Judgment in the Svea Court of Appeal, 16 October 2018. Case No. T 6862-17

Summary:

The Claimant as a losing party in the arbitration appealed the decision of the District Court regarding the compensation to an arbitrator. The Claimant argued that the arbitrator’s fees should be reduced based on an alleged lack of impartiality and independence, stressing that the arbitrator failed to disclose the circumstances that may affect his independence or impartiality. The Claimant further asserted that the time the arbitrator spent in the course of the proceedings was useless and represented no value. Therefore, according to the Claimant’s position, the arbitrator’s compensation should be adjusted in accordance with Section 36 of the Swedish Contracts Act related to unconscionable contractual clauses.

The Court of Appeal affirmed the District Court’s judgement and rejected the claim for a reduction of the compensation awarded to the arbitrator. The Court noted that section 41 of the Swedish Arbitration Act should be applied differently depending on whether the cost decision is made by the arbitrators themselves or by an institution. When the compensation is set by an institution, in this case by the SCC under its rules chosen by the parties, then the cost decision is binding on the parties as if they themselves had agreed on the amounts in question. Pursuant to the Court’s reasoning, the court’s review should not include general analysis of reasonable compensation standards, being strictly limited to the assessment of whether the grounds invoked by the Claimant had justified a deviation from the parties’ agreement that referred to the rules of an arbitration institute. Since no such justification had been presented by the Claimant, the Court of Appeal rejected the Claimant’s arguments on this ground.

The Court of Appeal also considered whether the mere establishment of the circumstances that allegedly gave rise to the doubts as to arbitrator’s impartiality or independence could serve as a ground for reduction of the arbitrator’s compensation. The Court found that the existence of such circumstances could not be treated as a standalone basis for reduction of the fees awarded to the arbitrator.