Litigation 2019 Second Edition Comparisons

Last Updated December 05, 2019

Law and Practice

Authors



Merilampi Attorneys Ltd. is one of the leading full-service law firms in Finland. Merilampi advises its domestic and international clients in a wide range of business law matters and across business sectors. Merilampi’s dispute resolution team comprises some fifteen lawyers and it advises clients in all areas of dispute resolution and in a variety of industries and areas of substantive law. The team has broad experience in litigation and in domestic and international arbitration. The team also provides strategic advice in disputes and conflict situations, as well as assisting clients in mediations and other forms of alternative dispute resolution. Merilampi’s dispute resolution team is well-known for its expertise in various types of liability cases, construction and real estate sector disputes and high-profile white-collar defence cases.

The legal system in Finland adheres to the civil law tradition and originates from the period of Swedish rule. The primary institutional source of law is legislation, which consists of the Constitution, Acts of Parliament, Decrees and Legal rules and regulations of lower-ranking authorities. Preparatory legislative work and praxis by the higher courts, especially the Supreme Court and the Supreme Administrative Court, are secondary sources of law. Although the precedents of these two courts are not legally binding, they have great practical importance. Other admissible sources of law are jurisprudence, general legal principles and factual argumentation.

As a member of the European Union, Finland is bound by its treaties, regulations and directives as well as other regulatory instruments.

As a general rule, court proceedings follow an adversarial model and the court is bound by the claims, demands and assertions made by the parties. In civil cases, each party to the dispute is obliged to acquire the evidence required to prove their case. The court may, on its own initiative, decide on the obtaining of evidence only in a civil action that is not amenable to out-of-court settlement. In criminal cases, the burden of proof rests with the prosecutor, and the court may only obtain evidence if it would probably not support the charges. However, and regardless of the nature of the case, the court has the right to acquire an expert opinion on its own initiative. This right is rarely used. Administrative courts may take a more active role and obtain evidence on their own initiative.

Court proceedings follow the principles of immediacy, orality and concentration. According to these principles, evidence should be presented orally and directly in person to the judge(s) deciding the case, and only information presented during the main hearings may influence the outcome of the case.

The Finnish court system consists of general courts and administrative courts. The general courts deal with civil cases, criminal cases and petitionary matters, whereas the general administrative courts specialise in administrative law and cases relating to the exercise of public power.

The general court system is three-tiered and consists of 20 District Courts, five Courts of Appeal and, as the highest judicial instance, the Supreme Court. The jurisdiction of a District Court is generally determined by the domicile of one of the parties, and the Court of Appeal will thereafter be determined by the District Court that has tried the case. As jurisdiction is determined by geography, most courts handle a wide array of cases. However, some special case types, namely land court cases, maritime cases, military cases, class actions, enforcement complaints, corporate restructuring cases as well as summary civil cases are concentrated to certain District Courts. Notable reforms to juridical districts regarding special case types were made in 2019. 

The decisions of public authorities can generally be appealed to the administrative courts, and the jurisdiction of the court is usually determined by the district of the decision-making authority. The administrative court system is two-tiered and consists of Regional Administrative Courts and, as the highest judicial instance, the Supreme Administrative Court. In addition to the six Regional Administrative Courts, the autonomous Åland Islands have a separate administrative court, the Administrative Court of Åland. 

There are also certain special courts for cases that require expert knowledge: the Market Court, the Labour Court, the Insurance Court and the High Court of Impeachment, which deals with charges brought against a member of the Government or certain high government officials as well as the criminal liability of the President of the Republic. The Market Court – which deals with cases concerning market law, competition law, supervisory matters, public procurement and intellectual property rights – is the most relevant of these from a corporate point of view. 

From the beginning of 2020, the responsibility for central administration of the courts vests with the newly established National Courts Administration, an independent agency operating in the administrative branch of the Ministry of Justice.

Written submissions and court hearings are generally open to the public. The starting point in Finnish legislation is the principle of publicity, whereby court proceedings and documents are public, unless otherwise provided for. The legislation includes detailed provisions on the preconditions for restricting publicity of court documentation and hearings.

As an exception to the principle of publicity, court documentation must be kept secret to the extent that it contains information which might endanger the security of the State; sensitive information regarding matters relating to a person’s private life, health, disability or social welfare; information which might violate victims' rights; certain information regarding a person charged with an offence (for example, forensic psychiatric examination); and information regarding the deliberations of the court. The court may rule on the publicity of such information solely on the basis of a weighty public or private interest connected with the case or at the request of the person whom the information concerns.

A court document containing information that is privileged based on the provisions of other Acts – for example, trade secrets – may be ordered to be kept secret to the extent necessary, when disclosing the information would probably cause significant detriment or harm. An order regarding secrecy may be given either at the request of a party or, if there are special reasons, on the court's own initiative. Orders of secrecy regarding confidential information such as trade secrets are very common in civil cases. In practice, to avoid documents becoming public, it is advisable to make a request for an order regarding secrecy when submitting those documents to the court.

In cases when grounds for restricting the publicity of trial documentation exist, a hearing can be held without the presence of the public.

Court rulings are always public, although the court may decide to restrict the publicity of certain confidential information. Access to public court documents is provided, at the latest, when the judgment of the court has been rendered. 

