LEGAL JUSTIFICATION

1. The main provisions on contesting the arbitral award

The main legislative acts regulating the procedure for challenging arbitral awards are:
1) The Swedish Arbitration Act 1999 (hereinafter referred to as the Arbitration Act);
2) The Code of Procedure of Sweden 1942
According to the legal doctrine and the norms of Swedish law, there is no right of appeal with respect
to arbitral awards, only a right to challenge, which entails consideration of a limited range of issues
related to the allegation of serious procedural violations during the arbitration.
The Law on Arbitration provides two types of grounds for challenging an arbitral award:
1) the grounds for the initial invalidity of the decisions, such as non-arbitrability, violation of public
order (Article 33 of the Law on Arbitration);
2) the grounds on which the arbitral award can be fully or partially canceled by the court at the request
of the parties, such as the absence of a valid arbitration agreement, the arbitrators going beyond their
powers (Article 34 of the Law on Arbitration).
The Law on Arbitration also allows you to challenge the decision of the arbitration made without
examining the merits of the case (Article 36 of the Law on Arbitration).
Moreover, the decision of the arbitration institution may be reversed on the grounds set forth in Art.
34 of the Law on Arbitration, if it is not subject to cancellation on the grounds contained in Art. 36 of
the same Law.

Despite the fact that the Swedish legal doctrine proceeds from the principles of minimal court
interference in the activities of the arbitration, maintaining the invariability and integrity of the arbitral
award, the current Swedish law provides for the possibility of challenging arbitral awards in two
instances:
1) Challenging the arbitral award in the court of appeal;
2) Challenging the ruling of the court of appeal in the Supreme Court of Sweden.
The Arbitration Law contains a closed list of exceptional grounds, in connection with which the arbitral
award may be fully or partially invalidated, canceled by a state court at the request of one of the parties.
The application for the cancellation or invalidation of the arbitral award shall be considered by the
court of appeal of the district in which the arbitral proceedings took place. If the place of the arbitration
is not specified in the decision, the application shall be forwarded to the Svea County Court of Appeal
(Stockholm).
In accordance with Art. 45a of the Law on Arbitration, when considering in the Court of Appeal and
the Supreme Court applications for the cancellation of arbitral awards, at the request of the party, the
court may hear the evidence of the parties in English without being translated into Swedish.
2. Grounds for invalidating the decision of the arbitration institution

According to Art. 33 of the Arbitration Act, an arbitral award is invalid:

1. if it contains a decision on an issue which, under Swedish law, cannot be the subject of arbitration
(non-arbitrability);
2. if the decision or the procedure for its adoption is obviously incompatible with the basic principles
of the Swedish legal system (contrary to public policy);
3. if the decision does not meet the requirements for the written form and signature provided for in the
first part of Article 31 (violation of the rules for processing the decision).
Part of the arbitral award may be invalidated.
The grounds for invalidating the arbitral award in accordance with the above article are aimed at
protecting public interests and the rights of third parties. That is why the norm of Art. 33 of the
Arbitration Act does not establish time limits for filing an application for invalidating an arbitral award.
It is fundamentally important that the invalidity of part of the decision does not entail the invalidity of
the entire arbitral award.

2.1 Dispute that may not be the subject of arbitration

The position of the Arbitration Act is that arbitrability is determined both by law applicable to the
arbitration clause and by Swedish law. If the dispute is not arbitrable in accordance with one of the
indicated legal procedures, the arbitral tribunal may not have jurisdiction to resolve it.
According to Part 1 of Art. 1 of the Arbitration Act, arbitrability is determined by the ability to resolve
the dispute by agreement of the parties. Consequently, the arbitration cannot be considered disputes
that the parties can not resolve through the conclusion of a settlement agreement.
In accordance with the provisions of this rule, disputes affecting the interests of third parties are also
considered non-arbitrable.

