Commercial mediation in Sweden
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?
Does the court have powers to support a mediation?
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?
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).