Insufficient reasoning — a proper basis for setting aside an award?
Av jur.kand. JACOB FRANK1
The most important product of the arbitration is the arbitral award. A (final) award is the culmination of the arbitration, it embodies the tribunal’s ultimate and binding determination of the dispute between the parties and it is to a very large extent (even more so than court judgments) enforceable in foreign countries. But to what extent must arbitrators provide reasons in their award and what is the standard with which the reasoning must comply? Two separate questions arise in relation to reasons. The first is what constitutes good practice among arbitrators and forms a general requirement in arbitration, i.e. in a sense what level of reasoning that should — but not necessarily must in order for the award to be enforceable and unchallengeable — be contained in an award. The second question is under what circumstances challenges can be made to have an award set aside in instances where reasoning is alleged to be lacking or insufficient.
The latter is arguably a more significant issue — at least from a strictly legal perspective — which this article will focus on, with particular regard to Swedish arbitration law.2
In the absence of an internationally binding standard with respect to assessing if an award is duly reasoned, it is for each state to decide whether its arbitration law should contain a reasoning requirement (and if so to the extent of such requirement).3 The Swedish Arbitration Act (“SAA”), however, does not contain an explicit requirement that an award — whether domestic or international — be reasoned.4
1 The author is an associate at Roschier Advokatbyrå AB. This Article has been produced in independent capacity and has no relation to nor represents any view of either the firm or clients of the firm. It was drafted prior to the author commenced his employment. 2 So-called quality arbitrations (“look and sniff”, i.e. straightforward trade arbitrations before trade experts, where a quick factual determination by an expert is sought) does not customarily rely on reasoned decisions. The same is true for awards on agreed terms. 3 Notably, there is no express provision in the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958) (the New York Convention”) in relation to reasons underlying awards and it does not include failure to state reasons as a ground for annulment or setting aside. 4 However, the subject was touched upon in the committee report SOU 1994:81 s. 166 and discussed in more detail in the governmental bill prop. 1998/99:35 s. 133 f. After having pointed out that there are substantive arguments both for and against a statutory requirement of reasoned awards, the government decided not to include a reasoning requirement in the SAA given the overall purpose to limit the grounds on which an award may be set aside (particularly observing that had a reasoning requirement been introduced, the threshold from a qualitative