Section 2(1) of the Swedish Arbitration Act (SAA) provides that "[t]he arbitrators may rule on their own jurisdiction to decide the dispute. The aforesaid shall not prevent a court from determining such a question at the request of a party. The arbitrators may continue the arbitral proceedings pending the determination by the court."

Section 34(2) of the SAA provides that "[a] party shall not be entitled to rely upon a circumstance which, through participation in the proceedings without objection, or in any other manner, he may be deemed to have waived."

Article 24(2)(ii) of the SCC Arbitration Rules 2007 provides that "[t]he Respondent shall, within the period of time determined by the Arbitral Tribunal, submit a Statement of Defence which shall include, unless previously submitted: [...] any objections concerning the existence, validity or applicability of the arbitration agreement." (See also Article 24(2)(i) of the SCC Arbitration Rules 2010.)

Carpatsky Petroleum Corporation (Carpatsky I) was established in Texas, USA in 1992. OJSC Ukrnafta (Ukrnafta) is a company which initially was wholly owned by the Ukrainian state. The company was partly privatised between 1995 and 1998, but is still half owned by the state. Poltavnaftogaz (PNG) is a subsidiary of Ukrnafta. In 1995, PNG concluded a joint activity agreement (JAA) with Carpatsky I. The JAA concerned exploitation of a gas field in Ukraine and contained an arbitration clause providing for arbitration in Ukraine.

In June 1996, a company with the same company name as Carpatsky I (Carpatsky Petroleum Corporation) was established in Delaware, USA (Carpatsky II). Shortly thereafter, Carpatsky I ceased to exist by merging with Carpatsky II.

In August 1998, Ukrnafta replaced PGN as a party to the JAA through an addendum (Addendum 1998). Addendum 1998, among other things, amended the arbitration clause in the JAA by providing for arbitration at the Arbitration Institute of the Stockholm Chamber of Commerce (SCC), to be administered according to the UNCITRAL Arbitration Rules.

In September 2007, Carpatsky II requested arbitration against Ukrnafta at the SCC on the basis of the arbitration clause contained in Addendum 1998. The Request for Arbitration identified the claimant, Carpatsky Petroleum Corporation, as a company incorporated and organised under the laws of Delaware and, at the same time, stated that it was a party to the JAA concluded in 1995.

In November 2007, the parties agreed, among other things, to apply the SCC Arbitration Rules instead of the UNCITRAL Rules which had been designated in the arbitration clause in Addendum 1998.

Carpatsky II's Statement of Claim was submitted in May 2008 and Ukrnafta's Statement of Defence in June 2008. In August 2008, Carpatsky II submitted a number of documents in the arbitration, including (among other things) a certificate of merger.

In December 2008, Ukrnafta objected to the jurisdiction of the arbitration tribunal. In March 2009, Ukrnafta commenced parallel court proceedings against Carpatsky II in the district court of Stockholm, based on section 2 of the SAA. Ukrnafta requested the district court to declare that the arbitration tribunal lacked jurisdiction to decide the dispute between Ukrnafta and Carpatsky II.

Carpatsky II was served with the writ of summons but failed to enter an appearance. Therefore, a default judgment was issued in October 2009. Carpatsky II requested a reopening of the default judgment and the trial was resumed.

In September 2010, the arbitral tribunal issued an arbitration award. In December 2011, the district court rendered judgment on Ukrnafta's claim for declaratory relief. Carpatsky II then appealed to the Svea Court of Appeal.

In the Svea Court of Appeal, Ukrnafta argued that there was no arbitration agreement between Ukrnafta and Carpatsky II. Carpatsky II objected and argued that the parties concluded a binding arbitration agreement:

Further, Carpatsky II argued that Ukrnafta had, in any case, lost its right to object to the jurisdiction of the arbitral tribunal as it had submitted a Statement of Defence in the arbitration without objecting to the tribunal's jurisdiction.

Ukrnafta argued that no arbitration agreement could be found on the basis of the circumstances relied upon by Carpatsky II. Further, Ukrnafta argued that it was not precluded from raising the jurisdictional objection as it had not been aware of the relevant circumstances, namely the identity of Carpatsky II and the underlying merger and its legal consequences (including the non-existence of Carpatsky I as a legal entity). Ukrnafta argued that until November 2008, it had not been aware that Carpatsky II, which requested the arbitration, was a different entity than Carpatsky I, stated as a party to Addendum 1998.

