Svea Court of Appeal’s 2019 decisions: a year in review
In 2019 the Svea Court of Appeal and the Supreme Court of Sweden dealt with several noteworthy cases related to challenges of arbitral awards. Now SCC provides a brief summary review of these decisions.
- Excess of mandate and failure to provide grounds for reasoning
The Svea Court of Appeal dismissed the challenge of separate arbitral award in a dispute between a Russian company and a Ukrainian company. The dispute concerned claims for payment and claims for invalidity or replacement of certain contractual clauses. The Russian Claimant claimed that the arbitral tribunal went beyond the scope of the arbitral proceedings, committed several procedural errors and failed to provide complete grounds for its reasoning.
The Court of Appeal found that the arbitral tribunal did not go beyond the parties’ references and, consequently, no excess of mandate or procedural error occurred. Furthermore, it stated that only the complete absence of grounds, or grounds that are so incomplete, that they must be equated to a situation in which no grounds have been provided, could constitute a procedural error. It concluded that there was no absence of grounds and rejected the challenge claim in its entirety.
- Due process and procedural errors affecting the outcome of the case
The Supreme Court affirmed a decision of the Svea Court of Appeal, partially setting aside an arbitral award and finding that the tribunal’s deviation from a position stated in a procedural order constituted a procedural error.
The Supreme Court placed special focus on the prerequisite that the irregularity had probably influenced the outcome of the case. The Court found that the error was substantial, since the arbitral tribunal had failed to give the challenging party a reasonable opportunity to present its case regarding the specific issue. Had the tribunal announced in advance that it would re-examine its position on interpretation of the royalty clause in the parties’ agreement, the challenging party would have further argued this issue. The Court found that due process had been violated and that it could be presumed that such an irregularity influenced the case's outcome.
- Excess of mandate and issues not covered by the arbitration agreement
The Supreme Court dismissed in its entirety the challenge of the arbitral award claimed by Belarusian company in a dispute against Turkish company under the construction contract.
The challenging party claimed that the award should be set aside as the arbitral tribunal had exceeded its mandate by deciding on issues which were not covered by the arbitration clause. Also, other procedural errors were claimed.
The Supreme Court found that the starting point when reviewing the arbitral tribunal’s decision on jurisdiction is that the tribunal’s interpretation and evaluation of evidence is correct. The review of the court shall therefore be limited to the question whether the challenging party has established that the tribunal has made an incorrect assessment of the scope of the arbitration agreement.
The Supreme Court also found, amongst other things, that the effect of a procedural error must be of essential importance as such and of reasonable importance for the challenging party in relation to the part of the award that is subject to setting aside in order for the challenge to be successful. The Supreme Court found that the challenging party had not established the asserted circumstances and rejected the challenge.
- Arbitrability and compatibility with Swedish public order
The Svea Court of Appeal dismissed a claim for invalidity and setting aside of separate and final arbitral awards. The Republic of Poland challenged the separate and final arbitral awards rendered in an investment treaty arbitration initiated by Luxembourg investor, claiming that that the dispute was non-arbitrable and conflicted with Swedish public order.
The Court of Appeal concluded that the arbitral awards were not invalid, since the dispute which the arbitral awards concerned was arbitrable and since neither the arbitral awards nor the manner in which they arose was incompatible with Swedish public order. Also, the circumstances of the case could not, as a matter of law, result in the substantive contents of the arbitral awards being contrary to fundamental EU law. The Court of Appeal stated that the present case was incompatible with the Mostaza Claro ruling and the Achmea ruling.
However, the Court of Appeal concluded that a minor part of the final award should be set aside as the arbitral tribunal made an addition to the separate arbitral award too late and therefore exceeded its mandate to that extent.