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National arbitration laws
What legislation applies to arbitration in your jurisdiction?
The principal law applicable to arbitration in Finland is the Arbitration Act (967/1992), which came into force on December 1 1992.
Certain other laws also contain provisions on arbitration. Of greatest practical importance is the Limited Liability Companies Act (624/2006), which provides that disputes over the right of squeeze-out and the redemption price must be settled through arbitration.
Are there any mandatory laws?
Arbitration is a flexible way to resolve disputes, as it is generally based on the agreement between the parties. Thus, the parties are free to agree, for example, on the procedure to be followed in a particular dispute.
However, certain provisions of the Arbitration Act are mandatory – for example, the provisions on setting aside an award.
In addition, the Limited Liability Companies Act provides for mandatory arbitration of, for example, squeeze-out disputes.
New York Convention
Is your country a signatory to the New York Convention? If so, what is the date of entry into force?
Finland is a signatory to the New York Convention, which entered into force on April 19 1962.
Are there any reservations to the general obligations of the convention?
Finland has made no reservations to the general obligations of the convention.
Treaties and conventions
What other treaties and conventions in relation to arbitration is your jurisdiction party to?
In addition to the New York Convention, Finland has adopted the following multilateral treaties relating to arbitration:
- the Protocol on Arbitration Clauses (September 24 1923, Geneva);
- the Convention on the Execution of Foreign Arbitral Awards (September 26 1927, Geneva);
- the General Act of Arbitration (Pacific Settlement of International Disputes) (September 26 1928, Geneva);
- the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (March 18 1965, Washington); and
- the Convention on Conciliation and Arbitration within the Conference on Security and Cooperation in Europe (December 15 1992, Stockholm).
In addition, Finland has entered into bilateral investment treaties with more than 60 states.
Has your jurisdiction adopted the UNCITRAL Model Law?
Finland has not adopted the UNICTRAL Model Law as such, but the Arbitration Act is largely compatible with the UNICTRAL Model Law.
Are there any impending plans to reform the arbitration laws in your jurisdiction?
There are no formally pending legislative reforms concerning arbitration legislation in Finland. However, there is some discussion within the Finnish arbitration community regarding suggestions to reform the Arbitration Act.
The rules of the Arbitration Institute of the Finland Chamber of Commerce were recently revised and entered into force on June 1 2013.
What are the validity requirements for an arbitration agreement?
According to the Arbitration Act, an arbitration agreement must be made in writing to be valid and must concern either an existing dispute or future disputes that may arise from a particular legal relationship specified in the agreement. In addition to a document duly signed by the parties, an arbitration agreement is considered to be made in writing if the parties have agreed that a dispute is to be settled through arbitration in an exchange of letters, emails, faxes or similar documents. An arbitration agreement is also considered to be made in writing if it is referred to in an agreement which fulfils the requirements mentioned above.
In practice, the requirement for a written arbitration agreement is not interpreted formalistically, as can be seen in a recent Supreme Court decision in which a third-party beneficiary was found to be bound by an arbitration clause included in a shareholders’ agreement to which the third party was not a signatory.
Enforcement of agreements
How are arbitration agreements enforced in your jurisdiction? What is the attitude of the national courts towards arbitration agreements?
The state courts are considered arbitration friendly.
A valid arbitration agreement excludes the jurisdiction of the courts. If court proceedings are initiated despite an arbitration agreement, the opposing party must invoke the arbitration agreement before it states its case on the merits in court. If a party fails to object to the jurisdiction of the court in its first statement on the substance of the dispute, it loses the right to invoke the arbitration agreement.
If the arbitration agreement is timely invoked, the court can only determine whether the arbitration agreement is valid, in force and applicable to the dispute. If the court finds that the aforementioned requirements are met, it cannot take the substance of the matter into consideration and shall refer the matter to arbitration.
Can an arbitral tribunal with its seat in your jurisdiction consolidate separate arbitral proceedings under one or more contracts, and, if so, in what circumstances?
