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Stockholm Arbitration Report (SAR)

Preview Page SAR 1999- 1

1. Arbitrability

The principle that contracting parties may agree to have their disputes resolved by arbitration and thereby exclude resort to litigation before courts of law is derived from the principle of freedom of contract. Normally, there is no public interest which would deprive the parties of the right to go to arbitration. The Swedish Arbitration Act, in Section 1, stipulates that disputes concerning matters which may be resolved by settlement are arbitrable. The same section determines that an arbitration agreement may also apply to future disputes regarding matters which have been stipulated in the arbitration agreement. It is also made clear that such matters may concern not only a legal relationship but also the existence of a factual circumstance. Some concern has been expressed about the latter since it may be difficult to assess to what extent an award which finds that a factual circumstance exists may later be connected to legal relationships. Nevertheless, arbitration has traditionally often focused on matters of fact rather than matters of law. If a party so wishes, he may avoid the uncertainty by following a request by the other party for a ruling on the existence of a factual circumstance by himself asking for an award on the legal relationship to which that factual circumstance may be connected. 

2. Interpretation and supplementation of contracts

Section 1, second paragraph, allows the parties to ask the arbitrators to supplement their agreement. In most cases, it is possible to do this by the customary methods of interpretation of contracts1 . In other words, the right to supplement contracts by applying methods of interpretation would normally be comprised in the arbitration agreement without any need for the parties specifically to instruct the arbitrators. Even if the arbitrators appear to have entirely rewritten the contract, it will seldom be possible to challenge the award by alleging under Section 34.2 that the arbitrators have gone beyond the terms of their mandate, since the application of an incorrect or too generous method of interpretation of contracts will amount to incorrect application of the law, which may not be challenged. Thus, Section 1, second paragraph, seems to have very little if any practical importance.