Arbitration
Arbitration under the SCC rules is a quick and effective method of settling disputes out of court. The dispute is decided by impartial and expert arbitrators and the process is confidential. SCC arbitration results in an award that cannot be appealed and is enforceable in more than 160 countries.
For arbitration to be an option, there must be an arbitration agreement between the parties. The parties will usually have resolved this by including an arbitration clause (dispute resolution clause) in the overall contract. If there is no such clause at the time the dispute arises, the parties may nevertheless agree to arbitration as a method of dispute resolution.
Why use arbitration?
Global trade is becoming increasingly sophisticated and fast-moving, requiring flexible and agile methods of dispute resolution. In a commercial contractual relationship, no party wants to end up in a dispute, but if one does arise, a quick and efficient resolution is essential to allow the parties to get back to focusing on what matters most – their core business. Court proceedings are a slower option and they are not confidential – unlike arbitration, where both the hearing and the award are kept confidential. Arbitration also gives the parties a great opportunity to participate and influence the process. Among other things, the parties can appoint arbitrators, which is particularly important when specialist knowledge is needed to assess the dispute.
Established and secure process
Arbitration is a common and accepted way of resolving disputes throughout the world. An arbitration award cannot be appealed, but there are legislation and international rules to ensure that the arbitration process meets the requirements of legal certainty. This is regulated by law, and issues such as conflicts of interest etc. can, if necessary, be tried in court.
Benefits of arbitration
- It is a quicker and smoother process than court proceedings.
- It is cost-effective because a faster procedure often means lower costs. The average time for the majority of all arbitrations is six to twelve months.
- Arbitration is confidential – all proceedings under the SCC rules are confidential.
- The work is conducted by impartial and unbiased arbitrators.
- The process is flexible but regulated. The parties have more influence over the process and can, for example, appoint experts as arbitrators.
- An arbitral award cannot be appealed, and is final and enforceable.
- An SCC award is globally enforceable in over 160 countries.
As mentioned under question 6 above, an award cannot be challenged on substantive grounds. It is true that under certain circumstances it is possible to set aside an award on formal grounds by pursuing a challenge. However, the chances of success in a challenge are very limited.
In essence, the actual procedure in an arbitration does not differ from that in a court proceeding, except that the arbitration is faster, and the parties have greater influence over the process in an arbitration. Arbitration proceedings are also conducted in such a way that one party initiates the proceedings by sending a request to, for example, the SCC Arbitration Institute requesting arbitration. The other party is then notified and given the opportunity to comment on the request for arbitration. And then there are usually a few more rounds of correspondence between the parties. This is normally followed by an oral hearing of the case, where the parties have the opportunity to argue orally on the issues under consideration. An arbitration is concluded by the Arbitral Tribunal issuing its decision in the case. Usually this is done by issuing an award, but it can also be a decision.
The advantages generally associated with arbitration as a method of dispute resolution are its speed and its confidentiality. The first advantage should be seen in the light of the fact that arbitration is a single instance procedure, i.e. the decision of the arbitral tribunal cannot be appealed on substantive grounds. The confidentiality of the arbitration means that the parties can decide that the proceedings and the award will not be made public. Further advantages of arbitration as a method of dispute resolution are that the parties can choose the arbitrator and that the procedure is flexible, i.e. can be adapted to the agreement of the parties.
One difference with court proceedings is that parties to an arbitration are responsible for the fees of the Arbitral Tribunal. Arbitration can therefore initially be somewhat more expensive than court proceedings. This means that arbitration as a method of dispute resolution is primarily suitable for commercial disputes of such a nature that the claims raised in the case at least exceed the cost of the Arbitral Tribunal. A guideline here is that the dispute should in any event concern a claim exceeding SEK 500,000. It should be noted, however, that court proceedings generally take longer than arbitration, so that in the long run it may be more expensive to litigate in court than to resolve a dispute through arbitration.
Dispute resolution clauses
An arbitration can only take place if there is an arbitration agreement between the parties. We recommend that a dispute resolution clause is included in any business agreement.
The SCC rules
The SCC rules are modern and flexible and give the parties and the arbitrators means to form an effective procedure adapted for the individual case.
Step by step guide to arbitration
A guide to how an arbitration at the SCC Arbitration Institute works.