The Challenge of Arbitral Awards : Arbitrators' application of the "wrong" substantive law - a ground for challenge!

Abstract: This thesis examines whether arbitrators’ application of the wrong substantive law is a ground for challenge of arbitral awards. The topic is divided into the theoretical question of whether to refer the arbitrators’ application of the wrong substantive law to excess of mandate or procedural irregularity, and the practical question of how national courts handle the demarcation problems that occur in review of awards. The scope of the thesis is limited to challenges on the grounds excess of mandate and procedural irregularity under section 34 of the Swedish Arbitration Act (SAA).[1] The SAA has thereby served as a basis for the study, but the legislative history, case law and doctrine have also been important. The thesis finds that arbitrators’ application of the wrong substantive law could in theory constitute both excess of mandate and procedural irregularity. However, there are several demarcation problems that occur in practice because it is difficult to distinguish between substantive and procedural errors. Therefore, it seems like only a deliberate disregard of the parties’ choice of law could lead to awards being set aside. Throughout the thesis, the interests of party autonomy and finality of awards are weighed against one another with the conclusion that theory seems to emphasize party autonomy whereas practice seems to emphasize finality of awards. The thesis provides an alternative school of thought of how national courts’ could handle demarcation problems to allow for a wider scope of review on the provision procedural irregularity. This would permit review of also substantive matters to ensure that no significant procedural error has occurred and thus, it would lead to a better balance between party autonomy and finality of awards. [1]Lag (1999:116) om skiljeförfarande.