Bulgarian Foreign Trade Bank v. A.I. Trade Finance, Inc.

Bulgarian Foreign Trade Bank (Bulbank) (plaintiff) entered into a credit agreement with an Austrian bank, which contained an arbitration clause. The Austrian bank then assigned the loan agreement to A. I. Trade Finance, Inc. (AIT) (defendant). A dispute arose regarding Bulbank’s repayment of the loan, and AIT requested arbitration in Sweden. Bulbank challenged jurisdiction, arguing that even though the loan agreement had been assigned to AIT, the arbitration clause in the agreement was not binding on Bulbank as to AIT. The arbitrators issued an interim award confirming that it had jurisdiction over the dispute. AIT provided a copy of the decision to Mealey’s International Arbitration Report, which published the decision. Following publication of the decision, Bulbank sought an order from the arbitral tribunal declaring that AIT had breached its duty of confidentiality and, therefore, the arbitration agreement was null and void. The panel dismissed Bulbank’s request for relief and entered an award against Bulbank and in favor of AIT. Bulbank then petitioned the Swedish court to declare the award invalid. The matter went to the Swedish Court of Appeals, which ruled in favor of AIT. Bulbank then appealed to the Swedish Supreme Court, again arguing that the award was invalid on the grounds that AIT’s breach of confidentiality nullified the arbitration agreement and, therefore, the arbitration award was also null and void.