A party to the case may always represent itself in proceedings. Hence, a legal representative for a company or other legal entity may act as a representative of that entity, and natural persons may also represent themselves.

In order to act as counsel or attorney for someone else in court proceedings, one must be either an attorney-at-law, a licensed legal counsel or a public legal aid attorney. All the mentioned practitioners are subject to specific legislation as well as the supervision of the Disciplinary Board of the Finnish Bar Association. Only members of the Finnish Bar Association are entitled to use the title of attorney-at-law.

However, in most proceedings of the administrative courts and in summary civil cases, undisputed petitionary matters and land court matters, any “honest and otherwise suitable and competent” person can represent a party to the case provided that he or she is of age, not bankrupt and his or her legal competence has not been restricted.

In-house counsel may represent their employers in court. In Labour Court and in cases concerning employment disputes, lawyers employed by labour market organisations may also act as counsel before court.

An attorney-at-law in another member state of the European Union intending to practice as an attorney in Finland on a permanent basis must register with the Finnish Bar Association.

The costs of litigation are generally funded by the parties themselves or covered by their legal-expenses insurance.

There is no legislation regarding third-party funding in Finland. There are no legal restrictions for third-party funding, but it is still very uncommon and there is no established practice.

All civil lawsuits that are of high enough value to raise interest from prospective funders are available for third-party funding. However, it is not a widespread phenomenon and, for the time being, third-party funding is mostly used in international arbitration cases.

There is no established practice in Finland.

There is no established practice in Finland.

There is no established practice in Finland.

The Guidelines of the Finnish Bar Association effectively limit the use of contingency fees. According to these Guidelines, contingency fees are permitted only when there is a specific reason to do so and an agreement on a contingency fee must be made in writing. The practice of the Finnish Bar Association is very strict on this issue and, as a rule, contingency fees cannot be used for business clients. In practice, incentive bonuses are sometimes used but they are not compensable as legal costs. 

There is no established practice in Finland.

There are no general mandatory pre-action conduct requirements and claims can be filed without any previous action required. Nevertheless, it is both recommended and customary for a plaintiff to send a letter to a prospective defendant before initiating proceedings offering an opportunity to resolve the dispute without litigation. If a lawsuit is initiated without any prior contact and attempt to resolve the dispute out of court, and the defendant immediately complies with the claim or does not contest it, the plaintiff may be ordered to bear the defendant’s court fees and legal costs.

Members of the Finnish Bar Association, licensed legal counsel and public legal aid attorneys must not, without specific reason, take legal action for their clients unless the counterparty is given a reasonable amount of time to consider the client’s claim and to reach an amicable settlement. 

The Act on the Statute of Limitations on Debt includes provisions on limitation of debts in general. The Act provides for general limitation periods as well as the renewal of the period of limitation. The general period of limitation is three years, and it can be renewed unofficially by notifying the debtor or by initiating legal proceedings. However, when a final decision or a judgment by default has been issued concerning the debt, the limitation period is five years from the date of that decision.

With regard to compensation for damages, the three-year period of limitation begins once the injured party is aware, or should have been aware, of the damage and the party responsible thereof. In all cases, an interruption of the limitation period needs to be made within ten years of the breach of contract or other specific occurrence creating the basis for the claim.

There are also numerous specific statutes of limitation which are generally shorter than the general limitation period of three years. Such provisions are included in special legislation concerning, for example, insolvency proceedings and employment law matters. As a rule, these specific limitation periods cannot be interrupted informally by reminding the debtor of the debt and, accordingly, require initiation of legal proceedings within the time frame provided. 

As a general rule, the factor determining jurisdiction is the domicile of the defendant. According to the Code of Judicial Procedure, a claim against a natural person is considered by the District Court of his or her domicile or habitual residence, and claims against a corporation, association, foundation or other legal entity are considered by the District Court of the place where that corporation or other legal entity is registered or where its administration is primarily conducted. Similarly, lawsuits against the state or against a municipality are considered by the District Court that has jurisdiction over the place where the state authority or the municipality is located.

With regard to certain case categories, there are also courts of alternative jurisdiction. For example, in employment law cases the District Court of the place where the work is performed also has jurisdiction over an employment dispute, and real estate cases can also be considered by the District Court of the location of the real estate. These claims can be filed either to the court of the domicile of the defendant or considered by the court of alternative jurisdiction.

Criminal charges are considered by the District Court of the place where the crime was committed.

With regard to certain matters, mostly in the field of family law, exclusive jurisdiction has been vested in certain District Courts. For example, in inheritance matters the court of the domicile of the deceased person has exclusive jurisdiction in matters relating to his or her estate and inheritance. 

Judicial matters between Finland and other EU member states are governed by the recast Brussels I Regulation (EU Regulation No 1215/2012 on the Recognition and Enforcement of Judgments in Civil and Commercial Matters). Furthermore, the Lugano Convention, which is applicable in matters with Iceland, Norway and Switzerland, provides for rules on international jurisdiction.

