Judgment of the Svea Court of Appeal, 24 February 2012, Case No. T 6238-10

Summary: The appellant challenged the arbitral award maintaining that the award was invalid as it contradicted Swedish public policy (Section 33(2) Swedish Arbitration Act) or, in the alternative, that the tribunal had incurred in a procedural error which likely affected the outcome of the case (Section 34(6) of the Swedish Arbitration Act). During the arbitral proceedings, which were conducted under the SCC Rules for Expedited Arbitrations, the sole arbitrator had rejected the appellant’s request to hold a hearing to hear the witnesses’ testimony. The denial of a hearing, according to the appellant, prevented it to reference any evidence in support of its claim as the appellant only had oral evidence available. On the alleged breach of Swedish public policy, the Court explained that arbitral proceedings are different from court proceedings in that the parties choose who’ll decide the dispute and the arbitrator is not bound by procedural principles such as concentration, immediacy and orality. It further explained that the travaux préparatoires of the Swedish Arbitration Act provide as examples for violation of public policy claims based on criminal activity, an award ordering the parties to carry out an unlawful action or an award resulting from criminal activity. Also, the provision on public policy is narrowly interpreted in Sweden, being section 33 (2) of the Swedish Arbitration Act is rarely applied. On the alleged procedural error, the Court explained that Article 27(1) of the SCC Rules for Expedited Arbitrations provide that a hearing shall be held if requested by party and if deemed necessary by the arbitrator. In this case, the arbitrator considered that taking into account the submissions of the parties and in particular the witness statements, it was not necessary to hold a hearing to summon the witnesses to resolve the dispute. In addition, according to the law applicable to the dispute, it was prohibited any evidence beyond the parties’ written agreement. The Court considered that when deciding not to hold a hearing, the arbitrator applied the rules and the applicable law the parties agreed upon; the Court further found that the decision not to hold a hearing didn’t contradict the arbitration rules applicable to the proceedings and rejected the challenge.