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Legal framework

National arbitration laws

What legislation applies to arbitration in your jurisdiction?

The Arbitration Act (SFS 1999:116) applies to both domestic and international arbitrations.

In addition, the Companies Act provides that disputes over the right of squeeze-out and the redemption price must be settled through arbitration.

Mandatory laws

Are there any mandatory laws?

Although the Arbitration Act recognises the principle of party autonomy to a large extent, the act contains provisions that cannot be set aside by the parties, such as due process requirements and requirements for an arbitrator to be impartial and independent.

New York Convention

Is your country a signatory to the New York Convention? If so, what is the date of entry into force?

Sweden is a signatory to the New York Convention, which entered into force on April 27 1972.

Are there any reservations to the general obligations of the convention?

No. Sweden ratified the New York Convention without either the reciprocity or the commercial nature reservation. Accordingly, all foreign arbitral awards are enforceable in Sweden, irrespective of where they are rendered and whether they are of a commercial nature.

Treaties and conventions

What other treaties and conventions in relation to arbitration is your jurisdiction party to?

Sweden is a party to:

  • the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (1966);
  • nearly 70 bilateral investment treaties or other treaties with investment provisions;
  • the Energy Charter Treaty (1998);
  • the Geneva Convention on the Execution of Foreign Arbitral Awards (1927); and
  • the United Nations Convention on Transparency in Treaty-Based Investor-State Arbitration (2015).

UNCITRAL

Has your jurisdiction adopted the UNCITRAL Model Law?

No. However, the principles underlying the Arbitration Act are largely identical to those of the model law. Some minor differences exist between the Arbitration Act and the model law.

Reform

Are there any impending plans to reform the arbitration laws in your jurisdiction?

The Swedish legislature is reviewing the Arbitration Act with a view to, among other things, render the process more efficient.

Arbitration agreements

Validity

What are the validity requirements for an arbitration agreement?

Under the Arbitration Act, an arbitration agreement is an agreement between two or more parties to refer a dispute regarding a particular legal relationship to resolution by one of more arbitrators.

The definition of an ‘arbitration agreement’ set out in the Arbitration Act involves the following requirements:

  • There must be an agreement between two or more parties.
  • The agreement must provide for resolution by arbitration.
  • The determination must be by one or more persons acting in the capacity of arbitrator.
  • The parties’ intention to choose arbitration must be unambiguous.

In cases involving arbitration agreements for arbitration of future disputes, the dispute in question must relate to an identified legal relationship. 

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 considered arbitration friendly.

A valid arbitration agreement excludes the jurisdiction of the courts.

If court proceedings are initiated despite an arbitration agreement, the opposing party must invoke an arbitration agreement on the first occasion that a party pleads its case on the merits in the court. The invocation of an arbitration agreement on a later occasion will have no effect unless the party had a valid excuse and invoked the agreement as soon as the excuse ceased to exist.

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 does not deal with the consolidation of separate arbitration proceedings. Thus, the consolidation of ad hoc proceedings would require, among other things, agreement between all parties.

However, the Arbitration Rules of the Arbitration Institute of the Stockholm Chamber of Commerce – which are the most frequently used institutional rules in Sweden – contain specific provisions on consolidation. Under these rules, the board of the institute may decide to consolidate a newly commenced arbitration with a pending arbitration at the request of a party, subject to the satisfaction of a number of requirements, including agreement by all parties to consolidate.

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?

Where the parties have agreed that the law of a given state will apply to the merits of the dispute, the tribunal must base its award on that law. However, where no such agreement exists, this issue is to be decided on the basis of Swedish conflict of law principles. 

Separability

Are there any provisions on the separability of arbitration agreements?

Yes. Section 3 of the Arbitration Act provides that where the validity of an arbitration agreement which constitutes part of another agreement must be determined in conjunction with a determination of the arbitrators’ jurisdiction, the arbitration agreement will be deemed to constitute a separate agreement.

Multiparty agreements

Are multiparty agreements recognised?

Multi-party arbitration is recognised in Sweden.