The civil litigation procedure is initiated by an application for summons to the court with jurisdiction in the matter. In addition to the basic information (names and domiciles of the parties as well as their contact information), the application needs to include the specific relief sought by the plaintiff and the circumstances on which the claims are based. To the extent possible, the application for summons should also include the evidence the plaintiff intends to present in the case. If the application has no major flaws, a summons will be issued without delay, requesting a response from the defendant.

If an application for summons is incomplete, the court will set a time limit for the plaintiff to correct the deficiencies and supplement the application. A failure to comply will lead to immediate dismissal of the case, without considering the merits, when the application is so incomplete that it is unsuitable as the basis for proceedings or the case cannot be accepted for consideration for another reason.

In civil cases, the parties may present new claims and argumentation as well as new evidence until the end of the preparatory phase of the proceedings; however, once the preparatory phase has been conducted and the case has been transferred to the main hearing, the parties are barred from invoking new circumstances or evidence. This rule does not apply in criminal cases or indispositive civil cases –ie, cases that are not amenable to settlement.

Service of notices is the responsibility of the court, which sees to it that the parties and the witnesses receive the notices, as well as summonses to hearings, properly. Upon consent of the party and when considered appropriate, serving notice can also be entrusted to a party.

When a verifiable service of notice is required, it is predominantly done by post. The court usually sends a letter containing the documents served together with a certificate of receipt directly to the recipient, who is requested to return the signed certificate to the court by a fixed date. With the consent of the recipient, notices may also be served electronically. When service by mail has been unsuccessful – or when it is known beforehand that such service is unlikely to succeed – the District Court's process servers deliver the notice to the recipient in person. In criminal cases, the notice is often delivered by process servers.

Between EU Member States, service of documents is governed by the EU Service Regulation. A separate Nordic Agreement is applied between Finland, Denmark, Iceland, Norway and Sweden. Finland has also ratified the Hague Service Convention, which is applied, for example, in relation to the United States of America as well as Russia. Documents to countries with which Finland has no agreement are transmitted by the courts to the Ministry for Foreign Affairs, which forwards them for service abroad.

In civil cases that are amenable to settlement, if the defendant has not delivered the requested response by the deadline, or has not presented any relevant grounds for contesting the action, the court will decide the matter by rendering a default judgment. In so far as the plaintiff has abandoned the action or the court finds it manifestly unfounded, the action is dismissed on the merits by a judgment.

A default judgment can be given even if the plaintiff has not requested it.

The defendant will have 30 days from the receipt of the default judgment to appeal it by initiating an application for retrial. In such cases, the case will be reopened by the District Court. 

Since 2007, class actions have been possible in certain disputes between a consumer and a business. The Consumer Ombudsman has the exclusive right to initiate a class action, and members must opt in to participate. The Consumer Ombudsman represents the class. The members are not liable for legal costs, which are covered either by the Consumer Ombudsman, or eventually by the defendant.

As of 1 January 2019, the District Court of Helsinki has sole jurisdiction over all class actions.

No class action lawsuits have been initiated yet. However, the Consumer Ombudsman announced in October 2019 that it is looking for participants for the potentially first class action lawsuit, concerning consumer credit.

All lawyers offering services to consumers must either provide a cost estimate or, when an exact prior estimation cannot be given (which is quite often the case with potential litigation cases), they must inform the client of the grounds for the fees.

According to the rules and regulations of the Finnish Bar Association, when agreeing to an assignment, an attorney-at-law needs to inform the client of the grounds for his or her fees and billing practices as well as provide a cost estimate for the assignment or part of it, if the client requests it. Informing the client is also required if, during the assignment, it becomes apparent that the estimate will be exceeded.

As a rule, lawsuits proceed to the main hearing, and the possibilities of making interim applications/motions are limited. For example, summary judgments, interim payments and security for costs, as understood in a common law context, are not available for parties. However, it is generally possible before trial or substantive hearing of the entire case to request for:

  • extensions of time;
  • amendment of case (if the case will not change fundamentally);
  • a partial or intermediate judgment on a claim or an issue (see below 4.2 Early Judgment Applications); and
  • injunctive relief (see below 6 Injunctive Relief).

Moreover, when the relevant preconditions are met, a District Court issues, ex officio, a default judgment due to certain procedural omissions by the defendant (see 3.6 Failure to Respond) or dismisses a case without considering its merits (see 4.3 Dispositive Motions).

As a rule, cases are not decided before they have been heard and evidence has been presented in the main hearing. The possibilities of obtaining an early judgment or having the other party’s action dismissed before the main hearing of a case are limited. When relevant preconditions are met, a District Court, however, issues a default judgment due to certain procedural omissions by the defendant (see 3.6 Failure to Respond) or dismisses a case without considering its merits (see 4.3 Dispositive Motions).

Also, when several claims have been made in a case, a party may apply for, and a court may give a separate partial judgment on an independent claim before the substantive hearing of the entire case. However, claims for payment and corresponding claims for set-off are, as a rule, decided together.

If a decision on a claim depends on the decision on another claim made in the same proceedings, or if resolution of a particular issue is deemed a prerequisite for a claim in other respects, a party can apply for, and the court may issue a separate intermediate judgment before the case is heard in its entirety.

Moreover, a court may, either on its own initiative or based on a party’s request, dismiss a case without considering its merits if the plaintiff’s claim is manifestly groundless. A court may also issue a judgment in favour of the plaintiff if the defendant has invoked, in its reply to the court, legal facts that are obviously irrelevant.