The Svea Court of Appeal dismissed Ukrnafta's appeal.

The Svea Court of Appeal first considered the issue of whether Ukrnafta was precluded from objecting to the jurisdiction of the arbitral tribunal on the basis that its objection was submitted too late. Section 34(2) of the SAA provides that a party that participates in arbitration without raising objections as to the existence of a valid arbitration agreement loses the right to rely on any such circumstance in challenge proceedings.

The Svea Court of Appeal considered whether Ukrnafta had been aware that Carpatsky II was a different entity to Carpatsky I. The Court of Appeal took into account the contents of the Request for Arbitration and found that it contained contradictory information with respect to the identity of the claimant. On the one hand, the Request provided that the claimant was a company incorporated in Delaware. On the other hand, it provided that the claimant was a party to the JAA concluded in 1995. The parties did not dispute that the party to the JAA was Carpatsky I. Therefore, the Court of Appeal found that Carpatsky II was not able to prove that Ukrnafta had actual knowledge that the counter-party was not Carpatsky I, before November 2008.

The Court of Appeal then turned to the issue of whether a party could be deemed to have waived its right to object to the jurisdiction of an arbitral tribunal if it ought to have had knowledge of the relevant circumstances. The Court of Appeal stated that an arbitral tribunal did not have the same responsibility as a court of law to investigate the identity of the party requesting arbitration. Therefore, it could be expected that the counter-party should carry out certain checks regarding the identity of the parties and their capacity to bring an action. If, as a result of any investigations there transpires to be any circumstance which appears irregular, it is reasonable that a party should be deemed to have an extended duty to investigate the matter further.

The Court of Appeal found that the information in the Request for Arbitration, specifically that the claimant was incorporated in Delaware, contained an indication that a significant change had occurred since Ukrnafta concluded the arbitration agreement with the company registered in Texas. This ought to have led to further investigations with respect to the identity of the claimant. Such inquiries would have led to Ukrnafta's awareness of the circumstances invoked as a basis for the tribunal's lack of jurisdiction.

The Court of Appeal considered that Ukrnafta had been passive with regard to examining the identity of Carpatsky II from the time it received the Request for Arbitration until the objection to jurisdiction of the arbitral tribunal was submitted in December 2008.

Section 34 of the SAA does not provide a specific deadline as to how quickly an objection to jurisdiction must be raised before the right to object is lost. The timeliness of an objection will depend on the circumstances of a particular case. However, as a rule, an objection to jurisdiction should be raised in the Statement of Defence, although there may be some exceptions.

According to article 24(2)(ii) of the SCC Arbitration Rules 2007, the respondent should, not later than in the Statement of Defence, state any objections to the existence, validity or applicability of the arbitration agreement. According to the Court of Appeal, this rule must be given weight when considering the forfeiture of the right to raise jurisdictional objections.

Therefore, the Court of Appeal concluded that the objection to jurisdiction ought to have been raised in Ukrnafta's Statement of Defence. Ukrnafta's objection to jurisdiction in December 2008 was therefore raised too late and could not be tried in challenge proceedings.

Finally, the Court of Appeal concluded that the forfeiture of the right to object to the jurisdiction of the arbitral tribunal in challenge proceedings was directly relevant also for the declaratory claim in the proceedings pending before the Appeal Court. The conclusion that Ukrnafta forfeited its right to bring an action meant that the arbitral tribunal had jurisdiction to resolve the dispute.

With this outcome, the Court of Appeal found that there were no reasons to try other grounds.

Generally, a party cannot be considered to have waived its right to rely on a circumstance of which it has not been aware. Different views have been expressed with regard to the consequences of a party's lack of knowledge due to an omission or negligence. On the one hand, it has been argued that a party can forfeit its right to object to the jurisdiction of an arbitral tribunal even if it was not aware of the circumstance giving rise to the objection but ought to have had such knowledge. Others have argued that, in principle, it is not sufficient that a party ought to have had knowledge of the grounds for challenge. The latter view has also been supported by case law. However, the proponents of this view have also stated that the principle should not be strained. In particular, if a party has some record of an irregularity or a conflict of interest, in order to maintain the right to challenge the arbitration award it should not knowingly refrain from an investigation of the circumstance.

The judgment of the Svea Court of Appeal imposes an extended duty on the counter-party to examine any circumstances which appear contradictory or which raise questions. A failure to perform such investigations may lead to the forfeiture of the right to raise jurisdictional objections.