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Finland Arbitration Institute ("FAI")

A concise overview of the key procedural features, advantages, disadvantages, and practical considerations involved in arbitrations administered by the Finland Arbitration Institute ("FAI").

Overview

Overview: advantages and disadvantages

ADVANTAGES DISADVANTAGES 
Multilingual. The FAI allows arbitration proceedings to be conducted in English or Finnish, making it accessible to international parties. Other languages may also be used if the parties agree. Discovery. FAI arbitration does not include extensive discovery procedures, which may limit a party’s ability to access evidence held by the opposing party (alternatively, some parties may see this as an advantage).
Enforcement. Arbitration awards issued under FAI rules are recognised and enforceable internationally under the New York Convention, to which Finland is a party. Finality. FAI awards are final and not subject to appeal, which could be a disadvantage for parties seeking a robust review.
Confidentiality. FAI arbitration proceedings are confidential. Scrutiny. The FAI has a limited role in scrutinising awards. 
Flexibility. Parties enjoy broad autonomy in determining how the case is handled, including the ability to choose an arbitrator. 
Cost-efficiency. FAI proceedings are relatively quick and provide good value for money compared with other institutions.  

Overview: Process

Procedural element Details
Rules
  • The current FAI Rules came into force on 1 January 2024.
Commencing proceedings
  • A Request for Arbitration is submitted to the FAI and the filing fee is paid.
Answer to the Request
  • To be submitted within 21 days of receipt of the Request.
  • Must contain the information specified in Article 8.
Terms of Reference
  • No obligation for the Tribunal to draw up.
Constitution of the Tribunal 
  • The parties may agree on the number of arbitrators and the procedure for appointment of the Tribunal.
  • Where the parties have not agreed on the number of arbitrators, the Tribunal shall be composed of a sole arbitrator, unless the Board determines that a Tribunal composed of three arbitrators is appropriate taking into account the amount in dispute, the complexity of the case, any proposals made by the parties, and any other relevant circumstances.
Procedural Order No. 1
  • Not provided for by the Rules.
Procedural measures
  • The Tribunal has a wide discretion and shall conduct the arbitration in the manner it considers appropriate.
Witness evidence 
  • The Tribunal may, after consulting with the parties, order that the evidence of fact and expert witnesses shall be presented in the form of written witness statements or reports.
Fees & costs
  • The costs of arbitration under FAI rules are based on the value of the dispute, following the FAI's fee schedules. 
  • All parties are jointly and severally responsible for paying the FAI’s administrative fees and expenses. 
  • Before arbitration proceedings can begin, the parties must pay an advance on costs, which includes the application fee (currently EUR€3,000).
  • The arbitration costs are set in the final award and can be allocated between the parties as the Tribunal sees fit.

Expedited arbitrations

The FAI offers an expedited arbitral process that has its own set of Expedited Rules.

Where the parties agree on the application of the Expedited Rules, the arbitration may be referred to the Expedited Rules prior to the confirmation of any arbitrator.

Under the Expedited Rules, the Award must be rendered within 3 months of the arbitrator receiving the case file from the Institute.

Constitution of the tribunal

Where the parties have agreed that the dispute shall be referred to a sole arbitrator, the Claimant and the Respondent may jointly nominate the sole arbitrator for confirmation within 10 days from the date on which the Answer was received by the Claimant. Failing such joint nomination within the applicable time limit, the Board shall appoint a sole arbitrator.

Where the parties have agreed that the Tribunal will be comprised of 3 arbitrators, each party shall nominate an arbitrator. The parties may jointly nominate the third arbitrator, who shall act as the presiding arbitrator of the Tribunal, for confirmation.

Note: Emergency Arbitrators

A party in need of urgent interim protective measures that cannot wait until the constitution of a Tribunal may apply for the appointment of an Emergency Arbitrator, unless otherwise agreed by the parties.

Arbitrator conflicts / disclosure of interest

Before confirmation, a prospective arbitrator must submit a statement to the FAI declaring their acceptance, availability, impartiality and independence, and disclosing any potential conflicts.

The FAI will share this with the parties who may comment or object. Arbitrators must also disclose any new conflicts that arise during the arbitration.

Note:

The 2024 IBA Guidelines on Conflicts of Interest in International Arbitration are also applied in practice. A link to those IBA Guidelines can be accessed here.

Consolidation

At the request of a party, the FAI Board may consolidate two or more arbitrations into a single arbitration in any of the following scenarios:

The parties have agreed to consolidation

All of the claims are made under the same arbitration agreement

The claims in the arbitrations are made under different arbitration agreements but the disputes in the arbitrations arise in connection with the same legal relationship and the arbitration agreements do not contain contradictory provisions that would render the consolidation impossible

 

Pleadings or memorial approach?

The memorial approach is more commonly used and generally expected.

The parties have a broad discretion to agree on the course of the proceedings as well as the content of the submissions. The parties may agree to use the pleadings approach, but this is exceedingly rare. 

Summary judgment

The FAI Rules do not allow for summary judgment (or other early determination procedure). 

Security for costs

The FAI Rules do not specifically address applications for security for costs.

Disclosure of documents

The Rules do not provide for the mandatory disclosure of documents.  

Hearings

The Tribunal shall arrange a Case Management Conference with the parties as soon as practicable, and often within 21 days from the date on which the Tribunal receives the case file from the FAI. 

The parties shall agree jointly on the procedural deadlines during the Case Management Conference. 

Case Management Conferences can be conducted in person, by video, or by phone, as determined by the Tribunal after consulting the parties.

Note: A final hearing is normally always conducted. However, under the Expedited Rules, the parties and the Tribunal may agree that the dispute shall be resolved solely on the basis of documentary evidence.

Court's role in scrutiny of arbitral awards

The FAI has the power to make certain alterations to the Award if a request is made by a party within 30 days from the date of receipt of the Award. The Tribunal may:

(a) correct any clerical, typographical or computational error in the award.

(b) correct an omission to state in the Award the seat of arbitration or the date on which the Award was made, or an omission of an arbitrator to sign the Award.

(c) provide an interpretation of a specific point or part of the Award.

Note: The Tribunal shall give the other parties an opportunity to submit comments, upon any request.

Appeals

The FAI rules preclude appeals against Final Awards on a question of law.

Further information

    Model clause
    Any dispute, controversy or claim arising out of or relating to this contract, or the breach, termination or validity thereof, shall be finally settled by arbitration in accordance with the Arbitration Rules of the Finland Chamber of Commerce.

    [Recommended additions:]

    (a) The number of arbitrators shall be [one / three].
    (b) The seat of arbitration shall be [town and country].
    (c) The language of the arbitration shall be [language].

If you would like any further information about FAI arbitrations, please contact Timo Skurnik (timo.skurnik@nordialaw.fi).  

Global Arbitration Map detailing the arbitration landscape around the world 

By clicking on a country or an arbitral body that is highlighted on the map, you can read more about the intricacies of arbitration in those areas. The map will be useful for people who are negotiating contracts and those who have disputes across the world. The map's content was written by lawyers from across DACB's international network of offices as well as friends from firms in other jurisdictions, demonstrating our global arbitration expertise. 

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