There are no provisions in the Arbitration Act concerning consolidation of separate arbitration proceedings. As such, consolidation of ad hoc proceedings would require, among other things, agreement between all parties.
The Arbitration Institute of the Finland Chamber of Commerce (FAI) Rules, which are the most frequently used institutional rules in Finland, contain specific provisions on consolidation. According to the FAI Rules, several proceedings pending under the FAI Rules may be consolidated by the board of the FAI at the request of a party if all parties agree or if all claims are made under same agreement. If the claims are made under different agreements, consolidation is possible if the disputes in arbitration have arisen in connection with the same legal relationship and the arbitration agreements do not contain contradictory provisions that would render consolidation impossible.
Choice of law
How is the substantive law of the dispute determined? Where the substantive law is unclear, how will a tribunal determine what it should be?
If the parties have agreed that the law of a given state is applicable to the merits of the dispute, the tribunal will base its award on that particular law.
If the parties have not agreed on the law applicable to the merits of the dispute, the tribunal will apply the law determined by the conflict of laws rules which it considers applicable to the case.
Only with express authorisation from the parties may the tribunal base its award on what it finds reasonable (ex aequo et bono).
Are there any provisions on the separability of arbitration agreements?
No; however, the separability doctrine is nevertheless established and accepted in Finland.
Are multiparty agreements recognised?
Multi-party arbitration is recognised in Finland.
The Arbitration Act contains no provisions on multi-party arbitration. Thus, multi-party arbitration in ad hocproceedings requires, among other things, agreement between all parties.
In comparison, the Arbitration Institute of the Finland Chamber of Commerce Rules contain specific provisions applicable in multi-party situations, including provisions on joinder and appointment of the tribunal in multi-party proceedings.
Criteria for arbitrators
Are there any restrictions?
In accordance with the Arbitration Act, unless otherwise agreed by the parties, anyone with full legal capacity (ie, a person who is of age and is not bankrupt, and whose competence has not been restricted) may act as an arbitrator.
However, an arbitrator must be and remain impartial and independent of the parties. In evaluating the impartiality and independence of an arbitrator, the International Bar Association Rules on Conflict of Interest in International Arbitration may, for example, be used as a reference.
There are no explicit requirements as to the nationality or particular expertise of arbitrators under the Arbitration Act. In comparison, the Arbitration Institute of the Finland Chamber of Commerce Rules contain a default rule that if the parties are of different nationalities, the presiding or sole arbitrator should also be of a different nationality from those of the parties.
What can be stipulated about the tribunal in the agreement?
The parties may freely agree on the number of arbitrators, their competence, their language skills and so on. It is generally recommended that the parties agree at least on the number of arbitrators and the manner of their appointment.
However, stipulations regarding the composition of the tribunal that would jeopardise the impartiality and independence of the tribunal – for example, a stipulation that a relative or other person close to one of the parties is to serve as the sole arbitrator – will most likely not be enforceable.
Furthermore, discriminatory stipulations included for no justifiable reason could potentially be considered to be against the Finnish legal order and therefore invalid.
Are there any default legal requirements as to the selection of a tribunal - for example, concerning the number of arbitrators or their characteristics?
According to the Arbitration Act, unless otherwise agreed by the parties, there will be three arbitrators. The Arbitration Institute of the Finland Chamber of Commerce Rules provide for a sole arbitrator.
As stated, an arbitrator must be neutral and independent of the parties, which can have implications for the characteristics of the arbitrator. For example, in international arbitration the chairman or the sole arbitrator cannot, as a rule, be from the same country as one of the parties.
Challenging the appointment of an arbitrator
Can the appointment of an arbitrator be challenged? Can an arbitrator be disqualified? What is the procedure for this?
The appointment of an arbitrator may be challenged by a party if that arbitrator would have been disqualified to handle the matter as a judge in accordance with the Code of Judicial Procedure (4/1734), or if there are justifiable doubts as to his impartiality or independence. If a challenge is accepted, the arbitrator is disqualified.