The most common dispositive motion made is a challenge against the court’s jurisdiction. Quite rarely used dispositive motions involve, for example, the composition of the court, the impartiality of a judge, the capacity of a party to legal proceedings, or the proper service of documents.

A person who is not party to the proceedings may participate in them in support of any party as an intervener if he or she can plausibly argue that the case concerns his or her rights. The court will hear the parties on the intervener’s application, and a decision to reject such an application is subject to separate appeal. Generally, an intervener has the right to act in the proceedings in the same manner as a party.

Claims brought simultaneously by one plaintiff against several defendants, or by several plaintiffs against one or more defendants, can be heard in the same proceedings if they are based on essentially the same legal facts. A party may also bring his or her claim for recourse or damages or other comparable claim against a third party to be heard in the same proceedings, and an outside third party may bring his or her claim, based on the eventual outcome of a pending case or the object of dispute thereof, to be heard against one or more parties in those proceedings. Cases between the same or different parties may also otherwise be heard in the same proceedings if this will contribute to resolving the cases.

Generally, the cumulation of cases discussed above requires that the cases be brought in the same competent court, and that the same procedural rules apply to them. Moreover, cumulation may be refused if it is not requested in the early stages of the proceedings.

The right to apply for an order against a plaintiff to furnish security for a defendant’s costs is not recognised in Finland.

Courts rule on the costs of interim applications when they decide on the merits of the principal claim.

It is advisable to file the interim applications discussed above without undue delay after they are deemed necessary. As regards applications for interim relief, courts are required by law to process them urgently. See 6.1 Circumstances of Injunctive Relief.

The common law concept of discovery is not recognised. However, courts may, upon request, issue an order for production of documents. See 5.4 Alternatives to Discovery Mechanisms.

The common law concept of discovery is not recognised. However, courts may, upon request, issue an order for production of documents even against an outside third party. See below 5.4 Alternatives to Discovery Mechanisms.

The common law concept of discovery is not recognised. However, courts may, upon request, issue an order for production of documents. See below 5.4 Alternatives to Discovery Mechanisms.

The common law concept of discovery is not recognised. As such, a party cannot rely on court assistance in obtaining evidence in support of his or her case. However, a court may, upon request, order that a document (or an object) which is in the possession of another party – or an outside third party – be produced before the court. Generally, the requested document must be sufficiently identified, and the court must be satisfied that it may have relevance as evidence.

The concept of attorney-client privilege is recognised. It applies to both documents and testifying in court.

In the absence of the client’s consent, an attorney (or licensed counsel) is neither required nor allowed to disclose the client’s affairs or professional secrets as a witness before a court or otherwise, when this disclosure would have a connection to an assignment involving legal proceedings or the preparation or avoidance thereof.

By contrast, in-house counsel do not enjoy legal privilege. It is advisable to consider including an outside counsel among the recipients of certain important documents and to clearly mark such documents “Attorney-client privilege”.

Objections against requests for the production of documents (see 5.4 Alternatives to Discovery Mechanisms) typically include one or more of the following arguments:

  • the requested document does not exist or is not in the relevant party’s possession;
  • the requested document (or document category) has not been sufficiently identified; or
  • the requested document cannot or is unlikely to have relevance as evidence.

Requests for production of documents can also be challenged and rejected on the grounds that the requested document involves circumstances upon which the holder of the document could not testify before a court as a witness. Aside from, for example, certain authorities and health-care professionals and the documents and information they may hold, this may also apply to documents containing commercial or professional secrets. See also 5.5 Legal Privilege.

Unless “very important” reasons require otherwise, a person may refuse to testify on commercial or professional secrets or to produce a document containing them for use as evidence. Whether “very important reasons” are at hand is determined on a case-by-case basis. Special attention is drawn to the nature of the case, the significance of the evidence in deciding the case and the consequences which the presenting of the evidence may have, especially for the holder of the evidence.

Injunctive relief can be pursued, and a relevant court may grant injunctive relief before or at any stage of the proceedings. The process is two-tiered. If the applicant wishes to enforce the injunctive relief order, he or she must apply for enforcement with the execution authority and furnish a security for the damages potentially incurred by the respondent (see 6.4 Liability for Damages for the Applicant).

If a party can satisfy a relevant court that he or she probably has an enforceable right against the opposing party, and that there is a risk that the opposing party, by taking or failing to take some action, will hinder or undermine the realisation of this right or significantly decrease the value or significance thereof, and if the inconvenience incurred by the opposing party is not deemed disproportionate to the secured benefit of the applicant, a court may:

  • issue an order or an injunction against the opposing party under a threat of a fine;
  • allow the applicant to do something;
  • order that the opposing party’s property be placed under the administration and care of a trustee; or
  • order other measures that are deemed necessary for securing the applicant’s right.

A court may also order the attachment of the opposing party’s movable or other property if the applicant can prove that it is probable that he or she has a receivable from the opposing party and that there is a risk that the opposing party will hide, destroy or assign his or her property or jeopardise the applicant’s right by taking other action.

Applications for injunctive relief are considered matters of urgency, and courts may issue interim orders ex parte (i,e, without providing the opposing party an opportunity to be heard) if the purpose of the injunctive relief would otherwise be compromised.

