Re-arbitration of claims withdrawn from previous arbitration proceedings

Olof Ragmark (Partner), Delphi

In a decision of 9 June 2009 (case T9424-07), the Svea Court of Appeal held that the mere withdrawal of claims from arbitral proceedings could not, of itself, be construed as a waiver of the arbitration clause. Since the respondent had failed to exercise its right, under section 28 of the Swedish Arbitration Act, to have the withdrawn claims ruled upon, it followed that the claimant was entitled to commence fresh proceedings in respect of those claims.

Facts

In 2004, the claimant (H) requested arbitration against his former employer (the respondent) under an arbitration clause contained in H's employment contract (the first arbitration). The parties had been unable to agree on amounts payable for certain employment benefits and H submitted a number of claims to the tribunal, such as claims for holiday grants and different pension premiums. Several of these claims were subsequently withdrawn by H. The respondent did not require a ruling on the withdrawn claims (which it was entitled to do pursuant to section 28 of the Swedish Arbitration Act). Consequently, the withdrawn claims were not covered by the award issued by the tribunal in the first arbitration.

In 2006, H commenced further arbitration proceedings to try the claims previously withdrawn from the first arbitration. The respondent denied the competence of the second tribunal to try the claims in question, arguing that H had, by withdrawing the claims from the first arbitration, waived the arbitration agreement in relation to those claims. The second tribunal agreed with the respondent and dismissed the claims for lack of competence. H appealed the award at the Svea Court of Appeal.

 

Decision

The Svea Court of Appeal found in favour of H, setting aside the relevant parts of the second award. The court noted that in situations when a claim is withdrawn from arbitration proceedings, the other party has an unconditional right, pursuant to section 28 of the Swedish Arbitration Act, to request that the claim is tried. The reason for this is to prevent a party from reverting with the same claim time and again. In the present case, the respondent did not request that the claims which had been withdrawn by H be tried in the first arbitration. The claims had not been tried in the first arbitration and H was therefore obviously free to pursue them in a subsequent arbitration or before the ordinary courts. The Court of Appeal concluded that the mere withdrawal of the claims - without any explanation - could not be construed as a waiver of the arbitration clause, as such. In the present case, there was no reason to consider that H intended to withdraw from the arbitration agreement when withdrawing the claims, nor that the respondent had reasonable grounds for so believing. Consequently, the arbitration agreement was still binding and the dismissal of the claims by the second arbitral tribunal was unfounded and incorrect.

 

Comment

In connection with withdrawal of claims from arbitration proceedings, both parties should consider whether or not the withdrawn claims might be re-arbitrated or not. Should the respondent choose not to request that the claims be tried by the tribunal, notwithstanding the withdrawal, it is for the respondent to take action to exclude the claims from the arbitration agreement - if that is the respondent’s intent - in order to preclude the possibility of the withdrawn claims being pursued subsequently in further court of arbitral proceedings.

 

Case

Decision of the Svea Court of Appeal on 9 June 2009 (case T9424-07; H./. Handelshögskolan i Stockholm)

 
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