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Arbitration agreements

Validity            

What are the validity requirements for an arbitration agreement?

Under Swedish law, an arbitration agreement is, in general, no different than other agreements. Provided that an arbitration agreement is governed by Swedish law, issues relating to the formation and validity therein are governed by Swedish contract law.

An arbitration agreement must relate to an identified legal relationship, but no particular form is prescribed. Although arbitration agreements need not be in writing, this is recommended for evidentiary and enforcement related reasons.

In order for an arbitration agreement to be upheld, the parties must have legal capacity to conclude the agreement and it must concern a subject matter that is arbitrable under Swedish law.

An arbitration agreement can be declared void pursuant to ordinary contract law, if it was entered into as a result of fraud, undue influence, duress or on similar grounds. Although rare in a commercial context, an arbitration agreement can also be regarded as unreasonable due to certain circumstances relating to an uneven balance between the parties and therefore be set aside or modified by an arbitral tribunal or court. 

Enforcement of agreements

How are arbitration agreements enforced in your jurisdiction? What is the attitude of the national courts towards arbitration agreements?

Swedish courts are favourable towards arbitration. Valid arbitration agreements are respected and enforced by Swedish courts to the effect that they exclude the courts’ jurisdiction. A party that seeks to invoke an arbitration agreement as the basis for an objection to a court’s jurisdiction must do so in its first submission. 

Consolidation

Can an arbitral tribunal with its seat in your jurisdiction consolidate separate arbitral proceedings under one or more contracts, and, if so, in what circumstances?

The Arbitration Act contains no consolidation provisions. Thus, unless the parties agree otherwise, arbitral proceedings cannot be consolidated.

With respect to arbitrations governed by Arbitration Rules of the Arbitration Institute of the Stockholm Chamber of Commerce, arbitral proceedings may be consolidated under certain circumstances. 

Choice of law

How is the substantive law of the dispute determined? Where the substantive law is unclear, how will a tribunal determine what it should be?

The Arbitration Act contains no rules on how to determine the applicable substantive law. In the absence of an agreement between the parties on the choice of law, the tribunal will decide what substantive law will be applied to the dispute.

The established practice in Sweden has been that the tribunal decides the applicable substantive law based on Swedish choice of law principles (ie, the lex arbitri conflict of law rules). However, in international arbitrations, the trend has been for tribunals also to use other methods for deciding on the substantive law.

Article 27 of Arbitration Rules of the Arbitration Institute of the Stockholm Chamber of Commerce provides that the tribunal, in the absence of an agreement between the parties, can apply the law or rules of law which it considers to be most appropriate. Any designation made by the parties with regard to the law of a given state will be deemed to refer to the substantive law of that state and not to its conflict of laws rules.

Separability

Are there any provisions on the separability of arbitration agreements?

Yes, the doctrine of separability has been codified in the Arbitration Act. Section 3 of the Arbitration Act provides that an arbitration agreement will be deemed to constitute a separate agreement when the validity of an arbitration agreement, which constitutes part of another agreement, is determined in conjunction with a determination of the jurisdiction of the arbitrators.

Multiparty agreements

Are multiparty agreements recognised?

Yes, multiparty agreements are recognised. However, since the Arbitration Act has no specific provisions on multiparty arbitration, it is advisable to include provisions on the constitution of the tribunal and the right to consolidate disputes in the arbitration agreement.

With respect to multiparty arbitrations, the Arbitration Rules of the Arbitration Institute of the Stockholm Chamber of Commerce (SCC) provide in Article 13 that the SCC board, upon the request of a party to the arbitration, may decide to join one or more additional parties provided that the SCC does not manifestly lack jurisdiction over the dispute between the parties.

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