The parties may agree on the procedure for challenging the appointment of an arbitrator. Otherwise, a party that wishes to challenge an arbitrator must do so within 15 days of becoming aware of the constitution of the tribunal or of any circumstance that calls the arbitrator’s impartiality and independence into question. The challenge must be made in writing to the tribunal and include a statement of the reasons for the challenge.
Unless the arbitrator or the other party agrees to the challenge, the tribunal will decide on the challenge. The challenging party may pursue its objections before a court only in an action to set aside the award.
The FAI Rules contain similar provisions on challenging the appointment of an arbitrator, with the exception that the board of the FAI will decide on the challenge.
How should an objection to jurisdiction be raised?
If a party wishes to challenge the jurisdiction of a tribunal, it may do so at any time during the proceedings. However, depending on the circumstances of the case, a party that does not object to the jurisdiction in its first written statement could be regarded as having silently accepted the jurisdiction of the tribunal.
The challenge to jurisdiction can be made in court, although it is more commonly raised in the arbitration proceedings. If an objection raised in the arbitration proceedings is not accepted by the tribunal, the party which raised the objection may challenge the award.
If a party challenges the tribunal’s jurisdiction in court during the arbitration proceedings, the tribunal may nevertheless continue the arbitration proceedings while awaiting the outcome of the court’s decision.
Replacement of an arbitrator
Why and how can an arbitrator be replaced?
An arbitrator cannot continue his mandate against the will of all parties. Thus, an arbitrator may be removed if the parties so agree.
Furthermore, if an arbitrator is unable to perform his functions in an adequate manner or delays the arbitration without just cause, the court shall remove the arbitrator upon request of a party. The arbitrator shall be heard, whenever possible, before being removed.
The court decision on removal of an arbitrator is not subject to appeal.
TheArbitration Institute of the Finland Chamber of Commerce (FAI) Rules contain similar provisions on the replacement of an arbitrator, with the exception that the board of the FAI Institute will decide on the replacement.
Powers and obligations
What powers and obligations do arbitrators have?
The arbitrator has the powers provided by his mandate – first and foremost of which is to decide the final resolution of the dispute which the parties have referred to arbitration.
The extent of this mandate depends on what the parties have agreed to and what relief the parties have sought. Unless the parties have agreed otherwise, the tribunal – in addition to the authority to exercise its discretion in rendering a final award – has, among other things, the power:
- to decide on the procedure and schedule to be followed;
- to decide on the law applicable to the dispute;
- to decide on the place and language of the arbitration;
- to grant interim measures;
- to order witnesses, experts and other persons to appear before it for questioning; and
- to decide on the costs of the arbitration.
However, an arbitrator’s powers to grant interim measures and order persons to appear before the tribunal are not absolute, meaning that such orders cannot be enforced. Such orders can be enforced only when ordered by a state court.
The tribunal’s main powers and obligations are closely connected. Its main obligation is to render the final award within a reasonable timeframe. Another central obligation is to provide the parties with sufficient opportunity to present their case. An arbitrator is obliged to keep the proceedings confidential. If the tribunal fails to perform its obligations, this can, under special circumstances, lead to liability for damages.
Liability of arbitrators
Are arbitrators immune from liability?
No. However, the Supreme Court has stated that arbitrators may be held liable only under special circumstances – specifically, in clear cases of procedural fault and neglect on the arbitrator’s part. When the tribunal has acted within the scope of its discretionary powers, an arbitrator cannot be held liable for any damages that may arise out of the use of these discretionary powers, even if the award is successfully challenged.
The Arbitration Institute of the Finland Chamber of Commerce Rules contain a limitation of liability clause according to which arbitrators are not liable to any person for any act or omission in relation to the arbitration, unless and only to the extent that such limitation of liability is prohibited by applicable law.
Communicating with the tribunal
How do the parties communicate with the tribunal?
As a general rule, all communications with the tribunal shall also be directed to the other party.
