Supreme Court refuses to enforce arbitration award due to lack of notification | Practical Law

Supreme Court refuses to enforce arbitration award due to lack of notification | Practical Law

Therese Villard, Associate, Advokatfirman Delphi, Stockholm

Supreme Court refuses to enforce arbitration award due to lack of notification

Practical Law Legal Update 4-502-4391 (Approx. 2 pages)

Supreme Court refuses to enforce arbitration award due to lack of notification

Published on 02 Jun 2010Sweden
Therese Villard, Associate, Advokatfirman Delphi, Stockholm
The Swedish Supreme Court has held that an obstacle to the recognition and enforcement of a foreign arbitral award may be presumed if it is not clear from the award, or otherwise, that the respondent has been notified of the arbitration or if the respondent in the recognition/enforcement matter can show reasonable doubt that he received proper notice.
In OAO Lenmorniiproekt v. Arne Larsson & Partner Leasing (Ö 13-09, dated April 16, 2010) , Lenmorniiproekt OAO (Lenmornii) requested, among other things, that the Supreme Court allow the company's application for the recognition and enforcement of an arbitration award between the parties which was issued by the International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Russian Federation on 27 April 2004.
Arne Larsson & Partner Leasing (ALPL) argued that the application should be rejected, since it was not aware of either the arbitration or the award until Lenmornii sought enforcement.
Lenmornii submitted that ALPL had intentionally absconded. Lenmornii argued that the request for arbitration was sent to ALPL's address, which was the address set forth in the arbitration agreement relied upon and in the request for arbitration. The arbitration tribunal found it possible to try and decide the dispute in ALPL's absence. Lenmornii did not dispute that ALPL had notified a change of address to the Swedish Companies Registration Office in November 2002 and that the new address was registered and published in December 2002.
The Supreme Court stated that, as a general rule, foreign arbitral awards may be recognised and enforced in Sweden under and in accordance with the provisions of the Swedish Arbitration Act (the Act) unless the respondent can show that it had not been duly notified of the appointment of arbitrators or of the arbitration proceedings as such or if that party for any other reason had not been able to present his case. The Act is in this respect based on the New York Convention and the Supreme Court noted that, contrary to what would otherwise follow from procedural principles of law, it follows from the travaux preparatoires of the Act that it is for the non-appearing party to prove that it has not received notice of the proceedings.
The Supreme Court concluded that high standards should be applied regarding notification concerning the initiation of arbitration proceedings and that it was not acceptable that an award could be recognised and enforced against a party which had not been notified of the arbitration proceedings. The respondent's receipt of notification of the proceedings is a fundamental requirement. In this case, ALPL established that the company had not been duly notified of the arbitration.