Judgment in the Court of Appeal, 25 August 2016, Case No. T 391-16

Summary: The respondent in the arbitration challenged a separate award on costs, in which the arbitral tribunal had ordered the respondent to reimburse the claimant for the respondent’s part of the advance on costs. Respondent argued that the arbitral tribunal committed a procedural error and exceeded its mandate by rendering an award that did not resolve the dispute on the merits, and that the award should be declared invalid on the same ground. The Court of Appeal dismissed the challenge in its entirety. First, the Court explained that the respondent had waived the right to challenge the award based on a procedural error or excess of mandate, having failed to objected to the tribunal deciding the cost issue through a separate arbitral award during the proceedings. Second, the Court noted that in order for an arbitration award to be declared invalid, the award or the manner in which it was rendered must be clearly incompatible with fundamental principles of Swedish law. Here, Article 45(4) of the SCC Rules authorizes arbitrators to render separate awards on costs, which is not contrary to the Contracts Act or any other law. The provisions of the Swedish Arbitration Act are largely optional.