The Arbitration Act contains no provisions on multi-party arbitration. Thus, multi-party arbitration in ad hoc proceedings requires agreement between all parties.

However, the Arbitration Rules of the Arbitration Institute of the Stockholm Chamber of Commerce contain provisions on the joinder of additional parties and multiple contracts.

Arbitral tribunal

Criteria for arbitrators

Are there any restrictions?

The Arbitration Act provides that anyone with full legal capacity (ie, a person who is of age and is not bankrupt, and whose competence has not been restricted) may act as an arbitrator.   

In addition, an arbitrator must be and remain impartial and independent of the parties. In evaluating the impartiality and independence of an arbitrator, the International Bar Association Rules on Conflict of Interest in International Arbitration may be used as a reference.

There are no explicit requirements as to the nationality or particular expertise of arbitrators under the Arbitration Act. In contrast, the Arbitration Rules of the Arbitration Institute of the Stockholm Chamber of Commerce provide that where the parties are of different nationalities, the presiding or sole arbitrator should be of a different nationality from the parties.

Contractual stipulations

What can be stipulated about the tribunal in the agreement?

The parties may agree on the number of arbitrators, their competence and their language skills. However, the parties’ right to agree on these issues is not without limits. For example, the parties may not agree that one party is entitled to appoint the majority of the arbitrators.

Default requirements

Are there any default legal requirements as to the selection of a tribunal - for example, concerning the number of arbitrators or their characteristics?

Section 13 of the Arbitration Act provides that – unless the parties have agreed otherwise – there will be three arbitrators. Each party appoints one arbitrator, and then the two appointed arbitrators appoint the third.

Challenging the appointment of an arbitrator

Can the appointment of an arbitrator be challenged? Can an arbitrator be disqualified? What is the procedure for this?

Section 10 of the Arbitration Act provides that a challenge to an arbitrator must be presented within 15 days commencing on the date on which the party became aware both of the appointment of the arbitrator and of the existence of the circumstance giving cause for the challenge.

The challenge will be adjudicated by the arbitrators, unless the parties have decided that a challenge should be determined by another party.

If the challenge is successful, the decision cannot be appealed.

A party which is dissatisfied with a decision denying a motion or dismissing a motion on the grounds that the motion was not filed in a timely manner may file an application with a competent district court for the arbitrator to be removed from his or her post. The application must be submitted within 30 days of the date on which the party received the decision. The arbitrators may continue with the arbitral proceedings pending the determination of the district court

Jurisdictional objections

How should an objection to jurisdiction be raised?

Section 2 of the Arbitration Act provides that arbitrators may rule on their own jurisdiction to decide the dispute. However, this will not prevent a court from determining such question at a party’s request.

The arbitrators may continue the arbitral proceedings pending determination by the court.

Even if the arbitrators issue a decision during the proceedings to the effect that they possess jurisdiction to resolve the dispute, this decision is not binding.

Replacement of an arbitrator

Why and how can an arbitrator be replaced?

Although not explicitly stated in the Arbitration Act, it is clear that acting jointly, the parties can remove an arbitrator for any reason or for no reason at all.

An arbitrator can also be removed for:

  • a lack of impartiality;
  • delaying the arbitration; or
  • lack of a general qualification or a qualification agreed by the parties.

Powers and obligations

What powers and obligations do arbitrators have?

The arbitrator possesses the powers of his or her mandate, which is to resolve the dispute referred to arbitration by the parties.

Unless the parties have agreed otherwise, the arbitrator has the power, among other things, to decide on:

  • the procedure and timetable of the arbitration;
  • the law applicable to the dispute;
  • the place of the arbitration; and
  • the costs of the arbitration.

The main duty of the arbitrator is to administer justice between the parties. The arbitrator also has a duty to make its award and sign it. In addition, the arbitrator has a duty to disclose circumstances that could give cause for concern in regard to his or her impartiality and independence.

Liability of arbitrators

Are arbitrators immune from liability?

 No. An arbitrator may be held liable in damages towards the parties where he or her has acted negligently.

Communicating with the tribunal

How do the parties communicate with the tribunal?

