03.07.2019

Arbitration more attractive than ever – Sweden is modernising its arbitration law

Blog

With the aim of modernising arbitration proceedings in Sweden and of adapting them to the development of international practice, Sweden has amended its arbitration procedure law. The new arbitration procedure statute (Lag (1999:116) om skiljeförfarande) that came in to force in March 2019, has introduced many reforms that affect not just the arbitration proceeding itself but also the remedies that the parties can invoke at court. Parties, that intend to initiate arbitration proceedings in Sweden, should be aware of this new legal framework.

Background

Reforms

In order to facilitate the initiation and execution of ad-hoc arbitration proceedings – including such arbitration proceedings that are not taken to an arbitral institution (such as the ICC or the SCC) – new rules have been introduced concerning, amongst others, the choice of arbitrators, the choice of applicable law and the conditions for ending arbitration proceedings. If a party rejects an arbitrator, suggested by the other party, or if the chosen arbitrator is unavailable, the parties are no longer obligated to take the matter to a national court. Now, the party that introduced the arbitrator may choose a new arbitrator.

The new arbitration procedure statute also changes the rules governing the choice of applicable law: The choice of law agreed by the parties now has priority. If no agreement is reached, the court of arbitration chooses the applicable law. However, the statute does not regulate which criteria the court of arbitration must fulfil when making this choice.

A further interesting innovation relates to the ending of arbitration proceedings. Prior to the amendment, arbitration proceedings could only be ended by way of an arbitral award. In many cases, for example when the parties settled the matter out of court or when a party failed to make the advance payment to the court of arbitration, the old law, that stipulated that an arbitral award must be made, lead to unnecessary delays. For this reason, the new arbitration procedure law has abrogated this requirement. The court of arbitration can now end the proceedings by way of a simple decree.

The most far-reaching changes however relate to remedies that are available to the parties to arbitration proceedings. Firstly, an examination of a court of arbitration’s jurisdiction by a national court is no longer possible at every stage of the arbitration procedure. In order to avoid parallel proceedings at a national court and at a court of arbitration, an inquiry into the jurisdiction of a court of arbitration by a national court is only possible before the opening of arbitration proceedings. Furthermore, an examination of jurisdiction is generally not possible, if a court of arbitration declared its jurisdiction over a matter. In this case, a party may call upon the national courts within thirty days and challenge the court of arbitration’s decision on the jurisdiction.  

Stricter limits have also been set concerning the complaint that a court of arbitration has exceeded its mandate. The complaining party must now establish that the exceedance influenced the arbitral award.

But the legislators have also changed the appeal procedure for other objections to an arbitral award before the Court of Appeal (Hovrätt). The time period within which a party may exercise their rights to appeal has been reduced from three to two months. If a party exercises its right to appeal against a decision of the Court of Appeal, the Supreme Court (Högsta Domstol) now has the possibility of denying the appeal or of limiting it to particular questions of law.

Furthermore, according to the new arbitration procedure law, in oral hearings, the parties may conduct the taking of evidence in English. Before, all evidence and information had to be presented in Swedish. This change of law considerably reduces the parties’ translation costs and other expenditures. 

 

Conclusion

The new set of rules make arbitration proceedings in Sweden considerably more attractive. The legislator has significantly simplified the conditions for opening and conducting arbitration proceedings and has introduced new rights that allow the parties to take more influence on the proceedings. 

In how far the rules concerning legal remedies will prove their value in arbitration proceedings must be awaited. Though the reduced time periods and the higher thresholds could cause challenges in some cases, on the whole, the new law will most probably effect the avoidance of unnecessarily long proceedings. From an international perspective, the amendments in general and in particular the fact, that appeal proceedings may now be nearly completely conducted in English, are to be welcomed.
 

Author
Dr Christoph von Burgsdorff, LL.M. (Essex)

Dr Christoph von Burgsdorff, LL.M. (Essex)
Partner
Hamburg
christoph.von.burgsdorff@luther-lawfirm.com
+49 40 18067 12179

Robert Burkert

Robert Burkert
Associate
Hamburg
robert.burkert@luther-lawfirm.com
+49 40 18067 14837