FINLAND Law and Practice Contributed by: Timo Lehtimäki, Niklas Thibblin, Essi Hietaoja and Oona Honkamaa, Waselius
jurisdiction, and there is no binding legal framework for resolving conflicts – this may particularly impact on security over receivables where the creditor and debtor of the receivables are not located in the same jurisdiction. Further, submission to a foreign jurisdiction is also generally recognised in Finland, though enforcement of foreign judgments may be limited, as discussed in The enforceability of a judgment by a foreign court or of an arbitral award depends on where the judg - ment or arbitral award is issued. In each case, the enforcement of foreign judgments or arbitral awards in Finland is subject to the provisions of the applicable regulation, convention or treaty (such as the Brussels I Regulation, the Lugano Convention, the Hague Con - vention and the New York Convention). If no regula - tion, convention or treaty applies, enforcement may require a re-examination of merits and/or judgment of: • a Finnish court; • a court of another EU member state under the Brussels I Regulation; or • a court of a country signatory to an enforcement treaty with Finland or the EU, as applicable. 6.4 A Foreign Private Credit Lender’s Ability to Enforce Its Rights The commencement of insolvency proceedings may delay or prevent enforcement. For example, the filing for company restructuring usually triggers a morato - rium, as outlined in 7. Bankruptcy and Insolvency . 6.5 Timing and Cost of Enforcement The costs and speed of the process largely depend on the security asset in question and on whether enforce - ment is part of insolvency proceedings. 6.3 Foreign Court Judgments . 6.3 Foreign Court Judgments Since under the relevant security agreement the pledg - ee is usually free to choose the means of enforce - ment regarding security over specific movable prop - erty (such as shares, bank accounts and receivables), the timeframe for the completion of the enforcement proceedings and the distribution of the enforcement proceeds primarily depends on the practicalities, such
as how swiftly the security assets can be sold and/or instructions given. However, in the case of a floating charge, given that the pledgor may plead its case in the court proceed - ings and appeal the court’s decision, this may serve to materially postpone the enforcement proceedings. Further, enforcement measures regarding a floating charge typically result in formal insolvency proceed - ings. The costs associated with pre-insolvency enforcement typically consist of the fees for the advisers, valuers, etc, and, with regard to certain security assets, of the court’s and the bailiff’s fees. In bankruptcy, the bankruptcy estate has priority to receive payment of certain expenses from the pro - ceeds of the realisation of security assets. The bank - ruptcy trustee is also entitled to a reasonable fee, considering the nature and amount of work required. 6.6 Practical Considerations/Limitations on Enforcement The primary practical considerations regarding enforcement are of a commercial nature – ie, as fol - lows. • What is the best enforcement point in the struc - ture? • How quickly can a buyer be found and assets sold? • Can the business be disposed of as a going con - cern? • Can all assets be sold at the same time? • How likely is the borrower to file for formal insol - vency proceedings, which may be destructive for value and/or result in a moratorium for enforce - ment, etc? As a slight limitation deriving from Finnish law, the pledgee may not just simply appropriate the security assets – ie, have the title to the assets automatically transferred to the pledgee upon default. However, even though appropriation as such is prohibited, Finn - ish law does not prohibit the pledgee from effectively assuming ownership of the security assets (essentially by selling the security assets to itself) or selling the
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