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The dispute resolution
Review
Law Business Research
Fifth Edition
Editor
Richard clark
The Dispute Resolution Review
Reproduced with permission from Law Business Research Ltd.
This article was first published in The Dispute Resolution Review, 5th edition(published in February 2013 – editor Richard Clark).
For further information please [email protected]
The Dispute Resolution
Review
Fifth Edition
EditorRichard Clark
Law Business Research Ltd
ThE Law REviEwsThE MERgERS AnD ACquiSiTionS REviEw
ThE RESTRuCTuRing REviEw
ThE PRivATE CoMPETiTion EnFoRCEMEnT REviEw
ThE DiSPuTE RESoLuTion REviEw
ThE EMPLoyMEnT LAw REviEw
ThE PuBLiC CoMPETiTion EnFoRCEMEnT REviEw
ThE BAnking REguLATion REviEw
ThE inTERnATionAL ARBiTRATion REviEw
ThE MERgER ConTRoL REviEw
ThE TEChnoLogy, MEDiA AnD TELECoMMuniCATionS REviEw
ThE inwARD invESTMEnT AnD inTERnATionAL TAxATion REviEw
ThE CoRPoRATE govERnAnCE REviEw
ThE CoRPoRATE iMMigRATion REviEw
ThE inTERnATionAL invESTigATionS REviEw
ThE PRojECTS AnD ConSTRuCTion REviEw
ThE inTERnATionAL CAPiTAL MARkETS REviEw
ThE REAL ESTATE LAw REviEw
ThE PRivATE EquiTy REviEw
ThE EnERgy REguLATion AnD MARkETS REviEw
ThE inTELLECTuAL PRoPERTy REviEw
ThE ASSET MAnAgEMEnT REviEw
ThE PRivATE wEALTh AnD PRivATE CLiEnT REviEw
ThE Mining LAw REviEw
ThE ExECuTivE REMunERATion REviEw
ThE AnTi-BRiBERy AnD AnTi-CoRRuPTion REviEw
ThE CARTELS AnD LEniEnCy REviEw
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acknowLEDgEmEnTs
ii
Acknowledgements
DiTTMAR & inDREniuS
FonTES TARSo RiBEiRo ADvogADoS
FuLBRighT & jAwoRSki LLP in ASSoCiATion wiTh
MohAMMED AL-ghAMDi LAw FiRM
gATMAyTAn yAP PATACSiL guTiERREz & PRoTACio
hEngELER MuELLER
hERgünER BiLgEn ÖzEkE ATToRnEy PARTnERShiP
hoMBuRgER
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jun hE LAw oFFiCES
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MoLiToR AvoCATS á LA CouR
MoTiEkA & AuDzEviČiuS
oSLER, hoSkin & hARCouRT LLP
oxFoRD & BEAuMonT SoLiCiToRS
Acknowledgments
iii
Pellegrini & UrrUtia
Pinsent Masons llP
PiPer alderMan
Plesner law firM
PotaMitisVeKris
schrecK law offices
slaUghter and May
sofUnde, osaKwe, ogUndiPe & Belgore
szecsKay attorneys at law
toMaier legal adVoKÁtnÍ KancelÁŘ s.r.o.
tsMP law corPoration
ŢUca zBârcea & asociaŢii
Uria Menendez
UrÍa Menéndez – Proença de carValho
UteeM chaMBers
yoUng conaway stargatt & taylor llP
iv
conTEnTs
Editor’s Preface ...................................................................................................xiRichard Clark
Chapter 1 AuSTRALiA .............................................................................. 1Malcolm Quirey and Gordon Grieve
Chapter 2 AuSTRiA ................................................................................. 32Helena Marko and Anna Zeitlinger
Chapter 3 BAhRAin ............................................................................... 47Haifa Khunji, Kaashif Basit and Jessica Lang Roth
Chapter 4 BELgiuM ............................................................................... 59Geert Bogaert, Etienne Kairis, Aude Mahy and Stéphanie De Smedt
Chapter 5 BRAziL.................................................................................... 80Marcus Fontes, Max Fontes and Juliana Huang
Chapter 6 BRiTiSh viRgin iSLAnDS ................................................. 99Arabella di Iorio and Victoria Lord
Chapter 7 CAnADA ............................................................................... 113David Morritt and Eric Morgan
Chapter 8 CAyMAn iSLAnDS ............................................................. 128Aristos Galatopoulos and Caroline Moran
Chapter 9 ChiLE ................................................................................... 141Enrique Urrutia and José Manuel Bustamante
Chapter 10 ChinA .................................................................................. 152Xiao Wei, Zou Weining and Stanley Xing Wan
Chapter 11 CoLoMBiA .......................................................................... 162Bernardo Salazar and Natalia Caroprese
Contents
v
Chapter 12 CzECh REPuBLiC .............................................................. 174Jan Tomaier and Matúš Hanuliak
Chapter 13 DELAwARE .......................................................................... 190Elena C Norman and Lakshmi A Muthu
Chapter 14 DEnMARk ........................................................................... 202Peter Schradieck and Peter Fogh
Chapter 15 EngLAnD & wALES .......................................................... 214Richard Clark and Damian Taylor
Chapter 16 FinLAnD.............................................................................. 234Jussi Lehtinen and Heidi Yildiz
Chapter 17 FRAnCE ................................................................................ 246Tim Portwood
Chapter 18 gERMAny ............................................................................ 261Henning Bälz and Carsten van de Sande
Chapter 19 ghAnA ................................................................................. 279David A Asiedu and Joseph K Konadu
Chapter 20 giBRALTAR .......................................................................... 292Stephen V Catania
Chapter 21 gREECE ................................................................................ 301Konstantinos P Papadiamantis
Chapter 22 guERnSEy ........................................................................... 312Alasdair Davidson and Jon Barclay
