In 1996, Acron North River Investments SA (Acron) and Norsk Hydro (Hydro) signed a shareholders agreement (the Agreement) according to which disputes between the parties would be settled in Stockholm under the rules of the Arbitration Institute of the Stockholm Chamber of Commerce (SCC). Hydro assigned part of its rights under the Agreement to a third party, Yara International ASA (Yara). The Agreement terminated in 2001.

Yara requested arbitration against Acron. Acron contested the request, denying that Yara was ever a party to the arbitration agreement or that the arbitration agreement had ever entered into force, and arguing that the arbitration agreement, in any case, had terminated. The arbitrators determined, in a decision headed "Partial Award", that they were competent to hear the arbitration. Acron then sought to challenge the Partial Award in the Svea Court of Appeal (the Court), maintaining that the tribunal lacked competence as the request was not covered by a valid arbitration agreement. Acron submitted that the arbitrators’ decision regarding their competence was an award and could therefore be challenged under sections 34 or 36 of the Swedish Arbitration Act (the Act). They relied on the heading of the decision and on the fact that the arbitrators considered their decision to be a partial award.

The Court referred to the competenz-competenz principle as recognised in section 2 of the Act and noted that the arbitrators could decide either that they had competence or that they had not. In the former case, their decision would, under the Act, be characterised as a procedural decision and not as an arbitration award. A procedural decision does not have res judicata effect, and a party who is dissatisfied with it does not have to challenge the decision to maintain its right to challenge a later arbitration award. The Court of Appeal consequently dismissed Acron’s application, as there was no basis upon which the arbitrators’ positive decision on competence could be separately challenged under sections 34 or 36 of the Act.

This case illustrates one of the peculiarities of the Swedish Arbitration Act, namely that arbitrators' positive findings of competence are declared in procedural decisions, and not in partial awards as is the practice in many other jurisdictions. International tribunals in arbitrations which are seated in Sweden regularly issue partial awards. The Court’s decision clarifies that a mistake by the arbitrators as to the correct form of their decision under Swedish law has no material effect. Even if their decision purports to be an award, it will be characterised as a procedural decision which is not binding and which cannot be challenged by an action before the court. Nevertheless, despite the impossibility of challenging procedural decisions, a party who disagrees with a procedural decision would be wise to lodge a protest with the tribunal and reserve his rights to later appeal the award, so as not to be deemed to have accepted the decision or otherwise to have waived his rights to challenge the award.

It should be noted that a similar decision was taken by the court in case RosInvest Co. UK v. The Russian Federation, T 58-08.