Judgment in the Svea Court of Appeal, 19 December 2019. Case No. T 7929-17
The Appellant (Respondent in the arbitration) challenged the Final Award. The original dispute arose out of the loan agreement between the Claimant and the Respondent, which contained two dispute resolution provisions: one referring to a state court and the other to arbitration.
The Appellant argued that the arbitral award should be set aside based on Section 34 of the Swedish Arbitration Act because:
- there was no valid arbitration agreement between the parties which unequivocally refers parties’ disputes to arbitration;
- the tribunal committed procedural errors that probably impacted the outcome of the dispute, namely it did not allow the Respondent to ask certain questions during the cross-examination of Claimant’s witness and it did not apply agreed rules for the arbitration procedure;
- the tribunal exceeded its mandate or made a procedural error by failing to review one of Appellant’s objections, namely that the loan agreement was a sham agreement.
The Respondent (Claimant in the arbitration) objected to all challenge grounds invoked by the Appellant.
The court rejected the challenge in its entirety. Firstly, it concluded that the parties’ intention was that disputes regarding the loan agreement would be resolved through arbitration and that the valid arbitration agreement did not contain any restrictions. The court took into account, inter alia the Respondent’s explanation and the testimony of the Respondent’s witness that presence of prorogation clause referring to a state court was an oversight.
Secondly, the court found that it was not shown that the tribunal’s refusal of certain cross-examination questions overstepped what the IBA Rules on the Taking of Evidence in International Arbitration allowed and what the parties agreed. Therefore, no procedural error was found.
Finally, the court concluded that the arbitral award’s reasoning encompassed all the objections that were put forth by the Appellant. Accordingly, it was not shown that there was any excess of mandate or procedural error in this regard.