SWEDEN: An Introduction to Dispute Resolution
Sweden – a Powerhouse for Regional and International Disputes
Overview
Against the backdrop of Sweden’s long-standing position in the arbitration world, the market for law firms in dispute resolution is undergoing transformation. These changes are driven by a combination of the economic market, legal trends and political shifts, each of which carries implications for the practice of dispute resolution.
In brief, Sweden has seen financial downturn but the forecast is looking better – several large energy projects are driving industrial development in the northern parts of Sweden, and political focus is on the near-geopolitical region with the security issues at hand.
The current economic, legal and political trends for dispute resolution in Sweden are as follows.
Economic Trends
The Swedish economy, influenced by global economic trends, has faced challenges that have led to increased financial market volatility. In addition, Sweden has experienced years of high inflation and high interest rates. This has resulted in a rise in company restructurings, bankruptcy proceedings and recapitalisations, as well as increasing tensions under various forms of long-term contracts. With these developments, markets and participants with high leverage (such as the real estate market) have also taken a significant toll.
Law firms with capabilities in dispute resolution, financial restructuring and recapitalisations have seen their scope of work expand due to the adversarial nature of these matters.
However, the forecast for the near future is that the Swedish economy should expect a turn-around for 2024–2025. Swedish GDP is expected to increase by 0.7% for 2024 and by 2.5% in 2025. Sweden’s Central Bank is also expected to lower the policy interest rate during 2024–2025.
Another factor driving change in the economic and legal landscapes in Sweden are energy transition projects, as part of a global sustainability agenda. Several high-tech green energy projects are taking place, particularly in the north of Sweden (though also in other regions). This has created a growing market for legal expertise in energy law, project finance, environmental law, construction law, public procurement and regulatory compliance.
However, large-scale energy projects are not without friction. Disputes arise over project delays, construction issues, energy contracts, new technologies and environmental regulation. Law firms are engaged to navigate these complex matters and to resolve the often-contradictory interests of business partners, financial stakeholders, government agencies and others (such as local and regional municipalities). This has already created novel legal issues in disputes centred on the energy transition.
Legal Trends
The legal landscape in Sweden is also evolving. In addition to the dispute matters mentioned above, compliance and regulatory matters have received a heightened focus, particularly in industries such as banking and finance, energy, public procurement and telecommunications, where regulatory scrutiny is greater.
The digital revolution is transforming the legal field in Sweden, as elsewhere. This has resulted in new tools in dispute resolution practice, such as virtual arbitration hearings and the use of artificial intelligence. Fortunately, with Sweden being a leading country in IT, law firms are welcoming this change and adapting to the new technology.
The increasing globalisation of Sweden’s market economy also drives development in the legal sector. Law firms are now required to have a deeper understanding of not only Swedish and EU law but also common, civil and international law, as adversarial matters increasingly involve parties from different jurisdictions.
Sweden is praised and recognised globally for its transparency and its consistent adherence to the rule of law. On the basis of such recognition, Stockholm has long been a leading venue for international arbitration. At the heart of Sweden’s arbitration community is the Arbitration Institute of the Stockholm Chamber of Commerce (SCC). Established in 1917, the SCC has a global reputation for efficiency, neutrality and expertise through innovation. Furthermore, Sweden’s legal framework is arbitration-friendly, with a modern arbitration law and appellate courts being highly experienced in arbitration matters, such as the Svea Court of Appeal founded in 1614.
Swedish law itself has been described as neutral, predicable and a middle ground between civil law and common law as it possesses features from both traditions. Swedish private law derives both from statutes and from case law, and the Swedish Supreme Court is active in deciding matters. As such, Swedish law will have a certain familiar feel to a civil law lawyer as well as to a common law lawyer.
Political Trends
On the political front, Sweden’s role in its near-geopolitical region is expanding, driven by strategic security interests and in particular with Sweden joining NATO in 2024. As Sweden strengthens its position in the Baltic Sea region and in the international arena, law firms must stay on top of regulatory developments. Russia’s invasion of Ukraine and the international sanctions regime that followed has already resulted in multiple disputes in Sweden. It is too early to tell whether other types of disputes can also be expected.
The Swedish government’s policy regarding clean energy – in addition to more renewable energy sources such as wind farms – is to design and construct two new nuclear reactors before 2035, as well as a massive expansion of new nuclear power up to 2045. This will likely affect the regulatory environment, and certain aspects of the projects will probably result in disputes, expanding the market for law firms in dispute resolution.
Finally, there is an increasing focus on critical infrastructure and cybersecurity, partly due to hacker attacks and other similar cyber-threats. Cyber-threats are posing fresh challenges for companies, governmental authorities and organisations, and are causing new legal disputes between the negatively affected parties.
Conclusion
The interplay of these economic, legal, and political trends forms a complex environment for law firms specialising in dispute resolution in Sweden. These trends present both challenges and opportunities. Law firms that navigate these trends successfully will contribute to, as well as benefit from, the evolution of dispute resolution practices in Sweden and beyond. With its arbitration-friendly legal framework, Sweden remains a key player in the global and regional arena of international arbitration and dispute resolution.