Section 1
Disputes concerning matters in respect of which the parties may reach a settlement may, by agreement, be referred to one or several arbitrators for resolution. Such an agreement may relate to future disputes pertaining to a legal relationship specified in the agreement.
The dispute may concern the existence of a particular fact. In addition to interpreting agreements, the filling of gaps in contracts can also be referred to arbitrators.
Arbitrators may rule on the civil law effects of competition law as between the parties
Section 33
An award is invalid:
Section 55
Recognition and enforcement of a foreign award shall also be refused if a court finds:
Before even commencing arbitration, parties often have to ask a threshold question: can a dispute involving sanctions be resolved by arbitration at all, or, in other words, is it arbitrable under the applicable legal framework? This matter deserves particular attention at both front-end and back-end stages: at the front-end stage, respondents frequently invoke non-arbitrability objections to challenge the tribunal’s jurisdiction or delay the proceedings, and, at the back-end, similar arguments may reappear at the enforcement stage. Arbitrability is therefore a key element of both case strategy and enforcement risk analysis.
In simple terms, arbitrability concerns whether a given type of dispute can, under the applicable law, be resolved by arbitration and whether a tribunal has the power to decide it. It is often framed as a public policy limitation on party autonomy in domestic arbitration laws and in the New York Convention. The Swedish Arbitration Act in Section 1 defines arbitrable matters as those in respect of which the parties may reach a settlement.
Many national laws define arbitrability negatively: all disputes are arbitrable except those expressly excluded (e.g. family or consumer matters). In international arbitration practice, there has been a clear trend towards a broad presumption of arbitrability, with courts, including the Court of Justice of the European Union (“CJEU”), emphasising that subsequent judicial review at the enforcement stage is a safeguard against public policy violations.
Importantly, arbitrability is not determined solely by the law of the seat. The law governing the arbitration agreement, the domestic law of the parties and the law of potential enforcement fora may all influence whether a sanctions-related dispute is treated as arbitrable in practice.
Historically, some authorities took a restrictive view, holding that disputes requiring the application of trade sanctions were non-arbitrable because they touch the public domain and public policy in a way deemed inappropriate for adjudication by arbitrators as private individuals.
Nevertheless, many sanctions-related disputes arise out of purely commercial transactions between private parties. This supports the qualification of such disputes as belonging to the sphere of private law and therefore capable of being resolved by arbitration. In line with that, the prevailing view in practice now is that the mere fact that a dispute engages a sanctions regime does not, by itself, render the subject matter non-arbitrable: sanctions may affect performance and available remedies, but not the existence of the arbitration agreement.
Non-arbitrability objections are often framed through public policy. In the international arbitration context, however, the relevant reference point is international rather than strictly national public policy, with the international public policy understood more narrowly than domestic.
For Member States, EU public policy and national public policy are closely connected. The fundamental provisions of EU law pertaining to the public policy domain are, or at least are expected to be, incorporated into the national public policy of Member States and must be considered by domestic courts when reviewing arbitral awards or assessing arbitrability of a dispute. In Sweden, accordingly, EU public policy forms part of the Swedish public policy and is relevant when Swedish courts examine non-arbitrability objections grounded in public policy defence. At the same time, Swedish courts traditionally interpret public policy narrowly, favouring arbitrability (Cf Achmea and Biondi, see below).
Current sanctions regimes against Russia are largely unilateral or regional measures, not UN Security Council sanctions. This makes it less straightforward to argue that they form part of a universal transnational public policy that would exclude arbitration altogether. Unilateral and regional restrictive measures are more appropriately treated as elements of the enforcing state’s own public policy. As a result, public policy concerns are more likely to influence recognition and enforcement than to exclude arbitrability at the outset.
The EU’s approach to public policy in the context of arbitration has evolved through several landmark decisions of the CJEU.
In Eco Swiss case, the CJEU emphasised that the EU competition rules are part of public policy domain and that national courts seized with an action to set aside an arbitral award must annul it if the award contradicts such rules. The Court recognised that certain fundamental areas of EU law, such as competition law, as public policy and required domestic courts to intervene, even where domestic arbitration laws may provide for very limited grounds for challenging awards. Eco Swiss judgement thus establishes that EU public policy can require courts to set aside awards or refuse enforcement despite a general preference for finality.
