All Aboard the SCC Express

May 22, 2022

This article analyses the latest innovation in Swedish arbitration, SCC Express, which represents a new addition to the dispute resolution spectrum. SCC Express is a confidential, consent-based mechanism designed to provide a swift resolution by a neutral assessor at a fixed fee primarily to less complex disputes between business partners looking for an alternative to a lengthy and expensive arbitration or litigation.

The article first considers the preconditions of the innovative nature of Swedish arbitration with a summary of the history and culture of arbitration in Sweden. Secondly, it provides an analysis of the SCC Express with a focus on the applicable rules. Finally, it comments on the overall merits of SCC Express.

The latest Swedish innovation

Sweden is well known for its social welfare state and labour market model, traditional industry brands such as IKEA, Volvo, AstraZeneca, Tele2 and H&M, start-up unicorns such as Spotify and the world-leading online payment services giant Klarna and, of course, ABBA. For businesses and arbitration practitioners alike, Sweden is synonymous with ‘stability’ and ‘neutrality’. Indeed, Stockholm is consistently listed among the top ten seats of international arbitration and the Arbitration Institute of the Stockholm Chamber of Commerce (SCC) is ranked among the top arbitral institutes in the world.

Another valid descriptor of Swedish arbitration is arguably ‘innovation’. The latest Swedish innovation within arbitration is the SCC Express, a new, more streamlined dispute resolution service launched in May 2021. This article will first briefly examine how Sweden got to this point, i.e., a short history of Swedish arbitration and overview of the underlying legal environment, before analysing the SCC Express in detail and finally provide some comments on the merits of the SCC’s latest innovation.

Arbitration in Sweden

Arbitration in Sweden typically (although not exclusively) entails the involvement of the SCC. The SCC was established in 1917, but arbitration in Sweden can be traced back to the medieval period.[1]Many readers from the CIS region will be aware of the recognition in the 1970s by the Soviet Union and the United States of the SCC as a neutral centre for the resolution of East West trade disputes, elevating the SCC as a preferred venue for international dispute resolution. As a neutral state that was perceived as neither too socialist nor too capitalist, Sweden was able to play a unique role in preserving international peace and promoting economic cooperation between what were two very different worlds. Significantly, China also recognized the SCC as a forum for resolving international disputes around the same time.[2]

Arbitration under the SCC Arbitration Rules is comparatively expeditious, with an award typically rendered within 6-12 months from referral to the arbitral tribunal.[3]The SCC also compares favourably on cost to other European arbitral institutions.[4]As of 2019, all new SCC arbitrations are administrated online via a secure digital platform, in line with Sweden’s broader ambitions on innovation.

Pro-arbitration legal environment

Sweden is considered a civil law jurisdiction, but its legal system is also influenced by the common law.[5]The Swedish Arbitration Act (Act) rests on basic contractual principles, pacta sunt servanda, with a particular focus on party autonomy. Following lobbying from practitioners, the Act was modernised in 2017 to meet the demands of both domestic and international users in terms of the speed, security and flexibility of the procedure, while also taking into account the basic requirements of legal certainty.[6]

In Sweden there is a near-automatic recognition of arbitration agreements as binding. For example, in one recent case a hybrid arbitration clause referring disputes to one arbitral institution (SCC) under the rules of another (ICC) was upheld as valid.[7]Interim measures in arbitration proceedings are also available from domestic courts, e.g., to assist with the taking of evidence, and challenge actions against arbitration awards seated in Sweden are brought in the first instance to a special division of the applicable Court of Appeal. The solid foundations of Swedish arbitration thus provide fertile grounds to pursue new innovations for the benefit of prospective users.

SCC Express

Based on trends such as emergency arbitration being (mis)used for prima facieassessments of substantive issues and “a specific need identified among arbitration users”,[8]the SCC has developed a new tool, SCC Express. Launched in May 2021, SCC Express is a confidential, consent-based mechanism designed to provide a swift resolution by a “neutral assessor” (Neutral)[9]at a fixed fee primarily to less complex disputes between business partners looking for an alternative to a lengthy and expensive arbitration or litigation.There is no requirement that an SCC Express be conducted in person, e.g., in Stockholm.

According to Article 2(4) of the SCC Rules for Express Dispute Assessment (SCC Express Rules) the resulting “Express Dispute Assessment” (Assessment) is non-binding. However, the parties may agree to make the Assessment contractually binding by executing a settlement agreement. Subject to the Neutral’s consent, the parties may also agree to appoint the Neutral as an arbitrator to confirm the Assessment in an arbitral award. According to Article 9 of the SCC Express Rules, the Assessment shall be delivered within 21 days from referral of the case to the Neutral.

The SCC Express process is not unlike an arbitration in that one party submits a request with a description of the dispute and pays an administrative fee (EUR 4,000). The other party then has the opportunity to respond and, in the absence of prior consent to submit disputes to SCC Express, confirm its consent. The Assessment requires the consent of all parties to the dispute but is not conditional upon an agreement to arbitrate under the rules of the SCC. Once the SCC has verified the consent of the parties, the SCC will request payment of the Neutral’s fixed fee (EUR 25,000), which pursuant to Article 11 of the SCC Express Rules is split between the parties unless otherwise agreed.

