International Commercial Arbitration Q1 2025

This update explores trends and developments in international commercial arbitration from a Norwegian perspective.

In this Q1 2025 newsletter we follow up on our main topic from Q4 2024 and the proposals made at the first Nordic Commercial Arbitration Forum on 11 March 2025, and ask the following question: What is next (step) for Nordic Arbitration?

Furthermore, we will highlight What’s On the Agenda – where we take a look at the new UK Arbitration Act and a fresh Danish Supreme Court judgment on due process.

Nordic Arbitration – what is next (step)?

Start with the end in mind – what is success?

On 11 March 2025, the first Nordic Arbitration Forum was held in Stockholm. The forum is a joint venture between the Stockholm Centre for Commercial Law (SCCL) and the Oslo Centre for Commercial Law (OCCL) – with the backing of all the Nordic arbitration institutions. A total of 26 (!) esteemed speakers took the floor in Stockholm – covering a wide range of topics.

Kaj Hobér, kicked off the forum by exploring how the Nordics stand out and what should be done to increase the level of arbitration activity in the region. He emphasised that for a Nordic project to take off, «hard work» is required – referencing Vince Lombardi’s famous quote: The only place where success comes before work is in the dictionary.

However, and with reference to Dr. Stephen R. Covey’s second habit in his bestselling book «7 Habits of highly effective people» (2020), we need to start with the end in mind and define success before we make concrete plans and start the (hard) work.

In our view, it should be easy for all the Nordic Arbitration institutions to agree that joint success lies in keeping and attracting more commercial arbitrations to the Nordics. Despite being competitors, this will in the long run benefit everybody. Assuming there is agreement on this, the overriding question is how should we reach success?

Based on the views expressed during the forum, we believe the hard work should be concentrated along these three work streams:

First, all the Nordic arbitration institutions should as soon as possible get together to discuss concrete alignment of their rules and best practice documents under a joint «storyline». Statistics and surveys are all nice «evidence», but if Nordic Arbitration is to be sold internationally, a good (joint) story is in our view needed.

Second, and in line with BAHR partner Thomas Svensen’s recent proposition, it should be explored whether there is room for a consolidation of the four local arbitration institutions in Norway (OCC), Denmark (DIA), Sweden (SCC) and Finland (FAI) to create an international player with sufficient size and market power.

Third, a joint initiative from the Nordic arbitration institutions directed at the Nordic governments should be considered for a joint alignment and update of the four local arbitration acts. Inspiration should here be sought from what the world’s most popular arbitration seat, the UK, is doing. The UK Arbitration Act has just been updated based on i.e. the government’s expressed support for its «world leading dispute resolution sector«.

In the following we will elaborate on these three suggested main steps.

The power of a «Nordic Arbitration-story»

Daniel Kahneman’s research into the importance of story-driven cognition has been summarised in the following quote: “No one ever made a decision because of a number. They need a story.”[1] This is because stories activate regions of the brain involved in visual processing, emotional empathy, and social cognition. In light of this, and taking a research-based approach, it is obvious that a good joint story is needed to sell Nordic Arbitration internationally.

The main question is thus on what the Nordic Arbitration-story should be based?

In our view, the answer to this question is «solution-based arbitration». The commercial parties to a dispute, regardless of the level of disagreement, both want a solution. The solution can come in two forms: a settlement or an award. By offering «solution-based arbitration» – where the arbitral tribunal tries to nudge the parties towards an amicable solution while simultaneously running an effective process towards an award if no settlement is reached – Nordic Arbitration will appeal to the users of arbitration services.

That such a storyline will resonate with the users of arbitration, such as in-house lawyers and contract negotiators, is evident from e.g. the ICC publication «Facilitating Settlement in International Arbitration» (2023) p. 4:

«The role of the arbitral tribunal in facilitating settlement of the parties’ dispute has evolved in recent years. While arbitrators in some jurisdictions are accustomed to being proactive in this respect, the traditional viewpoint in most jurisdictions has been that the role of the arbitral tribunal is to decide the case in an enforceable award. Consistent with this view, the parties remained free to negotiate and settle their dispute should they wish to do so, but that was not something the arbitral tribunal should seek to encourage, facilitate or, least of all, become directly involved with. This view was motivated by concerns that taking on such a role would negatively impact the tribunal’s neutrality vis-à-vis the merits of the dispute or the parties’ perception of it.

