FINLAND Law and Practice Contributed by: Tuuli Timonen, Annika Lampela and Tony Chokairy, Dottir Attorneys
3.7 Regulation of Arbitration The Finnish Arbitration Act
However, note that the role of the ECT and other intra- EU investment treaties have lost some of their rel- evance following the CJEU’s Achmea ruling and its subsequent approach to intra-EU investment arbitra- tion. 3.8 Court Powers Finnish courts play a supportive role in arbitration and may, for example: • assist in the appointment of arbitrators if a party fails to act in accordance with the agreed proce- dure; • decide on challenges to arbitrators in some cases; • grant interim measures before or during arbitration; and • enforce arbitral awards. 3.9 Court Intervention Court intervention in arbitration is limited and occurs only in situations expressly provided by law. A court may decline jurisdiction in favour of arbitra- tion where a valid and applicable arbitration agree- ment exists and a party invokes it. In this context, the court may assess the existence and scope of the arbitration agreement. Although the current Finnish Arbitration Act does not contain an explicit provision on competence-competence, it is generally accepted in Finnish legal practice that arbitral tribunals may rule on their own jurisdiction. In practice, courts tend to exercise restraint and will typically refer the matter to arbitration unless the arbitration agreement is clearly invalid, inapplicable or incapable of being performed. Finnish courts have also, in certain circumstances, assessed arbitration agreements from the perspec- tive of reasonableness when there has been a clear imbalance between the parties. The Supreme Court has held that an arbitration clause may be disregarded under general contract law principles if its application would unreasonably restrict a party’s access to jus- tice, for example, due to disproportionate arbitration costs. This has been emphasised in cases involving individuals or parties in a comparably weaker posi- tion. For example, in a case concerning an employ- ment-related dispute, the Supreme Court found that enforcing an arbitration clause against an individual
Arbitration in Finland is governed by the Finnish Arbi- tration Act, which regulates arbitration agreements, the constitution of tribunals, the conduct of proceed- ings, and the recognition, enforcement and setting aside of awards. The Act applies to both domestic and international arbitration proceedings. A comprehensive reform of the Arbitration Act is cur- rently underway. The reform is expected to result in the enactment of a new Arbitration Act that is more closely aligned with the UNCITRAL Model Law, both in structure and substance. The objective is to mod- ernise the legislative framework, improve clarity and enhance Finland’s attractiveness as a seat for inter- national arbitration. Key proposed changes include, for example, the removal of the formal written form requirement for arbitration agreements and the introduction of clearer rules on the law applicable to the arbitration agree- ment. The reform also strengthens the role of arbitral tribunals by expressly recognising their competence to rule on their own jurisdiction and by introducing provisions on tribunal-ordered interim measures, which would exist alongside the courts’ powers. The new Act, if adopted, is expected to enter into force in 2027. International Conventions and Treaties Finland is a party to the New York Convention. This ensures that arbitral awards rendered in Finland are widely enforceable internationally and likewise, that foreign arbitral awards can be recognised and enforced in Finland. Finland is also a party to the Convention on the Set- tlement of Investment Disputes between States and Nationals of Other States (the “ICSID Convention”) and had entered into 82 bilateral investment treaties (BITs) at the time of writing this article, providing a framework for investor-state dispute resolution. In addition, Finland is a contracting state party to the Energy Charter Treaty (ECT).
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