Judgment in the Svea Court of Appeal, 31 October 2017. Case No. T 6247-15
Summary: The Respondent to the arbitration (challenging party) challenged the award under item 2 of Section 34 of the Swedish Arbitration Act (SAA), requesting that the Court of Appeal annul the award in its entirety, or alternatively in part. The challenging party argued three separate grounds for annulment. Firstly, that the tribunal had decided issues that were not covered by a valid arbitration agreement between the parties; secondly the tribunal exceeded its mandate by failing to review the dispute in accordance with the parties’ instructions (the date of accrual of interest for example) and thirdly the tribunal committed a procedural error by not providing the party an opportunity to argue its case. This final argument was based on a claim that the tribunal did not allow for extensions of time or for the appointment of an independent expert. Therefore the challenging party argued that the award should be annulled in it’s entirely or alternatively partially due to excess of mandate and/or material procedural error.
The other party (Claimant in the arbitration) claimed that there was a valid arbitration agreement covering the matters in dispute. It argued that the parties had agreed that the additional works in question would be covered by the arbitration clause, or at least such an agreement came into existence because of the respondent party’s passivity and implied actions. The claimant in the arbitration further argued that the tribunal had not committed any procedural errors in its handling of the case. In arguing this point the party claimed that it was reasonable not to allow extensions of time and that in determining the date for interest accrual the Tribunal had undertaken a review on the merits and no procedural error was made. They further argued that if an error was made, it had no effect on the outcome of the arbitration or alternatively was caused by the other party.
The Court partially annulled the award. The Court held that the determination in relation to compensation for additional works was not covered by a valid arbitration agreement. Additionally the Court found that the arbitral tribunal in its award had based its decision in relation to interest on an incorrect assumption, that the parties agreed that interest calculation should be based on the invoice date. The Court reasoned that a procedural error occurred which would likely affect the outcome and this was not caused by the challenging party.
However, the Court dismissed the final argument that the challenging party had not been provided a reasonable opportunity to present its case. Finding that the tribunal did not fail in its management of the proceeding by not granting extensions of time or rejecting the challenging party’s request for the appointment of a non-partisan expert.
The Court held that the award compensation for additional works and other interest amounts are clearly separable from other parts of the award. Therefore the Court partially annulled the award to the extent that the operative part of the award dealt with the amount for additional works and interest.