Section 24(2) of the Arbitration Act provides that a party mustbe given an opportunity to review all documents and all other materials pertaining to the dispute which are supplied to the arbitrators by the opposing party or another person.

Accordingly, in general all communication with the tribunal must also be directed to the other party. Hence, ex parte communication should be avoided.

Reaching decisions

Is unanimous agreement of the tribunal required? If there is disagreement, does the will of the majority suffice? What are the implications of this?

Unanimous agreement between the arbitrators is not required. Rather, Section 30 of the Arbitration Act provides that unless the parties have decided otherwise, the opinion agreed by the majority of the arbitrators will prevail. If no majority is attained for a particular opinion, the opinion of the chair will prevail.

Arbitrability

Are there any disputes incapable of being referred to arbitration?

Only disputes concerning matters in respect of which the parties may reach a settlement may be referred to arbitration under the Arbitration Act. Under Swedish law, disputes concerning, for example, rights in rem and criminal law cannot be resolved by arbitration.  

Can the arbitrability of a dispute be challenged?

The arbitrability of a dispute may be challenged. Pursuant to Section 2 of the Arbitration Act, the arbitrators may decide whether a matter referred to the tribunal is arbitrable. However, the tribunal’s decision is not binding.  

The arbitrators’ determination of the panel’s authority does not prevent a court from determining such question at the request of a party. However, the arbitrators may continue the arbitral proceedings pending determination by the court.

If an award is made in a non-arbitrable matter, the award is null and void.

Jurisdiction and competence-competence

Is the principle of competence-competence recognised in your jurisdiction? Can a party to an arbitration ask the courts to determine an issue relating to the tribunal’s jurisdiction and competence?

The principle of competence-competence is recognised and accepted in Sweden.

Under Section 2 of the Arbitration Act, the arbitral tribunal has the power to rule on its own jurisdiction.

However, a party may challenge, for example, the validity or applicability of the arbitration agreement in court. In such proceedings, the tribunal’s decision on jurisdiction is not binding on the courts. Thus, the principle of competence-competence is not absolute.

Arbitral proceedings

Starting an arbitration proceeding

What is needed to commence arbitration?

An ad hoc arbitral proceeding is initiated when a party receives a written request for arbitration, containing:

  • an express and unconditional request for arbitration;
  • a statement of the issue covered by the arbitration agreement and to be resolved by the arbitrators; and
  • a statement of the party's choice of arbitrator (where the party is required to appoint an arbitrator).

An arbitral proceeding administered by the Arbitration Institute of the Stockholm Chamber of Commerce is commenced when the institute receives a request for arbitration which includes:

  • the names, addresses, telephone numbers and email addresses of the parties and their counsel;
  • a summary of the dispute;
  • a preliminary statement of the relief sought, including an estimate of the monetary value of the claims;
  • a copy or description of the arbitration agreement or clause under which the dispute is to be settled;
  • where claims are made under more than one arbitration agreement, an indication of the arbitration agreement under which each claim is made;
  • comments on the number of arbitrators and the seat of arbitration; and
  • if applicable, the name, address, telephone number and email address of the arbitrator appointed by the claimant.

Limitation periods

Are there any limitation periods for the commencement of arbitration?

No.

Procedural rules

Are there any procedural rules that arbitrators must follow?

Section 21 of the Arbitration Act provides that arbitrators will handle the dispute in an impartial, practical and speedy manner. They will act in accordance with the decisions of the parties insofar as there is no impediment to so doing.

However, as stated in Section 24, to the extent necessary the arbitrators must afford the parties an opportunity to present their respective cases in writing or orally.

Where a party so requests, and provided that the parties have not otherwise agreed, an oral hearing must be held before determination of an issue referred to the arbitrators.

Further, a party must have the opportunity to review all documents and  other materials pertaining to the dispute which are supplied to the arbitrators by the opposing party or another party.

Dissenting arbitrators

Are dissenting opinions permitted under the law of your jurisdiction?

Yes.

Judicial assistance

Can local courts intervene in proceedings?

