Enforcing Foreign Arbitral Awards

In general the enforcement of all arbitral awards is decided by a district court on application. The proceedings are formal and it is usually difficult to challenge the contents of the arbitral award. However, under the recently implemented New York Convention Finnish courts do not differentiate between Finnish and international arbitration proceedings.

New York Convention

The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1962 has been ratified and enacted in Finland. Sections 51 to 55 of the Finnish Arbitration Act contain corresponding provisions concerning the recognition and enforcement of foreign arbitral awards. Finland has not made the reservation of reciprocity provided for in the convention and therefore it is also possible to enforce awards rendered in countries that have not ratified the New York Convention.

Procedure

A party who wants to enforce a foreign arbitral award in Finland must file a written application with a district court in Finland. The application shall include the agreement on the basis of which the arbitral proceedings were initiated, as well as the arbitral award itself. Certified copies of the documents are sufficient. All documents must be translated into either Finnish or Swedish unless the court grants an exemption. Such exemption is usually only granted if the original documents are in English.

After the application has been filed and before the order for enforcement the court must give the other party an opportunity to be heard. If the opposing party does not contest the application, then the court accepts the application for enforcement without any further process and gives an order for enforcement. However, if the opposing party contests the application and provides sufficient grounds for challenging the arbitral award then the matter is transferred to a proper trial. In this case the court may, at the applicant's request, oblige the opposing party to provide reasonable collateral.

A foreign arbitral award must not be contrary to Finnish public policy. If it is, the court handling the application can use this as grounds for invalidating an award on its own initiative.

Grounds for Challenging

The grounds for challenging the enforcement of a foreign arbitral award must be especially referred to and proved by the opposing party. The following is an exhaustive list of grounds that sets out the only reasons that an opposing party may challenge a foreign arbitral award:

• If there is no valid arbitration agreement between the parties. The opposing party must prove that it did not have the required legal competence to conclude the arbitration agreement or that it was not duly represented when concluding the agreement. The opposing party can also challenge the award on the ground that the agreement is not valid according to the law chosen by the parties for a reason other than that concerning the form of the agreement;
  
  
• If the opposing party can prove that it was not given proper notice of the appointment of an arbitrator or of the proceedings, or that it was otherwise prevented from presenting its case;
  
  
• On the grounds that the arbitrators have exceeded their authority;
  
  
• If either the formation of the arbitration panel or the arbitration proceedings have materially deviated from the parties' agreement. A deviation will be determined on the basis of the law of the country where arbitration took place. The deviation must be considered significant in order to render the award unenforceable; and
  
  
• the award has not yet become binding on the parties, that its enforcement has been postponed in the state where it was given or that it has been declared void in that country.
  

Conclusion

The rules of the enforcement of a foreign arbitral award in Finland are closely related to the rules of the New York Convention. It has been even said that the enforcement of a foreign arbitral award pursuant to the Finnish Arbitration Act is somewhat easier than pursuant to the New York Convention.

For further information on this topic please contact Jouko Huhtala or Marko Hentunen at Castrén & Snellman by telephone (+358 9 228 581) or by fax (+358 9 601 961) or by email ([email protected] or [email protected]).