In this edition of who wins where and why, we look north to Scandinavia. What started as a fact finding mission on a recent trip to Stockholm quickly revealed that a wider investigation was needed in order to appreciate the Stockholm legal market. The value and significance of the Stockholm Chamber of Commerce (SCC) and the many excellent law firms in Stockholm could only really be understood by widening the lens of our analysis to include all of Scandinavia. This article considers our findings and then focuses on Stockholm as a major international arbitration centre for dispute resolution.
In summary our findings are as follows:
Arbitration is by far the preferred method of dispute resolution. The non-public nature of arbitration retains its position as the most valued attribute of arbitration followed by efficiency of procedure and expertise of arbitrators. When litigation is chosen over arbitration the principle reason appears to be costs. Adjusting for national bias, the majority of potential claimants prefer the SCC rules followed by the International Chamber of Commerce rules (ICC). The main attraction of the SCC rules is the experience, reputation and costs of the institute and arbitrators. These basic conclusions reveal a simple truth that is good for funders and lawyers alike in Scandinavia and Finland: Arbitration is the preferred dispute resolution mechanism amongst potential users but costs and rising costs are inevitably a concern.
In the previous edition of who wins, where and why?, we focussed on London, England and identified that users are frequently caught in the time, cost, quality triangle in respect of disputes. They want the process to be fast, cheap and of top quality but the principle of the time, cost, quality triangle is that you can only have two at the expense of the third. In Scandinavia arbitration is the preferred dispute resolution mechanism (see Graph 1) because it has a qualitative difference to that of the courts - it is private. It is also considered to be efficient - it is faster and more flexible. These two angles of the triangle have prevailed but it comes at a cost. Third party funding may very well be the key that unlocks the time, cost quality triangle for potential users of arbitration in Scandinavia. A fact that is good for claimants, lawyers, funders, arbitrators and even the judiciary.
Source: The data for this analysis was the result of a collective study by the law firm Roschier and the independent market research firm TNS Sifo Prospera who conducted in-depth interviews with general counsel and in-house counsel from some of the largest organisations in Denmark, Finland, Norway and Sweden - a total of 264 companies. To this Vannin has added analysis of the statistical reports published by the SCC, our own enquiry amongst the leading firms in Stockholm and from the growing number of disputes that we see from claimants facing or embroiled in SCC arbitration.
ARBITRATION IN SWEDEN
One of the explanations for why arbitration is so popular in Sweden at least is the fact that there is no commercial court. Parties must choose between taking their complex, often sensitive, commercial dispute to the civil courts or to arbitration. That would of and in itself be a good reason to chose arbitration over litigation. However, the differences between these two systems and what they mean for potential claimants goes beyond confidentiality.
Resolution of litigation at first instance may be, relative to other civil law jurisdictions, quick in Sweden, but as with many other litigation jurisdictions (the UK being a notable exception) the losing party has an...