Application of Interim Measures

Introduction
The Nature of the Measures
The Proceedings
Enforcement of the Interim Measures
Indemnity for Damages, Guarantees
Costs of the Proceedings

Disputes in Finland, which are to be settled by arbitration, are regulated by the Arbitration Act of 1992 (the 'Act'). The majority of the provisions of the Act are based on the UNICITRAL (United Nations Commission on International Trade Law) Model Law on International Commercial Arbitration. Judicial power regarding interim measures is, however, contrary to the UNICITRAL model excluded from the powers of arbitrators.

According to the Finnish Code of Judicial Procedure the courts of law, that is district courts, have, despite the arbitration agreement, exclusive right to order interim measures. Subsequently, the Act states that a court of law may, before and during arbitral proceedings, order interim measures from the request of either party.

A widely disputed question related to this is, whether awards including provisions similar to interim measures of protection (security deposits etc.) can be enforced.

The Nature of Interim Measures

The Code of Judicial Procedure sets forth a wide variety of interim measures.

Seizure as interim measure may be used while securing a right to payment of a possible receivable or securing a better right to certain objects. Furthermore, while securing other than these rights, the purpose may be reached by

• prohibiting certain actions under penalty of a fine;
  
  
• ordering a party to take certain actions under penalty of a fine; by entitling the party to undertake certain actions;
  
  
• ordering assets of a party to the care of a trustee etc.

The Proceedings

The proceedings regarding interim measures are governed by the rules in the Finnish Code of Judicial Procedure.

A party seeking interim measures shall file an application to the district court. Regardless of whether the arbitral proceedings are being held in Finland or abroad, the competent court is normally the court in the jurisdiction where the particular subject of interim measures is located or alternatively the court where the measures can be carried out most appropriately. Correspondingly, the cancellation of interim measures must also be applied for from the competent district court.

The party requesting interim measures shall prove that the request is justified within the meaning of law. Consequently, a requesting party shall be able to provide sufficient evidence that a risk that the possessions of the opposite party might be lost exists. In practice, this means that the party requesting interim measures must enclose a copy of the request for arbitration to the application, in which the risk of loss is being mentioned.

The application for interim measures may be handled without affording the other party an opportunity to be heard. The application is always handled in urgent proceedings and enforcement is normally carried out without giving prior notice to the other party.

After the court has approved the application, arbitral proceedings shall be started (ie the other party must be notified with a request for arbitration) within one month after the approval.

The court's decision of interim measures is not subject to appeal.

Enforcement of the Interim Measures

The proceedings concerning execution are governed by the rules in the Finnish Execution Act. After the court has granted permission for interim measures, the execution officer will carry out the enforcement. Enforcement is applied for separately from the competent execution officer.

Indemnity for Damages, Guarantees

The party seeking interim measures has a strict liability for any damages arising from unfounded interim measures. The liability covers all losses incurred by the other party, including indirect losses, such as losses in business profits. Damages must be claimed in a separate action.

According to the Execution Act, the party seeking interim measures has a duty to place a guarantee or pledge for possible damages before the interim measures may be executed. In some cases, however, the competent court may grant a relief from this duty if the claimant is unable fulfil it and apparent grounds for the application exist.

Costs of the Proceedings

According to the Finnish Code of Judicial Proceedings, the party seeking interim measures is responsible for all costs incurred from interim measures. Whether the arbitrators have the authority to give an award, which includes provisions concerning such costs, has been much discussed. According to legislative literature, the arbitrators do apparently have the authority. Therefore, if the party seeking interim measures has claimed the costs in arbitration, they may be awarded to be paid by the other party.