Return to site

Hybrid arbitration clause upheld

Svea Court of Appeal upholds SCC administration under ICC rules.

The Svea Court of Appeal in Stockholm has upheld an award rendered on a hybrid arbitration clause, as did the Singapore Court of Appeal in Insigma Technology Co Ltd v Alstom Technology Ltd [2009] SGCA 24.  A hybrid arbitration clause specifies one arbitral institution to administer an arbitration in accordance with the rules of another institution.  

In The Government of the Russian Federation v I.M. Badprim, S.R.L. (Case No T2454-14), the arbitration clause provided for the proceedings to be administered by the Arbitration Institute of the Stockholm Chamber of Commerce (SCC) under the Arbitration Rules of the International Chamber of Commerce (ICC). It was undisputed that the SCC lacked the required organizational structure to administer an arbitration fully compliant with ICC’s rules. The tribunal adapted the ICC rules to the organisation of the SCC.

The Russian Government argued that the award should be set aside because the arbtiration clause was contradictory and unenforceable. The court agreed at p 13 the clause was contradictory but said that  when an arbitration agreement provides a self-contradicting procedure, the agreement should, to the extent possible, be interpreted in line with the parties’ basic intentions to settle the dispute by arbitration. It said the court can disregard the contradicting provision if it is clear that the remainder of the agreement represents the parties’ actual intentions. Here the the main purpose of the arbitration agreement was that disputes between the parties would be resolved by arbitration in Stockholm before the SCC. The SCC agreed to and in fact administered the arbitration.

A similar result was reached in Singapore in Insigma Technology Co Ltd v Alstom Technology Ltd [2009] SGCA 24. Insigma was unsuccessful in its attempt to set aside an award rendered in an arbitration administered by the SIAC applying the ICC Arbitration Rules. The ruling upheld a “hybrid” arbitration clause indicating that all disputes should be resolved by arbitration before the Singapore International Arbitration Centre in accordance with the Rules of Arbitration of the International Chamber of Commerce.

While these decisions may not settle the question of the enforceability of hybrid arbitration clauses, they lend support to their enforceability where the clause is practically possible to follow.