## Facts

- Russia’s state-owned Arkhangelskoye Geologodobychnoye Predpriyatiye (GPA) entered into a business relationship with Archangel Diamond Corporation (ADC), a Canadian company, to develop a diamond-mining venture.
- The parties’ contract provided for cooperation in developing diamond resources and contemplated the creation of a joint venture.
- The contract included a provision addressing the eventual transfer of the joint venture’s license to another entity jointly owned by GPA and ADC.
- The contract contained an arbitration clause referring contract disputes to arbitrators in Sweden.
- A dispute arose concerning the contract’s license-transfer provision.
- ADC submitted the dispute to a Swedish arbitration panel.
- The arbitration panel noted the likelihood that Russian law barred foreign arbitrators from deciding disputes involving Russian natural resources, reasoned that Russia had an overriding interest in the dispute whereas Sweden had none, and concluded Russian law should govern the dispute’s treatment.
- On that basis, the arbitration panel dismissed ADC’s claim for lack of jurisdiction.
- ADC challenged the dismissal in a Swedish district court, which set aside the jurisdictional dismissal and reinstated the Swedish arbitration.
- GPA appealed the district court’s ruling to the Svea Court of Appeal (Case No. T 2277-04).

## Issues

1. Whether a Swedish-seated tribunal could decline jurisdiction under a Swedish arbitration clause based on the view that Russian law barred foreign arbitration of disputes involving Russian natural resources.
2. Whether the dispute over a contractual license-transfer provision was within the scope of the parties’ arbitration agreement, notwithstanding the dispute’s connection to a Russian license.
3. Whether the district court correctly set aside the tribunal’s jurisdictional dismissal and ordered the arbitration to continue.

## Decision

- The Svea Court of Appeal reviewed the district court’s order setting aside the tribunal’s dismissal for lack of jurisdiction.
- The court affirmed the reinstatement of the arbitration, allowing the Sweden-seated proceedings to go forward under the parties’ arbitration clause.

## Legal Principles

- A Sweden-seated arbitration agreement is generally given effect according to Swedish arbitration law; a tribunal may not refuse jurisdiction merely because the dispute concerns rights regulated by foreign law.
- A dispute about contractual obligations (including an obligation to take steps toward transferring or restructuring licensed rights) may remain arbitrable even if performance is connected to foreign regulatory regimes or requires actions before foreign authorities.
- Foreign rules described as mandatory or public-law restrictions may bear on the merits, available remedies, or later enforcement, but do not automatically negate the parties’ agreement to arbitrate in Sweden.
- Swedish courts may set aside a jurisdictional dismissal when the tribunal’s refusal to hear the dispute is inconsistent with the arbitration agreement’s scope as assessed under Swedish law.

## Conclusion

In *OAO Arkhangelskoye Geologodobychnoye Predpriyatiye v. Archangel Diamond Corp.*, the Svea Court of Appeal addressed whether a Swedish-seated tribunal could refuse to hear a contract dispute over a license-transfer clause because of perceived limits in Russian law on foreign arbitration of natural-resource disputes, and it upheld the district court’s decision to set aside the tribunal’s jurisdictional dismissal and resume the arbitration in Sweden.


OAO Arkhangelskoye Geologodobychnoye Predpriyatiye v. Archangel Diamond Corp., Case No. T 2277-04 (2005)