A Review of The FAI’s Year 2016

2016 was yet another interesting year at the FAI in terms of arbitration cases, events and activities. This is evidenced already by the 2016 FAI case statistics that have been published at https://arbitration.fi/the-arbitration-institute/statistics/.

The following is a summary of some statistical information of interest to FAI users as well as a brief review of the FAI’s latest events and activities. At the end of the article, we will elaborate on what we have planned for the year 2017 and why it is a big year in Finland.


FAI Arbitration Cases

Increase in the annual caseload: In 2016, 64 new cases were filed with the FAI, which represents an increase of 23% with respect to 2015. Picture 1 below shows the yearly development of the number of FAI cases from 2006 to 2016.


Picture 1


Efficiency in FAI arbitrations
: FAI arbitrations have been consistently efficient while meeting high quality standards. As can be seen in Picture 2 below, the median duration of arbitrations conducted under the FAI Arbitration Rules was eight months in proceedings that ended in 2016 (i.e., below the nine-month time limit for rendering the final award set by the FAI Arbitration Rules), while the median duration of cases conducted under the FAI Expedited Rules was three months.


Picture 2


Types of arbitrations
: In line with recent years, most of the arbitration cases were filed under the FAI Arbitration Rules (86%). The share of cases filed under the FAI Expedited Rules was 8% while 6% of the cases were ad hoc arbitrations where the FAI is only called upon to appoint the arbitral tribunal.

An important number of FAI arbitrations were complex disputes, including many multi-party and multi-contract proceedings. In this respect, we have seen an increased interest in applying the consolidation provisions of the FAI Arbitration Rules. Since the new FAI Rules entered into force in June 2013, a total of five requests for consolidations have been made. To date, the FAI Board has granted consolidation on three occasions, two in 2016 and one in 2017.

The monetary value of disputes continued to increase.


Subject matter and line of business of disputes
: Consistent with the trend over the past few years, most of the cases also in 2016 arose from company acquisition/sales of business agreements (23%) and shareholders’ agreements (22%). As to the line of business, about 20% of the cases filed related to activities in the manufacturing sector. For a full overview, please see Pictures 3 and 4 below.


Picture 3


Picture 4


Increase in the number of international cases
: The share of international cases—in which one or more parties were not Finnish—increased from 27% in 2015 to 36% in 2016. For information on the nationality of the parties, please see Picture 5 below.


Picture 5


Confirmation of arbitrators:
The FAI Arbitration Rules and FAI Expedited Rules, effective as of 1 June 2013, introduced the system of confirmation of arbitrators. This means that all nominations of arbitrators by the parties and party-nominated arbitrators as well as the appointments of arbitrators by the FAI Board are subject to confirmation.

In the FAI practice so far, the FAI Board has confirmed 230 nominations/appointments of arbitrators. Where a party has objected to the confirmation of an arbitrator (14 times), the FAI has only one time refused to confirm an arbitrator. In eight cases, the FAI has decided to confirm the arbitrator. In five cases the arbitrator candidate has voluntarily withdrawn before the FAI Board has made a decision on confirmation.


Challenge of arbitrators
: During 2016, the FAI received only one notice of challenge, which was rejected by the FAI Board. The above-described confirmation system has proven to be a successful innovation introduced by the FAI Rules, and it has resulted in a lesser number of challenges to arbitrators.


Replacement of arbitrators
: In 2016, the FAI replaced one arbitrator who voluntarily withdrew from his appointment after confirmation by the FAI due to conflicts of interest noticed after receiving the case file.


Diversity in the appointment and nomination of arbitrators
: In 2016, the FAI signed the Equal Representation in Arbitration Pledge (“Pledge”), a global initiative to promote gender diversity in arbitration, confirming thereby its commitment to diversity and particularly gender diversity in arbitrator appointments.

According to a study conducted for the Pledge in 2016, the FAI had the highest numbers of female arbitrator appointments of all arbitral institutions included in the study. Both in 2015 and 2016, 32% of the arbitrators appointed by the FAI Board have been women. The FAI’s experience is that, traditionally, the parties themselves have rarely appointed women as arbitrators. Indeed, before 2016, this happened in a couple of FAI cases only. However, in 2016, we saw an improvement in this respect in comparison with previous years. Please see the statistics below for further information.

  • A total of 72 arbitrator appointments and nominations were confirmed in FAI arbitrations and a total of 4 arbitrator appointments were made in ad hoc Out of them, 75% were of male arbitrators and 25% of female arbitrators.
  • 44 arbitrators were directly appointed by the FAI Board: 30 male arbitrators (68%) and 14 female arbitrators (32%).
  • 31 arbitrators were nominated by the parties: 26 male arbitrators (84%) and 4 female arbitrators (16%).
  • 1 arbitrator, a male, was nominated by party-nominated co-arbitrators.


Efficiency in Case Administration and Digitalization

During 2016, FAI arbitration users continued to praise the FAI for its efficient and professional case administration. To provide efficient services to its customers, FAI case administration procedures are being continuously streamlined and optimized. Furthermore, in recognition of the need expressed by arbitration users for more electronic case administration, the FAI continues to digitalize its operations.


FAI Case Commentaries

The FAI continued to publish anonymous case commentaries on its website. The case commentaries address landmark decisions by both the FAI Board and arbitral tribunals in FAI cases. You may read the case commentaries at https://arbitration.fi/category/fai-cases/.


