Commercial mediation in Sweden

Mediation can be conducted prior to litigation or once litigation has taken place and the applicable statutory regime will depend on which situation applies. Mediation is generally voluntary, unless the parties have contractually agreed to mediate. However, the courts can order that mediation shall take place. Under current legislation, the courts have a duty to encourage parties to settle their disputes, including to reach a settlement, if possible. There are no costs sanctions for failure to mediate, unless this constitutes a breach of contract. Mediations are confidential. Settlement agreements are enforced as contracts. Depending on the rules of mediation followed, the parties may be able to request that the settlement agreement be enforced as an arbitral award or a court order.

What is the status of mediation in this jurisdiction?

Mediation is a recognised form of dispute resolution and has received increased attention during recent years in both academic and commercial circles. Well-known mediation institutes include the Arbitration Institute of the Stockholm Chamber of Commerce (the “SCC“) and the West Sweden Chamber of Commerce and Industry (the “WSCCI“).

On 1 August 2011, Sweden implemented EU Directive 2008/52/EC by introducing the Law (2011:860) on mediation in certain civil law disputes (Sw. lag (2011:860) om medling i vissa privaträttsliga tvister) (the “Mediation Law”). The Mediation Law applies to mediation proceedings in Sweden which are not conducted within the framework of already initiated court proceedings, arbitration proceedings or proceedings before a public authority. The Mediation Law addresses issues which have previously been of concern to parties considering mediation, such as confidentiality, enforcement and limitation.

Sweden has implemented the EU Directive on Consumer ADR 2013/11/EU through the Law (2015:671) on alternative dispute resolution in consumer disputes (Sw. lag (2015:671) om alternativ tvistlösning i konsumentförhållanden), which came into effect on 1 January 2016.

How is a mediation conducted?

Although the mediation procedure can differ from case to case, it generally consists of the following five, simplified, phases: (i) a preparatory phase in which practical factors such as the costs and timeframe are decided upon and the mediator explains the process to the parties; (ii) a plenary session during which the parties present their cases; (iii) private sessions between the mediator and each party; (iv) a negotiation phase; and (v) a final phase where a settlement agreement is concluded, assuming that the parties have reached a solution. It is not unusual for mediating parties to have their legal counsel attend the proceedings.

Although the actual mediation process is usually conducted in the manner described above, the regulatory framework governing the mediation will differ depending on the context in which it is initiated.

Parties can choose to initiate mediation and appoint a mediator before legal proceedings are commenced. This type of mediation is governed by the Mediation Law. It is not unusual to find model clauses in commercial agreements prescribing that mediation shall be conducted under the rules of a mediation institute. Both the SCC and the WSCCI have a set of rules which the parties can choose to adopt to govern their mediation.

As mentioned above, the Mediation Law is not applicable when disputing parties choose to mediate after litigation has already been commenced. In these circumstances, as set out in the Code of Judicial Procedure (Sw. Rättegångsbalken), the court can, subject to both parties’ consent, appoint a mediator. It is important, in this context, to distinguish between formal mediation and separate attempts made in court to settle the dispute where the judge assists the parties to reach a settlement.

The cost of mediation, which is typically shared between the parties, will vary depending on, for example, the complexity of the dispute and the disputed amount.

Is there any obligation on litigants to mediate?

Subject to any contractual arrangements between parties to mediate a dispute, there is no obligation on disputing parties to mediate.

Does the court have powers to support a mediation?

Under current legislation, courts have a duty to encourage parties to settle their disputes. Since 1 August 2011, courts have been obliged to encourage the parties to reach a settlement if it is not inappropriate, taking into account the nature of the dispute and other circumstances. Subject to the parties’ consent, the court can go a stage further and order that mediation shall take place. In these circumstances, a mediator will be appointed by the court. The mediator, who is paid for by the parties, will normally be a person who is not associated with the court and shall never be the judge hearing the case. The National Courts Administration (Sw. Domstolsverket) keeps a record of mediators appointed by courts to act in such mediations.

Are mediations confidential?

In mediations conducted under the Mediation Law, the mediator and the mediator’s assistant are bound by a statutory duty of confidentiality and cannot reveal any information they have gained during the mediation proceedings. Hence, the mediator and the mediator’s assistant cannot, unless prescribed by law, or if the party with the benefit of the confidentiality undertaking agrees, give evidence in court regarding what has taken place during the mediation. However, this undertaking does not extend to the parties. For this reason, the parties must enter into a separate confidentiality agreement or adopt mediation rules which include confidentiality provisions, to ensure that confidentiality is maintained.

In mediations conducted under the rules of the SCC, the mediator, the mediation institute, the parties and any other persons participating in the mediation are bound by a duty of confidentiality with regards to information disclosed during the mediation, unless the parties agree otherwise.

Does failure to mediate attract adverse cost consequences?

Swedish law does not impose any requirements on parties to a dispute to mediate. The court, therefore, has no power to impose any kind of sanction – including cost sanctions – on parties who refuse to do so. However, if the failure to mediate is in breach of a prior agreement to do so, it will be treated in the same way as any other breach of contract.

How are settlement agreements enforced?

The rules of the SCC prescribe that the parties can, subject to the consent of the mediator, agree to appoint the mediator as an arbitrator and ask him or her to confirm the settlement agreement in the form of an arbitral award. This will enable the settlement to be enforced as such.

Parties to a mediation regulated under the Mediation Law can also apply to the court in a district in which any of the parties is domiciled, for the court to declare that the settlement agreement shall be enforceable as a court order.

If none of the measures above is adopted, a settlement agreement will be enforceable as a contract.

In this context, it should be noted that failure of the parties to reach a settlement does not prevent them from subsequently litigating or arbitrating the case. The Mediation Law sets out that if a limitation period is running when mediation is commenced, that period may not expire until one month after the mediation is concluded (subject to this not being contrary to Sweden’s international commitments).

Is there a system of accreditation and/or regulatory body for mediators?

There is no regulatory body for mediators in Sweden. However, the National Courts Administration provides information on mediation which is intended to assist the parties in their choice of mediator and to improve the quality of mediation offered in Sweden. The information includes references to codes of conduct for mediators.