In practice, injunctive relief orders, and especially freezing orders, are relatively easy and quick to obtain.

The applicant must initiate proceedings (litigation or arbitration, as the case may be) regarding the principal claim within one month from the issuance of the final injunctive relief order –ie, after the defendant has been given an opportunity to be heard.

At best, temporary interim relief can be ordered within a single day ex parte in an urgent case without the opposing party being heard. It must be noted, however, that the process is two-tiered. If the applicant wishes to enforce an injunctive relief order, he or she must apply for enforcement with the execution authority. See 6.1 Circumstances of Injunctive Relief.

As a starting point, the court will hear the defendant before granting injunctive relief. However, courts may (and often do) issue interim orders without providing the opposing party an opportunity to be heard if the applicant can demonstrate that the purpose of the injunctive relief would otherwise be compromised.

The applicant has a strict liability for the substantiated damages and costs incurred by the respondent in connection with an injunctive relief order and the enforcement thereof if the injunctive relief order is later deemed unnecessary.

Enforcement of an injunctive relief order generally requires that the applicant furnishes a security for the potential damages incurred by the respondent. The amount of the security, which is typically a bank guarantee and sometimes a cash deposit, is determined by the relevant execution authority.

Generally, freezing orders issued by courts do not specify the respondent’s assets that are covered by the freezing order. Accordingly, the respondent’s assets can, as a rule, be frozen wherever the freezing order is recognised and enforced.

In principle, injunctive relief can be pursued against third parties if the general requirements of injunctive relief, discussed in 6.1 Circumstances of Injunctive Relief, are met. Also here, the applicant must be able to satisfy the court that it is probable that he or she has a right or a receivable from or in relation to the third party who, by taking or failing to take some action, may attempt to compromise it. Moreover, the applicant must be able to initiate proceedings regarding a principal claim corresponding to the injunctive relief against the third party within one month from the issuance of the final injunctive relief order.

If the respondent has been ordered to do something or refrain from doing something under a threat of a fine, the failure to comply with the terms of an injunction will result in an enforceable duty to pay the said fine.

The court procedure is divided into two phases: the preparatory phase, which is for the most part conducted in writing; and the main hearing, which is conducted orally.

Court proceedings follow the principles of immediacy, orality and concentration. During the main hearing, the parties first present their case to the judge by giving short oral opening statements. Thereafter the parties present the evidence supporting their arguments through presentation of written evidence and witness hearings, which are typically conducted by the counsel of the parties in an adversarial manner and without much interference from the judge. The main hearing is concluded with oral closing statements.

The appeal procedure in courts of appeal is written, unless a party requests that a new main hearing is held and the court does not find it clearly unnecessary. In practice, a new main hearing is held in all notable disputes and a request for a main hearing is seldom denied.

The procedure in the Supreme Court is conducted through written submissions, though a hearing may be held when deemed necessary.

After the written preparatory phase, at least one preparatory hearing is usually held in all civil cases and in more complex criminal cases. Unofficial early case management meetings are sometimes arranged in exceptionally large cases. 

When considering interim applications, the court may arrange a hearing if requested. However, such hearings are unusual. 

Jury trials are not available in civil cases.

As a rule, a party has the right to present the evidence he or she wants to the court investigating the case and comment on each piece of evidence presented in court. There are no limitations in relation to the forms of evidence that can be presented. The court may reject unnecessary evidence; however, the presentation of evidence is seldom limited.

The probative value of the evidence and other circumstances are considered by the court on the basis of free consideration of the evidence. Each party is required to obtain the evidence required in the case and both parties have the burden of proof on the circumstances on which their claim or objection is based. Thus, a circumstance may only be taken as grounds for the judgment if a party has presented credible evidence thereon.

If credible evidence on the amount of a claim under private law is not available, or it is obtainable only with difficulty or with unreasonable cost, the court may assess the amount.

The court may, on its own initiative, decide on the obtaining of evidence in a civil action that is not amenable to out-of-court settlement. In a criminal case the court may obtain evidence if it probably will not support the charges. Nonetheless, and regardless of the nature of the case, the court has the right to obtain expert opinions on its own initiative.

Evidence obtained through torture is inadmissible. Furthermore, in criminal proceedings, evidence obtained contrary to the privilege against self-incrimination or against spousal privilege is generally inadmissible.

Parties may hear an expert witness regarding empirical rules requiring special knowledge and on the application of such rules to the circumstances of the case. An expert witness needs to be impartial, honest and competent in his or her field. Generally, expert witnesses give testimony in writing.

Court proceedings – both preparatory and main hearings – as well as court transcripts and recordings are public unless otherwise provided. The hearing or a part thereof can be conducted behind closed doors when the preconditions for restricting public access are met (see 1.3 Court Filings and Proceedings).

Court rulings are always public, although the court may decide on restricting the publicity of certain confidential information.

The presiding judge needs to ensure that the hearing is conducted in a clear and orderly manner and that irrelevant matters are excluded from the case.