This traditional view has, however, evolved as demonstrated by the way in which the ICC Arbitration Rules themselves and other publications now address the topic. The debate has now moved from whether arbitrators (and arbitral institutions) should take steps to facilitate settlement, to how that should be done.»

Picking up on the last sentence of this quote – the next main question for the Nordic arbitration institutions is: How should a solution-based arbitration process be organised?

There is no clear-cut answer to this question, and it is something that representatives from all the Nordic arbitration institutes collectively should discuss and seek alignment on. However, and as expressed in our Q4 2024 newsletter, we believe one should aim high but focus on picking the low-hanging fruit first to see if there is a collective will for such an alignment. And to repeat what we said in our previous newsletter; the three suggested low-hanging fruits are:

First, using the Norwegian system of joint appointment of the arbitral tribunal as the starting point – which has already been incorporated into the NOMA arbitration rules, see article 6 (1) and 7 (1) of the NOMA Arbitration Rules of 2024. This ensures an independent and impartial tribunal.

Second, the arbitrators should encourage the parties to agree on a “mediation window” in the arbitration schedule to enhance the chances of reaching a settlement. This view is supported in ICC’s publication “Effective Conflict Management” (July 2023), page 37, paragraph 111:

“The aim of (a) mediation/negotiation window(s) is to encourage the parties to settle in the course of an ongoing arbitration. Such mediation/negotiation window(s) occurs during the arbitration, after the parties will have gained more information on the other side’s case and will have been able to reassess their own positions.”

Third, developing a joint Nordic best practice, and eventually firm rules, on the use and effect of “sealed offers” (also referred to as “Calderbank offers”) with the aim of encouraging more settlements early in the arbitration process. This is also supported by the ICC in the last-mentioned publication paragraph 119, which specifically highlights that sealed offers “promote settlement by exerting pressure on the receiving party to consider settling, rather than risk incurring additional arbitration cost«. For a more extensive review of Sealed Offers, see our Q3 2023 newsletter.

The combination of a story about «solution-based arbitration», together with concrete features that backs the storyline, will in our view be a recipe for success. However, only action will create change – so it is essential that the stakeholders get together and start the work.

The power of a pan-Nordic arbitration institution

During the Nordic Commercial Arbitration Forum on 11 March 2025, BAHR’s Managing Partner Thomas Svensen, backed by e.g. the slide below, made the fresh proposition that a consolidation of the four local arbitration institutions in Norway (OCC), Denmark (DIA), Sweden (SCC) and Finland (FAI) should be explored to create an international player with sufficient size and market power.

At the outset we support this proposition – while at the same time acknowledging that there are legal, cultural and administrative challenges to achieving full integration. However, the best should not be the enemy of the good.

In the maritime cluster at the West-coast of Norway there is a saying: We co-operate when we can and compete when we have to. The same approach should be taken by the cluster of arbitration institutions in the Nordics. If they are able to find a joint Nordic Arbitration story and agree on common features to back that storyline, the next step should be to explore whether there is a basis for a more formalised cooperation between the institutes – potentially resulting in a full integration.

As evidence that an integration between OCC, DIA, FAI and SCC could be possible, NOMA offers a telling example – which may serve both as inspiration and a partner in a bolder path forward for the global competitiveness of Nordic arbitration. Remember: Stronger together!

The power of aligned Nordic Arbitration Acts

In line with the above suggested steps, but not dependent on it, we advocate the following: The Norwegian, Danish, Swedish and Finnish governments should jointly update and align their respective arbitration acts to underscore that the Nordics are «arbitration friendly».

The reason for this proposition is that commercial arbitration within the Nordics need to have its seat in one of the four countries. The choice of seat will decide which arbitration act that will govern the arbitration process and potential subsequent challenge proceedings (lex arbitri). To avoid that the choice of seat will make a difference within the Nordics, and to send a clear message that the underlying arbitration acts are arbitration friendly, it is a strength if they are aligned (and updated).

In our view, one should seek inspiration from what the government in the world’s most popular arbitration seat, the UK, is doing. The updated UK Arbitration Act was recently adopted (see details of the changes below under «What’s on the Agenda»). Perhaps more important than the update itself, is the UK government’s expressed support for its dispute resolution business, see its opening statement in a letter to London Maritime Arbitration Association (LMAA) (which is NOMA’s main competitor):

«This government has made securing economic growth a key priority. To achieve that growth, we are supporting our services industry at every opportunity, including our world-leading dispute resolution sector. I am therefore delighted to share that the Arbitration Act 2025 has today received Royal Assent.»

