The arbitrator appointed by KPMG was Mr Axel Calissendorff, a partner in the Stockholm office of Roschier, a law firm based in Northern Europe. Roschier's Stockholm office (although not Mr Calissendorff) had also accepted to represent HQ AB in a substantial matter (the claims presented are in the range of several hundred million euros) against the previous board of directors of HQ AB and KPMG as HQ AB's auditors.

Roschier was asked whether they could take on the assignment against KPMG in October 2010. They subsequently did so, with the first demand letter sent to KPMG on 20 December 2010. The award in the arbitration proceedings was rendered on 22 December 2010 and KPMG was registered as a counterparty in the firm's client register on 23 December 2010.

The Svea Court of Appeal held that it was clear that Mr Calissendorff knew about the question in October 2010, but it is not clear that he had knowledge that the assignment had been taken on before the award was rendered.

However, the assessment of whether an arbitrator is impartial or not is to be made on an objective basis. If the firm where an arbitrator is a partner takes on an assignment for or against one of the parties to the arbitration, that is normally seen as a circumstance which, viewed objectively, may give rise to justifiable doubts as to the arbitrator's impartiality. In such cases, the arbitrator shall be discharged or the award set aside. In this case, the assignment Roschier had taken on against KPMG was of a very substantial nature and with an important economic impact for the firm.

The court also held that, viewed subjectively, Mr Calissendorff, as a senior partner of Roschier in Stockholm, held a central position at the firm and with such a position he ought to have known about the substantial assignment conducted by his colleagues in the same office. This, together with the fact that KPMG was registered as a counterparty the day after the award was rendered, also contributed to raising a justifiable concern over Mr Calissendorff's impartiality as an arbitrator.

Taking the above into consideration, the court concluded that the evidence gave rise to justifiable doubts over Mr Calissendorff's impartiality and so set aside the arbitral award. The case has prompted a disciplinary investigation by the Swedish Bar Association. The party that won the arbitration has also indicated that they will seek compensation from Mr Calissendorff for costs incurred.

Case: KPMG AB v ProfilGruppen AB (Svea Court of Appeal) (case no. T 1085-11).