International Arbitration 2020

Last Updated August 18, 2020

Finland

Law and Practice

Authors



Merilampi Attorneys Ltd is one of the leading full-service law firms in Finland and advises domestic and international clients in a wide range of business law matters and across business sectors. Merilampi’s dispute resolution team comprises 15 lawyers and 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. It also provides strategic advice in disputes and conflict situations, and assists 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.

Arbitration is generally considered to be the most effective means of resolving commercial disputes in Finland, whether they are domestic or international. Arbitration is widely used in that context in Finland, and parties typically insert an arbitration clause into their contracts. Institutional arbitration and ad hoc arbitration are both used in Finland.

Commercial disputes are also resolved in national courts to a certain extent but arbitration has become an increasingly popular alternative, especially due to the length of court proceedings. Naturally, arbitration also has other benefits compared to litigation in national courts, including the possibility for the parties to modify the arbitration and select suitable arbitrators to meet the characteristics of the dispute. In an international context, arbitration is also widely used, partly for enforcement reasons.

In 2019, the Finnish Ministry of Justice launched a revision process of the Finnish Arbitration Act (FAA), the current version of which dates back to 1992. The revision will be addressed under 2 Governing Legislation. Once finalised, the revision will hopefully have a positive effect on arbitration in Finland.

There are no general statistics available on the yearly number of arbitration cases that are seated in Finland, but the Arbitration Institute of the Finland Chamber of Commerce (FAI), which is the main arbitration institute in Finland, tracks its owns caseload, thus providing a source for arbitration trends in the market. According to the FAI statistics, the annual number of arbitration cases is increasing. In 2019, the number of new filings increased by 10% over the previous year, reaching 67 cases by the end of the year. For 2020, the number of new filings has already reached 60 and it therefore seems likely that the FAI will see a record number of new cases again. As stated before, it is important to note that these numbers only contain the cases administered by the FAI and therefore do not reflect the total number of cases seated in Finland.

The COVID-19 pandemic has also likely had an impact on the number of arbitration cases, as Finnish national courts have postponed a large number of hearings as a consequence of the pandemic. During the pandemic, some arbitration hearings have successfully been held virtually, which is definitely a new development in the conduct of arbitration proceedings in Finland.

There are no particular industries that stand out in terms of experiencing significantly more arbitration activity than others.

Based on the statistics of the FAI statistics, which can be found on the FAI website, in 2019 the industries most represented in the FAI arbitration case load were construction (16%), finance and insurance (13%), professional, scientific and technical activities (13%), manufacturing (12%) and wholesale and retail trade (10%). There are no statistics available on ad hoc arbitrations where the FAI has no involvement. However, the FAI statistics give a rather good overview of the industries that have recently been experiencing arbitration activity in Finland.

The FAI (www.arbitration.fi) is the main arbitration institute in Finland; no other relevant arbitration institutions are used for the administration of international arbitration cases in Finland. During the past few years, the share of international cases administered by the FAI has varied between 16% and 36% of the total annual case load.

The FAI administers both domestic and international cases, and appoints arbitrators for ad hoc cases. Moreover, the FAI acts as an appointing authority under the UNCITRAL Arbitration Rules.

In addition to arbitrations administered by the FAI, some international arbitrations that are seated in Finland are administered by the Arbitration Institute of the Stockholm Chamber of Commerce (SCC) or the ICC International Court of Arbitration (ICC).

The Finnish Arbitration Act (967/1992; FAA) governs both international and domestic arbitration cases seated in Finland, as well as the recognition and enforcement of foreign arbitral awards in Finland. The FAA has been in force since 1992 and is based on the 1985 version of the UNCITRAL Model Law, while still differing from it in certain aspects. For instance, the FAA includes a strict written form requirement for a valid arbitration agreement, and a provision according to which it is possible to have a final award declared null and void. This provision allows the unsuccessful party of an arbitration to bring an action for the annulment of an award at any time without any time limits. The FAA also does not include a default provision on the applicable law, and the time limit set for instituting setting aside proceedings is longer than in the UNCITRAL Model Law (three months from the date on which the party filing the action received a copy of the award).

