Commercial mediation in Sweden

Commercial mediation proceedings can be initiated by the parties to a dispute, either before or after court or arbitration proceeding have been initiated. The mediation proceedings can be conducted on an ad hoc basis or by the parties agreeing on the use of specific rules of mediation. Also, the applicable statutory regime differs depending on which of these situations that is at hand. Swedish courts have a general duty under procedural law to facilitate for the parties in a litigation to try to settle their dispute. The use of commercial mediation as a dispute resolution mechanism is however voluntary and will only be decided by a court if the parties agree to it. There are generally no adverse consequences associated with failing to agree to mediate, unless such failure would constitute a breach of contract. If the mediation proceedings result in a settlement agreement, such agreement may be enforced as a binding contract or through a court/arbitrator confirmation process, depending on the applicable rules of mediation. The mediator is generally subject to a duty of confidentiality, while such duty for the parties must be contractually agreed.

What is the status of mediation in this jurisdiction?

Mediation is a recognised form of dispute resolution mechanism which has gained 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“).

The European Mediation Directive 2008/52/EC was implemented into Swedish law in 2011, through the Act on Mediation in Certain Civil Law Disputes (Sw. lag (2011:860) om medling i vissa privaträttsliga tvister) (the “Mediation Act”). The Mediation Act applies to mediation proceedings which are conducted outside the framework of already initiated court or arbitration proceedings or proceedings before a public authority. Most notably, the Mediation Act addresses three issues which previously have been of concern to mediating parties: (i) that mediators are bound by a duty of confidentiality, (ii) that limitation periods are postponed, and (iii) that the parties can have their settlement agreement declared enforceable upon application to a court.

How is a mediation conducted?

A mediation is conducted in accordance with the parties’ agreement in each individual case. Although there are no statutory requirements which regulate the procedure, a mediation process generally involve the following 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 case; (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 an amicable solution. It is not unusual for mediating parties to have their legal counsel attend the proceedings.

Mediation proceedings which are initiated not as part of court or arbitration proceedings are governed by the Mediation Act, which includes rules on confidentiality, limitation periods and enforcement. The choice of mediator and the applicable rules of the proceedings are decided by the parties themselves. It is not unusual to utilise 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 rules on mediation which the parties can choose to adopt to govern their mediation.

As mentioned above, the Mediation Act is not applicable when parties in a dispute agree to mediation after court or arbitration proceedings have been initiated. During litigation proceedings, the courts have a general duty to facilitate for the parties to try to settle their disputes. Courts may, with the parties’ consent, decide for mediation proceedings to take place.

The cost of mediation, which is typically shared between the parties, will vary depending on e.g. the complexity of the dispute and the amount in dispute.

Is there any obligation on litigants to mediate?

Subject to any contractual arrangements between parties, there is no obligation to mediate. Further, a contractual arrangement between the parties to mediate does not constitute a procedural impediment or an impediment to arbitration.

Does the court have powers to support a mediation?

Courts have a duty under the Code of Judicial Procedure to facilitate for the parties to try to reach a settlement, unless this would be inappropriate considering relevant circumstances such as the nature of the dispute. Subject to the parties’ consent, the court can order that mediation shall take place. In these circumstances, a mediator will be appointed by the court, but the costs associated with the mediation will be borne by the parties. The mediator will normally be a person who is not associated with the court and cannot be a judge hearing the case. The National Courts Administration (Sw. Domstolsverket) keeps a record of mediators appointed by courts.

Are mediations confidential?

A court-appointed mediator is in accordance with the Public Access to Information and Secrecy Act (Sw. Offentlighets- och sekretesslagen) bound by confidentiality if the parties have stipulated that the information disclosed as part of the mediation proceedings should be kept confidential. In mediation proceedings where the Mediation Act is applicable, the mediator is bound by a statutory duty of confidentiality. Hence, a mediator appointed by the court or under the Mediation Act cannot give evidence in court regarding what has taken place during the mediation, unless prescribed by law or with the consent of the party which benefits from a confidentiality undertaking.

The duty of confidentiality for mediators under the abovementioned legislations do not extend to the parties. For this reason, the parties must enter into a separate confidentiality agreement or adopt mediation rules which include a confidentiality undertaking if they want to ensure that confidentiality is maintained. Such confidentiality undertaking will however not preclude the duty to give evidence in court.

Under the rules of the SCC or WSCCI, the mediator, the mediation institute, the parties and any other persons participating in the mediation are bound by a duty of confidentiality with regard to information disclosed during the mediation, unless the parties agree otherwise.

Does failure to mediate attract adverse cost consequences?

The rejection of an invitation to mediate or a failure to complete mediation proceedings will not constitute grounds for any type of sanction or other adverse costs for either party. However, if the parties were contractually obligated to mediate, failure to comply may give rise to adverse consequences due to breach of contract.

How are settlement agreements enforced?

A settlement agreement entered into as a result of a mediation decided by a court can be made enforceable as a judgment upon request from the parties. A settlement agreement entered into following a mediation under the Mediation Act can be made enforceable as a court order upon a request from the parties.

The rules of the SCC and WSCCI prescribe that the parties can, subject to the consent of the mediator, agree to appoint the mediator as an arbitrator and request that the settlement agreement is confirmed in the form of an arbitral award.

When a settlement agreement has been declared as a judgment, court order or arbitral award, the agreement will constitute a procedural impediment or an impediment to arbitration.

If none of the measures above is adopted, a settlement agreement will be enforceable against the counterparty on a contractual basis.

In this context, it should be noted that failure by the parties to reach a settlement does not prevent either party from subsequently initiating court or arbitration proceedings concerning the same matter. The Mediation Act stipulates that if a limitation period is running when mediation is commenced, the limitation period will 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.