Setterwalls has represented Austrian Erste Bank, the respondent in an arbitration against Sparbanksstiftelsernas Förvaltnings AB, following a claim for more than one billion SEK after a previous transfer of Swedbank shares from Sparbanksstiftelserna. “We are very pleased with the outcome”, says Åke Fors and Johan Strömbäck and goes on to sat that: “It is of course satisfying when an arbitral tribunal awards the client full success. The award confirms that it is fully acceptable for a pledgee to purchase the pledged property”.
The arbitration was a result of the heavy borrowing that Sparbanksstiftelserna, through Sparbanksstiftelsernas Förvaltnings AB, had engaged in during 2007 and 2008 to facilitate the purchase and subscription of new Swedbank shares in order to protect its position as the controlling share holder in Swedbank (one of the four largest Swedish banks). One of the lenders was Austrian Erste Bank which lent SEK400 million. The collateral for the loan consisted of shares in Swedbank which were pledged in favour of Erste Bank. When the financial crisis hit Swedbank the value of its shares dropped which consequently also had a major impact on the value of Erse Bank’s collateral. At a time when Sparbanksstiftelserna could not post additional collateral, or repay the loan, it was agreed between Sparbanksstiftelserna and its major lenders, including Erste, that the lenders would purchase the pledged Swedbank shares in consideration for the set-off of the loan. Through this agreement Sparbanksstiftelserna lost close to all of its holdings in Swedbank.
Several months later Sparbanksstiftelserna approached Erste and claimed that the purchase violated mandatory Swedish law. Sparbanksstiftelserna argued that the agreement violated the prohibition on forfeiture of pledges (stemming from section 37 of the Swedish Contracts Act). Sparbanksstiftelserna requested that the transaction should be rescinded and that Erste Bank should hand over the Swedbank shares, then equivalent to a value of more than SEK one billion. The arbitral proceedings resulted in an award which confirmed that the parties’ agreement and Erste Bank’s actions did not violate any applicable legal principle or law. “It is of course regrettable that Sparbanksstiftelserna had to face this unfortunate situation, but it could not be attributed to our client” says Johan Strömbäck. “There are always risks associated with financing through loans and the posting of collateral. The risk naturally increases when the value of the security fluctuates, as is the case with listed shares.” says Åke Fors.
Lastly it can be concluded that the award sheds further light on the concept of forfeiture of collateral under Swedish law and provides important input on how to best deal with collateral under Swedish law. The team from Setterwalls consisted of Åke Fors, Johan Strömbäck and Marigó Oulis.
For further information:
Joakim Edoff, Executive Partner, +46 (0)705-10 18 37, firstname.lastname@example.org
Johan Strömbäck, partner, +46 703 62 12 13, email@example.com
Maj-Britt Arhelm, Marketing Manager, +46 (0)705-87 78 80, firstname.lastname@example.org
Setterwalls co-authors new book about international arbitration
Marie Öhrström , Senior Associate in Setterwalls’ dispute resolution team, has written the chapter describing arbitration in Sweden under the rules of the Arbitration Institut...
Setterwalls advised Peab in the company’s refinancing of existing credit agreements
Setterwalls advised Peab in the company’s refinancing of existing credit agreements, which expired in May and September 2014 with a new credit facility of SEK 5.0 billion.
Webhallen – Consolidation in electronics retail business
Setterwalls has assisted Norwegian Komplett AS – one of Scandinavia’s leading e-commerce companies – in the acquisition of Webhallen Sverige AB from Pixmania S.A.S (a company ...
Setterwalls rises in international ranking
The reputable ranking institution Legal 500, which ranks business law firms worldwide, has launched its ranking as regards 2013.
Setterwalls recruits Jörgen S. Axelsson from Linklaters
By recruiting Jörgen S. Axelsson, Setterwalls strengthens its position in equity capital markets. Jörgen comes to us from Linklaters, where he was a partner from 2001.
Setterwalls speaks at ICC conference in Vilnius
Johan Sidklev , partner at Setterwalls, is one of the speakers at ICC YAF conference in Vilnius, Lithuania, 8 March 2013. The conference is a forum for younger arbitration pra...
Setterwalls speaker at GAIUS in Gothenburg
Law over the Internet – something for you?
Setterwalls given an award in real estate M&A
At yesterday’s Real Estate Öresund in Malmö the Real Estate Öresund Award 2013 was given to the Skåne’s best real estate company. Setterwalls was named Skåne’s best company in...
Setterwalls’ success on Facebook continues
We have now passed 500 likes on our Facebook page and we want to say thanks to all of you students and others who follow us in everything we do. We are now excited for spring ...
Setterwalls participates in the IT fair
On January 22-23, Agnes Andersson and Magnus Dahlén will participate in the IT fair in Göteborg. Agnes will participate in a panel discussion on cloud services on January 22. ...