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The award

Requirements

What legal requirements are there for recognition of an award? Must reasons be given for the award? Does the award need to be reviewed by any other body?

The award must be made in writing and signed by all the arbitrators. It must also contain the date and place of arbitration.

The Finnish Arbitration Act (967/1992, as amended) (FAA) does not require that the award state the reasons on which it is based, although in practice the arbitrators always state their reasons absent specific circumstances.

The merits of an award will not be reviewed by another body, but the FAA does lay down certain requirements that must be fulfilled before a foreign award can be recognised in Finland. The award must have been made by virtue of an arbitration agreement that complies with the written form requirement of the FAA, and the award must not contradict the public policy of Finland (Section 52). Furthermore, a foreign award will not be recognised in Finland where a party proves the existence of one of the following circumstances:

  • It lacked the capacity to enter into the arbitration agreement, it was not properly represented when the agreement was entered into, or the agreement is not valid (for a reason other than its form) under the law to which the parties have subjected it (or under the law of the seat if the law that the parties intended to apply to their agreement is unknown);
  • It was not given proper notice of the arbitrator’s appointment or of the arbitration proceedings, or it was otherwise unable to present its case;
  • The arbitrators exceeded their authority;
  • The tribunal’s composition or the proceedings substantially deviated from the parties’ agreement or, in the absence of an agreement, from the law of the seat; or
  • The award has not become binding on the parties, its enforcement has been suspended “in the state in which, or under the law of which, that award was made, or it has been declared null and void or annulled in said state”.

Overall, Finnish courts are respectful towards foreign awards.

Timeframe for delivery

Are there any time limits on delivery of the award?

The FAA contains no time limit for the delivery of the award, but the parties can agree on a time limit.

The arbitrators must also promote an appropriate and expedient settlement of the matter (Section 27) and an arbitrator may be removed if he or she delays the proceedings without just cause (Section 19).

The Arbitration Rules of the Arbitration Institute of the Finland Chamber of Commerce (FAI) impose a time limit of nine months for the delivery of the award.

Remedies

Does the law impose limits on the available remedies? Are some remedies not enforceable by the court?

The FAA does not limit the types of remedy available, although it does state that the tribunal cannot issue orders under the threat of a fine or orders regarding coercive means (Section 27). According to legal scholars, awarding punitive or exemplary damages could be considered as contradicting Finnish public policy. Thus, an award allocating such damages could be deemed null and void under the FAA.

What interim measures are available? Will local courts issue interim measures pending constitution of the tribunal?

The FAA is silent on the tribunal’s power to order interim measures, although it does state that the tribunal may not impose a threat of a fine or issue orders regarding other coercive means. Legal scholars are, however, unanimous that an arbitral tribunal may order interim measures when the parties have so agreed. But arbitrator-ordered interim measures are not enforceable through the judicial system in Finland.

In practice, tribunals seated in Finland have broad discretion as to the standards for granting interim measures and they have ordered measures falling within the following categories:

  • measures aimed at facilitating the conduct of the proceedings, such as conserving evidence/property;
  • measures aimed at preserving or restoring the status quo for the duration of the proceedings, such as an order not to terminate an agreement;
  • measures aimed at facilitating the enforcement of a future arbitral awardsuch as freezing of assets; and
  • orders for security for costs.

Finnish general courts have jurisdiction to order interim measures in aid of arbitration before or during the proceedings (Section 5 of the FAA). The types of measure available from the courts and the requirements for obtaining such measures are set forth in Chapter 7 of the Code of Judicial Procedure.

Under the FAI Rules, the tribunal may order any interim measure that it deems appropriate. The FAI Rules also contain provisions related to the appointment of an emergency arbitrator where a party cannot await the constitution of a tribunal.

Interest

Can interest be awarded?

Arbitrators may award interest, but only if a party has requested that interest be awarded.

At what rate?

Where Finnish law governs the dispute, the interest rate is determined pursuant to the Finnish Interest Act (633/1982, as amended). This act ties the reference rate to the interest rate applied by the European Central Bank (Section 12 of the Finnish Interest Act). As an example, the interest on late payments is seven percentage points higher than the reference rate in force when the interest started to accrue.

Finality

Is the award final and binding?

Yes. The grounds for challenging the award – that is, declaring it null and void or setting it aside – are limited (Sections 40 and 41 of the FAA) and the only element of the award that a party can appeal to general courts is the tribunal’s compensation (Section 47).  

What if there are any mistakes?

A party may request the tribunal to correct minor mistakes (eg, errors in computation, clerical errors) within 30 days of receipt of a copy of the award. If the request is justified, the tribunal must correct the award without delay. The tribunal may also correct such errors on its own initiative (Section 38 of the FAA).

If the arbitrators have disregarded a claim, either party may, after notifying the other party, request that the arbitrators make an additional award regarding that claim, unless otherwise agreed by the parties. If the arbitrators consider the request justified, they must make the additional award as soon as possible (Section 39).

Can the parties exclude by agreement any right of appeal or other recourse that the law of your jurisdiction may provide?