This is explicitly stated in the Arbitration Institute of the Finland Chamber of Commerce Rules, which stipulate that once the case file has been submitted to the tribunal, a party shall submit any written statement or other communication directly to the arbitrator and simultaneously to the other parties.
The parties are free to agree on the manner in which communications with the tribunal are to take place (eg, only email or email and subsequent submission in paper format). The parties usually agree on the manner of communication with the tribunal after the process has been initiated (eg, in a preparatory conference).
Is unanimous agreement of the tribunal required? If there is disagreement, does the will of the majority suffice? What are the implications of this?
Unanimous agreement between the arbitrators is not required.
If the arbitrators are not in unanimous agreement, the award shall be made by a majority of the arbitrators.
If no majority of votes is achieved for any opinion, the opinion of the chairman shall prevail, unless otherwise agreed by the parties. Dissenting opinions can be attached to the award.
Are there any disputes incapable of being referred to arbitration?
Any dispute in a civil or commercial matter, including future disputes, which arise from a particular legal relationship specified in the arbitration agreement and can be settled by agreement between the parties may be referred to arbitration. Thus, a tribunal cannot decide, for example, on criminal matters or matters concerning the legal capacity of natural persons, divorce, adoption or child custody.
Can the arbitrability of a dispute be challenged?
The arbitrability of a dispute may be challenged. The arbitrators shall decide whether a matter referred to the tribunal is arbitrable. However, the tribunal’s decision is not binding on a court reviewing a claim that the dispute is non-arbitrable. If an award is made in a non-arbitrable matter, the award is null and void.
Jurisdiction and competence-competence
Is the principle of competence-competence recognised in your jurisdiction? Can a party to an arbitration ask the courts to determine an issue relating to the tribunal’s jurisdiction and competence?
The principle of competence-competence is recognised and accepted in Finland. It is for the tribunal to review its own jurisdiction in order to decide whether to continue or to stop the arbitration proceedings. However, a party may challenge the validity or applicability of the arbitration agreement in court, and in such proceedings the tribunal’s decision on jurisdiction is not binding on the courts. Thus, the principle of competence-competence is not absolute.
If a party challenges the tribunal’s jurisdiction in court, the arbitrators may nevertheless commence or continue the arbitration proceedings and decide the matter at hand. If a court denies the arbitrator’s jurisdiction and this decision has become final, the arbitrators should issue an order terminating the arbitration proceedings.
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.
Estimation & allocation
How are the costs of arbitration proceedings estimated and allocated?
Unless otherwise agreed or provided, the parties shall be jointly and severally liable to pay compensation to the arbitrators for their work and expenses.
In ad hoc proceedings the arbitrators decide independently on their compensation, which must be reasonable considering the time spent, the complexity of the matter and other relevant circumstances. The parties have the right to appeal the arbitrators’ decision with regard to the amount of their compensation.
If the arbitration proceedings are conducted under the Arbitration Institute of the Finland Chamber of Commerce (FAI) Rules, the FAI determines the costs of arbitration before the final award is rendered. In addition to the costs of the actual tribunal, FAI determines the administrative fee payable to it depending on the value of the dispute.
Unless otherwise agreed by the parties, the tribunal may order a party to compensate, in whole or in part, the costs of arbitration as well as the legal costs of the other party. The principal rule regarding compensation of costs is that the unsuccessful party is responsible for the costs of both parties, as well as the fees and costs of the tribunal.
However, if both parties have won, in part, on the merits, the costs may be divided between them in proportion to the success of their respective claims. The parties may also be ordered to bear their own costs relating to the arbitration proceedings.
Security for costs
Can the national court or tribunal order security for costs under the law in your jurisdiction?
Pursuant to the Arbitration Act, the arbitrators are entitled to demand an advance on their forthcoming compensation or security for it.
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 arbitrators. The date and place of arbitration, as agreed or determined, must also be stated in the award.
