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Stockholm Arbitration Report (SAR)

Preview Page SAR 2004 - 1

SUBJECT MATTERS:
(1) Parent company guarantee; elements of interpretation.
(2) Character of guarantee – independent or accessory?

FINDINGS:
(1) When no joint intention of the parties could be established, the Arbitral Tribunal analysed the wording of the guarantee and the character of obligations undertaken by the guarantor as described in the guarantee.
(2) The wording of the guarantee provided that a performance failure was a condition for the guarantor’s obligations. The guarantee contained not only an obligation to pay money but also specific performance; it offered the guarantor the choice of either performing through its own means or through a third party. These facts indicated that the guarantee was not one independent from the underlying agreement, but accessory.

PARTIES:
Claimant: the Alpha Company, the Beneficiary (Sweden)
Respondent: the Beta Company, the Guarantor (Sweden)

PLACE OF ARBITRATION: Stockholm

LANGUAGE: English

APPLICABLE LAW: Swedish

NATIONALITY OF THE ARBITRATORS:
Chairman: Swedish
Arbitrator: Swedish
Arbitrator: Swedish