Legal Alerts / 30 May 2013

Legal Alert – The Rules of The Arbitration Institute of The Finland Chamber of Commerce Are Changing

1 BACKGROUND

The revised rules of the Arbitration Institute of the Finland Chamber of Commerce (the “Institute”) were published on 22 May 2013 on Helsinki International Arbitration Day 2013. The new version of the rules (the “New Rules”) will enter into force on 1 June 2013, and will apply to all arbitrations started on or after that date.

The Institute was established in 1911, and it is the main arbitration institute in Finland with a case load of about 70 cases a year.

The New Rules attempt to better address the changes in international standards and other institutional rules, especially the ICC Rules of Arbitration (the “ICC Rules”) and to increase time and cost efficiency. The Institute also aims to improve its profile internationally, and to make arbitration under its rules a more appealing option for international companies. This attempt is further assisted by the Institute’s plan to invite experienced international experts to become members of the new Board of the Institute (the “Board”) as of June 2013.

2 MORE EFFECTIVE TIME AND COST MANAGEMENT

The New Rules make the proceedings more efficient in many ways, e.g. by introducing preparatory conferences, procedural timetables, and cut-off dates. In addition, the starting of the proceedings is made more efficient by deeming the proceedings started already from the receipt of the request for arbitration by the Institute.

The final award is now to be declared within nine months after the arbitral tribunal has received the case file from the Institute. The aim to speed up the proceedings is also demonstrated by the decision to cut the time limit for challenge of arbitrators by half, to only 15 days.

The New Rules also confer the Board exclusive power to determine the arbitrators’ fees. The arbitrators are no longer allowed to deviate from the rates set by the Institute, but on the other hand the maximum and minimum fees have been slightly increased.

The registration fee of 1,500–55,000 euros was abolished and replaced with a non-refundable filing fee of 3,000–8,000 euros. This means that the fee is reduced significantly in cases with a larger interest.

3 MULTI-PARTY ARBITRATION, INTERIM MEASURES, EMERGENCY ARBITRATION AND OTHER CHANGES

The New Rules introduce entirely new provisions on multi-party arbitration to answer to the challenges presented by increasingly complex contract structures. These additions to the New Rules are welcome, since, for example, under the ICC Rules, approximately 30 per cent of all arbitrations were multi-party proceedings in 2010–2012. At its best, multi-party arbitration can help avoid the risk of conflicting awards while also offering cost and time savings.

In order to be consolidated, it is sufficient that the arbitrations arise in connection with the same legal relationship. In comparison, the ICC Rules, for example, require the arbitrations to be between the same parties if claims are made under more than one arbitration agreement.  When a request to consolidate is received, the parties’ opinion is consulted, but their consent is not required. In extreme circumstances the Board has the power to go as far as to revoke the confirmation and appointment of arbitrators. If all parties do not agree to the consolidation, the Board shall make the final decision in the matter based on the circumstances of the case.

Parties can also request to join an additional party to the arbitration by submitting a request for joinder to the Institute. A request for joinder can be made until the case file is transmitted to the arbitral tribunal. The rules are more flexible than some other institutional rules since the right to make a request for joinder is not affected by the confirmation or appointment of an arbitrator. Under the ICC Rules, for example, a joinder is not possible after the confirmation or appointment of an arbitrator, unless the parties agree otherwise.

The New Rules also include updated provisions on interim measures of protection, which an arbitral tribunal can grant in the form of an order. These provisions follow the example set out in the UNCITRAL Arbitration Rules and other institutional arbitration rules, and do not prohibit the parties from applying to a competent judicial authority for interim measures.  However, an arbitral tribunal cannot grant ex parte interim measures under the New Rules.

If a party is in immediate need of interim measures, and cannot wait for the constitution of an arbitral tribunal, such party can now also apply for the appointment of an emergency arbitrator. The New Rules are influenced by other institutional rules, such as the ICC, Swiss, SCC and ICDR rules. It needs to be noted that using an emergency arbitrator is not an alternative to arbitration under the New Rules, but merely offers interim relief.

Some other changes are worth mentioning, too. For instance, the New Rules explicitly enable an arbitral tribunal to give orders for the production of evidence. Confidentiality obligations have also been added to the New Rules, and in addition to the arbitrators, experts and secretaries, they also apply automatically to the parties themselves with some exceptions.

Under the New Rules the parties are free to agree on the number of arbitrators and on the procedure of appointment of the arbitral tribunal. Despite the Institute’s attempt to emphasize party autonomy in the constitution of the arbitral tribunal, the powers of the Institute have been also increased in some respects. Now arbitrators have to be confirmed by the Institute’s secretariat and the Board in order for the nomination to become effective.

4 CONCLUSION

The New Rules aspire to improve time and cost effectiveness, party autonomy and the overall reliability of arbitration, all of which can be seen as welcome improvements. They also describe the progress of the arbitration proceedings in detail, and provide non-binding suggestions to the parties, creating a comprehensive framework for the proceedings. Moreover, the provisions regarding multi-party and emergency arbitration and production of evidence will surely be useful additions to the New Rules.

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