The Arbitration Act contains no provisions on the reasons on which the award is based. However, it is generally held that due process in arbitration requires that the arbitrators clarify the reasoning on which the award is founded.
The Arbitration Institute of the Finland Chamber of Commerce (FAI) Rules stipulate that the tribunal shall state the reasoning on which the award is based, unless the parties have agreed that no reasoning is to be given.
Awards governed by the Arbitration Act are recognised without review by any separate institutional body. However, as stated above, if the arbitration is conducted under the FAI Rules, the tribunal must request that the FAI determine the costs of arbitration before rendering the final award.
Timeframe for delivery
Are there any time limits on delivery of the award?
The Arbitration Act contains no provisions on time limits for delivery of the award. It merely states that the tribunal shall promote the appropriate and efficient settlement of the matter.
If the proceedings are conducted under the Arbitration Institute of the Finland Chamber of Commerce (FAI) Rules, the time limit for rendering the award is nine months from the date on which the tribunal receives the case file from the FAI. In expedited arbitration, the time limit is three months.
Upon a reasoned request of the tribunal or, if deemed necessary, even on its own motion, the FAI may extend these time limits.
Does the law impose limits on the available remedies? Are some remedies not enforceable by the court?
The Arbitration Act does not limit the types of permissible remedies.
However, the public order rule determines the limits of the remedies available, as an award will be deemed null and void if it conflicts with Finnish public policy. For instance, under Finnish law, the arbitrators cannot award punitive or exemplary damages, as these would generally be considered to contradict Finnish public policy.
What interim measures are available? Will local courts issue interim measures pending constitution of the tribunal?
State courts may also grant interim measures in relation to disputes being resolved by way of arbitration. Interim measures, including protective measures, may be issued both before and after the arbitration proceedings have commenced.
Can interest be awarded?
Arbitrators may award interest. However, the parties are also free to agree on the award of interest.
At what rate?
If Finnish law applies to the dispute, interest is generally awarded according to the Interest Act (633/1982), which binds the interest rates to the reference rate of the European Central Bank. For instance, with regard to the amount of interest for late payment, the Interest Act stipulates that the amount of interest is seven to eight percentage points higher that the European Central Bank reference rate, depending on the matter.
However, the award of interest always requires that a party make a claim for interest.
Is the award final and binding?
Arbitration awards are final and binding.
However, the decision on the amount of compensation granted to the arbitrators may be appealed.
What if there are any mistakes?
A party may request the tribunal to correct errors in computation, clerical or typographical errors and any other minor errors of a similar nature in an award. After notifying the other party thereof, a party shall request the correction of the abovementioned error within 30 days of receipt of a copy of the award, unless some other period has been agreed by the parties.
The tribunal may also, on its own initiative, correct such errors within 30 days of the date of the award. Before this correction is performed, the parties must, where necessary, be given the opportunity to comment on the correction.
Can the parties exclude by agreement any right of appeal or other recourse that the law of your jurisdiction may provide?
After the award has been rendered, a party may waive its right to challenge the award, for example, by agreement, if it so wishes.
On what grounds can parties appeal an award?
Arbitral awards cannot be appealed in Finland. Awards can be challenged only on the grounds mentioned above.
What is the procedure for challenging awards?
A party can seek to have an award rendered null and void or set aside before a state court. Both types of claim must be filed with the court of first instance at the place where the award was made.
The grounds for rendering an award null and void are as follows:
- The tribunal decided an issue that was not arbitrable under Finnish law;
- Recognition of the award would be against Finnish public policy;
- The award is so obscure or incomplete that it cannot be ascertained how the dispute was decided; or
- The award was not made in writing or signed by the arbitrators.
There is no time limit in the Arbitration Act for seeking to have an award rendered null and void.
A court may also set aside an award for the following reasons:
- The tribunal exceeded its authority;
- An arbitrator was not properly appointed;
- An arbitrator could have been disqualified, but a challenge duly made by a party was not accepted before the award was made;
- A party was not aware of the grounds for disqualification and was unable to challenge the arbitrator before the award was made; or
- The tribunal did not give a party sufficient opportunity to present its case.
