The Soyak case: challenging arbitrators' fees under the SCC Rules | Practical Law

The Soyak case: challenging arbitrators' fees under the SCC Rules | Practical Law

Olof Ragmark (Partner), Delphi

The Soyak case: challenging arbitrators' fees under the SCC Rules

Practical Law Legal Update 3-386-5093 (Approx. 2 pages)

The Soyak case: challenging arbitrators' fees under the SCC Rules

Published on 29 Jun 2009International, Sweden
Olof Ragmark (Partner), Delphi
In Soyak International Construction and Investment Inc. ("Soyak") v. Hober, Kraus and Melis, the Swedish District Court considered, but did not need to decide, whether fees which had been "finally determined" by the SCC pursuant to its Arbitration Rules were susceptible to challenge in court.
In December 2008, the Swedish Supreme Court gave its much debated decision in Soyak International Construction and Investment Inc. v. Hober, Kraus and Melis, Ö 4227-06, 3 December 2008. The Respondents were the arbitrators appointed in a prior arbitration between Soyak International Construction and Investment Inc (Soyak) and Hochtief AG under the rules of the Arbitration Institute of the Stockholm Chamber of Commerce (SCC). In those proceedings, Soyak sought a reduction of the fees of the arbitrators in respect of their award, which was rendered in 2003. The question raised before the Supreme Court was whether Soyak was free to challenge the costs in question, having regard to the fact that the decision as to costs had been taken by the SCC under its Rules. The Supreme Court concluded that there was no procedural obstacle to such a challenge. Consequently, the case was remitted to the District Court for a material decision.
There has been an ongoing discussion between practitioners about how to understand the legal situation following the decision of the Supreme Court. The fact that there was no procedural obstacle to the challenge should certainly not be understood as providing any indication as to the approach the courts will take to the substantive issue of whether or not the agreed rules may materially preclude a dissatisfied party from successfully challenging the SCC's decision on fees. According to Article 43 of the Rules, the Board of the SCC shall "finally determine the Costs of the Arbitration in accordance with the Schedule of Costs" applicable in the arbitration in question.
On 28 May 2009, the Stockholm District Court rendered its decision in Soyak International Construction and Investment Inc. v. Hober, Kraus and Melis, T 14504-03. Unfortunately, no answer is given by that decision, as the arbitrators had accepted the claim to reduce their fees, and the decision was given solely on that basis. It is hoped that the situation will be clarified as soon as possible.