As stated in 1.2 Trends, the revision process of the FAA was launched by the Finnish Ministry of Justice in 2019. The Finland Chamber of Commerce had submitted a proposal to the Ministry calling for a reform of the FAA, requesting any obsolete provisions to be removed and any deficiencies found in the Act to be corrected. The stated goal of the Chamber of Commerce was to have an arbitration act that is internationally competitive and meets international best practices. The Finland Chamber of Commerce, like many other stakeholders, considers that the goal of such revision should be an arbitration act that is consistent with current internationally recognised standards embedded in the UNCITRAL Model Law.

When the Ministry of Justice launched the revision of the Act, it set up a Monitoring Group for the law reform, whose term will end on 31 December 2020. However, it seems that the law reform has not advanced as initially planned and will likely not be finalised within its original time frame.

Beyond the issue of the arbitrability of a dispute (see 3.2 Arbitrability for more about arbitrability), the Finnish Arbitration Act (FAA) sets forth two conditions for an arbitration agreement: the agreement must have been concluded in a written form, and the agreement must refer to a defined legal relationship between the parties.

An arbitration agreement is deemed to be in writing when it is contained in a document signed by the parties or in an exchange of letters between the parties, when the parties have agreed that a dispute shall be decided by one or more arbitrators by exchanging telegrams or telex messages or similar correspondence (this is nowadays understood to include email messages and other types of electronic correspondence), or when an agreement that has been validly concluded refers to a document that contains an arbitration clause. For example, it is adequate that the written document includes a reference to the applicable general terms and conditions, which in turn include an arbitration clause.

The FAA also lists a few additional instances in which an arbitration clause is deemed effective. These include situations where an arbitration clause has been included into a will, a deed of gift, a bill of lading and corresponding documents, the bylaws of an association or a foundation, as well as the articles of association of a limited liability company and other corporate entities.

It is also noteworthy that, pursuant to certain consumer protection enactments, agreements in which a consumer, as a buyer, has agreed to arbitration with a business, as a seller, before the dispute has arisen are ineffective.

In practice, Finnish courts generally respect the parties’ intent to arbitrate well. In a few rare cases, courts have found otherwise valid arbitration agreements so unreasonable to the weaker contracting parties that the enforcement of the arbitration agreement has been denied. The threshold for such a conclusion has, however, been extremely high, and such cases have concerned mainly employees or other private individuals.

The FAA limits the applicability of arbitration to commercial and civil disputes, which the parties can effectively settle by an agreement between themselves. Consequently, disputes relating to marital status and the custody of children, for example, are automatically excluded from arbitration. Matters concerning the invalidity and cancellation of intellectual property rights are also outside the sphere of arbitration.

Competition law damages claims are arbitrable under Finnish law. Whether such a claim in a particular case is deemed to be within the scope of the arbitration agreement, however, is a different issue. In the only reported Finnish case on this issue, a Finnish district court ruled that an injured party could not be deemed to have intended that claims based on a possible illegal cartel infringement of the other party would be subject to an arbitration agreement in a regular supply agreement between the parties.

Finnish courts generally respect the parties’ intent to arbitrate well. As noted above, the use of arbitration in a commercial context is widespread in Finland, and Finnish national courts are very accommodating in terms of recognising a lack of jurisdiction where a valid and applicable arbitration agreement exists.

A court may not hear an action in a matter that is subject to arbitration if a party raises the issue (ie, that an arbitration agreement exists) before responding to the main claim. The tendency of the national courts is to interpret arbitration agreements broadly and in line with the intent of the parties.

However, it is noteworthy that a national court has jurisdiction to examine the validity and effect of an arbitration agreement that is already before or during the arbitration proceedings. A party may, for example, request a court to confirm that the arbitration agreement is invalid during the arbitration proceedings, regardless of whether the arbitral tribunal has ruled on the issue.

As noted in 3.1 Enforceability, only in very exceptional cases have national courts found otherwise valid arbitration agreements so unreasonable to the weaker contracting party that the enforcement of the arbitration agreement has been denied. The threshold for such a conclusion, however, has been extremely high.

As regards the standalone validity of arbitral clauses, the doctrine of separability has been recognised and confirmed by the Supreme Court of Finland, even though it has not been codified in the Finnish Arbitration Act. The doctrine of separability is applied even in situations where the arbitration clause has been physically included into the main agreement that has later been deemed invalid.