To ensure this, the court may order that parts of the case are dealt with separately. If the court considers a statement of a party unclear or incomplete, the court may present questions to that party in order to clarify the case. The court may also present questions to witnesses and other persons that are heard. Naturally, the level of intervention depends on the judge and on the case, but in general judges do not very actively steer how the parties advocate their case.

In typical criminal cases, the judgment is given at the end of the main hearing. In typical commercial disputes as well as more complex criminal cases, the judgment is made available for the parties later. 

The duration of court proceedings depends greatly on nature of the case, the amount of evidentiary material as well as the caseload of the court and the presiding judge; in smaller District Courts, proceedings tend to be faster. For a typical corporate dispute, a duration of at least 12 to 18 months per instance can be expected.

As a rule, court approval is not required to settle a lawsuit. Exceptions to this rule are matters concerning child custody, the child's place of residence and right of access, in which cases the court will issue a decision that is in accordance with the settlement provided that the agreement is deemed to be in the best interests of the child. 

The parties can, and usually do, agree on the confidentiality of the settlement agreement. However, if the parties request that the court confirms the settlement, the agreement becomes a public document unless otherwise provided by law. As with any court document, a secrecy order can be requested.

The parties may request that the court confirms the settlement agreement, which then becomes enforceable. A settlement cannot be confirmed if it cannot be enforced as provided in the Enforcement Code. 

A settlement that is confirmed is final and cannot be set aside.

A settlement that is not confirmed is binding between the parties, as with any other agreement. 

The Finnish legal system acknowledges three types of available award. Firstly, preventive or mandatory injunctions, where a party is ordered to either do or refrain from doing something. Secondly, declaratory judgments determining the existence or the content of a legal question, and thirdly, judgments creating rights, which grant or modify rights.

The decisive factor in damages is whether they are awarded under contract or national tort law, as provided in the Tort Liability Act. Contractual damages are compensated based on the provisions of the contract and, in many cases, also based on specific provisions of legislation applicable to the contract. As a rule, contractual damages and losses are compensated in full.

The Tort Liability Act contains general provisions governing (non-contractual) liability for damages. According to the Act, compensable damages consist of personal injury and damage to property. Economic loss unconnected to personal injury or damage to property is only compensated if the injury or damage is result of a crime, exercise of public authority or if there are especially weighty reasons for such compensation.

Punitive damages are not available in Finland.

The general provisions regarding interest have been laid down in the Interest Act. A debtor is liable for interest after the debt falls due. Interest for late payment for a debt with a due date that has been fixed in advance must be paid from the due date onwards. Interest for late payment for a debt without a fixed due date must be paid when 30 days have passed from the date when the creditor requested payment of a fixed amount of money.

Interest for late payment of damages or a corresponding debt must be paid, at the latest, from the date on which a summons concerning the payment of the debt was served on the debtor or, if the claim is presented during court proceedings, from the date on which the claim was presented. However, in criminal cases, the interest for late payment begins to accrue from the date when the damages occurred. Interest may thus be accrued both from the time before and after the issuance of a judgment. 

On decisions concerning the compensation for the legal costs of the prevailing party, interest on late payments starts accruing when 30 days have passed from the date on which the judgment or decision was rendered.

The statutory rate for interest for late payment is seven percentage points higher than the reference rate published biannually by the Bank of Finland and, in commercial contracts, eight percentage points higher than this reference rate. The statutory rate in consumer credit has recently been lowered and, from 1 September 2019, the interest cap is 20%. 

Domestic civil judgments as well as criminal sanctions of a monetary nature are enforced by the enforcement authorities, namely district enforcement officers and the Åland provincial enforcement officer.

If no voluntary payments are made after receipt of a collection letter, wages, salaries, pensions and business income may be disbursed. Assets can be distrained and ultimately sold by compulsory sale.

As a rule, civil judgments issued in a foreign country are not recognised or enforced in Finland. They are recognised and enforced only if this has been separately agreed upon in an international treaty or provided for in the national or EU legislation.

Civil judgments from other EU member states are recognised and enforced based on the recast Brussels I Regulation (Regulation (EU) No 1215/2012 of the European Parliament and of the Council on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters), according to which judgments are directly enforceable in another EU member state. The recast Brussels I Regulation replaced the earlier Brussels I Regulation (Regulation (EC) No 44/2001), which is still applicable to judgments that have been given in court proceedings instituted before 10 January 2015. 

Provisions on the recognition and enforcement of a civil judgment have also been laid down in the Lugano Convention, which is applied in relations with Iceland, Norway and Switzerland.

The avenues of appeal that may be available depend on whether the decision of the court of first instance has been issued by a general court (ie, a District Court), an administrative court or a special court. To some extent, the avenues of appeal may also depend on the subject matter of the decision. Moreover, a leave for continued consideration or a leave to appeal may be required. See 10.2 Rules Concerning Appeals of Judgments.

District Court judgments can be appealed to the relevant Court of Appeal that has jurisdiction. The decisions of the Courts of Appeal can, subject to a leave to appeal, be appealed to the Supreme Court, which establishes legal precedents and may also, under exceptional circumstances and compelling reasons, even annul or reverse a final judgment or grant a new time limit for lodging an appeal against a final judgment. Such exceptional decisions are referred to as extraordinary relief.

The decisions of administrative courts can be appealed to the Supreme Administrative court.