FAI Mediation Rules

The Mediation Rules of the Finland Chamber of Commerce entered into force on 1 June 2016. Available in Finnish and English, they provide a straightforward, flexible and user-friendly framework for conducting facilitative mediation. The Mediation Rules and the FAI Mediation Guidelines, which include more information about mediation and practical guidance on the application of the Mediation Rules, can be found at https://arbitration.fi/mediation/.


FAI Arbitration Rules in Spanish

In 2016, the FAI Arbitration Rules and FAI Expedited Rules were published in Spanish. The Spanish version aims at facilitating the use of FAI arbitration by Spanish-speaking arbitration users. Next, the FAI Rules will be translated into German. You may find the FAI Rules in different language versions here: https://arbitration.fi/arbitration/rules/.


Finnish Arbitration Academy

The Finnish Arbitration Academy was held for the third time. The half-year study program aimed to provide legal practitioners with experience and interest in arbitration with the necessary tools to effectively participate in arbitrations as counsel or arbitrators in accordance with current best practices and standards. 32 legal practitioners participated in the 2016 Academy.


FAI Newsletter

The FAI Newsletter was successfully launched in 2016. The principal aim of the newsletter is to keep FAI customers informed of our latest news, events and activities. It includes particularly useful information on recent publications—such as case commentaries regarding selected FAI arbitral decisions published on the FAI’s website or articles on FAI arbitration—and forthcoming events and activities. It also includes the blog of the Young Arbitration Club Finland (YACF) and a section “Did you know …?” to bring attention to special features of the FAI, FAI arbitration and mediation, and Finland. You may subscribe to the mailing list and read the previous newsletters here: https://arbitration.fi/subscribe-fai-newsletter/.


Arbitration Events in 2016

The FAI held several successful events during 2016.

The year started with the “Morning Seminar on Arbitration in Finland and Sweden” co-organized with the Arbitration Institute of the Stockholm Chamber of Commerce (SCC) and held both in Helsinki and Stockholm.

In May, Helsinki International Arbitration Day 2016 (HIAD 2016) devoted to the topic “Time to Change our Mindsets and to Think Outside the (Tool) Box?” was considered a great success both concerning content and the attendance of more than 250 delegates from 20 different countries. In connection with HIAD 2016, the FAI co-organized with the Swedish Women in Arbitration Network (SWAN) a “Champagne Brunch for Ladies in Arbitration”, which was kindly hosted by the Finnish law firm Dittmar & Indrenius. During the event, Ms. Wendy Miles QC and Ms. Carita Wallgren-Lindholm spoke and inspired discussions on the topic “Should We Still be Talking About Diversity in International Arbitration?”.

In connection with the Finnish Business in Moscow event in Moscow in October 2016, the FAI and the Russian Arbitration Association (RAA) held a joint morning seminar on “Arbitration as an Effective Means of Resolving Commercial Disputes Between Finnish and Russian Companies”.

The FAI representatives also held presentations and attended other events to increase the general awareness of FAI arbitration, including the Swedish Arbitration Association’s seminar “Fast Track Arbitration in Sweden and Finland” in Stockholm, the 5th DIS Baltic Arbitration Days in Riga and the AIJA 8th Annual Arbitration Conference 2016 in New York City.


Looking Ahead

The year 2017 is an important year for Finland, the Finland Chamber of Commerce and the regional Chambers of Commerce of Finland, and the FAI.

  • Finland is celebrating its 100 years of independence. The centenary of Finland’s independence will be the most significant commemorative year for this generation of Finns. Read more at http://suomifinland100.fi/info/?lang=en.
  • The FAI, which itself turns 106 years old this year, is organizing and participating in a series of events. To mention a few upcoming events:

– The fourth edition of Finnish Arbitration Academy 2017 will be held in spring. After its completion, already 115 Finnish legal practitioners will have completed the training.

– The FAI and the SCC will organize a joint morning seminar on arbitration in Helsinki on 8 March 2017. It will address topical issues at the FAI and the SCC, introduction to the new SCC Rules, and the FAI’s recent practice relating, inter alia, to consolidation of proceedings, confirmation of arbitrators and determination of the costs of arbitration. Read more at https://arbitration.fi/fi/2017/01/31/joint-morning-seminar-organized-scc-fai/.

– RAA will hold its annual conference on 20 April 2017. Ms Heidi Merikalla-Teir, Secretary General of the FAI, has been invited to participate in a panel discussion with the topic “Women in arbitration – A chicken is not a bird, Poland is not abroad, a woman is not an arbitrator? Do we need a special treatment for female arbitrators?”. Read more at http://arbitrations.ru/en/events/conference/vi-ezhegodnaya-konferentsiya-raa-i-sobranie-chlenov-vi-annual-raa-conference-and-members-meeting/index.php

– Helsinki International Arbitration Day 2017 (HIAD 2017) on the topic “Taking a Close Look at Today’s Arbitral Process and Who Pays for It” will be held in Helsinki on 18 May 2017. HIAD 2017 is organized with the support of the ICC International Court of Arbitration and ICC Finland. Read more at hiad.fi.

– The FAI is also planning to organize events addressing mediation as a means of resolving commercial disputes. More information will be available soon.

 

For more information, please see our website www.arbitration.fi. Remember to also follow us on LinkedIn and Twitter to keep informed of the FAI news, events, cases, and other topical issues.

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