The Finnish Arbitration Act (FAA) includes only a few mandatory conditions that limit the parties’ autonomy to select arbitrators: a person is eligible to act as an arbitrator as long as he/she is of legal age (18 years old), is not bankrupt and has the full legal capacity of a private individual.

An arbitrator is not required to be a legal professional or a Finnish citizen. It is noteworthy, however, that national court judges are not allowed to act as party-nominated arbitrators, and need special permission to act as sole or presiding arbitrators.

The selection of an arbitrator is also naturally limited by the requirement for the impartiality and independence of an arbitrator. To this effect, the FAA requires that the selected arbitrators shall be impartial and independent, but does not elaborate on the content of impartiality and independence in detail. In practice, guidance is generally sought from the International Bar Association’s Guidelines on Conflicts of Interest in International Arbitration, which are generally considered to reflect the best current international practice in terms of assessing independence and impartiality.

The FAA contains default rules for both the number of arbitrators and their appointment. To this effect, the number of arbitrators shall be three unless otherwise determined by the parties. Additionally, where there is no agreement on the identity of the arbitrators or the process of their appointment, both parties shall nominate one arbitrator, leaving the chair of the panel to be appointed by the two party-appointed arbitrators.

If needed, either party may request a national court to appoint a missing arbitrator or arbitrators. However, it is extremely rare for the parties to need to present such a request. Even arbitration agreements calling for ad hoc arbitration often provide that, where the parties are not able to agree on the arbitrator(s), the Arbitration Institute of the Finland Chamber of Commerce (FAI), or some other institute, shall appoint the arbitrator(s).

Unlike the Arbitration Rules of the FAI, the FAA does not provide for a default procedure for the appointment of arbitrator(s) in multi-party arbitrations.

National courts may not intervene in the selection of arbitrators on their own initiative, and not even by a request of a party who would like to prevent the selection of an arbitrator nominated by the other party or an arbitration institute. National courts potentially have a role only in instances where a party does not appoint an arbitrator in time, or where the party-appointed arbitrators are unable to reach an agreement on the identity of the chair. However, such cases are extremely rare.

The FAA contains provisions on both the grounds for the challenge and the removal of an arbitrator.

The parties may agree on the procedure for the challenging of an arbitrator. When the parties have not agreed on such procedure, they have 15 days from becoming aware of the appointment of an arbitrator – or of any circumstance that creates justifiable doubts as to the arbitrator’s independence and impartiality – to present a challenge to the arbitral tribunal. The arbitrators will then rule on the challenge, unless both parties agree on the removal of said arbitrator. The decision of the arbitrator(s) cannot be appealed. National courts will only assess the issue of the alleged impartiality and independence of an arbitrator in conjunction with a possible set aside action, as described in more detail in 11.1 Grounds for Appeal.

In terms of the grounds for disqualification, the FAA contains a provision according to which an arbitrator shall be disqualified if he or she would have been disqualified from hearing the case as a judge, or if other circumstances exist that give rise to justifiable doubts as to his or her impartiality or independence as an arbitrator. In practice, the criteria for the disqualification of an arbitrator reflect the current international practice and the International Bar Association’s Guidelines on Conflicts of Interest in International Arbitration, which are generally considered to reflect the best current international practice.

Aside from conflict of interest situations, an arbitrator may naturally also have to be replaced in cases of death or resignation due to, for example, serious illness. If an arbitrator dies, resigns or is removed, a substitute arbitrator shall be appointed. If the parties have not been able to agree on the appointment of a substitute arbitrator (or if the party or someone else who shall appoint an arbitrator has not done so within the agreed time frame), then the court shall appoint a substitute arbitrator upon the request of either party, unless the parties have agreed that the arbitration agreement shall terminate in that event.

In terms of the requirements for the arbitrators’ independence, impartiality and/or disclosure, the FAA largely resembles other national legislation. An appointed arbitrator is obligated to disclose any information that may give rise to justifiable doubts as to the arbitrator’s impartiality and independence immediately upon accepting the appointment. The duty to disclose such information continues until the conclusion of the proceedings.

