Waiving the Right to Arbitrate by Initiating Court Proceedings - SIAR 2009-2
Bengt-Åke Johnsson and Ola Nilsson, White & Case, Stockholm
Originally from: Stockholm International Arbitration Review
WAIVING THE RIGHT TO ARBITRATE BY INITIATING COURT PROCEEDINGS
Bengt-Åke Johnsson and Ola Nilsson
An arbitration agreement may cease to apply if the parties agree on its termination. According to Swedish law it may also be terminated as any other agreement, i.e. in accordance with general contract law principles. It may therefore be terminated or made ineffective simply by the conduct of the parties (impliedly or tacitly), partly or wholly. The parties may agree that the arbitration agreement shall not apply to a certain dispute or that it shall cease to apply entirely. A common example is that a plaintiff and a defendant (by not objecting) tacitly agree to submit a dispute to an ordinary court of law although an arbitration clause in a contract between the parties provides for arbitration. In such a case, the arbitration agreement is made ineffective in respect of the dispute at hand by the conduct of the parties.
Furthermore, and which is the subject matter of this article, pursuant to the general principles of Swedish law, a party may also unilaterally lose its right to rely on an arbitration agreement by waiving it, while the other party retains its right pursuant to the arbitration agreement. Having lost this right, a party may be in a difficult position if it intends to take legal action against the counter- party. Below we will deal with this issue under Swedish law in comparison with the laws of England, France, Germany and Switzerland.
II. Swedish Law
A. Certain instances where a party is deemed to have waived its rights under the arbitration agreement
1. Statutory law
Section 4 of the Swedish Arbitration Act of 1999 ("Arbitration Act") sets out the fundamental principle that a Swedish court may not, upon objection....