In later sports arbitration, notably ISU and Seraing judgements, the CJEU further developed the relationship between arbitration, EU public policy and effective judicial protection. In ISU, the Court held that the mandatory arbitration could amount to an infringement of Article 101 TFEU, previously recognised as part of public policy, and deprive athletes of effective access to courts, conflicting with public policy. In Seraing case, the Court ruled that arbitral awards resulting from compulsory sports arbitration cannot enjoy res judicata or probative effect within the EU, unless their conformity with EU public policy has been subject to effective review by a Member State court. National courts must be able to verify and, where necessary, suspend or neutralise such awards to safeguard EU rights and freedoms. Practically, the Court held that the interest in ensuring effective compliance with EU law supersedes the underlying idea of finality of arbitral awards and effectively formulated the obligation to intervene if the matter of public policy is present.
In Achmea case, the CJEU held that intra-EU investment arbitration clauses are incompatible with the autonomy and supremacy of EU law. The Court concluded that disputes involving EU law and public policy cannot be removed completely from the EU judicial system by arbitration clauses. On the contrary, public policy exceptions must be invoked and considered by national courts where fundamental EU legal principles are at stake.
Read together, these decisions show a clear line of development that where fundamental norms, such as competition law, the autonomy of EU law, or effective judicial protection, are engaged, EU public policy requires meaningful judicial review of arbitral awards and, in certain categories of disputes, may restrict the scope of arbitration altogether. At the same time, the CJEU has on numerous occasions stressed that EU law does not oppose arbitration as such, but rather insists that arbitration can be used to circumvent EU public policy or deprive parties of effective judicial protection.
Against this backdrop, it might be argued that EU sanctions, especially those adopted to pursue fundamental objectives of the Union, are of equal importance for the Union’s functioning and should be treated in the same manner, i.e. as part of EU public policy, possibly affecting arbitrability. At minimum, objections from counterparties on that basis remain highly likely in practice.
In our view, however, sanctions should not generally be treated as public policy in a way that defeats arbitrability. First, most sanctions-related disputes in the field of commercial arbitration arise from contracts between private parties and concern performance, termination, price or restitution, rather than direct review of state measures. They are, in other words, firmly rooted in private law. Second, treating every sanctions provision indiscriminately as public policy would mean significant expansion of the public policy category beyond its traditional scope and risk undermining the autonomous nature of arbitration. Third, the prevailing position in jurisprudence and doctrine is that sanctions regimes do not as such render disputes non-arbitrable. Instead, they may influence the applicable law, available remedies, recognition and/or enforcement, while also leaving arbitration agreements untouched.
In light of the CJEU’s jurisprudence, it can be concluded that EU public policy has a specific role of obligating courts to review awards and, in exceptional cases, to refuse enforcement or set aside awards that contradict fundamental EU norms. That does not imply that every rule of EU law, including all aspects of sanctions regimes, should automatically be treated as a bar to arbitrability. Accordingly, sanctions may affect the outcome and potentially enforceability of an award, but they should not be assumed to invalidate arbitration clauses or exclude arbitration as a dispute resolution mechanism.
At EU level, the pending Reibel case is expected to clarify key aspects of the interaction between the EU sanctions regime and arbitration. In his Opinion, Advocate General Biondi confirmed that disputes affected by EU sanctions, including those involving the no-claims clause in Council Regulation 833/2014, remain arbitrable and that arbitration is not prohibited. At the same time, he treated EU sanctions as part of EU public policy and took the view that certain claims should not be granted where they conflict with no-claims provision.
In practice, this means that in the EU context sanctions are unlikely to defeat arbitrability, but they may significantly affect the merits of the claim and the enforceability of the award in Member States. At the same time, arbitration remains available and, in many cases, appropriate for sanctions-related disputes.
Finally, it should be taken into account that from a Swedish perspective, EU public policy essentially forms part of Swedish public policy, which leads to the fact that Swedish courts will likely consider EU sanctions when reviewing arbitral awards or addressing enforcement. However, Swedish jurisprudence on arbitrability and public policy still maintains a presumption in favour of arbitration, with a narrow interpretation of public policy. This, in practice, means that sanctions are unlikely to make disputes non-arbitrable under Swedish law, despite the potential objections.
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