Similarly to the FAA, the Arbitration Rules of the Finland Chamber of Commerce (FAI Rules) include a provision that explicitly states that each arbitrator shall be and remain impartial and independent of the parties throughout the arbitration proceedings.

As noted in 4.4 Challenge and Removal of Arbitrators, in assessing the independence and impartiality of an arbitrator, guidance is generally sought from the International Bar Association’s Guidelines on Conflicts of Interest in International Arbitration, which are generally considered to reflect the best current international practice in terms of evaluating independence and impartiality.

Please see 3.2 Arbitrability and 3.1 Enforceability.

Under Finnish law, an arbitral tribunal has the power to rule on its own jurisdiction. The principle of competence-competence exists and is acknowledged in Finnish law, even though it is not codified in the Finnish Arbitration Act (FAA). The arbitral tribunal’s competence is understood to extend not just to the jurisdiction of the tribunal but also to any objections concerning the existence, validity or scope of the arbitration agreement.

The arbitral tribunal’s decision on jurisdiction cannot be separately appealed; the decision can only be challenged in a national court in a separate action to set aside the arbitral award.

However, a national court has the jurisdiction to examine the validity and effect of an arbitration agreement that is already before or during the arbitration proceedings, if a party requests a court to declare the arbitration agreement invalid. This type of action is considered separate from the arbitration proceedings and does not automatically prevent the arbitration from proceeding. Moreover, it does not remove the tribunal’s competence-competence. A decision of a national court, if issued before the arbitral award, however, has a res judicata effect in the arbitration.

As noted in 3.3 National Courts' Approach, the Finnish national courts generally respect the parties’ intent to arbitrate well, and are very accommodating in terms of recognising lack of jurisdiction where a valid and applicable arbitration agreement exists.

In the case of a negative ruling on jurisdiction by the arbitral tribunal resulting in a decision on the termination of arbitral proceedings, a party may commence new arbitration proceedings (to see whether a different arbitral tribunal would decide differently on jurisdiction), or resort to a national court and request the court to confirm whether an arbitral tribunal has jurisdiction.

The parties may only challenge jurisdictional findings of an arbitral tribunal in a national court in conjunction with a set aside action. However, see 5.3 Circumstances for Court Intervention for some exceptions to this main rule.

When prompted, the Finnish national courts will perform a thorough assessment on the validity and scope of an arbitration agreement to determine its applicability, or the jurisdiction of an arbitral tribunal in general. In performing such an assessment, the national court is not bound by the findings of the relevant arbitral tribunal.

A Finnish national court will not decline jurisdiction ex officio if a party commences court proceedings in breach of an arbitration agreement. Parties themselves bear the responsibility of raising an objection when their counterparty has initiated a court proceeding when the correct contractual avenue would have been arbitration. If a court then determines that there is a valid arbitration agreement, the scope of which extends to the dispute at hand, said court will not hear the matter due to lack of jurisdiction.

The Finnish Arbitration Act (FAA) does not contain an express provision that would stipulate when an arbitral tribunal can assume jurisdiction over third parties. The starting point is that an arbitral tribunal has no jurisdiction over any person who is neither a party to the relevant arbitration agreement nor a signatory to the contract containing the arbitration agreement.

In the case law of the Finnish Supreme Court, however, there have been cases where third parties have been deemed to be bound by arbitration agreements or entitled to invoke arbitration agreements. In practice, the most common situation is probably that of universal succession, where the rights and obligations of a party are as such assigned to another person. Additionally, third parties have been deemed bound by an arbitration agreement in cases where said third party has been granted specific rights in a contract containing an arbitration clause, and where a third party has based its claim on a contract containing an arbitration clause.

In a notable recent precedent, the Finnish Supreme Court held that an arbitration clause included in a loan agreement also covered a claim against the guarantor of the loan (in addition to a claim against the borrower) in a situation where the guarantor belonged to the same group of companies as the borrower and was aware of the arbitration clause in the loan agreement. It must, however, be noted that this precedent was not based on the so-called group of companies doctrine, but on an overall assessment of the relevant circumstances. Thus far, no precedents concerning the group of companies doctrine have been issued in Finland.

