On 31 July 2012, an arbitral tribunal constituted under the Arbitration Rules of the Stockholm Chamber of Commerce (SCC) issued a final award in a dispute between JSC Gazprom and the Republic of Lithuania. The tribunal ordered Lithuania to withdraw certain claims brought in the Lithuanian state courts in breach of a shareholders' agreement between Gazprom, Ruhrgas and the Republic of Lithuania (SHA). The SHA contained an arbitration clause referring disputes to SCC arbitration in Stockholm (see Legal update, Gazprom v Lithuania: SCC arbitral tribunal orders Lithuania to withdraw claims brought in Lithuanian courts in breach of shareholders' agreement).

The decision provides valuable guidance on the definition of a breach of an arbitration agreement and its consequences. The tribunal gave primary importance to the effect of the pending proceedings in Lithuania on the rights and obligations of the parties under the SHA, irrespective of the legal basis of those proceedings. The tribunal therefore enforced the duty of the parties to the SHA not to submit disputes under that agreement to state courts. The tribunal reasoned that there is a breach of the arbitration agreement where the relief sought in investigation proceedings modifies a shareholders' agreement or otherwise affects the rights of the parties. Further, the party requesting the court proceedings can obtain the relief sought through arbitration.

In Swedish arbitration practice, a clause which does not clearly restrict the jurisdiction of the arbitral tribunal is generally given a broad scope. The award also reflects the dual nature of an arbitration agreement as both a procedural and a substantive agreement, a breach of which principally entitles the non-breaching party to request specific performance and damages.

On 2 July 2012, in Case T611-11, the Svea Court of Appeal in Stockholm dismissed an appeal by Naftogaz relating to an arbitral award issued by an SCC tribunal, finding that Naftogaz was obliged to deliver gas and pay penalties for undelivered gas (see Legal update, Svea Court of Appeal dismisses Naftogaz appeal: arbitral award finding Naftogaz bound by contract was not against public policy).

Naftogaz had appealed against the SCC award alleging, among other things, that the award was invalid as it obliged Naftogaz to deliver gas even though such deliveries would have been illegal under the laws of Ukraine. Accordingly, Naftogaz argued that the award was contrary to the public policy of Sweden as well as of the Ukraine (ordre public) and should be declared invalid pursuant to section 33(2) of the Swedish Arbitration Act (SAA).

In dismissing the appeal, the court rejected both Naftogaz's argument that such deliveries would have been illegal in the Ukraine and Naftogaz's ordre public arguments. The obligation for Naftogaz to deliver gas and pay penalties would not breach ordre public (public policy) in its traditional interpretation, or indeed the doctrine of international ordre public. The court also added that the penalties did not constitute the type of "punitive damages" found in the US which have been found to be contrary to public order by other courts.

In Sweden, public policy claims have been narrowly interpreted. In this case, the court probably considered international public policy to avoid the risk of rejecting international arbitration awards for purely national reasons and also referred to the International Law Association's recommendations on the application of public policy as a ground for refusing enforcement of an award.

In November 2012, the Svea Court of Appeal dismissed a claim for a declaration that the arbitral tribunal lacked jurisdiction on the basis that the claimant in the arbitration was not party to the arbitration agreement (see Legal update, Svea Court of Appeal: right to raise jurisdictional objection forfeited despite lack of actual knowledge as to circumstances giving rise to objections). The court concluded that the defendant had an extended duty to investigate the identity of the claimant upon receipt of the Request for Arbitration. Therefore, the defendant should have raised its jurisdictional objections in the Statement of Defence, despite its lack of actual knowledge of the circumstances.

The judgment of the Svea Court of Appeal imposes an extended duty on a counter-party to examine any circumstances which appear contradictory or which raise questions. If a party has any knowledge of an irregularity or a conflict of interest, in order to maintain the right to challenge the arbitral award it should not knowingly refrain from investigating the circumstance. A failure to investigate may lead to the waiver of the right to raise jurisdictional objections.

On 23 November 2012, the Swedish Supreme Court dismissed an appeal by the Moscow City Golf Club OOO relating to an SCC arbitral award (see Legal update, Swedish Supreme Court dismisses Moscow City Golf Club appeal). In the award, the Golf Club was ordered to repay Nordea Bank AB a bank loan, together with interest and costs.

The Supreme Court rejected arguments relating to arbitrability and the validity of the arbitration agreement. The decision clarifies that arbitrability, which under Swedish law is connected to the parties' competence to settle the dispute amicably, is decided on the basis of the legal situation at the time of the award, rather than at the time of entering into the arbitration agreement. The difference may obviously be of the utmost significance. The decision is also a reminder to the parties that challenges against the competence of arbitrators must be clear and explicit.

On 10 May 2012, the Swedish Supreme Court issued an order for production of documents against a third party that was not a party to the arbitration (see Legal update, Swedish Supreme Court orders production of documents against third party). The court emphasised the essential role of the arbitral tribunal in assessing whether or not a disclosure order is justified.

The scope of a Swedish court's assessment of a request for production of documents in arbitration is limited to the legality of the requested production order. The extent to which a court, when assessing legality, may re-examine the evidentiary value of the documents, and if so how, is not self-evident. This case demonstrates the arbitration-friendly approach of the Swedish Supreme Court. It emphasises the exclusive role of the arbitral tribunal in assessing evidence. For arbitral tribunals, it is a reminder of the importance of being transparent in their assessment of the evidentiary value of documents requested to be produced.

In May 2012, the SCC launched its new Swedish Arbitration Portal, which provides free access to English translations of Swedish court decisions on arbitration issues (see Legal update, SCC: caseload statistics and new Swedish Arbitration Portal). The database is updated regularly when new translations of court decisions become available.

Earlier this year, the SCC also expanded the range of unofficial translations of Swedish legislative acts available through the SCC website.

During 2012, the SCC continued its review of the secretarial and administrative services it provides as an appointing authority for arbitrations under the UNCITRAL Arbitration Rules. The stated aim was to update the SCC procedures and services to reflect international best practice for UNCITRAL arbitrations and to promote the SCC's role as an UNCITRAL appointing authority. It is not known when a proposal may be expected to be tabled.

On 1 January 2013, Ulf Franke took over as Chairman of the Board of Directors of the SCC. Mr Franke was Secretary General of the SCC from 1975 to 2010.

Ulf Franke is one of the few Swedes on the SCC board of directors, which includes representatives of several other international arbitration institutions. In 2001-2009, he was President of the International Federation of Commercial Arbitration Institutions (IFCAI) and he also served for ten years (1994 to 2004) as Secretary General of the International Council for Commercial Arbitration (ICCA).

Ulf Franke is also Honorary Secretary General of ICCA and Member of the ICCA Governing Board.