Sweden Thrives As Neutral Arbitration Ground

REPRINTED WITH PERMISSION FROM THE OCTOBER 18 EDITION OF THE NATIONAL LAW JOURNAL

Although international commercial arbitration has a long history in Sweden, it was not until the 1960s and 1970s that international arbitration on a larger scale took off. This happened in the context of East/West arbitration. Within the Communist world, and wherever countries could dictate the method of dispute resolution favored by the Council for Mutual Economic Assistance (the CMEA, known in the West by the name Comecon), it had been the practice to bring arbitrations in the country of the defendant.

This method led to many complicated, or even duplicative, procedures. The solution was to move the seat of arbitration away from the countries of both the claimant and the respondent and place it in a third, neutral country. When trade picked up between the United States and the Soviet Union, the method of resolving any disputes was one of the key issues. Recognizing the wide acceptance of Sweden as a venue for international arbitration, the then U.S.S.R. Chamber of Commerce and Industry, the American Arbitration Association and the Stockholm Chamber of Commerce developed a model arbitration clause for use in contracts between parties in the United States and Soviet foreign trade organizations. This clause became known as the "Optional Arbitration Clause for Use in Contracts in U.S.A.-U.S.S.R. Trade 1977" and provided for arbitration in Stockholm, Sweden, under the auspices of the Stockholm Chamber of Commerce.

In 1992, after the collapse of the Soviet Union, a new agreement was entered into between the Chamber of Commerce and Industry of the Russian Federation and the American Arbitration Association. Based on the 1977 agreement, the new 1992 agreement reflected historical changes in Russia and retained the status of Stockholm as the preferred venue for arbitrations between the United States and the Russian Federation.

One of the key questions facing the international arbitration community in that context was the effect of the elimination of the Soviet foreign trade monopoly, followed by the creation of thousands of new players and private enterprises conducting international business out of the territory of the former Soviet Union. Over the past 15 years, that part of the world has been a good source of business for international lawyers dealing with dispute resolution, and the competition between centers for international arbitration has been keen.

In this environment, Stockholm has maintained its position as a leading, if not the leading, venue for East/West arbitration. Other important institutions providing services in this connection are, in particular, the International Chamber of...