The Finnish Arbitration Act (FAA) does not contain provisions on the power of arbitral tribunals to order interim measures. Thus, it is unclear whether arbitrators have the right to issue interim measures in arbitration in Finland, unless for instance the applicable institutional rules provide for such a right. However, it is understood that interim measures have been ordered in some cases by arbitral tribunals even without explicit support for such orders in the FAA. In any event, interim measures issued by arbitral tribunals are not enforceable in Finland and cannot be backed by, for example, the threat of a fine.

While the FAA contains no provisions on the different types of interim and preliminary measures that may be ordered, the FAI Rules state that a tribunal may effectively decide on any interim measures that it considers necessary.

There are no specific limits to the types of preliminary/interim relief that can be awarded. In principle, a tribunal may grant any type of relief that it deems appropriate concerning the matter in dispute.

The Finnish national courts do not intervene in any interim measures ordered by an arbitral tribunal, and cannot be used to enforce such orders. Instead, parties to an arbitration proceeding always have the possibility of seeking interim relief from the national court separately from the arbitration proceedings, whether the proceedings have commenced or not. Such requests concerning interim measures are processed quickly and effectively, which has consequently led to this option being used relatively frequently.

It should be noted, however, that although the parties to an arbitration have the possibility to revert to Finnish national courts for interim measures, this does not limit the arbitral tribunal’s right to order interim measures (see 6.1 Types of Relief).

Security for costs is, in principle, a possible interim measure that can be requested. However, in practice, Finnish courts do not grant security for costs. The relief is occasionally granted in arbitration, and especially in international arbitration, although the FAA does not include a provision on this issue.

In accordance with international practice, in assessing whether such a measure may be granted, an arbitral tribunal will take into consideration the likelihood of a claim succeeding, the counterparty’s financial situation and the consequences of ordering such a measure.

The Finnish Arbitration Act (FAA) contains only a limited number of general level rules on the procedure of arbitration (see 7.2 Procedural Steps). Most such rules are also default ones by nature and only apply in situations where the parties have not agreed otherwise. Accordingly, the details of the arbitration proceedings have been left for the parties to agree upon (specifically or through the selection of applicable institutional rules) and/or for an arbitral tribunal to determine.

As stated in 7.1 Governing Rules, the FAA only contains general provisions on the procedural steps of arbitration proceedings. The FAA effectively only necessitates that parties present their claims and respond to the claims of the counterparty. Parties must also be given an appropriate opportunity to present their respective cases, and be provided with the award once rendered. The FAA further includes a provision regarding the commencement of arbitration proceedings. Unlike some other arbitration laws and institutional rules, the FAA does not necessitate the arranging of an oral hearing.

As noted in 7.1 Governing Rules, the FAA contains a rather general provision according to which arbitrators may determine the manner in which the proceedings will be conducted where the parties have not reached an agreement on the question. Where no agreement between the parties exists, the arbitrators have the power to decide on:

  • the structure of the proceedings (taking into account the requirements of impartiality and expediency);
  • the physical location of the proceedings;
  • the language of the proceedings;
  • the admissibility of evidence; and
  • a cut-off date.

In addition, the arbitrators have the power to request persons to be heard, and documents and other relevant evidence to be produced, and to appoint expert witnesses to conduct examinations and order information to be given to the expert witnesses. Where the proceedings cannot continue, arbitrators have the power to decide on the termination of the proceedings. Moreover, as discussed in 5.2 Challenges to Jurisdiction, an arbitral tribunal has the power to rule on its own jurisdiction.

The key duties of the arbitrators, in turn, include the obligation to:

  • disclose any circumstances that may influence the arbitrator’s impartiality and independence;
  • give the parties sufficient opportunity to present their case;
  • promote an appropriate and expedient settlement of the matter;
  • render and sign the arbitral award;
  • maintain the confidentiality of the proceedings;
  • respect the parties’ agreements – eg, on the procedure; and
  • correct any computation and clerical errors, if necessary after rendering the arbitral award, as well as any other errors to similar effect within the award.

The FAA is silent on the qualifications of the legal representatives of a party, nor can any particular qualifications or other requirements be found from other legislation or case law.