Depending on the subject matter of the case, Market Court decisions can be appealed to the Supreme Court or to the Supreme Administrative Court. By contrast, the decisions of the Labour Court (and the High Court of Impeachment) cannot be appealed, although the Supreme Court may grant an extraordinary relief in regard to a decision by the Labour Court. The decisions of the Insurance Court can be appealed to the Supreme Court if they involve certain personal injury cases.

In both civil and criminal cases (with the exception of those criminal cases where the defendant has been sentenced to a minimum of eight months’ imprisonment), appeals to the Court of Appeal are subject to leave for continued consideration. Generally, leave for continued consideration is granted if the appellant can satisfy the Court of Appeal that there is a reason to suspect the correctness of the District Court decision or that the correctness thereof cannot be assessed without granting the leave, or if it is necessary with regard to the application of the law in similar cases. In practice, leave to appeal is often granted in civil disputes.

Decisions issued by Courts of Appeal as courts of second instance can be appealed to the Supreme Court, subject to leave to appeal granted on one of the grounds below:

  • a Supreme Court ruling is necessary as a precedent or for securing the consistency of case law;
  • the law requires that the decision subject to appeal be reversed or annulled due to a procedural error or some other error; or
  • some other weighty reason for granting leave to appeal is at hand.

In practice, less than 10% of the requests for a leave to appeal are granted by the Supreme Court.

Administrative court decisions can be appealed to the Supreme Administrative Court. Due to a recent legislative reform, all appeals to the Supreme Administrative Court will, as from 1 January 2020, require leave for appeal on the grounds listed above.

The right to lodge an appeal against a special court decision in the Supreme Court or the Supreme Administrative Court, or a possible lack thereof, depends on the special court in question and on the subject matter of the case. See 10.1 Levels of Appeal or Review to a Litigation.

Before lodging an appeal against a District Court judgment, the appellant must file a notice of dissatisfaction within seven days from the date when the judgment was made available to the parties. The time limit for lodging an appeal is 30 days from the date when the decision was made available to the parties. However, an extension of time may be requested and granted.

When lodging an appeal against a decision issued by a Court of Appeal as a court of second instance, the appellant must request a leave to appeal from the Supreme Court. Both the request for a leave to appeal and the appeal must be filed within 60 days from the issuance of the judgment of the Court of Appeal. The time limit cannot be extended.

From 1 January 2020 onwards, lodging an appeal against an administrative court decision and requesting a leave to appeal from the Supreme Administrative Court will require basically the same procedure as the one which involves the Supreme Court and has been described above, but the time limit is 30 days instead of 60 days.

The time limits for lodging an appeal against a special court decision (when they are subject to appeal) vary depending on the special court and the subject matter of the case.

When issuing their decisions, courts must state whether their decisions are subject to appeal and give appropriate written instructions on the appeals procedure.

When leave to appeal has been granted, appellate courts provide the other involved parties with an opportunity to submit their written replies to the appeal. Even further rounds of written submissions may be allowed, but this is relatively rare.

Courts of Appeal generally arrange an oral hearing if a party makes a request to that end. By and large, this request will be rejected if an oral hearing is deemed unnecessary. The Supreme Court rarely organises oral hearings.

As a rule, the parties are not allowed to invoke new circumstances or new evidence in an appellate court unless they can demonstrate a legitimate reason for doing so. This rule does not apply in criminal cases.

From 1 January 2020, the general principles discussed above will, by and large, also apply in appeals against decisions issued by administrative courts. However, when appealing administrative court decisions, appellants may present new claims if they are based on a change of circumstances or invoke new circumstances if they have been discovered after the issuance of the decision subject to appeal.

See 10.2 Rules Concerning Appeals of Judgments.

After an appeal hearing (or, when an oral hearing is not organised, after the parties’ written submissions have been filed), appellate courts may, subject to what has been requested in the appeal:

  • decide on the merits of the case or any part thereof;
  • amend the decision of the lower court;
  • refer the case, or a part thereof, to a lower court for a rehearing; or
  • reject the appeal.

In criminal cases, appellate courts cannot render a more severe sentence for the defendant unless the prosecutor has, in his or her appeal, requested this.

In broad terms, the general principles discussed above will also apply in appeals against decisions issued by administrative courts from 1 January 2020.

The losing party is generally ordered to reimburse the prevailing party’s reasonable litigation costs. However, courts have a wide discretion to deviate from the loser-pays principle, based on an assessment of a variety of relevant circumstances.

Recoverable costs include all the costs of the preparation for and participation in the proceedings, attorneys’ fees, the value of the work incurred by a party in connection with the proceedings and losses directly linked to the proceedings. Cost awards are appealable.

In criminal cases, the state is generally liable to compensate for the defendant’s reasonable costs if the charges are dropped or dismissed (with or without considering the merits). In practice, courts tend to be conservative when assessing the amounts of costs to be awarded in criminal cases.

In administrative courts, the parties are liable for their own costs unless this is deemed unreasonable especially in view of the outcome of the case.

Although the general rule is that costs follow the event, courts may depart from this rule and consider a variety of relevant circumstances when awarding costs. Aside from the moderation of the claimed costs or the lack thereof; courts may consider, for example, the outcome of individual claims made, the possible ambiguity of the case and party behaviour.

