Swedish Arbitration Act revised: making arbitration more efficient and easily accessible

On 1 March 2019, the revised Swedish Arbitration Act entered into effect following a nearly five-year long legislative process to update the Swedish Arbitration Act of 1999.

The revised Act aims to make the arbitration process more efficient and easily accessible, especially for non-Swedish parties, and ensures that Stockholm continues to be an attractive venue for international arbitration. The revisions strengthen party autonomy and provide for an efficient process which further facilitates the needs of international arbitration.

Annette Magnusson, the Secretary General of the Arbitration Institute of the Stockholm Chamber of Commerce (SCC), provided the following comment in relation to the revised Act: “The revised Arbitration Act ensures that Sweden maintains its role as a jurisdiction with a strong, modern legal framework for international dispute resolution. The new legislation is in line with international trends, and will foster growth and development of international arbitration in Stockholm”. 

The revised or added provisions in the Act entail e.g. the following changes:

• A new and more efficient procedure for jurisdictional objections

Under the previous Act, parties were allowed to bring a declaratory claim in court regarding the tribunal’s jurisdiction at any point during the arbitration proceedings. In order to avoid uncertainty and parallel proceedings, the revised Act sets out that parties are only allowed to bring such declaratory actions in court until the commencement of the arbitration proceedings (unless the other party does not object to the initiation of such concurrent proceedings after the initiation of the arbitration proceedings).

The revised Act introduces a new provision allowing arbitrators to decide on the matter of jurisdiction in an order which can be appealed to the Court of Appeal within 30 days. The arbitration proceedings may continue during the Court of Appeal’s review of the matter. 

• Clarification of the determination of the applicable substantive law

In the absence of party agreement, the revised Act gives the arbitrators explicit mandate to determine the applicable substantive law. The revised Act does not specify the basis of the arbitrators’ determination, which enables the arbitrators to decide as they see fit in the relevant case. However, arbitrators may only decide on the applicable substantive law ex aequo et bono or as amiable compositeurs provided that the parties have so agreed.

• A more efficient and international challenge procedure

The timeline for applications to set aside an arbitral award is reduced from three to two months from the date when the party received the award. Moreover, the revisions provide that oral evidence in challenge proceedings in court can be undertaken directly in English without translation to Swedish.

• Causality requirement added to set aside awards where mandate has been exceeded

After the revision, the grounds for challenging an arbitral award now require that, where the tribunal has exceeded its mandate, this must have affected the outcome of the case in order for an award to be set aside.

A judgment by the Court of Appeal concerning challenge of an award can be appealed to the Supreme Court, subject to the Court of Appeal granting permission for such an appeal. Following the Court of Appeal’s permission to appeal to the Supreme Court, the revised Act provides that the Supreme Court may grant or deny leave for the appeal. Further, the Supreme Court may now determine which issues it will decide. Hence, the revised rules enable the Supreme Court to limit its examination to issues of precedential value.

The revised Act entered into force on 1 March 2019 and applies to arbitrations seated in Sweden initiated after that date.