Swedish courts have no power to intervene in arbitration proceedings. However, the Swedish courts have jurisdiction over some matters relating to arbitration.

Can the local courts assist in choosing arbitrators?

Local courts may assist in appointing arbitrators if a party, the party-appointed arbitrator or a designated body fails to fulfil its obligation to appoint an arbitrator.

What is the applicable law (and prevailing practice) where a respondent fails to participate in an arbitration? Can the courts compel parties to arbitrate? Can they issue subpoenas to third parties?

The Arbitration Act provides no means to compel the parties to arbitrate. However, if any of the parties fails to appear at a hearing or otherwise fails to comply with an order of the arbitrators without valid cause, such failure will not prevent continuation of the proceedings and a resolution of the dispute based on the existing materials.

Local courts may assist in the taking of evidence if the tribunal considers it necessary to hear a witness under oath or truth affirmation or to produce documentary evidence.

Third parties

In what instances can third parties be bound by an arbitration agreement or award?

An arbitration agreement generally binds only the parties thereto. However, in certain situations the effects of an arbitration agreement can also extend to non-signatories.

For example, in cases of universal succession (eg, mergers) the successor is bound by an arbitration agreement that was binding on the succeeded party. Although also a form of universal succession, bankruptcy comes with distinct principles in this regard; generally, where the debtor’s rights are subject to arbitration agreements, the bankruptcy estate is bound by those.

Swedish law does not recognise the group of companies doctrine. 

Default language and seat

Unless agreed by the parties, what is the default language and location for arbitrations?

Usually, it is for the arbitrators to determine the language to be used in the proceedings, unless agreed by the parties.

Section 22 of the Arbitration Act provides that, unless agreed by the parties, the arbitrators will determine the place of arbitration. 

Gathering evidence

How is evidence obtained by the tribunal?

As stated in Section 25 of the Arbitration Act, the parties will supply the evidence. However, the arbitrators may appoint experts unless both parties are opposed. 

What kinds of evidence are acceptable?

The Arbitration Act contains no provisions on the admissibility of evidence. Thus, the parties are free to introduce such evidence as they consider appropriate. Thereafter, it is up to the tribunal to determine the evidentiary value of the evidence introduced.

Confidentiality

Is confidentiality ensured?

A party to an arbitration is generally not subject to any confidentiality undertakings in relation to the proceedings, unless agreed to.

However, arbitrators are bound to keep confidential information that they learn in the proceedings. 

Can information in arbitral proceedings be disclosed in subsequent proceedings?

If a party seeks court assistance, the existence of the dispute and its subject matter, including the award, become public knowledge unless the court grants a request for confidentiality based on the fact that the material contains trade secrets.

Ethical codes

What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your jurisdiction?

There are no specific ethical guidelines for arbitrators or counsel to be followed during arbitration proceedings. Although the International Bar Association Guidelines on Party Representation in International Arbitration are not binding in Sweden, they are generally observed, at least in part.

If the arbitrators or counsel are members of the Swedish Bar Association, the association’s ethical rules also apply to them during arbitration proceedings.  

Costs

Estimation & allocation

How are the costs of arbitration proceedings estimated and allocated?

Unless agreed otherwise, the parties will be jointly and severally liable to pay compensation to the arbitrators for their work and expenses.

In ad hoc proceedings the arbitrators decide on their compensation, which must be reasonable. The parties have the right to challenge the arbitrators’ decision with regard to the amount of their compensation.

If the arbitration proceedings are conducted under the Rules of the Arbitration Institute of the Stockholm Chamber of Commerce, the chamber determines the costs of arbitration before the final award is rendered. The cost of the arbitration are based on the value of the dispute.

The arbitral tribunal may order a party to compensate the costs of arbitration as well as the other party’s legal costs. The principal rule regarding compensation of costs is that the unsuccessful party is responsible for the costs of the other party, as well as the fees and costs of the tribunal.   

Security for costs

Can the national court or tribunal order security for costs under the law in your jurisdiction?

