Judgment of Svea Court of Appeal, 25 June 2015, Case No T 2289-14

Summary: The respondent, a Russian energy company, challenged a 2013 arbitral award that ordered it to pay damages to a U.S. oil company for breaches of a cooperation agreement relating to the exploitation of an oil field in Siberia. The respondent argued that the tribunal had exceeded its mandate and committed procedural errors that affected the outcome of the case. In advance of the arbitral hearing, the tribunal had proclaimed that it would review and decide the dispute based solely on circumstances and facts referenced in a Summary of grounds jointly submitted by the parties. According to the respondent, the tribunal had subsequently made findings regarding oil reserves in the oil field, even though the Summary had been restricted to oil flow. The respondent also alleged other procedural irregularities and accused the tribunal of lack of impartiality. The claimant maintained that the size of the oil reserves had been an issue in the dispute, despite not being referenced in the Summary. The Court of Appeal upheld the challenge, holding that the tribunal had exceeded its mandate by reviewing and deciding legal grounds beyond those referenced in the Summary. The Court’s investigation showed that the parties had attempted, in drafts of the Summary, to reserve arguments and facts referenced in earlier submissions. The Tribunal had rejected such reservations, stating that the Summary must include all legally relevant circumstances upon which the parties intended for the tribunal to base its ruling. The size of the oil reserves was not referenced in the Summary; nonetheless, the tribunal ruled that the Russian company had made certain misrepresentations about the oil reserves, and that these misrepresentations had influenced the decision to abandon the project. The Court of Appeal found that the tribunal’s rulings regarding the oil reserves constituted an excess of mandate. The court also held that the Swedish Arbitration Act includes an implicit requirement that a tribunal’s excess of mandate must affect the outcome of the arbitration for the award to be set aside, a requirement that had been met in this case. Therefore, the USD 173 million award was set aside in its entirety.