Arbitrability and Foreign Law : An analysis of under which state’s law a dispute must be amenable to out-of-court settlement in order to be arbitrable under Swedish law

University essay from Uppsala universitet/Juridiska institutionen

Abstract:

Which State’s law should determine if a dispute is amenable to out-of-court settlement and consequently whether a dispute is arbitrable under Swedish law? Some legal scholars reason that general principles of private international law should solve the question as a conflict-of-laws issue, while others believe that Swedish mandatory law should apply directly. The Swedish Arbitration Act is unclear and both solutions find support in contradictory case law. It is thus not only debatable what the law should be, but also what it is. The Supreme Court recently had an opportunity to clarify this point of law (NJA 2012 s. 790), but left us with a ruling that is reminiscent of the words by the Swedish poet Esaias Tegnér (own translation):

What you cannot say clearly, you do not know; with thought the word is conceived on the lips of man; words unclearly spoken are unclearly thought.

This paper attempts to bring clarity to what the law is (de lege lata), as well as a proposition to what the law should be (de lege ferenda). The suggested solution aims to be consistent with a number of concepts. These include; the underlying rationale of non-arbitrability, the obligations under the New York Convention, general principles of private international law, international trends and Swedish law in general.

First, it is held that non-arbitrability serves to protect the exclusive jurisdiction of the State’s own courts. There is therefore no need to investigate whether a dispute is amenable to out-of-court settlement, or apply the doctrine of non-arbitrability, in international disputes with little connection to Sweden. In these cases, there is no risk of collision with the exclusive jurisdiction of Swedish courts.

Second, the requirement that disputes must be amenable to out-of-court-settlement should be interpreted in light of its context. No duty exists to consider foreign concepts under general principles of private international law. For this reason, and others presented in this paper, the question of whether the parties can settle their dispute by agreement should be examined under Swedish mandatory law. This should only be examined when there is a collision between the exclusive jurisdiction of Swedish courts and a tribunal.

This solution is in line with the international trend of in favorem arbitrandum and the New York Convention. It is also the only practical solution since it would be unnecessarily complicated for Swedish courts to ex officio determine the content of foreign law. This would prolong the process and limit arbitration’s effectiveness.

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