The Finnish Arbitration Act (FAA) does not contain specific rules of evidence. The parties may agree on the procedure relating to the presentation of evidence, and, if no such agreement exists, the arbitrators have the power to rule on evidentiary issues, as noted in 7 Procedure.

In general, arbitration proceedings in Finland are adversarial in nature and it is for the parties to collect and present the evidence they wish to invoke. Arbitrators do not usually take an active role in the collection or taking of evidence.

In practice, especially in international arbitrations, the IBA Guidelines on the Taking of Evidence in International Arbitration are used as a source of guidance in evidentiary matters.

Written evidence is typically submitted in connection with the written statements. Furthermore, parties to arbitration may request the arbitral tribunal to order the other party to produce specified documents of relevance. The preconditions for document production follow the principles codified in the IBA Guidelines on the Taking of Evidence in International Arbitration:

  • the documents or the document category must be specified in sufficient detail;
  • the documents must be in the possession, custody or control of the other party; and
  • the documents need to be such that they may have relevance in resolving the case.

In practice, the application of the preconditions and the threshold for document production varies significantly, depending on the arbitrators.

In almost all arbitrations, witness evidence is presented. Written witness statements, together with cross-examination alone in the oral hearings, is the most commonly used approach in international arbitrations. The domestic tradition has been to present brief themes of evidence for each witness in the written statements, and to have a full direct examination and cross-examination of the witnesses in the oral hearings. In some cases, elements of these two approaches have been combined, as deemed appropriate by the parties or the arbitrators.

The FAA contains only a few specific provisions relating to evidence, concerning:

  • the general power to request a party or any other person to appear to be heard in the matter, and to request a party or any other person to produce a document or object;
  • the power to request a translation of a document into the language of the proceedings;
  • the power to appoint an expert witness; and
  • the assistance of general court in the taking of evidence (see 8.3 Powers of Compulsion).

Also, the general procedural principles must be complied with in evidentiary matters: the parties must be given a sufficient opportunity to present their case, and the requirements of impartiality and expediency need to be taken into account. Otherwise, the parties may agree on the rules of evidence, and if no such agreement exists, the arbitrators may conduct the arbitration in such a manner as they consider appropriate. Accordingly, in most cases, the arbitral tribunal has the power to determine the admissibility of any evidence and freely assess the relevance and weight of the evidence presented.

Especially in international arbitrations, the IBA Guidelines on the Taking of Evidence in International Arbitration are used as a source of guidance in evidentiary matters.

Arbitral tribunals may request any person to appear to be heard or any person to produce a document or object. However, arbitral tribunals do not have powers of compulsion: arbitrators cannot force a person to appear and be heard, they cannot impose the threat of a fine, and they cannot issue any other type of coercive order.

If an arbitral tribunal deems it necessary for a person (party, witness or expert) to be examined in a national court (under oath), for instance because of the person’s refusal to appear as a witness voluntarily, or if a party or another person is ordered to produce a document or an object, the tribunal may give permission to a party – or even request a party – to submit an application for this measure to the district court with jurisdiction. Under the FAA, the court is, as a rule, to undertake the requested measure pursuant to the evidentiary rules applicable in the court proceedings. In practice, this possibility is used extremely rarely.

The Finnish Arbitration Act (FAA) does not contain any provisions relating to the confidentiality of the arbitral proceedings and the procedural documents. Accordingly, unless there is some other source providing for the confidentiality, the parties are not prohibited from disclosing the existence of the arbitral proceedings or the documents submitted in the proceedings outside the arbitration.

The confidentiality of the arbitral proceedings and the relevant documents may derive from a confidentiality obligation included in the underlying main agreement. The scope of such a confidentiality obligation often covers disputes between the parties and related documents.

As regards the arbitrators, their mandate is generally perceived to include an obligation not to disclose the existence of the proceedings or the documents thereof to any third parties, even without any specific provisions prohibiting disclosure.

With respect to the above, it is noteworthy that, as a rule, documents and hearings in Finnish court proceedings are accessible to the public. The secrecy of the documents and the exclusion of an audience in the hearing can be requested – eg, by invoking business secrets – but the general information on the existence of a case between the parties in question remains public information. Accordingly, full confidentiality is compromised in cases where enforcement is sought or setting-aside proceedings are commenced before Finnish courts.

