by Annette Magnusson
The practice of third-country arbitration to resolve commercial disputes has been growing constantly since the 1960s, particularly in the context of East-West trade. Only a few decades ago, international commercial arbitration, and particularly arbitration in commercial matters between East and West, meant proceedings in the country of either party. In the post-Soviet context of growing trade and investment by Western companies in the former Soviet Union, Sweden has become a favored location for East-West dispute resolution. Over the past decade, some 450 arbitrations involving NIS and Western parties have been carried out in Sweden. The strength of Sweden as a venue for international arbitration has grown out of the country’s long experience solving commercial disputes by way of arbitration, its neutrality, and its proximity to the former Soviet Union.
Arbitration in Sweden
Most international contracts that stipulate arbitration in Sweden either specifically refer to the “Rules of the Arbitration Institute of the Stockholm Chamber of Commerce,” or simply provide for ad hoc arbitration. Other international contracts providing for arbitration in Sweden refer to the “UNCITRAL (UN Commission on International Trade Law) Arbitration Rules” or, in the case of Russian-American contracts, to the“U.S.-Russian Optional Clause Agreement 1992.” Parties to the 1992 agreement are the Russian Federation Chamber of Commerce and Industry, the American Arbitration Association, and the Stockholm Chamber of Commerce.
The 1999 Swedish Arbitration Act represents an efficient and modern legislative framework for the arbitral resolution of disputes. It recognizes the important principle of party autonomy and contains few mandatory rules. At the same time, it takes into account the development of international arbitration, notably the UNCITRAL Model Law on International Commercial Arbitration.
An arbitral award is enforceable in more than 120 countries that have signed the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention). However, the award must be recognized as enforceable by the court system of the country where it needs to be enforced. In Russia, the SCC Institute is a well-known arbitral institution, which may present an advantage in certain cases in the Russian courts. At times, difficulties do arise in enforcing awards in Russia, as well as in other countries.
SCC Arbitration
The Arbitration Institute of the Stockholm Chamber of Commerce (SCC Institute), established in 1917, is one of the world’s major international arbitration institutes. During the past decade, nearly half of its cases have involved parties from the NIS (see chart).
Like other arbitral institutions, the SCC Institute does not settle disputes itself. Its main function is to assist the parties in getting an arbitral tribunal appointed. There are no restrictions, nationality or other, for persons eligible to serve as arbitrators. However, all arbitrators, including those appointed by the parties, are required to be independent and impartial. The large number of East-West disputes handled by the SCC Institute means that it has well established contacts with arbitration experts in the field of East-West commercial disputes.
New SCC rules, adopted in 1999, are designed to achieve a rapid and inexpensive procedure. The arbitral tribunal has 6 months to render the award. Under the new rules, the SCC Institute decides on the fee due to the arbitrators based on the amount in dispute according to a fixed schedule of fees, which is included in the rules.
Why Institutional Arbitration?
The assistance of an arbitral institution may be of particular value in third-country arbitration. It offers stability and common ground in proceedings where the participants—parties, counsel, and arbitrators—frequently come not only from different countries but also from different legal, economic, and cultural environments. For the SCC Institute, the continuing trust placed in it by businesses in the United States and the Newly Independent States underscores its expertise in handling East-West disputes.
More information on the SCC Institute can be found at www.chamber.se/arbitration.
Annette Magnusson is legal counsel for the Arbitration Institute of the Stockholm Chamber of Commerce.
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Additional arbitration options
Int’l Commercial Arbitration Court of the Russian
Federation Chamber of Commerce and Industry
Moscow, Tel: +7 (095) 929-0112, Fax: 929-0357
American Arbitration Association, www.adr.org
London Court of Int’l Arbitration (LCIA)
www.lcia-arbitration.com
Int’l Court of Arbitration, Int’l Chamber of Commerce, Paris, www.ccwbo.org/index_court.asp