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Starting an arbitration proceeding
What is needed to commence arbitration?
Pursuant to the Arbitration Act, a party that wishes to refer a dispute to arbitration must initiate the proceedings by giving notice thereof in writing to the other party.
The arbitration agreement and the dispute that is intended to be resolved in arbitration must be referred to in the notice.
The notice must also contain the name of the arbitrator or arbitrators that the party initiating the proceedings wishes to appoint. At the same time, the other party to the proceedings shall be requested to select its own appointees for the position of arbitrator or arbitrators.
If the parties have agreed that someone other than the parties is to appoint an arbitrator, the notice must also be sent to the agreed-upon appointing authority.
If the arbitration is conducted under the Arbitration Institute of the Finland Chamber of Commerce (FAI) Rules, the party initiating the proceedings shall submit a request for arbitration to the FAI together with a sufficient number of copies to provide one copy to each party, one for each arbitrator and one for the FAI. The FAI shall then transmit a copy of the request for arbitration with the attached documents to the respondent once the claimant has supplied a sufficient number of copies and paid the filing fee.
The FAI Rules stipulate specific prerequisites for the request for arbitration. According to the FAI Rules, the request for arbitration must contain, among other things:
- details of the parties;
- identification of the arbitration agreement and the agreement from which the dispute has arisen;
- a brief description of the dispute;
- a preliminary statement of the relief sought;
- the proposals as to the number of arbitrators;
- the language and the seat of arbitration; and
- the law applicable to the substance of the dispute.
Are there any limitation periods for the commencement of arbitration?
Are there any procedural rules that arbitrators must follow?
As a starting point, the parties are free to agree – either in writing or orally – on procedural questions as they see fit. Otherwise, the tribunal may conduct the arbitration in such manner as it considers appropriate, subject to the provisions of the Arbitration Act and institutional rules, if applicable, and at all times taking into account the requirements of impartiality and efficiency.
Most importantly, the tribunal is obliged to give all parties sufficient opportunity to present their case.
Are dissenting opinions permitted under the law of your jurisdiction?
Can local courts intervene in proceedings?
As previously stated, state courts in Finland are perceived to be arbitration friendly and do not have competence to intervene in arbitration proceedings. However, the state courts have jurisdiction over some matters related to arbitration.
Can the local courts assist in choosing arbitrators?
State courts may assist in appointing arbitrators if a party fails to fulfil its obligation to appoint an arbitrator.
What is the applicable law (and prevailing practice) where a respondent fails to participate in an arbitration? Can they compel parties to arbitrate? Can they issue subpoenas to third parties?
The Arbitration Act does not provide for any means to compel the parties to arbitrate. If a respondent fails to participate in an arbitration, the tribunal may nevertheless proceed with the matter and render a verdict. However, even if the respondent remains passive, the verdict must be based on sufficient evidence presented by the claimant.
State courts may assist in the taking of evidence, if the tribunal considers it necessary to hear a witness under oath or truth affirmation or for producing documentary evidence.
In what instances can third parties be bound by an arbitration agreement or award?
Due to the principle of privity of contract, an arbitration agreement generally binds only the parties thereto.
However, this principal rule is not applied without exception and in certain situations the effects of an arbitration agreement can also extend to non-signatories.
It is generally accepted, for example, that in cases of universal succession – such as mergers – the successor is bound by an arbitration agreement that was binding on the succeeded party. Also, in insolvency situations, the bankruptcy estate is generally bound by an arbitration agreement.
Furthermore, in recent precedents the Supreme Court held that third-party beneficiaries were bound by arbitration clauses contained in the contracts which the parties had based their claims upon, even though the parties in question had not signed the contracts.
These precedents may be seen as a demonstration of the pro-arbitration approach of the state courts.
Default language and seat
Unless agreed by the parties, what is the default language and location for arbitrations?
If the parties have not agreed on the language of the proceedings, the arbitrators have the power to decide on the language or languages of the arbitration. In making this decision, the arbitrators will consider the language of the arbitration agreement and the language used in the business relationship between the parties.
The same rule applies to the seat of the arbitration. Hence, if the parties have not specifically agreed on the seat of the arbitration, the arbitrators will make this decision.
How is evidence obtained by the tribunal?
The parties are free to agree on the procedure applicable to the hearings and the taking of evidence.
If the parties have not agreed on the taking of the evidence, the tribunal may govern the matter as it sees fit. However, the arbitrators are at all times obliged to treat the parties with impartiality and to give each party a sufficient and equal opportunity to present its case.
Under the Arbitration Act, the tribunal may require a party, a witness or any other person to appear for questioning and request a party or any other person in possession of a written document or other object relevant as evidence to produce the document or object in question. However, the act specifically states that a tribunal may not impose any penalty or use other means of constraint. The tribunal also cannot administer oaths or any other equivalent affirmations. If a party insists on hearing a witness under oath, the tribunal may request court assistance in the matter if it considers it necessary. The Arbitration Act includes no provisions on the admissibility of evidence.
In practice, inspiration is often drawn from the International Bar Association Rules on the Taking of Evidence when deciding on issues pertaining to evidence. In international arbitration, it is also recommended that the tribunal consider the reasonable expectations of parties of different nationalities. The evidence presented in the arbitral proceedings in Finland consist usually of oral and written witness statements, expert witness statements and written documentation.
Generally speaking, proceedings seated in Finland are customarily described as adversarial in nature, meaning that the parties rather than the tribunal are primarily responsible for obtaining and presenting evidence.
What kinds of evidence are acceptable?
As is common in civil law jurisdictions, the Arbitration Act includes no provisions on the admissibility of evidence. Thus, in Finland, the parties are free to present such evidence as they consider appropriate. Thereafter, it is left to the tribunal to determine the evidentiary value of the evidence presented as it sees fit.
Is confidentiality ensured?
In Finland, arbitration proceedings are neither public nor automatically confidential. Confidentiality may be based on the agreement between the parties or institutional rules that provide for confidentiality.
For instance, the Arbitration Institute of the Finland Chamber of Commerce Rules state that, unless otherwise agreed, the tribunal and each party to the arbitration undertake to keep confidential all awards and other decisions of the tribunal, as well as all materials submitted by the opposing party in connection with the arbitration and so on.
Can information in arbitral proceedings be disclosed in subsequent proceedings?
If court assistance is required – for instance, in the enforcement of the award – the award must be disclosed and consequently becomes public. However, if the award or other documents relating thereto contain trade secrets or other information that requires confidentiality, a party may ask the court to declare the proceedings either partially or entirely confidential.
What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your jurisdiction?
There are no separate ethical guidelines for arbitrators or counsel that are to be followed during arbitration proceedings. Although the International Bar Association Guidelines on Party Representation in International Arbitration are not binding in Finland, they are generally observed.
The arbitrator’s ethical responsibilities also derive from the Arbitration Act and its requirements of impartiality and independence, as the arbitrators are obliged to provide both parties with sufficient opportunity to present their case.
If the arbitrators or counsel are members of the Finnish Bar Association, the ethical rules of the association also apply to them during arbitration proceedings.
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