According to Article 6 of the SCC Express Rules, upon proof of payment of the fees, the SCC Board appoints the Neutral within 48 hours taking into consideration all relevant factors, such as any party proposals, the nature of the dispute, applicable law, availability, and diversity. Analogously to the appointment of a sole arbitrator under the Arbitration Rules, the SCC Secretariat provides a shortlist from its internal database to the SCC Board, which may either select from the shortlist or appoint such other person it considers appropriate. The Neutral must be “impartial and independent”, and any challenge must be made within 48 hours, with the SCC Board taking a final decision after providing the opportunity for the parties and the Neutral to comment.

Pursuant to Article 7 of the SCC Express Rules, the SCC Board then “promptly” refers the dispute to the Neutral who guides the parties through the SCC Express process “in an impartial and efficient manner, giving each party an equal and reasonable opportunity to present its case”. The Neutral then summarises the issues raised by the parties for Assessment and inquires whether the parties agree to make the findings contractually binding. The Assessment is based on the agreed applicable law, or in the absence thereof, such law as the Neutral considers most appropriate in accordance with Article 8.

The aim of the Assessment is to provide the parties with insight into how any future arbitrator might decide the case before a party makes the commitment to pursue arbitration. The SCC refers to feedback from arbitration users who consider that SCC Express may be of particular use to parties disputing “a matter of law, contract interpretation, or a limited factual disagreement,” for example:

issues arising in long-term contractual relationships, such as in construction projects;

the meaning of particular term in a contract;

closing conditions in M&A transactions; or

executive level employment disputes.[10]

Thus, SCC Express provides significant flexibility but is predicated on a high level of trust more common in longer-term partnerships which both parties intend to continue.

Concluding remarks

Arguably, the soundness of the Swedish arbitration model as outlined above has laid the foundations for the development of new innovations that aim to fill the gaps in the existing dispute resolution spectrum. The new SCC Express represents a streamlined process, a halfway house between arbitration and mediation with a “predictable price tag”.[11]Given the total administrative cost is EUR 29,000, it has been suggested that SCC Express will only be viable for disputes valued at over EUR 300,000.[12]While SCC Express will certainly not be suitable for all disputes, this was never the aim. Rather, the service is designed to complement the other methods of dispute resolution available and in response to party needs. Although it is still early days, for parties regardless of location who recognise (or whose legal counsel recognise) that their dispute can be resolved without the need for a full arbitration or litigation, it may well be worth further considering taking a ride on the SCC Express.

Johan Molin, Partner, Co-Head of Dispute Resolution

Madeleine Engzell, Specialist Counsel

Jake Lowther, Associate

Magnusson

[1] J. W. Rowley (ed), ‘Stockholm Arbitration Institute’, Arbitration World - Jurisdictional Comparisons(2006, 2nd ed.), pp. cxxi - cxlii; J. Rosengren, ‘Maritime Arbitration in Sweden - a reliable, swift and relatively cost effective service’, 1 TheSwedish Club Triton(2010).

[2] A. Havedal-Ipp, ‘Ulf Franke, Stockholm Arbitration, and the Bridge to China’, 9 China Business Law Journal16 (2015) <https://sccinstitute.com/media/81035/china-business-law-journal_havedal-ipp.pdf> [accessed 7 May 2021].

[3] SCC, ‘SCC STATISTICS 2019’ (2021) <https://sccinstitute.com/our-services/investment-disputes/> [accessed 07/05/2021].

[4] See, e.g., Queen Mary University of London and White & Case, ‘2021 International Arbitration Survey’ (2021) <https://www.whitecase.com/publications/insight/2021-international-arbitration-survey/current-choices...; [accessed 6 May 2021].

[5] See, e.g., U. Bernitz, What is Scandinavian Law? Concept, Characteristics, Future(2010) <https://www.scandinavianlaw.se/pdf/50-1.pdf> [accessed 7 May 2021].

[6] Proposition 2017/18:257.

[7] Russian Federation v I.M. Badprim S.R.L [Svea Court of Appeal] T 2454-14 (23 January 2015).

[8] SCC, ‘Guidelines to the SCC Rules for Express Dispute Assessment’ (2021) <https://sccinstitute.com/media/1800128/scc-express-guidelines_2021.pdf> [accessed 12 October 2021], p 2.

[9] SCC Rules for Express Dispute Assessment, Article 2(1).

[10] SCC, ‘Guidelines to the SCC Rules for Express Dispute Assessment’ (2021) <https://sccinstitute.com/media/1800128/scc-express-guidelines_2021.pdf> [accessed 12 October 2021], p 7.

[11] Ibid, p 2.

[12] A.-M. Tamminen & M. Nyberg, Kluwer Arbitration Blog, ‘SCC Express: A Shortcut or A Detour?’ (4 August 2021) <http://arbitrationblog.kluwerarbitration.com/2021/08/04/scc-express-a-shortcut-or-a-detour/> [accessed 12 October 2021].