If any of the grounds of Section 40 of the FAA are met, the award is automatically null and void and the court must declare it as such ex officio. The parties cannot agree otherwise.

Conversely, a party may lose its right to request that an award be set aside under Section 41 by waiving, or being deemed to have waived, that right (except if it was not given a sufficient opportunity to be heard). It would thus appear that the parties may also explicitly agree to exclude their right to set an arbitral award aside.

Appeal

What is the procedure for challenging awards?

A party can request a state court to declare an arbitral award null and void or to set it aside (Sections 40 and 41 of the FAA). Both actions must be brought before the district court with jurisdiction over the place where the award was made (Section 50).

The award is considered null and void:

  • to the extent that the arbitrators have resolved an issue that is not arbitrable under Finnish law;
  • to the extent that recognition of the award is deemed contrary to Finnish public policy;
  • if the award is so obscure or incomplete that the decision cannot be inferred from it; or
  • if the award was not made in writing or signed by the arbitrator(s).

The FAA does not contain any time limit for having an award declared null and void.

If any of these grounds are present, the award is in theory automatically null and void and the court must declare it as such ex officio. In practice a party should, in order to preserve its interests, invoke the ground for nullity in the course of the challenge proceedings or when opposing to the enforcement of the award.

The award may be set aside at the request of a party if:

  • the arbitrators have exceeded their authority;
  • an arbitrator has not been properly appointed;
  • an arbitrator has not been impartial and independent and a challenge correctly submitted by a party was not accepted before the award was rendered, or a party became aware of the grounds for a challenge so late that it was not able to challenge the arbitrator before the award was rendered; or
  • a party was not provided with sufficient opportunity to present its case.

A claim for setting aside an award must be made to the district court within three months of the date on which the party bringing the challenge received a copy of the award.

On what grounds can parties appeal an award?

The only element of an award that can be appealed is the tribunal’s decision regarding its compensation.

Enforcement

What steps can be taken to enforce the award if there is a failure to comply

Sections 43 to 45 of the FAA lay out the rules for enforcing an award rendered in Finland, whereas Sections 52 to 55 relate to the recognition and enforcement of foreign awards. A district court shall decide on the enforcement of an award in both instances (Section 43), but the FAA does not specify which specific district court has jurisdiction to make this decision.

The district court should give the party against whom enforcement is sought an opportunity to be heard, unless there are particular reasons for not hearing that party (which is rare in practice) (Sections 43 and 55).

A court can refuse to enforce an award rendered in Finland if:

  • the award is null and void under Section 40 of the FAA;
  • the award has been set aside by a court pursuant to Section 41; or
  • a court that has been seized under Section 40 or Section 41 has suspended the enforcement of the award.

If none of these grounds applies, the court must order the enforcement of the award. Where enforcement has been granted, the award will be enforced in accordance with the Enforcement Code (Section 45 of the FAA). 

A foreign award that is recognised in Finland according to the provisions of the FAA must be enforced upon application (Section 54). An award that a court has ordered to be enforced shall be enforced like a court judgment (Section 19 of the Enforcement Code).

If, after a court decision ordering enforcement, a party still refuses to perform (or is incapable of performing) the award, the party seeking enforcement may turn to the enforcement authorities (Chapters 1 and 3 of the Enforcement Code).

Enforcement proceedings are somewhat uncommon in Finland as parties usually comply with arbitral awards voluntarily.

Can awards be enforced in local courts?

Yes. An application for enforcement must be submitted to the court of first instance (Sections 43 and 54 of the FAA). Following the decision on enforcement, the arbitral award is enforced in the same manner as general courts’ judgments (Section 19 of the Enforcement Code).

How enforceable is the award internationally?

To these authors’ knowledge, awards rendered in Finland are typically enforced internationally, especially if the state where enforcement is sought has ratified the New York Convention. This is because the FAA lays down a set of criteria that an award must fulfil, and these criteria largely correspond to those required by most modern jurisdictions.

To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?

The FAA is silent on state or sovereign immunity. The FAA’s grounds for refusing enforcement of arbitral awards are, however, exhaustive. Thus, where a state or state entity has participated in the arbitration pursuant to a valid arbitration agreement, a defence of state or sovereign immunity is unlikely to succeed before Finnish courts.

Are there any other bases on which an award may be challenged, and if so, by what?

The FAA’s grounds for declaring an award null and void or setting it aside are exhaustive.

How enforceable are foreign arbitral awards in your jurisdiction?

Finnish courts are generally respectful towards foreign awards. A foreign award that is recognised in Finland shall be enforced upon request (Section 54 of the FAA) and the grounds for refusing recognition are rather restrictive.

Will an award that has been set aside by the courts in the seat of arbitration be enforced in your jurisdiction?

No, if a party proves that the foreign award was declared null and void or set aside at the seat (Section 53 of the FAA).

The court may also adjourn a decision on the enforcement of a foreign award if a party invokes that it has made an application for declaring the award null and void or for setting it aside at the seat (Section 55).

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