The arbitral tribunal has the power to request security for the compensation. Where a party fails to provide its share of the requested security within the time specified by the arbitrators, the opposing party may provide the entire security. Where the requested security is not provided, the arbitrators may terminate the proceedings.

The award

Requirements

What legal requirements are there for recognition of an award? Must reasons be given for the award? Does the award need to be reviewed by any other body?

The award must be made in writing and signed by the arbitrators. It suffices if the award is signed by a majority of the arbitrators, provided that the reason why all of the arbitrators did not sign the award is noted. The parties may decide that the chair of the arbitral tribunal alone will sign the award.

The date and place of arbitration must also be stated in the award.

There is no requirement that the award must include reasons. However, the Rules of the Arbitration Institute of the Stockholm Chamber of Commerce provide that the arbitral tribunal must state the reasons for the award unless agreed otherwise by the parties.

Awards made under the Arbitration Act are recognised without review by other institutional bodies.

Timeframe for delivery

Are there any time limits on delivery of the award?

The Arbitration Act provides no time limits for delivery of the award.

If the proceedings are conducted under the Rules of the Arbitration Institute of the Stockholm Chamber of Commerce, the time limit for rendering the award is six months from the date on which the tribunal receives the case file. In expedited arbitration, the time limit is three months.

Remedies

Does the law impose limits on the available remedies? Are some remedies not enforceable by the court?

The Arbitration Act sets down no limitations in terms of permissible remedies. 

However, the public order rule determines the available remedies, as an award will be deemed null and void if it conflicts with Swedish public policy. 

What interim measures are available? Will local courts issue interim measures pending constitution of the tribunal?

Under Section 25 of the Arbitration Act, if so requested an arbitral tribunal may, unless otherwise agreed by the parties, decide that the other party must undertake an interim measure to secure the disputed claim during the proceedings. An arbitral tribunal may grant interim measures to:

  • maintain or restore the status quo pending determination of the dispute;
  • take action that would prevent, or refrain from taking action that is likely to cause, imminent harm or prejudice to the arbitral process itself;
  • provide a means of preserving assets from which a subsequent award may be satisfied; or
  • preserve evidence that may be relevant and material to the resolution of the dispute.

However, orders issued by the arbitral tribunal granting interim measures are not enforceable through enforcement proceedings in Sweden.

The arbitration agreement does not prevent the parties – before or during a dispute before arbitrators – from seeking interim measures in court.

Interest

Can interest be awarded?

Yes.

At what rate?

Where Swedish substantive law applies to the dispute, interest is generally awarded pursuant to the Interest Act (SFS 1975:635). The statute provides that interest for late payment accrues at a rate corresponding to the reference rate of the Swedish Central Bank plus eight percentage points.

However, the award of interest always requires that a party make a claim for interest.

Finality

Is the award final and binding?

 Arbitration awards are final and binding. However, the decision on compensation granted to the arbitrators may be appealed.

What if there are any mistakes?

Section 32 of the Arbitration Act provides that if the arbitrators find that an award contains any obvious inaccuracy as a consequence of a typographical, computational or other mistake by the arbitrators or another person, or if the arbitrators failed to decide an issue which should have been dealt with in the award, they may, within 30 days of the announcement of the award, decide to correct or supplement the award. They may also correct or supplement an award, or interpret the decision in an award, where a party so requests within 30 days of receipt of the award by that party. 

Can the parties exclude by agreement any right of appeal or other recourse that the law of your jurisdiction may provide?

Agreements to exclude or limit the parties’ rights to challenge an award are recognised and enforced in Sweden only where:

  • none of the parties is domiciled or has its place of business in Sweden;
  • the parties’ relationship is of a commercial nature; and
  • the agreement is in writing.

Appeal

What is the procedure for challenging awards?

A party can seek to have an award rendered null and void or set aside before a court.

An award may be declared null and void if:

  • it includes determination of an issue which, in accordance with Swedish law, may not be decided by arbitrators;
  • it, or the manner in which it arose, is clearly incompatible with the basic principles of the Swedish legal system; or
  • it does not fulfil the requirements with regard to the written form and signature.

