Judgment in the Svea Court of Appeal, 28 August 2017. Cases No. T 756-16 and T 4427-16
Summary: The Respondent to the arbitration (challenging party) challenged the award under item 2 of Section 34 of the Swedish Arbitration Act, requesting that the Court of Appeal annul paragraphs 67, 71 and part of paragraph 73 of the arbitral award. The challenging party argued that the tribunal exceeded its mandate by basing its decision on circumstances which had not been referenced by the parties.
In the alternative the challenging party argued that a procedural error occurred in the arbitration and parts of the award should be set aside pursuant to item 6 of Section 34 of the Swedish Arbitration Act. The party claimed that the tribunal committed a procedural error by not informing the challenging party that it had taken certain circumstances into account, thereby depriving the party of its right to argue those legal facts. The challenging party argued that this constituted a material procedural error that materially affected the outcome of the arbitration.
The Claimant to the arbitration claimed that the tribunal did not base its decision on any circumstance which had not been referenced by a party and that even if it had done so, it would not have affected the outcome of the arbitration.
The Court dismissed the challenge in its entirety. The Court noted that if an arbitrator bases his/her decision on a circumstance which has not been involved by a party, he/she shall generally be considered to have exceeded his/her mandate. However, the Court noted that for an award to be annulled on the ground that the tribunal based its decision on circumstances not referenced by the parties, these circumstances must relate to legal facts not invoked by a party. The Court found in this case that the relevant circumstances taken into account by the tribunal did not constitute legal facts in the action at issue. Instead the circumstances were evidentiary circumstances in support of the parties having agreed on a waiver of the rent. As the circumstances were evidentiary facts the arbitral tribunal was not obliged to inform the party that it intended to take them into account. Therefore the tribunal did not exceed its mandate, additionally no procedural error occurred and the claim was dismissed.