For the sake of clarity, it is noted that, unlike the FAA, the Arbitration Rules of the Finland Chamber of Commerce (FAI Rules) provide for an explicit confidentiality obligation under which the key procedural documents submitted or prepared in a FAI arbitration (awards, orders, correspondence from the arbitral tribunal, recordings, transcripts, documents/materials submitted by another party) are confidential, subject to certain typical exceptions listed in the relevant section of the FAI Rules.

According to the Finnish Arbitration Act (FAA), in order to be valid, an award must be made in writing and signed by the arbitrator(s). An award must also contain the date on which it was made and the seat of arbitration.

It is worth noting, however, that the signature of a dissenting arbitrator is not required as long as the award contains an explanation as to why a signature is missing. The purpose of this rule is to ensure that arbitral awards may not be voided by dissenting arbitrators.

If an award contains a ruling on the arbitrators’ fees, the award must contain instructions on how the parties may appeal against the decision on the fees (an omission of this would not influence the validity of the award).

The FAA does not contain a provision on the time frame within which an award must be rendered. The Arbitration Rules of the Finland Chamber of Commerce (FAI Rules) set forth that the final award shall be made no later than nine months from the date on which the arbitral tribunal received the case file from the FAI. The FAI Rules also include other provisions regarding arbitral awards and decisions.

The FAA does not contain any limitations as to the remedies that an arbitral tribunal may award. Unless the parties have agreed otherwise, a tribunal may award any remedy a party has requested and the tribunal finds appropriate to award. Also, specific performance orders are available under Finnish law.

However, if a relief awarded would be contrary to the Finnish public policy (ordre public), the award could be declared null and void or set aside following the application of a party. For instance, punitive damages are unknown to Finnish law and are considered to be contrary to public policy.

If the parties have agreed on how the arbitral tribunal is to allocate the legal costs, the tribunal is to comply with such an agreement. In the absence of such an agreement, the FAA calls for the application of the cost rules of the Finnish civil court procedure. The general rule in that case is the principle of costs follow the event, but broad discretion is given to a court or an arbitral tribunal to award cost compensations as it deems appropriate. The FAI Rules provide for the same principle.

In practice, the arbitral tribunals seated in Finland almost always start their assessment applying the costs follow the event principle, but a tribunal may use its discretion to shift the allocation towards an appropriate direction based on how it deems justified having regard to the circumstances of the case.

There is no uniform opinion nor uniform practice as to whether the time spent on the case by a party’s in-house counsel or employees constitutes a compensable legal cost.

Interest may be awarded, by request of a party, on both principal monetary claims and legal costs. Unless otherwise agreed by the parties, and to the extent that interest is subject to Finnish law, the default interest (late payment interest) is seven or eight percentage points higher than the reference rate. For legal costs, interest is generally sought and awarded as from one month after the issuance of the award.

Finland does not recognise the possibility of appeal on the merits or facts of an arbitral award. Parties may only initiate court proceedings to have an award set aside or declared null and void.

Pursuant to the Finnish Arbitration Act (FAA), an award is null and void when the arbitrators have decided on an issue that is not arbitrable under Finnish law, when the recognition of the award would be against Finnish public policy, when the award is so unclear or incomplete that it is impossible to determine how the dispute has been decided, and when the award has not been made in writing or signed appropriately. There is no time limit for commencing an action to have an arbitral award declared null and void. This is a notable particularity in the Finnish arbitration law.

As regards setting aside, the FAA provides that an award may be set aside when the arbitrators have exceeded their authority, when an arbitrator has not been properly appointed or when the arbitrators have not given the parties to the arbitration an adequate opportunity to present their cases. Setting aside is also possible in certain instances where an arbitrator could have been successfully removed. A party shall bring its action for the setting aside of an arbitral award within three months from the date on which said party received a copy of the award.

The FAA also contains a separate provision on presenting an appeal on the arbitrators’ fee. In this regard, the FAA states that parties have 60 days from the date on which the award was received to present an appeal on the fee awarded to the arbitrators.