There is no time limit in the Arbitration Act for seeking to have an award rendered null and void. 

A court may also set aside an award if:

  • it is not covered by a valid arbitration agreement between the parties;
  • the arbitrators have made the award after expiry of the period decided by the parties or where the arbitrators have otherwise exceeded their mandate;
  • arbitral proceedings should not have taken place in Sweden;
  • an arbitrator has been appointed contrary to the agreement between the parties or the Arbitration Act;
  • an arbitrator was unauthorised; or
  • through no fault of the party, an irregularity occurred in the course of the proceedings which influenced the outcome of the case.

A party is not entitled to rely on circumstances which, through participating in the proceedings without objecting, it may be deemed to have waived.

A claim for setting aside an award must be made within three months of the party receiving a copy of the award.

An action against an award pursuant to the above will be considered by the court of appeal in the jurisdiction where the arbitral proceedings were held. Where the place of arbitration is not stated in the award, the action may be brought before the Svea Court of Appeal.

On what grounds can parties appeal an award?

Arbitral awards cannot be appealed in Sweden; they can be challenged only based on the grounds mentioned above.  

Enforcement

What steps can be taken to enforce the award if there is a failure to comply?

A foreign award (ie, an award made abroad) becomes enforceable only subject to an exequatur proceeding.

An application to that effect must be lodged with the Svea Court of Appeal.

A foreign award will not be recognised and enforced in Sweden where the party against which the award is invoked proves as follows:

  • The parties to the arbitration agreement, pursuant to the applicable law, lacked capacity to enter into the agreement or were not properly represented, or that the arbitration agreement was invalid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made.
  • The party against which the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings, or was otherwise unable to present its case.
  • The award deals with a dispute not contemplated by, or not falling within, the terms of the submission to arbitration, or contains decisions on matters which are beyond the scope of the arbitration agreement, provided that, if the decision on a matter which falls within the mandate can be separated from those which fall outside the mandate, that part of the award which contains decisions on matters falling within the mandate may be recognised and enforced.
  • The composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties or, failing such agreement, was not in accordance with the law of the country where the arbitration took place.
  • The award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, the award was made.

Recognition and enforcement of a foreign award shall also be refused where a court finds that:

  • the award includes determination of an issue which, in accordance with Swedish law, may not be decided by arbitrators; or
  • it would be clearly incompatible with the basic principles of the Swedish legal system to recognise and enforce the award. 

Can awards be enforced in local courts?

See above.

How enforceable is the award internationally?

Swedish arbitral awards are typically enforced internationally. However, domestic law in the state where enforcement is sought will ultimately determine the enforceability of a foreign award.

To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?

Sweden has adopted a restrictive approach to state immunity. Sweden has also ratified the UN Convention on Jurisdictional Immunities of States and Their Properties. The convention has yet to come into force due to the low number of ratifications, but Sweden’s ratification of the convention is confirmation  of Sweden’s adherence to the principles  of restrictive immunity.

Recent case law from the Supreme Court has held that enforcement may be granted in relation to property used for other purposes than governmental non-commercial purposes.   

Are there any other bases on which an award may be challenged, and if so, by what?

The grounds on which an award can be challenged are exhaustive.

How enforceable are foreign arbitral awards in your jurisdiction?

Foreign arbitral awards are typically enforced in Sweden.  

Will an award that has been set aside by the courts in the seat of arbitration be enforced in your jurisdiction?

If an award is set aside or declared null and void in the state of the seat of arbitration, the award cannot be enforced in Sweden.  

Third-party funding

Rules and restrictions

Are there rules or restrictions on third-party funders?

No. Third-party funding is generally permissible.

Class-action or group arbitration

Concept

Is there a concept in your jurisdiction providing for class-action arbitration or group arbitration? If so, are there any limitations to the arbitrability of such claims or requirements that must be met before such claims may be arbitrated?

There are no provisions regarding class-action or group arbitration in Sweden.

Hot topics

Emerging trends

Are there any hot topics or trends emerging in arbitration in your jurisdiction?

No.