If requested, interest begins to accrue on the awarded costs, one month from the date of the judgment. The applicable interest rate on the awarded costs is seven percentage points higher than the reference rate published biannually by the Bank of Finland.

Arbitration is widely regarded as the preferred dispute resolution method in commercial disputes. The Finland Arbitration Institute (FAI) administers domestic and international arbitrations under the FAI Arbitration Rules and the FAI Expedited Arbitration Rules. The FAI may also appoint arbitrators under the UNCITRAL Arbitration Rules as well as in ad hoc cases.

ADR is generally viewed in a positive light. Aside from arbitration, alternatives to litigation include voluntary court mediation, which is administered by judges who have received mediation training, and out-of-court mediation under the FAI Mediation Rules or under the mediation rules of the Finnish Bar Association. Mediation is expected to increase in popularity in the coming years. More rare forms of ADR also include expert determination (in M&A-related disputes) and protocol referee procedures (typically in certain construction disputes).

Agreements reached in out-of-court mediation may, upon application, be confirmed enforceable by a relevant District Court.

ADR is neither compulsory, nor part of court procedures in litigation. However, courts actively promote court mediation. There are no sanctions for refusing ADR.

Although mediation and other forms of ADR (excluding arbitration) have gradually gained popularity, they are not yet widely used in commercial disputes.

The Finland Arbitration Institute (FAI) administers domestic and international arbitrations and mediations. The FAI Arbitration Rules, as revised in 2013, the FAI Mediation Rules and the organisation of the FAI are consistent with the best international norms and practices.

In many respects, the FAI Arbitration Rules conform with the modern rules of leading international institutes. For example, the FAI Arbitration Rules incorporate rules on emergency arbitrators as well as consolidation and joinder of cases and parties. As a rule, the arbitral award must be given within nine months from the date when the arbitral tribunal received the case file. The corresponding time limit for arbitral awards issued under the FAI Expedited Arbitration Rules is three months. The fees of the arbitrators are determined by the FAI Board, and the fees generally depend on the value of the dispute.

The Finnish Arbitration Act of 1992 is applicable to all arbitrations where the seat of the arbitration is in Finland. In its current form, the Finnish Arbitration Act does not fully accord with the UNCITRAL Model Law on International Commercial Arbitration. However, the Finnish Ministry of Justice announced, in 2019, the launch of a revision process of the Finnish Arbitration Act.

The Finland Arbitration institute (FAI) administers domestic and international arbitrations under the FAI Arbitration Rules and the FAI Expedited Arbitration Rules. See 12.3 ADR Institutions.

Generally, commercial and civil disputes are arbitrable if they are capable of settlement and do not fall under the sole jurisdiction of a court. Most notably, consumer disputes and disputes involving cancellation or invalidity of IP rights cannot be referred to arbitration.

Arbitral awards are not open to appeal on merits. However, a District Court may, upon a party’s request made within three months from the date when that party received a copy of the arbitral award, set aside an arbitral award if a grave procedural error has been committed. The grounds for setting aside an arbitral award are as follows:

  • the arbitrators have exceeded their authority;
  • an arbitrator has not been properly appointed;
  • an arbitrator has had a conflict of interest; or
  • the arbitrators have not given a party an appropriate opportunity to argue his or her case.

A court may also declare an arbitral award null and void upon a party’s request (for which there is no time limit) if the arbitral tribunal has:

  • decided an issue that is not eligible for settlement by arbitration under Finnish law;
  • issued an arbitral award against ordre public;
  • issued an arbitral award that is so obscure or incomplete that it does not indicate how the dispute has been decided; or
  • not issued the arbitral award in writing or has not had it signed by the majority of the arbitrators.

The court procedure in both actions is three-tiered. The District Court’s decision is open to appeal in the relevant Court of Appeal that has jurisdiction. The Court of Appeal’s decision may then be appealed to the Supreme Court if a leave to appeal is granted.

The number of challenges against arbitral awards has recently increased. However, the challenges rarely succeed. The threshold for setting aside an arbitral award is high.

Finland has ratified the Convention on the Recognition and Enforcement of Foreign Awards (the New York Convention) without any reservations. The applicant must first submit an application, together with the arbitral award and relevant certified translations thereof, to a District Court that has jurisdiction in the matter. Generally, the opposing party will be provided with an opportunity to be heard. After the District Court has duly issued an enforcement order, both domestic and foreign arbitral awards may be enforced in Finland by the execution authority in the same way as final court judgments. District Courts generally issue enforcement orders swiftly.

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Law and Practice in Finland

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Merilampi Attorneys Ltd. is one of the leading full-service law firms in Finland. Merilampi advises its domestic and international clients in a wide range of business law matters and across business sectors. Merilampi’s dispute resolution team comprises some fifteen lawyers and it advises clients in all areas of dispute resolution and in a variety of industries and areas of substantive law. The team has broad experience in litigation and in domestic and international arbitration. The team also provides strategic advice in disputes and conflict situations, as well as assisting clients in mediations and other forms of alternative dispute resolution. Merilampi’s dispute resolution team is well-known for its expertise in various types of liability cases, construction and real estate sector disputes and high-profile white-collar defence cases.