Sweden improves efficiency in its award challenge procedures

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The Svea Court of Appeal has adopted new guidelines in relation to the challenge of arbitration awards.  

This follows a consultation arranged by the Arbitration Institute of the Stockholm Chamber of Commerce, led by Fredrik Wersäll, President of the Svea Court of Appeal, and involving the Justice of the Supreme Court, Ingemar Persson, and several other leading practitioners in Sweden. The topic of the discussion was how to increase the efficiency of the courts when processing cases concerning the invalidity of and challenges to arbitration awards, with the aim of making Stockholm even more attractive as a seat of arbitration. The results of this initiative are now starting to show.

Stockholm, considered by many to be one of the success stories of international arbitration, benefits from the well organised and efficient Arbitration Institute of the Stockholm Chamber of Commerce (the SCC) and modern arbitration legislation. Sweden is also often viewed as a neutral venue for the resolution of disputes. Stockholm’s new hearing centre, which opened in late 2012, specifically markets itself as a provider of hearing facilities for international arbitration proceedings. To make Stockholm an even more attractive seat of arbitration, the SCC initiated a dialogue with the Svea Court of Appeal, seeking to make challenge procedures faster and more effective.

An arbitration award from a Swedish-seated arbitration under the SCC rules is final and binding as of the day it is rendered, with no opportunity to appeal on the merits. It cannot be challenged on grounds of substantive law or due to the fact that the arbitral tribunal has made an incorrect assessment of the evidence. However, an award may be challenged if it suffers from a substantial procedural defect. In practice, the main grounds for a challenge are excess of mandate (Section 34(2) of the Swedish Arbitration Act) and procedural irregularity that can be shown to be likely to have affected the outcome of the proceedings (Section 34(6)).

Given that an arbitration award can only be challenged on the basis of procedural defects, the prospects of successfully challenging an award in Sweden are limited. Statistics shows that less than 10 percent of all awards are challenged. Further, a recent study has found that 18 percent of the challenges are struck out immediately as being clearly without merit. The same study suggests that only 10 percent of the challenges heard by the courts have been successful.  Also notable is that more than 85 percent of the challenge cases in Sweden were brought to the Svea Court of Appeal, being the exclusive forum for challenges of awards with Stockholm as the seat of arbitration.

Unfortunately, challenges to awards have previously taken far too long to be decided. In 2011 and 2012, the average time for processing a challenge case in the Svea Court of Appeal was approximately 20 months.

As mentioned above, a consultation on these issues involving several judges, arbitrators and leading arbitration practitioners was held in late 2012.  As part of the follow-up after the consultation, in autumn 2013 the Svea Court of Appeal adopted new guidelines in order to speed up and make the challenge procedure more efficient. The guidelines include immediately appointing an appeal judge to be responsible for the case and a law clerk for drafting purposes.

The appeal judge is responsible for immediately contacting the parties' counsel to discuss practicalities of the process, such as a time schedule for submissions. Once the court receives the statement of defence, all time limits for submissions, the time and date of a possible pre-trial hearing and the closing of the preparatory phase are to be decided with the parties’ cooperation. Later in the preparatory phase, the court is responsible for drafting a summary of the reliefs the parties respectively are seeking and the basis for such reliefs. Following the end of the preparatory phase, the court is to draw up the agenda for the main hearing. By delivering a decision to close the preparatory phase, the court can prevent the parties from referring to new circumstances or new evidence without reasonable excuse (according to Chapter 42, Section 15a of the Swedish Code of Judicial Procedure). Such a decision by the court effectively prevents delays.

As a further result of the dialogue among SCC, the Svea Court of Appeal and Swedish arbitrators and practitioners, the Swedish Ministry of Justice has initiated work on a directive for a committee of enquiry to overhaul the Swedish Arbitration Act of 2009 and the challenge procedure of awards in order further to strengthen Sweden's attraction as a seat of arbitration.

With improvements already clear and further positive changes on the way, it seems Stockholm may very well keep its success story going for a long time to come.                

 

 

Topics:  Appeals, Arbitration, EU

Published In: Alternative Dispute Resolution (ADR) Updates, Civil Procedure Updates, General Business Updates, International Trade Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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