Commentary: Rule 18 Disputes
As mentioned in the comments to Rules 1 and 2, The Swedish Club is a Swedish company subject to Swedish jurisdiction. Therefore, disputes between the Club and a Member under these Rules should be decided in Sweden according to Swedish law. The exception to this is when the Club is exercising its right of lien over Members ships for outstanding premiums under Rule 25 where foreign law and jurisdiction may apply.
This Rule provides two different ways to deal with such disputes. The first and more traditional way is to refer the dispute to a Swedish Average Adjuster. The Member or the Club can, however, instead request the dispute to be resolved by arbitrators in Gothenburg.
The Rule applies to all disputes of whatever kind arising out of the contract of insurance. It binds not only Members but also joint members and co-assureds according to Rule 30 and those who may have become subrogated to a Member’s rights against the Club. See for instance the comments on direct action under 2.9.
Notably, legal disputes between the Club and its Members are a very rare occurrence.
18.2 Disputes solved by average adjuster
A Swedish Average Adjuster is appointed by the government. For some years now there has been only one Average Adjuster in Sweden. According to the Swedish maritime code, the Average Adjuster should be a Swedish citizen, hold a law degree, enjoy personal and financial integrity and have no position or interest in any shipping or insurance business.
The adjuster’s position is similar to that of a court of law. Decisions rendered can be appealed to the District Court of Gothenburg and be further appealed to the Supreme Court. If no appeal is filed, the decision is legally binding in the same way as a court judgment.
This way of solving a dispute is quick professional and impartial.
18.3 Disputes resolved by arbitration
At the request of the Member or the Club, a dispute can be referred to arbitration in Gothenburg in accordance with Swedish law. There are no special requirements as to the qualification of an arbitrator. Nothing prevents a party from nominating a non-Swedish citizen to represent him. On the other hand, Sweden has a long tradition of international arbitration. A number of independent and qualified Swedish arbitrators are available.
According to the Swedish arbitration act, the parties appoint one arbitrator each who then jointly nominate a chairman. If they cannot agree on the choice of a chairman, the appointment is made by the District Court of Gothenburg. It is up to the parties to decide whether the procedure should be on documents alone or by an oral hearing. Written testimonies are allowed. An award is given by majority decision. As it cannot be appealed against it can be enforced immediately. To the extent the parties agree, they are given considerable freedom to adopt an arbitration procedure that suits their needs.
18.4 Member’s legal representation
There are several large law firms in Sweden with expertise within maritime and insurance law. A Member will have no difficulty in obtaining independent, legal representation to resolve a dispute.