Section 8 of the Swedish Arbitration Act (1999:116) provides that an arbitrator shall be impartial. The Act lists a number of circumstances which always diminish confidence in the arbitrator's impartiality:

However, this list is not exhaustive. Section 9 of the Act requires an arbitrator to immediately disclose all circumstances which, pursuant to section 8, might prevent him from serving as arbitrator. If an arbitrator is found not to be impartial due to any circumstance set out in section 8 of the Act, the arbitral award shall be wholly or partially set aside upon motion of a party (section 34 of the Act).

Korsnäs Aktiebolag (Korsnäs) challenged the arbitral award rendered in a dispute between Korsnäs and AB Fortum Värme samägt med Stockholms stad (Fortum). Korsnäs asserted that the arbitrator appointed by Fortum had previously been appointed as arbitrator in disputes where one of the parties was represented by counsel from the law firm which represented Fortum in the dispute. Korsnäs claimed that, prior to and during the arbitration proceedings, the arbitrator appointed by Fortum had failed to disclose information about these assignments, and further referred to the behaviour of the arbitrator in connection with Korsnäs' request for information about the arbitrator's earlier assignments after the rendering of the award.

With reference to its earlier decisions, the Supreme Court noted that the standards for objectivity and impartiality must be set particularly high when it comes to arbitrators, since errors concerning the evaluation of evidence or the application of law cannot be grounds to set aside an arbitral award. The Supreme Court concluded that where a particular arbitrator often receives arbitrator assignments from a law firm, this might give the impression that the arbitrator has connections to that law firm. This could therefore diminish confidence in the arbitrator's impartiality. According to the Supreme Court, both the number of earlier assignments and their scope are significant factors but an overall assessment must be made, taking into account all the circumstances in each particular case. In carrying out this overall assessment the court should give consideration to whether the arbitrator has received assignments only from the law firm in question or from several law firms. Furthermore, the court should consider whether one and the same attorney or several attorneys at the law firm have appointed the arbitrator in question. The Supreme Court also distinguished between appointments as arbitrator and chairperson.

From the witness examination it appeared that, during three years preceding the appointment in question, the arbitrator was twice appointed (as party appointed arbitrator) in disputes where one of the parties was represented by counsel from the law firm representing Fortum. During the ten-year period preceding the appointment, the arbitrator's appointments from this law firm constituted approximately ten per cent of this arbitrator's total number of appointments.

On basis of the foregoing the Supreme Court concluded that the predominant portion of the arbitrator's appointments was received from other law firms, and that it had not been established in the proceedings that the appointments from the law firm representing Fortum were received from one and the same attorney or a small number of attorneys at the law firm. The arbitrator was thus not found to be partial.

As regards Fortum's second ground for challenge, the Supreme Court concluded that the Swedish Arbitration Act does not provide for any sanction for a failure to disclose necessary circumstances, and that such failure does not constitute an independent ground for setting aside of an arbitral award. The statements made in travaux préparatoires, to the effect that withholding of information regarding a certain circumstance by an arbitrator might establish a conflict of interest in doubtful cases, should, according to the Supreme Court, be considered as referring only to borderline cases. The case before the Supreme Court was not of that character. Finally, the Supreme Court declared that section 34 of the Act does not permit the court to set aside an award on the basis of the arbitrator's subsequent conduct after the rendering of an arbitral award. Consequently, there were no grounds for setting aside the award.

The issue of repeat appointments has long been subject of hot debate as standards governing disclosure obligations of arbitrators are generally quite vague. Although the Swedish Arbitration Act, unlike the UNCITRAL Model Law, provides more guidance on the issue of arbitrators' impartiality, repeat appointments are not directly regulated by the Act. In the Korsnäs case, the Supreme Court confirmed that Swedish law sets high standards with regard to the objectivity and impartiality of arbitrators, and that frequent appointments by the same law firm is a circumstance that may diminish confidence in the arbitrator's impartiality.

The court upheld the principle of assessment on objective grounds and indicated certain factors that could be given consideration such as the number of earlier appointments and their scope. Interestingly enough, the court considered that the question of whether one and the same attorney or several attorneys at a law firm appoint the arbitrator should also be taken into account. Failure to disclose circumstances which might influence arbitrator's impartiality would not of itself give rise to a finding of bias and cannot be regarded as an independent ground for setting aside, although such failure can be taken into consideration in doubtful cases.

Although the court indicated some factors that could diminish confidence in the arbitrator's impartiality when it comes to repeat appointments, the principle of overall assessment has prevailed. For future practice it means that each case still needs to be decided on its own facts and general principles for repeat appointments are still difficult to establish.