Chapter 23 hong kong ...................................................................... 323Mark Hughes
Chapter 24 hungARy ............................................................................ 345Zoltán Balázs Kovács and Dávid Kerpel
Chapter 25 inDiA .................................................................................... 360Zia Mody and Shreyas Jayasimha
Contents
vi
Chapter 26 inDonESiA ......................................................................... 371Pheo M Hutabarat
Chapter 27 iRELAnD .............................................................................. 392Andy Lenny, Claire McGrade, Gareth Murphy and Sara Carpendale
Chapter 28 iSRAEL .................................................................................. 406Shraga Schreck and Daniella Schoenker-Schreck
Chapter 29 iTALy ..................................................................................... 432Monica Iacoviello, Vittorio Allavena and Paolo Di Giovanni
Chapter 30 jAPAn .................................................................................... 455Tatsuki Nakayama
Chapter 31 jERSEy .................................................................................. 469David Cadin and Dina El-Gazzar
Chapter 32 koREA .................................................................................. 481Tae Yong Ahn, Nathan D McMurray and Rieu Kim
Chapter 33 kuwAiT ............................................................................... 492Kaashif Basit and Basem Al-Muthafer
Chapter 34 LiThuAniA ......................................................................... 504Ramūnas Audzevičius and Mantas Juozaitis
Chapter 35 LuxEMBouRg ................................................................... 518Michel Molitor and Paulo Lopes Da Silva
Chapter 36 MALTA .................................................................................. 527Marisa Azzopardi and Kristina Rapa Manché
Chapter 37 MAuRiTiuS ......................................................................... 540Muhammad R C Uteem
Chapter 38 MExiCo ............................................................................... 553Miguel Angel Hernández-Romo Valencia
Chapter 39 nEThERLAnDS .................................................................. 567Ruud Hermans and Margriet de Boer
Contents
viii
Chapter 40 nigERiA ............................................................................... 586Babajide Ogundipe and Lateef Omoyemi Akangbe
Chapter 41 noRwAy .............................................................................. 601Jan B Jansen and Sam E Harris
Chapter 42 PAkiSTAn ............................................................................. 615Ashtar Ausaf Ali, Zoya Chaudary and Nida Aftab
Chapter 43 PERu ..................................................................................... 632Claudio C Cajina and Marcello Croci G
Chapter 44 PhiLiPPinES ........................................................................ 643Ben Dominic R Yap, Jesus Paolo U Protacio, Erdelyne C Go and Jess Raymund M Lopez
Chapter 45 PoLAnD ............................................................................... 657Justyna Szpara and Agnieszka Kocon
Chapter 46 PoRTugAL .......................................................................... 672Francisco Proença De Carvalho
Chapter 47 RoMAniA ............................................................................ 683Levana Zigmund
Chapter 48 SAuDi ARABiA .................................................................... 697Mohammed Al-Ghamdi, John Lonsberg, Jonathan Sutcliffe and Sam Eversman
Chapter 49 SCoTLAnD .......................................................................... 717Jim Cormack and David Eynon
Chapter 50 SingAPoRE ......................................................................... 732Thio Shen Yi, Karen Teo, Peter John Ladd and Adeline Chung
Chapter 51 SouTh AFRiCA .................................................................. 745Gerhard Rudolph and Nikita Young
Chapter 52 SPAin .................................................................................... 766Esteban Astarloa and Patricia Leandro Vieira da Costa
Contents
ix
Chapter 53 SwEDEn .............................................................................. 789Jakob Ragnwaldh and Niklas Åstenius
Chapter 54 SwiTzERLAnD ................................................................... 800Balz Gross, Claudio Bazzani and Julian Schwaller
Chapter 55 TuRkEy ................................................................................ 818Noyan Göksu
Chapter 56 ukRAinE .............................................................................. 840Sergiy Shklyar and Markian Malskyy
Chapter 57 uniTED STATES ................................................................. 851Nina M Dillon and Timothy G Cameron
Chapter 58 viETnAM ............................................................................. 869Do Trong Hai
Appendix 1 ABouT ThE AuThoRS .................................................... 885
Appendix 2 ConTRiBuTing LAw FiRMS’ ConTACT DETAiLS .. 925
xi
editor’s preface
Richard Clark
Following the success of the first four editions of this work, the fifth edition now extends to some 58 jurisdictions and we are fortunate, once again, to have the benefit of incisive views and commentary from a distinguished legal practitioner in each jurisdiction. Each chapter has been extensively updated to reflect recent events and provide a snapshot of key developments expected in 2013.
As foreshadowed in the preface to the previous editions, the fallout from the credit crunch and the ensuing new world economic order has accelerated the political will for greater international consistency, accountability and solidarity between states. Governments’ increasing emphasis on national and cross-border regulation – particularly in the financial sector – has contributed to the proliferation of legislation and, while some regulators have gained more freedom through extra powers and duties, others have disappeared or had their powers limited. This in turn has sparked growth in the number of disputes as regulators and the regulated take their first steps in the new environment in which they find themselves. As is often the case, the challenge facing the practitioner is to keep abreast of the rapidly evolving legal landscape and fashion his or her practice to the needs of his or her client to ensure that he or she remains effective, competitive and highly responsive to client objectives while maintaining quality.
The challenging economic climate of the last few years has also led clients to look increasingly outside the traditional methods of settling disputes and consider more carefully whether the alternative methods outlined in each chapter in this book may offer a more economical solution. This trend is, in part, responsible for the decisions by some governments and non-governmental bodies to invest in new centres for alternative dispute resolution, particularly in emerging markets across Eastern Europe and in the Middle East and Asia.
The past year has once again seen a steady stream of work in the areas of insurance, tax, pensions and regulatory disputes. 2012 saw regulators flex their muscles when they handed out massive fines to a number of global banks in relation to alleged breaches of UN sanctions, manipulation of the LIBOR and EURIBOR rates and money-laundering
Editor’s Preface
xii
offences. The dark clouds hanging over the EU at the time of the last edition have lifted to some degree after the international efforts in 2012 saved the euro from immediate and catastrophic collapse, although the region continues to prepare for a period of uncertainty and challenging circumstances. It is too early to tell what, if any, fundamental changes will occur in the region or to the single currency, but it is clear that the current climate has the potential to change the political and legal landscape across the EU for the foreseeable future and that businesses will be more reliant on their legal advisers than ever before to provide timely, effective and high-quality legal advice to help steer them through the uncertain times ahead.
Richard ClarkSlaughter and MayLondonFebruary 2013
234
Chapter 16
finland
Jussi Lehtinen and Heidi Yildiz1
I INTRODUCTION TO DISPUTE RESOLUTION FRAMEWORK
In Finland, standard court litigation and commercial arbitration are the main methods for resolving commercial disputes. Arbitration and other forms of private dispute resolution are discussed further in Section VI.
The Finnish general court system, comprising civil and criminal courts, is distinct from the administrative court system, which mainly administers cases concerning disputes regarding public interest between a public authority and a legal person, including private individuals and corporations. Different procedural laws and rules govern these two systems.
The general courts consist of 27 district courts constituting the courts of first instance, six courts of appeal and the Supreme Court. The court of appeal is the first appellate level for the decisions of the district courts, while the Supreme Court is the final judicial authority. Following the revision of the Code of Judicial Procedure in January 2011,2 in certain cases of small monetary value, where the difference between the amount of the claim and the award of the district court is less than €10,000, leave to appeal is required before a decision of a district court can be appealed to the court of appeal. The court of appeal must nevertheless grant leave to appeal if the decision of the district court gives rise to doubts as to the correctness of the court’s decision. However, the Code of Judicial Procedure now enables a party to obtain leave to appeal a district court’s decision directly to the Supreme Court in circumstances where the legal issue in question has been repeated in several other similar cases, the absence of precedent in such cases is prolonging legal uncertainty and the opposing party consents to the appeal.
1 Jussi Lehtinen is a partner and the head of the dispute resolution practice and Heidi Yildiz is a senior associate at Dittmar & Indrenius.
2 Code of Judicial Procedure (4/1734).
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If the Supreme Court refuses to grant leave to appeal, the decision of the district court becomes the final decision.
Moreover, a decision of a court of appeal can be appealed to the Supreme Court only with the Supreme Court’s leave. The Supreme Court grants leave to appeal on the following grounds: the hearing of the appeal is important in view of other similar cases or in the interest of securing uniformity of legal practice; there are special grounds for granting leave to appeal due to a procedural or other error; or the granting of leave to appeal is important for some other reasons. Thus, in practice, the court of appeal is the final authority in a vast majority of appeals from the decisions of the district courts.
Disputes regarding certain maritime, patent and trademark, insolvency and land registration matters are allocated to specific district courts designated for those particular matters. For instance, in patent and trademark matters, the district court is assisted by an expert, who does not participate in the decision-making, and in matters relating to the registration and formation of land plots, the quorum of the court includes a lay land engineer and two lay assessors. In addition to district courts, there are a limited number of specialised courts, including the Market Court, which hears commercial, competition and public procurement cases as a court of first instance, and the Labour Court, which hears mainly collective bargaining agreement-related labour disputes.
II THE YEAR IN REVIEW
i Legislation
The Legal Representation Act (715/2011)3 came into force on 1 January 2013 and it provides that only qualified attorneys-at-law and other lawyers that fulfil certain criteria relating to their professional experience and have been granted a specific licence may act as party representatives in Finnish courts. Previously, there were no restrictions on party representation in Finnish court proceedings. The Legal Representation Act is discussed further in Section III infra.
ii Case law
Finland has a civil law system and, thus, previous court decisions are not legally binding, either horizontally or vertically. Consequently, the lower court judges will not be guilty of misconduct in office if they decide against an earlier precedent. However, the Supreme Court, owing to its standing orders, will not decide against its earlier precedent, except on a basis of qualified procedure. In 2012, the Finnish Supreme Court rendered a handful of decisions regarding procedural matters. The following Supreme Court decision regarding forum conveniens is of particular interest.
3 Legal Representation Act (715/2011), available in Finnish and Swedish at www.finlex.fi/fi/laki/ajantasa/alkup/2011/20110715.
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The Finnish Supreme Court in KKO 2012:634
The Finnish Supreme Court established that the Finnish courts have jurisdiction over a matter that concerns international parties or has an international element when the matter has a factual connection to Finland.
A Finnish wholly owned subsidiary of a Bermudan company, Semi-Tech OY (‘Semi-Tech’) had obtained a short-term loan from its Bermudan parent, Akai Holdings Limited (‘Akai’) amounting to US$10 million. Semi-Tech had repaid US$0.9 million of the total loan to Akai. The receivership of the outstanding loan balance of US$9.1 million was then allegedly assigned to a British Virgin Island company, Tremendous Springs Limited (‘Tremendous’). A Finnish district court subsequently declared Semi-Tech bankrupt. Both Akai, which had also gone into liquidation, and Tremendous declared themselves the creditors of Semi-Tech in the Finnish bankruptcy proceedings. Akai’s administrator disputed the legitimacy of the assignment to Tremendous. Semi-Tech’s estate then initiated a claim against both Akai and Tremendous for the return of Semi-Tech’s loan repayments back to the estate under the Finnish bankruptcy legislation.
Akai and Tremendous claimed that the Finnish courts did not have jurisdiction over the matter on the basis that the loan receivable was subject to a dispute between the defendants in foreign jurisdictions and the matter lacked a sufficient factual connection to Finland. The Supreme Court held that the Finnish courts had jurisdiction. The Court reasoned that the matter had a sufficient connection to Finland as the defendants had assets in Finland, namely the receivable to which both Akai and Tremendous claimed to be entitled, and such assets could be made subject to an enforcement action in Finland. The Court considered that although the dispute over the legitimate ownership of the receivable between the defendants had not yet been finally settled, a judgment upholding Semi-Tech’s recovery action could be enforced in Finland against either of the defendants as the potential distribution asset was sufficiently specified. The receivable had been duly recorded in Semi-Tech’s estate’s distribution list and such list had been approved by the bankruptcy court. In addition, the receivable was not so insignificant as to render the action unenforceable.
The Finnish Enforcement Code has now been amended to expressly provide that a receivable may be recognised even if the creditor does not have a final established right to the receivable, provided that (1) the receivable has been sufficiently specified in a contract; and (2) the debtor has demanded payment from another on the basis of a contract or a legislation. In addition, the Code of Judicial Procedure was amended in 2009 to expressly stipulate rules for determining proper forum in matters involving international party(ies) or an international element. The Supreme Court’s decision is nevertheless significant in that it defines the meaning of a ‘connecting factor’ to Finland when determining the Finnish court’s jurisdiction over a particular matter.
4 KKO 2012:63.
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III COURT PROCEDURE
i Overview of court procedure
The Code of Judicial Procedure is the main statute that governs civil proceedings. The current version of the Code is available online in Finnish and Swedish.5 An unofficial English translation of the Code updated to August 2009 is also available online.6
ii Procedures and time frames
Pursuant to the Code of Judicial Procedure, civil proceedings are effectively divided into two phases: the preparatory stage and the main hearing. Civil proceedings commence by a claimant lodging a written application for summons at a district court. If the court grants summons on the basis of the application, the defendant is then invited to file a statement of defence. The court may, of its own motion or upon request, order further written submissions from the parties prior to the preparatory hearing.
In addition to the written submissions, the preparatory stage of the proceedings further entails an oral preparatory hearing, which aims to clarify the issues in dispute and identify the evidence to be presented at the main hearing. During and after the preparatory hearing, the court may request further written submissions. Thereafter, the parties are called to the main oral hearing, where the parties present their arguments and the supporting evidence, including oral witness evidence.
The length of the full proceedings varies greatly depending on the complexity of the case and the court’s caseload. The district court proceedings typically last between one and two years.
The district courts are empowered to grant interim measures at any time during or before the full trial and such measures can be of a compelling or prohibitory nature. Upon request, the court may also grant the interim relief ex parte, if the aim of the relief sought may otherwise be compromised and granting of the measure without hearing the opposing party is otherwise justified. If successful, the interim measure can usually be obtained and enforced within a couple of days from the filing of the application, the speed of the proceedings depending on the court’s timetable and resources as well as the complexity of the case.
If the interim measure is granted on completion of the inter partes stage, the applicant will be ordered to enforce the measure and to initiate the main proceedings within a month from the court’s final inter partes order.
The applicant has strict liability for costs and damages caused to the opposing party by an interim remedy that has subsequently been found to be unnecessary and unfounded. To enforce an interim remedy, the applicant must provide security for possible costs and damages.
5 Code of Judicial Procedure (4/1734), available at www.finlex.fi/fi/laki/ajantasa/1734/17340004000.
6 Unofficial English translation of the Code of Judicial Procedure (4/1734), available at www.finlex.fi/fi/laki/kaannokset/1734/en17340004.pdf.
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iii Class actions
The Act on Class Actions (444/2007)87 permits class actions to be commenced in disputes concerning the rights and interests of consumers, including, for instance, defective consumer goods or the interpretation of consumer contract terms. The Act also applies to disputes between consumers and undertakings concerning the selling and marketing of investment products and insurance. However, matters concerning issuing of securities and public bidding procedures do not fall within the ambit of the legislation. Moreover, only the Consumer Ombudsman may file a class action.
The Act stipulates the following grounds for bringing a class action: several parties have a claim against the same defendant based on the same or similar circumstances; and the class action will be an expedient means to proceed in view of the size of the class, the subject matter, the presented claims and the supporting evidence.
iv Representation in proceedings
The rules on court representation have recently undergone a reform in Finland. The Legal Representation Act (715/2011), which came into force on 1 January 2013, effectively introduces a new regulatory regime for legal representation in Finnish court proceedings and thus brings the Finnish legal representation system more in line with the ones in other EU countries. The Act provides that only qualified attorneys-at-law and other lawyers that fulfil certain criteria relating to their professional experience and have been granted a specific licence may act as party representatives in Finnish courts.
Previously, there were no restrictions on party representation in court proceedings in Finland: the parties were able to represent themselves or they could have been represented by a lawyer in possession of an upper law degree (LLM) from a Finnish university or a lawyer qualified in another Member State of the European Economic Area (EEA), or in a country with which the EU and its Member States have made an agreement on mutual recognition of professional eligibility of attorneys; in certain cases, even a layperson was able to act as a party representative.
v Service out of the jurisdiction
The primary rule is that the court will serve the claim on the defendant out of the jurisdiction. Upon request a party may, on justified grounds, also be entrusted to effect service.
In most cases, the court serves the claim out of jurisdiction pursuant to one of the international instruments to which Finland is a party. The EU Service Regulation (Council Regulation No. 1393/2007/EC) applies to service of judicial and extrajudicial documents in civil or commercial matters in the EU Member States. Finland has also signed a separate Convention of 1974 with the other Nordic countries in relation to cross-border procedural assistance. In addition, Finland is a signatory to the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil and
7 Act on Class Actions (444/2007), available in Finnish and Swedish at www.finlex.fi/fi/laki/alkup/2007/20070444 and in English (unofficial translation) at www.finlex.fi/en/laki/kaannokset/2007/en20070444.pdf.
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Commercial Matters of 1965. In circumstances where none of the above instruments applies, requests for service out of the jurisdiction are sent to the Ministry of Foreign Affairs, which refers the documents to the authorities in the receiving state.
vi Enforcement of foreign judgments
There are broadly two enforcement regimes for foreign judgments in Finland:a Judgments rendered in other EU Member States are recognised and enforced
pursuant to the Judgments Regulation or, in the case of uncontested judgments, pursuant to the European Enforcement Order Regulation; and
b Judgments rendered in other Member States of the EEA are recognised and enforced pursuant to the Lugano Convention and, in the case of judgments rendered in Norway and Iceland, the Nordic countries that are not members of the EU, are also recognised and enforced pursuant to the Convention of 1977 between the Nordic countries.
Except where the European Enforcement Order Regulation applies, a declaration of enforcement must be obtained from the Finnish district court. For all other foreign judgments, there is no simplified enforcement procedure and the case may, in principle, be retried on its merits, in which case the foreign judgment only serves as evidence in the retrial.
vii Assistance to foreign courts
The Finnish courts will assist foreign courts mainly in relation to service in the jurisdiction, taking of evidence and providing information on the Finnish legal system.
Under the EU Service Regulation, requests for service can be sent directly to the local district court either by the parties or the foreign transmitting authority. Under the Hague Convention, requests for service in Finland must be sent to the Ministry of Justice, which refers the matter to the regional authorities. Under the Nordic Convention, requests for service in Finland are sent directly or through the Ministry of Justice to the local district court. In all other cases, where none of the above instruments applies, the request must be sent to the Ministry of Foreign Affairs.
Under the Taking of Evidence Regulation (Council Regulation 1206/2001/EC), the courts of EU Member States may request the Finnish district courts to take evidence on their behalf or grant them permission to obtain the evidence in Finland directly. The courts of Nordic countries may similarly request the Finnish district courts to obtain evidence on their behalf under the Convention of 1974. Finland is also party to the HCCH Convention on the Taking of Evidence Abroad in Civil and Commercial Matters of 1970, under which the foreign courts can send their request for the collection of evidence to the Ministry of Justice.
viii Access to court files
As a general rule, court proceedings in Finland are public. The court may order private proceedings only in very limited circumstances, when it is deemed necessary to protect the privacy of a party.
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In civil matters, pleadings and evidence submitted by parties become public when they are filed at court. The courts may, however, postpone the public access to the case documents in circumstances, where placing the documents into the public domain would be detrimental to a party and no weighty reasons exist against such postponement. In such situations, pleadings and evidence become public during the oral hearing, at the latest, or where there is no oral hearing, when the court renders its decision.
Upon request, the court may declare evidential documents and parts of pleadings confidential in certain circumstances prescribed by law; for example, where documents contain trade secrets, the publication of which would cause financial detriment to a party.
ix Litigation funding
In principle, there are no legal restrictions on third party funding of litigation costs. However, such practice is currently not common in Finland. Thus, litigation of large commercial disputes is usually funded by the parties themselves. Conversely, individuals and small and medium-sized companies typically fund at least a part of the legal expenses through insurance.
IV LEGAL PRACTICE
i Conflicts of interest and inside information
The Code of Judicial Procedure contains the following provisions on conflict of interest:a public officials may not act as counsel in a trial if it is contrary to their official
duties;b judges (or other members of the court) may not serve as counsel in a trial unless
they have an interest in the case or appear on behalf of a spouse or close relative; c a person closely related to a judge (or other member of the court) taking part in
the hearing of the case may not serve as counsel to a party in the matter; and d a person who has participated in the hearing of a case as a judge (or other member
of a court) or served as counsel to the opposite party may not serve as counsel to a party.
In addition, the Finnish Bar Association has its own Code of Conduct that is binding upon its members and all lawyers working for members of the Association. The Code of Conduct requires advocates to decline an assignment if the personal or financial interest of the advocate or his or her colleagues conflicts with the interests of a potential client. Unless the client consents, the assignment must also be declined if the advocate has previously acted as a counsel to the opposing party in the same matter or another matter, pursuant to which the advocate had obtained information that might be of significance when carrying out the assignment in question.
Advocates may, however, assist two or more persons in concluding an agreement or act as a mediator if all parties request their assistance. In such a case, the advocate must equally observe the interests of all the clients. If a dispute subsequently arises between the parties, the advocate may not assist any of them in the dispute.
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Establishing information barriers (Chinese walls) within the law firm is not possible in Finland. Therefore, representation of competing parties in a suit is strictly forbidden.
ii Money laundering, proceeds of crime and funds related to terrorism
The Act on Preventing and Clearing Money Laundering and Terrorist Financing (503/2008)8 imposes a broad information obligation on certain regulated persons, including advocates that provide legal advice in relation to matters listed in the Act, to identify and know their clients and their business, to detect and investigate the background of fraudulent business activities and to report any suspicions to the Money Laundering Clearing House. The Act does not, however, apply to legal professionals carrying out duties as a trial counsel or providing legal advice concerning a client’s legal position in the pretrial investigation of an offence or other pretrial handling of the case.
V DOCUMENTS AND THE PROTECTION OF PRIVILEGE
i Privilege
The Code of Judicial Procedure provides that an attorney, a counsel or an assistant thereof may not without permission disclose confidential information received from the client in the course of his or her duties. A breach of this obligation is punishable as a criminal offence. Similarly, an attorney cannot testify as a witness in respect of confidential communications between a client and attorney, nor can the attorney be ordered to present a document that contains confidential communication between a client and attorney. The privilege rules do not, however, apply to in-house lawyers.
ii Production of documents
The Finnish court proceedings do not entail a disclosure of all documents in a party’s possession; rather, each party presents and discloses the evidence that it is going to refer to in the proceedings. Upon request of a party, the court may, however, order the opposing party or a third party to disclose sufficiently specified documents, if the requested documents are sufficiently identifiable and the court considers the documents as relevant and material to the outcome of the case.
If a party does not produce the documents ordered by the court, the court may impose a threat of fine or order a bailiff to enforce the document production. When requested by the party during the preparatory hearing, the opposing party must also confirm whether or not a specific document is in its possession.
8 Act on Preventing and Clearing Money Laundering and Terrorist Financing (503/2008), available in Finnish and Swedish at www.finlex.fi/fi/laki/ajantasa/2008/20080503 and in English (unofficial translation) at www.finlex.fi/en/laki/kaannokset/2008/en20080503.
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VI ALTERNATIVES TO LITIGATION
i Overview of alternatives to litigation
Arbitration is the main alternative to court proceedings and commonly resorted to in large commercial disputes. Recent years have witnessed a clear trend for the increased popularity of arbitration as well as a gradually growing interest in other forms of ADR in Finland.
ii Arbitration
Arbitration procedures in Finland are governed by the 1992 Arbitration Act (‘the Arbitration Act’),109 which largely mirrors the provisions of the UNCITRAL Model Law. The Model Law as such has not, however, been implemented into Finnish law. Pursuant to the Arbitration Act, any dispute in a civil or commercial matter that can be settled by agreement between the parties may be referred for final decision by one or more arbitrators. Thus, in practice only disputes relating to public or criminal law, as well as disputes in which the dominant issue concerns a public interest matter, such as a family law matter, cannot be submitted to arbitration in Finland.
Finland has a long tradition of institutional arbitration: the Arbitration Institute of the Finland Chamber of Commerce (‘the FCC’), established in 1911, celebrated its 100th anniversary in 2011. The statistics published by the FCC indicate a considerable level of arbitration activity in Finland and that the number of commercial arbitration cases conducted under the auspices of the FCC has been steadily increasing in the past few years. These figures do not, however, capture most of the ad hoc arbitrations that are also very common. In fact, the FCC has estimated that approximately half of all the arbitration cases conducted in Finland are ad hoc arbitrations. The FCC also acts as an appointing authority in a considerable number of these ad hoc arbitrations. The FCC has announced that it will launch its revised Arbitration Rules in June 2013. The current Arbitration Rules date to 1 January 1993. The FCC’s Rules will be amended to take into account the recent amendments to the UNCITRAL Arbitration Rules, as well as to make the Rules structurally more practical and user-friendly.
The Arbitration Act does not permit an appeal to a court on the merits of the arbitral award. The parties are, however, entitled to appeal to a local district court against the decision on the arbitrators’ fees.
The Arbitration Act provides that the award rendered by the arbitral tribunal is a final award and will be recognised as binding and enforceable, whether rendered in Finland or in a foreign state. The Arbitration Act stipulates, however, that a court may refuse an application for the enforcement of an arbitral award on the basis that it is null and void within the meaning of the Arbitration Act or if the award has been set aside by a court, or if a court, because of an action for declaring an award null and void or for setting it aside, has ordered that any enforcement of the award is to be interrupted
9 Arbitration Act (967/1992), available in Finnish and Swedish at www.finlex.fi/fi/laki/ajantasa/1992/19920967 and in English (unofficial translation) at www.finlex.fi/en/laki/kaannokset/1992/en19920967.
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or suspended. Under the Arbitration Act, an award is considered null and void only on certain specific grounds, including an obscure and incomplete award, and public policy.
The Arbitration Act further provides that an arbitral award may be set aside by the court upon request of a party if the arbitral tribunal has exceeded its authority, an arbitrator has not been properly appointed, an arbitrator could have been challenged or the arbitral tribunal has not given a party a sufficient opportunity to present its case. The parties must, however, bring an action for setting aside an arbitral award within three months of the date on which they received a copy of the award.
Finland ratified and enacted the New York Convention in 1962. Finland has made no declarations or reservations to the New York Convention. Consequently, in parallel to the New York Convention, the Finnish courts will refuse to recognise and enforce a foreign award on its own motion (ex officio) only if:a the award is contrary to the public policy of Finland;b a party did not have the capacity to enter into the arbitration agreement;c a party was unable to present its case;d the composition of the arbitral tribunal substantially deviated from the agreement
of the parties or the law of the arbitral seat;e the arbitral tribunal exceeded its authority; or f the arbitral award has not yet become binding on the parties, or has been declared
null and void or set aside or suspended in the state in which the award was made.
The Finnish district courts are empowered to decide on the enforcement of arbitral awards. The application for enforcement must enclose the original arbitration agreement and either the original award or certified copies of it. In addition, a document that is in a language other than Finnish or Swedish must be accompanied by a certified translation into either of these languages, unless the district court grants an exemption. The district court will give the opposing party an opportunity to be heard, unless there is a justified reason not to do so. The district court will deal with the matter in chambers, provided that a witness or another person is not required to be heard in person.
iii Mediation
There are two principal mechanisms for settling commercial disputes by mediation in Finland: first, mediation pursuant to the procedure and mediation rules developed by the Finnish Bar Association that also accredits mediators; and second, court mediation procedures pursuant to Act on Mediation in Civil Matters and Confirmation of Settlements in General Courts (394/2011) (‘the Mediation Act’).10 Both forms of mediation are voluntary in nature and aim at a situation where both parties mutually reach a satisfactory resolution to their conflict.
However, in comparison to mediation under the auspices of the Finnish Bar Association, the court mediation process entails a party or parties lodging a mediation
10 Mediation Act (394/2011), available in Finnish and Swedish at www.finlex.fi/fi/laki/ajantasa/2011/20110394 and in English (unofficial translation) at www.finlex.fi/en/laki/kaannokset/2011/en20110394.
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application either before the commencement of court proceedings or during the preparatory stage of the proceedings, or attaching a request for mediation to an application for a court summons (a claim form) at a local district court having the jurisdiction over the dispute and the court subsequently appointing a district court judge to manage the mediation procedure. The advantages of the court mediation process over other forms of mediation are the independence and impartiality of the district judge and the public trust in the procedure that the district courts enjoy. The district judge appointed to manage the mediation cannot hear any subsequent court proceedings in the matter. The Mediation Act further enables a court mediation process on an informal basis; apart from the requirement to conduct the mediation ‘expeditiously as well as in compliance with equality and impartiality’, the legislation does not contain any detailed procedural provisions. However, court mediation procedures are in principle open to the public, unless a party has requested a private process and sufficient grounds exist for the granting of mediation in private. The public is not, however, permitted to attend any separate discussions that the mediator has only with one of the parties.
Moreover, the Mediation Act also governs the procedure for the enforcement of settlement agreements reached in a mediation conducted out of court, where the mediator has been educated to act as a mediator, the parties have entered into a written settlement agreement and the dispute governs such civil law or competition matter that is at law capable of being settled between the parties. The Mediation Act provides that a settlement reached through court mediation will be affirmed by the relevant local district court upon a written request by the parties, after which it will be at once enforceable at law. Similarly, the Mediation Act enables both parties or a party with the counterparty’s agreement to request a district court to affirm a settlement agreement reached in the out of court mediation. The Mediation Act applies both to settlements reached in mediation conducted in Finland or in another EU Member State, except Denmark, and covers both domestic and cross-border disputes.
iv Other forms of alternative dispute resolution
There are various institutions that give non-binding decisions in certain specialised matters. The Consumer Disputes Board is an independent expert body that issues recommendations on disputes concerning consumer and housing matters. The Data Protection Ombudsman controls the observance of the law and provides guidance on all issues related to the use of personal data. The Insurance Board deals with disputes concerning the interpretation of legislation or terms of policy related to voluntary insurance. A matter may be referred to the Insurance Board for recommendation by a policyholder, injured party, beneficiary or insurance company.
Furthermore, a specific long-standing ‘alternative’ dispute resolution mechanism exists for the conciliation of collective bargaining disputes. When a dispute arises between negotiating labour market organisations, they are assisted by national and district conciliators.
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VII OUTLOOK AND CONCLUSIONS
A committee has been established to review the procedural rules relating to the production of evidence. The current rules date back to 1948 and, unlike other chapters of the Code of Judicial Procedure, the chapter on production of evidence has not been systematically revised since then. It will take several years, though, before any potential revised rules come into force.
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Appendix 1
about the authors
Jussi LehtinenDittmar & IndreniusJussi Lehtinen, partner at Dittmar & Indrenius, is the firm’s head of dispute resolution practice. His practice focuses on complex international arbitration and litigation and he has extensive experience in advising and representing corporate clients in a broad range of international arbitration disputes under the ICC, SCC and FCC Rules, as well as in litigation disputes at general and specialised courts. Mr Lehtinen has also been involved in numerous minority share squeeze-out arbitration proceedings in Finland. Prior to joining Dittmar & Indrenius, he gained commercial and legal experience from working in the legal departments of Nokia and the Helsinki Stock Exchange. Mr Lehtinen is a member of the Finnish Bar Association, the International Bar Association and the Finnish Arbitration Association.
heidi YiLdizDittmar & IndreniusHeidi Yildiz is a senior associate in Dittmar & Indrenius’ dispute resolution practice. Her experience includes working on international commercial arbitration disputes under the ICC, LCIA and DIS Rules. Ms Yildiz is an English qualified solicitor. She trained and qualified in WilmerHale’s London office, where she practised international arbitration as a solicitor until she joined Dittmar & Indrenius in 2011. Ms Yildiz has previously also worked in the London office of Herbert Smith (from 2004 to 2005). She obtained her LLB with honours from City University, London and postgraduate diploma in legal practice from BPP Law School, London. She is a member of the Law Society of England and Wales, the Finnish Bar Association, the International Bar Association, LCIA’s Young International Arbitration Group, ICDR Young & International, Young Arbitrators Stockholm, the Finnish Arbitration Association and Young Arbitration Club Finland.
About the Authors
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dittMAR & indReniusPohjoisesplanadi 25 A00100 HelsinkiFinlandTel: +358 9 681 700Fax: +358 9 652 [email protected]