The FAA does not contain provisions on the parties’ ability to exclude or expand the scope of appeal or challenge, and no authoritative case law exists on the topic to date. It is likely that any court presented with such a question would ignore the parties’ agreement on the scope of appeal or challenge and apply the legal grounds set forth in the FAA.

As stated above, Finland does not recognise the possibility of judicial review on the merits of an arbitral award.

The New York Convention was ratified by Finland in 1962 with no reservations concerning reciprocity or the commercial nature of disputes. As such, the Convention is applicable in terms of the recognition and enforcement of international arbitral awards, irrespective of the nature of the dispute. Moreover, the Finnish Arbitration Act is very much built around the core concepts of the Convention.

The enforcement of an arbitral award is sought at the competent district court (in the district court of Helsinki when neither party has their domicile in Finland). An application for enforcement must contain original copies of both the arbitration agreement and the arbitral award. Unless an exception is granted, the relevant documents must also be translated into Finnish or Swedish.

The enforcement is subject to different provisions of the Finnish Arbitration Act (FAA). depending on whether the arbitral award is rendered in Finland or abroad (foreign award).

The application for the enforcement of a domestic arbitral award will be granted unless the court finds the award null and void or unless the enforcement is stayed due to a pending setting aside procedure. The counterparty is nevertheless given an opportunity to provide a written statement concerning the application for enforcement before the award is ultimately declared enforceable.

A foreign arbitral award is enforceable in Finland if it is recognised in Finland under the FAA. The grounds for refusing recognition are enumerated in the FAA, and they largely correspond to the grounds for refusing recognition and enforcement in the New York Convention. The FAA explicitly provides that awards that have been declared null and void or set aside by the court of the seat of arbitration are not recognised in Finland.

A Finnish court considering an application for the enforcement of a foreign award may also suspend the handling of the enforcement application if the party against whom enforcement is sought invokes that it has made an application for setting aside or declaring the award null and void, or for suspension of the enforcement of the award, before a court in the seat of arbitration.

In general, Finnish courts have an enforcement-friendly approach towards the recognition and enforcement of arbitral awards. In cases where the respondent opposes the recognition or enforcement, a court normally considers the case with due care and assesses whether the invoked ground for refusing the recognition or enforcement is at hand.

A foreign arbitral award is, inter alia, not recognised, and accordingly not enforced, in Finland to the extent it is contrary to the public policy of Finland.

The Finnish Arbitration Act (FAA) does not provide for class action arbitration or group arbitration.

Unlike the FAA, the Arbitration Rules of the Finland Chamber of Commerce (FAI Rules) include specific provisions concerning multiparty arbitrations, the joinder of additional parties and the consolidation of arbitrations.

Finnish law does not set specific general ethical rules that would be applicable in arbitration.

Lawyers who are members of the Finnish Bar Association are bound by the ethical rules of the Finnish Bar Association when acting as counsel or arbitrator in any arbitration proceedings. In general, arbitrators and counsel are normally subject to the ethical rules of their respective home jurisdictions.

Finnish law does not contain rules or restrictions on third-party funders. Thus far, third-party funding has not become common in Finnish arbitrations even though it is available and sometimes offered to parties.

The FAA does not regulate the consolidation of separate arbitral proceedings. The parties can, of course, agree on the consolidation of arbitrations, either in the arbitration agreements/clauses or by a separate agreement.

Unlike the FAA, the FAI Rules contain specific provisions concerning the consolidation of arbitrations. Under the FAI Rules, the Board of the Arbitration Institute may, at the request of a party, consolidate two or more arbitrations pending under the rules if:

  • all parties have agreed to consolidation;
  • all claims in the arbitration are made under the same arbitration agreement; or
  • where the claims in the arbitrations are made under different arbitration agreements, the disputes in the arbitrations arise in connection with the same legal relationship and the arbitration agreements do not contain contradictory provisions that would render consolidation impossible.

See 5.7 Third Parties.

Merilampi Attorneys Ltd

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00100 Helsinki
Finland

+358 9 686 481

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Law and Practice

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Merilampi Attorneys Ltd is one of the leading full-service law firms in Finland and advises domestic and international clients in a wide range of business law matters and across business sectors. Merilampi’s dispute resolution team comprises 15 lawyers and 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. It also provides strategic advice in disputes and conflict situations, and assists 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.

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