of Arbitral Awards 8.193 8.6 Review of Jurisdictional Awards 8.205 8.6.1 Introduction 8.205 8.6.2 Scope of application 8.209 8.6.3 Scope of the review ' 8.211 8.6.4 Application of section 36 of the SAA in practice 8.215 9 Recognition and Enforcement of Arbitral Awards 355 9.1 Enforcement of Swedish Awards 9.02 9.1.1 Enforcement in Sweden 9:02 9.1.2 Enforcement abroad 9.06 9.2 Enforcement of Foreign Awards 9.07 9.2.1 Nationality of award 9.08 9.2.2 Recognition and enforcement 9.09 9-2.3 The New York Convention v the Swedish Arbitration Act 9.11 9.2.4 Separate, partial, and interim awards 9.14 9.2.5 Grounds for refusing recognition and enforcement 9.17 9.2.5-1 Lack of capacity of the parties and invalidity of arbitration agreement ' 9.23 9.2.5.2 Violation of procedural due process 9.26 9.2.5.3 Excess of mandate 9.31 9.2.5.4 Improper composition of the arbitral tribunal or improper arbitral procedure 9.34 9.2.5.5 Arbitral award not binding 9.38 9.2.5-6 Non-arbitrability, 9.52 9.2.5.7 Public policy 9.53 9.2.6 Procedures for recognition 9.64 Appendix 1 The Swedish Arbitration Act 375 Appendix 2A Arbitration Rules of the Arbitration Institute of the Stockholm Chamber of Commerce (2010) 388 Appendix 2B Rules for Expedited Arbitrations of the Arbitration Institute of the Stockholm Chamber of Commerce (2010) 402 XHl

Appendix 3 Procedures and Services under the UNCITRAL Arbitration Rules 415 Appendix 4 UNCITRAL Model Law on International Commercial Arbitration (1985) 417 Appendix 5 UNCITRAL Arbitration Rules (1976) 429 Appendix 6 UNCITRAL Arbitration Rules (2010) 441 Appendix 7 Requests to set Aside Arbitral Awards on the Basis of Section 33 and/or Section 34 of the SAA 456 Appendix 8 Review of Arbitral Awards on Jurisdiction 465 Appendix 9 Enforcement of Arbitral Awards 467 Index 469 xiv