2.2 Violation of public order

With reference to public policy, decisions that violate fundamental principles of the procedural or
substantive law of Sweden may be invalidated. The issue of public order violation can be considered,
for example, if the arbitral award was made as a result of threats or bribes or if the claims were based
on crimes, say, claims from illegal gambling or smuggling. Coercive testimonies were also mentioned
in court decisions of the Swedish courts as a potential violation of public order. An arbitral award may
also violate public policy if it is an agreement contrary to the norms of law and morality.
In practice, the parties rarely use this ground to challenge the decision: more often applications for
cancellation of decisions are made, on the basis of paragraph 7 of Art. 34 of the Law on Arbitration
(if, in the absence of fault of a party, during the proceedings there was any other procedural violation
that probably affected the outcome of the dispute). However, it should be borne in mind: a lawsuit to

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annul a decision on the grounds of Art. 34 of the Arbitration Act may be filed for a limited period of
time, which is not typical for invalidating a decision in accordance with Art. 33 of the Arbitration Act.

2.3 Violation of the rules of execution of the decision of the arbitration institution

A challenge on this basis is possible if the composition of the arbitration tribunal violates the
requirements set forth in part 1 of article 31 of the Arbitration Act, according to which the arbitral
award must be made in writing and signed by the arbitrators. Signatures of the majority of arbitrators
are sufficient if the arbitral award indicates the reason why it is not signed by all arbitrators. The parties
are entitled to agree that the decision be signed only by the chairman of the arbitral tribunal.

1. The grounds for the cancellation of the arbitral award when considering the merits of the case

In Art. 34 of the Arbitration Act contains an exhaustive list of grounds for the full or partial cancellation
of an arbitral award at the request of one of the parties. The decision may be reversed:
1. if it is not covered by a valid arbitration agreement of the parties;
2. if the arbitrators made a decision after the expiration of the period established by the parties,
or otherwise went beyond their powers;
3. if the arbitrators exceeded their authority and the result of such abuse of authority affected the
outcome of the case;
4. if the arbitration in accordance with article 47 should not have taken place in Sweden;
5. if the arbitrator has been appointed in conflict with the agreement of the parties or the
provisions of this Law;
6. if the arbitrator was not authorized to perform the functions of the arbitrator due to any
circumstance provided for in Articles 7 and 8 of this Law;
7. If, in the absence of guilt of the party, during the proceedings there was any other procedural
violation that probably affected the outcome of the dispute.
The Arbitration Act seeks to protect, as far as possible, the final nature of the arbitral award. Therefore,
if the basis for contestation is established, the decision is canceled only in that part that was affected
by the error. However, if it is impossible to distinguish the parts of the decision affected by the
procedural error from the rest, without examining the substance of the dispute, most likely the court
will cancel the entire decision. The court cannot replace the part of the decision affected by the
procedural error with a new decision, since the new decision would go beyond the powers of the court.
When applying the above grounds for challenging the arbitral award, it should be borne in mind that
the party cannot base the motion to cancel the arbitral award on the circumstance to which it has lost
the right to invoke, participating in the proceedings without objection or in any other way. The right
to appeal may be lost both due to the actions of the party and as a result of its passive behavior. In this
case, a party may be deemed to have lost its right due to passive behavior only if it actually knew about
the circumstances specified in Art. 34 of the Act b arbitration. As a general rule, it is not enough to
prove that the party “should have known” about such circumstances. Also important is the rule that

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the appointment of an arbitrator by a party should not be construed as its agreement with the
competence of the arbitrators to resolve the dispute submitted to them and, as a result, does not entail
the waiver of the right to appeal.
In order to maintain its right to invoke contested circumstances, the party must clearly express its
protest before the arbitral tribunal.

A motion to set aside an arbitral award must be submitted within two months from the date the party
received the decision or, if there was a correction, addition or interpretation of the decision, within two
months from the date the party received the final text of the decision. According to existing court
practice, a party is deemed to have received an arbitral award when she or her authorized representative
was notified and had the opportunity to read the full arbitral award. A party will not be considered to
have received an arbitral award if the decision has been transferred to any other person who is not its
authorized representative or legal representative, for example, an employee at the recipient's office.
On this issue, the Supreme Court also ruled that if the recipient signed the receipt of a registered letter
with a notice, knowing that it contains an arbitral award, but instructed someone else to pick up the
mail, he will be deemed to have received the decision on the day the registered letter was requested
with notice.
A party is not entitled to declare new grounds for substantiating its application after the expiration of
the period for contestation specified in the law. Claims or material facts declared out of time are
excluded from consideration, even if the party, through no fault of its own, learned of a new ground
for contestation only after the expiration of a two-month period.