SCC Spotlight Talk: Christina Ramberg 

Swedish contract law has emerged as a compelling choice for international commercial parties seeking a neutral, pragmatic legal framework that transcends traditional legal families. In this SCC Spotlight Talk, we speak with Professor Christina Ramberg, one of Sweden's leading authorities on contract law, about why non-Swedish parties increasingly select Swedish law to govern their international agreements.

Professor Ramberg explores the accessibility of Swedish contract law, its distinctive advantages for cross-border transactions, and its alignment with the UNIDROIT Principles of International Commercial Contracts.

Professor Ramberg, is it common for contracts between non-Swedish parties to refer to Swedish law as the applicable law? If so, what drives this choice?

Yes, it is common for non-Swedish parties to choose Swedish law as the applicable law for their international commercial contracts. The primary reason is that Swedish contract law is perceived as “neutral”, it does not belong to any particular legal “family”. Swedish contract law differs from both the civil law traditions (such as in Germany and in France) as well as from common law systems.

What makes this particularly attractive is that despite these differences, Swedish contract law is not strange or surprising to contract lawyers from other jurisdictions and offers parties from different legal backgrounds a level playing field. This neutrality is valuable in international transactions where parties want to avoid giving either side a perceived advantage through the choice of their domestic law.

How accessible is Swedish contract law for international parties and their legal advisers who may not be familiar with Swedish legal sources?

The content of Swedish contract law for business-to-business relations corresponds to 98 per cent with the UNIDROIT Principles of International Commercial Contracts (UPICC). As many international commercial lawyers are familiar with the UPICC, they will be able to use UPICC as a tool to understand Swedish contract law and as a basis for arguing about how to solve contract law questions.

The Swedish legal sources of contract law consist of a mixture of legislation and case law. Certain specific types of contracts are regulated by legislation, such as sales contracts governed by the CISG and agency agreements. There are also some quite old and fragmented provisions in the Swedish Contracts Act, whilst the Supreme Court has developed rules for general contract law as well as for specific contract types.

For practitioners seeking to understand Swedish contract law, the relevant legislation and case law are structured, compiled and continuously updated at the website www.avtalslagen2020.se, though this resource is currently available only in Swedish. Despite this language limitation, the alignment with the UPICC means that international lawyers can navigate Swedish contract law with relative ease.

What specific advantages does Swedish contract law offer for international commercial contracts?

There are many advantages of using Swedish law for international commercial contracts. Let me highlight four key benefits that are particularly relevant for cross-border transactions.

First, Swedish contract law is pragmatic, with few formal requirements and without complicated legal concepts and theories. This means parties can focus on the commercial substance of their agreements rather than navigating complex legal formalities. The law facilitates business rather than creating obstacles.

Second, Swedish contract law does not need to be supplemented by other legal areas such as tort law, condictio indebiti, or unjust enrichment. This is a significant practical advantage. In many jurisdictions, contract lawyers must consider how tort law or restitution principles might interact with or override contractual provisions. Under Swedish law, the contractual framework is largely self-contained, which provides greater certainty and predictability.

Third, Swedish law is reluctant to allow spill-over effects from consumer law into business-to-business contracts. This clear distinction is crucial for commercial parties. They can negotiate their agreements with confidence that consumer protection rules, which are necessarily paternalistic and restrictive, will not be imported into their sophisticated commercial arrangements. The law respects that businesses dealing at arm’s length should have freedom to allocate risks as they see fit.

Fourth, in Swedish contract law, business realities, that is, what makes commercial sense, are important, particularly for the interpretation and construction of contracts. Swedish courts and arbitrators take a practical, commercially-oriented approach to contract interpretation. They seek to understand what the parties were trying to achieve commercially and give effect to that commercial purpose. This approach resonates with international business parties who want their agreements to be understood in light of commercial realities rather than through overly technical legal analysis.

That’s a compelling set of advantages. Are there aspects of Swedish contract law that foreign lawyers find unusual or challenging?

Section 36 of the Swedish Contracts Act concerns “unconscionable contracts”, and foreign lawyers often find it strange to combine three entirely different concepts within one and the same provision. The unusual aspect is not the content but the structure.

As for the content, Section 36 regulates three distinct areas: first, threat, fraud, usury and mistake; second, unfair terms such as limitation of liability clauses and penalty clauses; and third, hardship due to a change of circumstances. The provision encompasses the UPICC provisions on validity, gross disparity, unilateral price determination, hardship, and grossly excessive specified damages (Arts. 3.2.1-7, 3.2.11, 5.1.7(2), 6.2.1-3, 7.1.6-7, and 7.4.13).

So, whilst the structural approach of combining these concepts in a single provision may initially seem unusual to foreign lawyers, the substantive content is familiar to anyone versed in international commercial contract law. Once lawyers understand that Section 36 serves as an umbrella provision covering these three well-established concepts, it becomes quite straightforward to work with.

Looking at the broader picture, what would you say to international parties considering Swedish law for their commercial contracts?

Swedish contract law offers international commercial parties a combination of neutrality, accessibility, and commercial pragmatism. Its alignment with the UPICC means it reflects internationally recognised best practices in commercial contracting. Furthermore, it provides a clear separation between consumer and commercial law and promotes the importance of business realities.

For parties negotiating international agreements, particularly where neither party wants to submit to the other’s domestic law, Swedish contract law provides an attractive neutral alternative. Combined with arbitration under modern rules such as those of the SCC, it offers a robust framework for international commercial relationships.