A claim for setting aside an award must be made within three months of the date on which the party received a copy of the award.
The first-instance decision can be appealed to the Court of Appeal. If leave to appeal is granted, the Court of Appeal decision may further be appealed to the Supreme Court. A party cannot waive its right to challenge an award before the award has been rendered.
What steps can be taken to enforce the award if there is a failure to comply?
In order for an arbitral award to be enforced, a decision on the enforceability of the award – an exequatur – must be issued by a state court of first instance. The proceedings for enforcement of a foreign arbitral award in Finland are simple.
Can awards be enforced in local courts?
In order to obtain a decision on enforceability, an application for enforcement of an arbitral award with relevant attachments must be submitted to the competent court of first instance.
A court may refuse to declare an award enforceable only if:
- it finds the award in question null and void;
- the award has been set aside by a court; or
- a court has ordered that enforcement of the award be suspended or interrupted.
The decision on enforcement may be appealed.
A court may never review the matters of substance in a dispute settled through arbitration and can refuse an application to enforce the award exclusively on the grounds stipulated in the Arbitration Act.
After the decision on enforcement is granted, enforcement of the arbitral award is regulated by the Enforcement Code (705/2007), according to which arbitral awards are enforced in the same manner as regular court decisions.
How enforceable is the award internationally?
Finnish arbitral awards are easy to enforce internationally, especially if the state in which the award is to be enforced is a signatory to the New York Convention. However, that state's domestic law will ultimately determine the enforceability of a foreign award. In practice, awards issued in arbitration proceedings seated in Finland are almost invariably enforced in other states.
To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?
Finnish law includes no stipulations on the defence of state or sovereign immunity. The grounds for refusing to declare an award enforceable are exhaustive. If any of these grounds cannot be invoked and if the state or a state entity has legitimately committed itself to arbitration, a defence of state or sovereign immunity will not succeed.
Although it is not yet in force, Finland is a signatory to the United Nations Convention on Jurisdictional Immunities of States and Their Property. This stipulates, for example, that if a state enters into an agreement in writing with a foreign natural or legal person to submit differences relating to a commercial transaction to arbitration, that state cannot subsequently invoke immunity from jurisdiction before a court of another state which is otherwise competent in a proceeding relating to the validity, interpretation or application of the arbitration agreement, the arbitration procedure or the confirmation or setting aside of the award, unless the arbitration agreement otherwise provides.
Are there any other bases on which an award may be challenged, and if so, by what?
The grounds on which an award can be challenged are exhaustive.
How enforceable are foreign arbitral awards in your jurisdiction?
Foreign arbitral awards are easily enforced in Finland, as Finland is a signatory to the New York Convention and the state courts are generally perceived to be arbitration friendly.
Will an award that has been set aside by the courts in the seat of arbitration be enforced in your jurisdiction?
If an award is set aside or declared null and void in the state of the seat of arbitration, the award cannot be enforced in Finland. However, this requires the party opposing enforcement to present proof that the award has in fact been declared null and void or set aside in the state of the seat of arbitration.
Rules and restrictions
Are there rules or restrictions on third-party funders?
No. Third-party funding is generally permissible, but it may raise questions with regard to the claims for costs.
Class-action or group arbitration
Is there a concept in your jurisdiction providing for class-action arbitration or group arbitration? If so, are there any limitations to the arbitrability of such claims or requirements that must be met before such claims may be arbitrated?
There are no provisions regarding class-action or group arbitration in Finland.
Are there any hot topics or trends emerging in arbitration in your jurisdiction?
The arbitration community in Finland has been thriving in recent years. The new Arbitration Institute of the Finland Chamber of Commerce Rules were adopted and entered into force on June 1 2013 and the Young Arbitration Club Finland was established in 2012. Debate is ongoing as whether the Arbitration Act should be reformed.