Whether the same expressed support from the Nordic governments is possible is perhaps wishful thinking. However, the Nordic countries’ have a long tradition, going back to 1872[2], of cooperating on the development of common rules of law. Thus, cooperation on aligning and updating the Nordic arbitration acts should be an «easy» task if there is an initial willingness to start such a process.

What’s On the Agenda

New Arbitration Act 2025 in England & Wales and Northen Ireland

On 24 February the Arbitration Act 2025 of England & Wales and Northen Ireland received Royal Assent – an approval from the Parliament for enforcement. The new Act amends the previous Act from 1996, aiming at maintaining and strengthening the highly established position of English Arbitration in international disputes.[3]

The new act makes 15 amendments to the legislative framework. In large parts, the amendments aim to implement established «best practices», many of which are already reflected in institutional rules. The Act also solidifies party autonomy as a cornerstone of international arbitration, imposing limitations on court intervention, see for instance sections 32 and 67.

It falls outside the scope of this newsletter to thoroughly review all the amendments, but a brief overview follows:

The choice of law of the arbitration agreement: In arbitration, the arbitration agreement’s choice of law does not necessary align with that of the underlying merits of the case, typically the contract between the parties, nor the law that applies to procedural matters. In legal theory, choice of law questions in respect of arbitration agreements remain debated and cause lack of clarity. However, section 6A of the new act establishes that in the absence of an agreement to the contrary, «the law of the seat of the arbitration in question» shall apply – thus following the lex loci-principle.

Summary disposal: A new section 39A grant the tribunal the power to make an award on a summary basis if a party has «no real prospects of succeeding» with a claim or issue, or the defence against it. The aim is to ensure efficiency and provide the tribunal with a tool to avoid unnecessary and expensive procedures.

Emergency arbitration: Following the widespread use in institutional arbitration, section 41A grants an appointed emergency arbitrator the power to issue a peremptory order to ensure adherence. It should be noted that the application of the section is conditional on the parties having already agreed on emergency arbitration and does not itself make emergency arbitration available irrespective of a preceding agreement.

Duty of disclosure for arbitrators: In accordance with the new section 23A, the arbitrator must, independently and as soon as possible, disclose any relevant circumstances that «might reasonably give rise to justifiable doubts as to the individual’s impartiality». The section is a codification of a duty already imposed by English case law.

If you want to learn more about the new act and its implications, the final report of the law commission is available here. The 2025 Act is available through this link.

New Supreme Court judgment from Denmark regarding due process

The Danish Supreme Court recently rendered a judgment rejecting recognition of a foreign arbitral award due to insufficient notice of arbitration (Case BS-34884/2024-HJR) . In the broader context, the judgment contributes to the discourse on due process in arbitration, emphasising principles that encourage a fair and balanced procedure.

The award in question was issued by Shanghai Arbitration Commission, and the claimant pursued enforcement in Denmark as this was the residence of the respondent. However, the arbitration notice had only been sent to the respondent’s old addresses in China and not to the current place of business in Denmark. Consequently, the respondent was unaware of the arbitration and did not attend the proceedings.

Considering the notice to be insufficient, the Danish Supreme Court held that the requirements for rejecting recognition of an award in the Danish Arbitration Act § 39 1) b) had been fulfilled. The section reflects the requirements in Article V of the New York Convention and Article 36 of the UNCITRAL model law.[4]

The reasoning behind the notification requirement is evident: if the respondent is unaware of the arbitration proceedings, and thus not able to attend, fundamental principles like an adversary hearing appear illusory. The judgment also displays how overarching principles may limit the competence of an arbitral tribunal, and how national courts have the power to ensure adherence to this.

[1] Ref. e.g. conversation with Daniel Kahnemann in «Making Sense: Conversations on Consciousness, Morality and the Future of Humanity», audio book (2020)

[2] See https://snl.no/nordisk_lovsamarbeid

[3] Boost for UK economy as Arbitration Act receives Royal Assent – GOV.UK

[4] The same goes for the Norwegian Arbitration Act, see section 46.

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There are many events to choose from on the international commercial arbitration scene. We recommend considering the following upcoming happenings: