Tvistlösning Nyhet

Arbitral award set aside by the Swedish Supreme Court following an arbitral tribunal’s deviation from its own procedural order

On 30 April 2019, the Swedish Supreme Court ren­de­red its ru­ling in the CicloMulsion ca­se which has gai­ned so­me at­ten­tion in the Swedish ar­bitra­tion mar­ket following the Court of Appeal’s de­ci­sion to set an ar­bi­tral award asi­de ba­sed on a pro­ce­du­ral er­ror ma­de by the tri­bu­nal. The Supreme Court’s ru­ling pri­ma­rily con­cer­ned un­der which cir­cumstan­ces an er­ror by the tri­bu­nal may be de­e­med to ha­ve ‘li­kely in­flu­enced the outcome of the ca­se’ as requi­red for a chal­lenge un­der the Swedish Arbitration Act.

Under the Swedish Arbitration Act an ar­bi­tral award shall be whol­ly or par­ti­al­ly set asi­de upon the re­quest of a par­ty if, wit­hout fault of the par­ty, an ir­re­gu­la­ri­ty has oc­cur­red in the cour­se of the pro­cee­dings (a pro­ce­du­ral er­ror) which li­kely in­flu­enced the outcome of the ca­se.

The dis­pu­te con­cer­ned a li­cen­se agre­e­ment and was re­sol­ved by ar­bit­ra­ti­on un­der the Rules of the Arbitration Institute of the Stockholm Chamber of Commerce. During the ar­bi­tral pro­cee­dings the tri­bu­nal had is­su­ed a pro­ce­du­ral or­der con­tai­ning the tri­bu­nal’s stand­point on the in­ter­pre­ta­tion of a clau­se in the li­cen­se agre­e­ment. The tri­bu­nal al­so sta­ted in its pro­ce­du­ral or­der that it would not de­vi­a­te from this stand­point wit­hout in­for­ming the par­ti­es the­re­of and al­lowing them to ela­bo­ra­te on the is­sue. The Supreme Court held that the tri­bu­nal in its ar­bi­tral award had de­vi­a­ted from its stand­point in the pro­ce­du­ral or­der wit­hout in­for­ming the par­ti­es of its in­ten­tion to do so, en­tailing that the­re had be­en a pro­ce­du­ral er­ror which the chal­lenging par­ty had not cau­sed, and that the award should con­se­quent­ly be set asi­de pro­vi­ded that the er­ror had ‘li­kely in­flu­enced the outcome of the ca­se’ (the “Influence Requirement”).

The Supreme Court ma­de the following sta­te­ments re­gar­ding the Influence Requirement. As a re­sult of the Influence Requirement, the sco­pe of ap­pli­ca­tion of the pro­vi­sion on pro­ce­du­ral er­rors has be­en li­mi­ted to ma­ni­fest er­rors. It is not suf­fi­ci­ent that the­re is a ma­te­ri­al pos­si­bi­li­ty of the er­ror ha­ving an im­pact on the outcome of the ca­se; the­re must be a concre­te link between the er­ror and the outcome. The re­le­vant test would ty­pi­cal­ly con­si­st of a com­pa­ri­son between the er­ro­ne­ous pro­ce­du­re and a hy­pot­he­ti­cal­ly correct pro­ce­du­re, whe­re the Influence Requirement is ful­fil­led if the correct pro­ce­du­re would li­kely ha­ve re­sul­ted in a dif­fe­rent outcome. In cer­tain si­tu­a­tions it may, ho­wever, be pre­su­med that the er­ror has in­flu­enced the outcome. Such pre­sump­tion may be ap­pli­ed in cer­tain ca­ses whe­re it is dif­ficult to pro­ve that the er­ror has in­flu­enced the outcome alt­hough the­re are se­ri­ous doub­ts as to whet­her the pro­ce­du­re has be­en ac­cep­tab­le, e.g. whe­re a par­ty has not be­en gran­ted due op­por­tu­ni­ty to ar­gue its ca­se, but the th­res­hold for de­vi­a­ting from the main ru­le and ap­p­ly­ing a pre­sump­tion is high.

Applying the abo­ve prin­ciples on the CicloMulsion ca­se, the Supreme Court held that the chal­lenging par­ty had be­en de­pri­ved of its op­por­tu­ni­ty to ar­gue its ca­se. It was al­so stres­sed that the chal­lenging par­ty had be­en en­tit­led to as­su­me that the tri­bu­nal’s stand­point as sta­ted in the pro­ce­du­ral or­der would not be re­con­si­de­red in the ar­bi­tral award. As the er­ror re­sul­ted in a bre­ach of fun­da­men­tal prin­ciples of le­gal cer­tain­ty, the Supreme Court con­clu­ded that the­re was re­a­son to pre­su­me that the er­ror had in­flu­enced the outcome, en­tailing that the award should be set asi­de.