Jurisdictional Award rendered in 1998 in SCC cases 38/1997 273 and 39/1997 & Judgment of the Stockholm District Court rendered in 2001 in case T 1510-99 & Judgment of the Svea Court of Appeal rendered in 2002 in case T 4496-01 - The Government Guarantee case - SAR 2003 - 1

Subject-matters:
1) Application, under Swedish law, of an arbitration clause laid down in a business contract, to a third party guarantor.
(2) Applicable law. Whether a choice of “governing law” in a supply contract is applicable when determining whether a guarantor is bound by an arbitration clause in the supply contract.
(3) Is state sovereign immunity a bar to arbitration?

Findings:
(1) Where the performance under a supply contract has been guaranteed by a third party, the third party (the guarantor) is bound by the arbitration clause in the main agreement when the undertakings of the debtor and the guarantor are identical or equivalent.
(2) The effect on the guarantor of an arbitration clause in the supply contract (to which it is not a party) shall be decided on the basis of the choice of law made by the parties in the supply contract.
(3) Under Swedish law, a state which becomes a party to an arbitration agreement, has waived any immunity with respect to the arbitration proceedings.