Decision Confirms Swedens Enforcement Friendliness

25 June 2004

John Kadelburger, Ulf Mellqvist

The Swedish Supreme Court has again confirmed the generally enforcement friendly attitude of the Swedish Courts of foreign arbitral awards.

On 1 July 1997, the arbitral tribunal in Strasbourg, Chambre Arbitrale International pour les Fruit et les Légumes,made an award in a dispute between the French company Société Planavergne S.A. (“Planavergne”) and the Swedish company K.B. i Stockholm AB (“KB”).

The arbitral tribunal found that KB was obliged to pay the remaining part of the purchase price for a consignment of fruit delivered by Planavergne to KB in addition to damages and legal costs. The French arbitral award was not challenged in France.

At the enforcement stage, KB objected on the grounds that there was no agreement between the parties and that at least, it did not contain an arbitration clause. It also (almost routinely) claimed that there had been violations of due process during the arbitral proceedings.

The main issue on which the Supreme Court had to rule was which party had the (final) burden of proof regarding the existence of an agreement to arbitrate. The Supreme Court first noted that according to § 58 of the Swedish Arbitration Act this burden rests with the party seeking enforcement, i.e. in this case Planavergne.

In the proceedings in the Supreme Court, Planavergne referred to the arbitral award and the arbitral tribunal’s determination of the issue of jurisdiction made by the arbitral tribunal. KB only adduced some limited evidence in regard to this issue.

The Supreme Court restated, as already confirmed in its manifest jurisprudence, that the provision regarding enforcement as set out in the Swedish Arbitration Act, and also the 1958 New York Convention, must be construed so as to facilitate the enforcement of foreign arbitral awards. The Supreme Court underlined that (as it also noted that it had not received all or rather very limited information on the arbitral proceedings) the arbitral tribunal is best placed to determine its own jurisdiction which in this case had to be determined according to French law as the law of the place of arbitration (according to § 48 of the Swedish arbitration Act).

The Supreme Court therefore (on the basis of what was known about the arbitral proceedings) found that it had to rely on the determination on its jurisdiction made by the arbitral tribunal. The Supreme Court stated that under these circumstances the party wanting to resist enforcement has a very heavy burden of proof in order to over turn the determination on the issue of jurisdiction made by the arbitral tribunal and that in such a case, the burden of proof transfers to such party which has to prove that the grounds for enforcement are not satisfied.

In addition, the Supreme Court confirmed its previous decision (NJA (Swedish Law Reports) 2001 page 738) that parties are entitled to claim compensation for legal costs in enforcement proceedings.

The case is a confirmation of the long standing tradition of a generally arbitration and enforcement friendly attitude by the Swedish courts and that a party seeking to resist enforcement has a very heavy burden of proof when, or if trying, to unwind the determination made by the arbitral tribunal of its own jurisdiction.