Judgment of Svea Court of Appeal, 18 June 2015, Case No T 4861-14

Summary: The respondent in the arbitration challenged the arbitral award under Section 34 and 34 of the Swedish Arbitration Act. The subject of the dispute was whether the respondent had breached a shareholders’ agreement between the parties.

First, the respondent argued that the tribunal had based its decision on a review of related transactions governed by other agreements involving other parties. This constituted an excess of mandate that affected the outcome of the case, and the arbitration award should be annulled pursuant to Section 34. The claimant responded that the arbitration clause in the shareholders’ agreement granted the arbitral tribunal jurisdiction to review related transactions that were relevant to the dispute, even if those transactions were governed by other agreements. The claimant further stated that even if this constituted an excess of mandate, the outcome of the arbitration was not affected because the tribunal had found that the respondent had committed several other breaches of the shareholders’ agreement. The Court rejected the respondent’s argument, explaining that an arbitral tribunal has jurisdiction to review legal relationships beyond the scope of the arbitration agreement, provided that those relationships are relevant as evidence for the review of the legal relationship governed by the arbitration agreement. Here, the entirety of the claimant’s case had been based on the shareholders’ agreement, with other agreements constituting evidentiary facts and interpretation data for the main breach of contract claim.

Second, the respondent claimed that the award should be declared invalid pursuant to Section 33 of the Act because the tribunal decided a question not eligible for arbitration under Swedish law, namely whether the certain transactions constituted unlawful distributions under the Swedish Companies Act. The Court rejected this argument as well. The parties had specifically incorporated the Companies Act into the shareholders’ agreement, so the provisions of that Act formed part of the parties’ contract. Therefore, the question of whether unlawful distributions had occurred was an issue on which the parties could agree freely, and which was therefore eligible for arbitration.