Judgment of the Svea Court of Appeal, 26 March 2015, Case No T 10470-10
Summary: In 1995, the parties signed a cooperation agreement involving the development of a natural gas field in Ukraine. The agreement was to last until 2023, but in 2007 the Ukrainian government enacted a regulation which made it impossible to produce and sell gas at a profit. The claimant filed for arbitration, and the tribunal found that the respondent had breached the cooperation agreement and owed damages. The respondent challenged the award before the Court of Appeal, alleging that the arbitrators had committed procedural errors that likely affected the outcome of the proceedings, and exceeded their mandate by basing the award on legally relevant circumstances that had not been referenced by the parties. Among other things, the respondent argued that: (1) it had been prevented from presenting evidence regarding new legislation; (2) the tribunal had found that the agreement’s limitation of liability clause did not apply in the event of an intentional breach, a legally relevant circumstance that had not been referenced by the claimant; (3) the tribunal awarded certain damages not explicitly requested; (4) and the tribunal had disregarded the parties’ joint instruction to use the valuation method used by the expert witnesses. The court rejected all grounds of the respondent’s challenge. In its reasoning, the court noted that it is within a tribunal’s mandate to disallow the submission of further evidence once it has declared the proceedings closed. It also stated that the arbitral tribunal’s calculation of damages relates to the merits of the case and is not subject to challenge. The fact that both parties’ expert witnesses used certain joint assumptions does not mean that the parties had provided the tribunal with joint instruction to use those assumptions in its calculation of damages.