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Starting an arbitration proceeding
What is needed to commence arbitration?
To launch arbitration proceedings, the claimant must send a written notice with the following information to the opposing party (Section 12 of the Finnish Arbitration Act (967/1992, as amended) (FAA)):
- the arbitration agreement and description of the dispute;
- the arbitrator(s) whom the claimant intends to appoint; and
- a request to the other party to appoint an arbitrator or arbitrators, where applicable.
A claimant can of course include additional information in its written notice.
The proceedings are deemed to commence when the opposing party receives the notice (Section 21 of the FAA).
The FAI Rules contain more detailed requirements regarding the content of the notice of arbitration.
Are there any limitation periods for the commencement of arbitration?
Pursuant to the Code of Judicial Procedure, if a party has obtained a court-ordered interim measure regarding the matter in dispute, it must start arbitration proceedings within one month from the order to keep the measure in force. Apart from this provision, Finnish law does not contain specific limitation periods for the commencement of arbitration.
If the applicable substantive law is Finnish law, the Finnish Act on Statute of Limitations (728/2003 as amended) regulates the limitation periods. This act contains a number of limitation periods for different types of debt claim.
Are there any procedural rules that arbitrators must follow?
For the most part, the parties may agree on the conduct of their proceedings and the tribunal must follow that agreement (including any institutional rules the parties may have agreed on). In the absence of a party agreement, the tribunal shall conduct the arbitration in a manner that it considers appropriate.
The FAA contains certain rules that must be followed in the conduct of the proceedings. First, the arbitrators must give the parties sufficient opportunity to present their case. Second, the arbitrators must promote the appropriate and expedient settlement of the dispute. Third, the arbitrators must terminate the proceedings if they find that the proceedings cannot continue for any reason, if the parties agree on the termination, or if the claimant withdraws its claim and the respondent does not have a legitimate interest in obtaining a final settlement (Sections 27 and 30). Fourth, a tribunal must decide the dispute in accordance with the law or ex aequo et bono if the parties have so agreed.
The arbitrators must also follow the FAA’s provisions on the formal requirements and service of the award, as well as the rules that apply when an award must be corrected or where the arbitrators disagree on the award.
Are dissenting opinions permitted under the law of your jurisdiction?
While the FAA does not expressly address this issue, dissenting opinions are permitted in Finland and they are added to awards from time to time.
Can local courts intervene in proceedings?
The courts cannot hear a dispute covered by a valid and invoked arbitration agreement (Section 5 of the FAA), but they have a number of powers that they can use during arbitral proceedings, such as:
- granting interim orders and prohibitions (Section 5);
- hearing a claim regarding the tribunal’s jurisdiction (see above); and
- assisting in the production of evidence if the arbitral tribunal deems it necessary (Section 29).
Can the local courts assist in choosing arbitrators?
A party may request a general court to appoint an arbitrator where the other party has failed to fulfil its obligation to appoint one (Section 15 of the FAA). Furthermore, any party may request a general court to appoint an arbitrator if the parties cannot agree on a sole arbitrator (Section 16).
The general courts can also appoint a substitute arbitrator in certain circumstances (Section 14).
Under the Arbitration Rules of the Arbitration Institute of the Finland Chamber of Commerce (FAI), the FAI Board may appoint the arbitrator(s) where needed.
What is the applicable law (and prevailing practice) where a respondent fails to participate in an arbitration? Can the courts compel parties to arbitrate? Can they issue subpoenas to third parties?
The FAA does not explicitly foresee the situation of a respondent failing to participate but, according to legal literature, the arbitral proceedings can commence and the arbitrators may rule on the dispute based on the material before them in such circumstances. Indeed, the FAA merely requires that the arbitrators give the parties an opportunity to present their case – it does not require that the parties actually seize this opportunity.
The arbitrators can urge a witness or any other person to appear before them, but they may not use coercive means (Section 27 of the FAA). If, in light of this lack of powers, the arbitrators need the general courts’ assistance, a witness can be heard in a local court (Section 29). The Finnish Code of Judicial Procedure regulates the duty of a subpoenaed witness to appear in court.
In what instances can third parties be bound by an arbitration agreement or award?
As a rule, an arbitration agreement and the award rendered on its basis bind only the parties, although a non-signatory can become bound in certain limited circumstances.
For instance, an arbitration agreement binds a third party in case of a universal succession where the rights of a party under the agreement are transferred to a third party. Furthermore, an arbitration clause can bind a non-signatory where the contract containing the clause explicitly grants rights to the non-signatory. The case law of the Finnish Supreme Court suggests a permissive stance on arbitration agreements’ binding third parties in these circumstances (eg, KKO 2013:84 and KKO 2007:39).
Default language and seat
Unless agreed by the parties, what is the default language and location for arbitrations?
Unless the parties have agreed thereupon, the arbitrators shall determine the place of arbitration and the language(s) of the proceedings (Sections 24 and 26 of the FAA).
How is evidence obtained by the tribunal?
The parties are free to agree on the production of evidence. If the parties have not agreed thereupon, the tribunal may decide on how evidence should be presented.
It is generally for the parties to supply the evidence that they rely on. The arbitrators may however request any person to appear as a witness and they may request any person in possession of a document or other object with evidentiary value to produce it; they have no coercive powers to enforce such requests, though. Furthermore, unless otherwise agreed by the parties, the tribunal may appoint an expert witness (Sections 27 and 28 of the FAA).
Where the arbitrators deem it necessary, a party may petition a local court to compel a witness to appear in court or any person to produce evidence that may be of relevance to the case (Section 29). A party may petition a local court to that effect only if so authorised by the tribunal.
In addition, tribunals may – and often do – apply (or at least seek guidance from) the International Bar Association Rules on the Taking of Evidence in International Arbitration, unless the parties agree otherwise.
What kinds of evidence are acceptable?
The FAA does not restrict the type of evidence that the parties may submit. Thus, the parties may rely on any relevant documents, expert witnesses, witness testimonies, and other material in support of their case.
The arbitrators may refuse to admit evidence where it is clearly irrelevant.
Is confidentiality ensured?
The FAA is silent on the question of confidentiality and there appears to be no authoritative case law on the issue. The prevailing opinion is that the arbitrators are bound by confidentiality regarding both the proceedings and the award. Conversely, the parties themselves seem to be under no obligation to retain the confidentiality of the proceedings or of the award. Therefore, it is advisable that the parties agree on confidentiality in their arbitration agreement or in the course of the proceedings if they wish their arbitration to be confidential.
Furthermore, information about the arbitration may become public if the parties or the arbitrators turn to courts for assistance.
The Arbitration Rules of the Arbitration Institute of the Finland Chamber of Commerce include an express provision on confidentiality, which imposes an obligation of confidentiality on the institute, the tribunal and the parties.
Can information in arbitral proceedings be disclosed in subsequent proceedings?
Yes. Court proceedings related to an arbitration (eg, challenge or enforcement proceedings) require the submission of the award and certain other documents to the court. The general rule under the Finnish publicity laws is that documents become public once submitted to the court. The court will only consider the award or other documents confidential if they include business or professional secrets or other information protected by law.
What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your jurisdiction?
No specific ethical standards bind arbitrators or counsels in arbitral proceedings.
The Finnish Bar Association has an ethical code that binds attorneys at law admitted in Finland, but neither counsels appearing in arbitration proceedings seated in Finland nor the arbitrators need to be admitted to the Bar.
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