Revised Arbitration Rules of the Finland Chamber of Commerce to enter into force on 1 January 2020

 

Revised Arbitration Rules of the Finland Chamber of Commerce to enter into force on 1 January 2020

The Arbitration Rules and Rules for Expedited Arbitration of the Finland Chamber of Commerce will enter into force on 1 January 2020 (the “2020 Rules”). The 2020 Rules contain individual improvements to the well-functioning 2013 Rules, with the aim of speeding up and streamlining the arbitration process. Key changes include wider possibilities to deliver documents by electronic means and more flexibility in the choice between standard and expedited arbitration proceedings.

Arbitration Rules of the Finland Chamber of Commerce 2020
Expedited Arbitration Rules of the Finland Chamber of Commerce 2020

 

Revision of Rules to increase speed, efficiency, and flexibility

The FAI Arbitration Rules and the Rules for Expedited Arbitration were fully revised in 2013. This comprehensive revision implemented best international practices, shortened the duration of arbitral proceedings and improved cost-efficiency.

Since the implementation of the 2013 Rules, FAI arbitration proceedings have proved very competitive in terms of speed and cost-efficiency. Arbitrations conducted under the 2013 Rules have thus been a reliable, efficient, and credible option for the resolution of commercial disputes both domestically and internationally.

The purpose of the 2020 Rules is to improve the efficiency and speed of FAI arbitrations even further. In addition, the 2020 Rules aim to offer more flexibility to enable the parties and tribunals to take into account the specificities of each individual dispute.

The revision was prepared by a working group chaired by the Vice Chair of the FAI Board, Marko Hentunen. The working group collected feedback and proposals for the development of the 2013 Rules from a broad group of stakeholders domestically and internationally. Their input was used as a source of inspiration in preparing the revised Rules.

Advances on costs now routinely required in all arbitrations

In accordance with the 2020 Rules, the Institute shall fix an advance on costs in connection with all arbitrations, domestic and international alike. Under the 2013 Rules, an advance on costs was always fixed in international cases, whereas the Arbitration Institute could use its discretion to order one in domestic disputes.

The filing fee is always EUR 3,000 in standard proceedings and EUR 2,500 in expedited proceedings

The 2020 Rules provide for a fixed filing fee, whereas previously the amount of the filing fee depended on the amount in dispute. As of 1 January 2020, the filing fee will be EUR 3,000 in standard proceedings and EUR 2,500 in expedited proceedings (Section 1 of the Appendix II of the Rules). These fees correspond to the lowest level of filing fees under the 2013 Rules.

The 2020 Rules do not include any changes to the tables regarding the administrative fees of the Institute or fees of the arbitrators.

Case documents may be transmitted increasingly by electronic means

The 2020 Rules simplify the procedures for transmitting case documents and seek to better enable the adoption of new means of communication and other technologies (Sections 4 and 5 of the Rules).

The 2013 Rules required that certain documents, such as the request for arbitration and the answer to the request for arbitration, be delivered to the Institute in multiple hard copies. Under the 2020 Rules, case documents may be transmitted by electronic means only or, alternatively, in a single hard copy. However, the Institute and the arbitral tribunal have the possibility to request transmission in hard copy when necessary, in single or multiple copies.

The 2020 Rules highlight that written statements, notices and other communications may be transmitted in any manner that provides a record of the transmission. The wording is neutral in this respect, in order to ensure that the Rules also allow the adoption of new means of communication and other technologies.

A document shall be deemed to have been transmitted on the day it was received, or on the day it would normally have been received given the means of transmission. Any time limits shall begin to run on the day following the day of transmission.

More flexibility in the choice between the FAI Arbitration Rules and Rules for Expedited Arbitration

When drafting an arbitration clause, parties are often unable to foresee the type of dispute that may potentially arise out of their agreement. For this reason, parties opt for proceedings under the FAI Arbitration Rules more often than expedited proceedings. This means that the FAI Expedited Arbitration Rules, which provide for a procedural framework that is particularly appropriate for small and simple disputes, have remained underutilized. The 2020 Rules aim to encourage the use of expedited proceedings by adding flexibility to the choice between the two sets of Rules.

In accordance with the 2020 Rules and subject to the consent of the parties, a case under the FAI Arbitration Rules can be referred to be conducted under the FAI Expedited Arbitration Rules, and vice versa, prior to the confirmation of any arbitrator. To this end, the parties shall include in the request for arbitration or answer any observations to the effect that the other set of Rules would be more appropriate for the conduct of the arbitration than the Rules agreed on in the arbitration agreement (Sections 6 and 8 of the Rules). The Institute may also on its own motion request that the parties comment on this matter. When the parties agree on the application of a set of Rules other than those provided for in their arbitration agreement, the parties also agree that the chosen set of Rules takes precedence over any contradictory statements in the original arbitration agreement (Section 10 of the Rules).

The Institute also offers a new model arbitration clause to supplement the existing model clauses. This so-called combined clause leaves the ultimate choice of the applicable Rules to the discretion of the Institute. According to the model clause, the dispute shall be subject to the Rules for Expedited Arbitration unless the Institute, at the request of a party, decides that the FAI Arbitration Rules shall apply. When deciding on whether to apply the FAI Arbitration Rules, the Institute shall take into account the complexity and value of the dispute, as well as other relevant considerations. The model clause serves to mitigate the risks and lower the threshold for agreeing on expedited arbitration proceedings.

Expediting the appointment of a three-member tribunal

In connection with the Rules revision, the working group extensively examined the possibilities to shorten the overall duration of arbitration proceedings. Based on practical experience, the working group concluded that the initial stages of the proceedings prior to the transmission of the case file to the arbitral tribunal could be shortened to a certain degree, without compromising due process or the parties’ ability to effectively influence the composition of the arbitral tribunal.

In the 2020 Rules, the default time limit reserved for the parties to nominate the presiding arbitrator in a panel of three arbitrators has been shortened from 15 days to 10 days. Correspondingly, the time limits reserved to nominate all three arbitrators have been shortened from 15 days to 10 days in cases where the Institute has first decided on the number of arbitrators. In these situations, the parties have already had time to prepare to nominate an arbitrator candidate.

Where the parties have not agreed on the number of arbitrators, and the Institute has decided that the arbitral tribunal shall be composed of three arbitrators, the time limit for respondent to nominate an arbitrator has been slightly modified to commence from the date on which the respondent received the notification from the Institute of the arbitrator nominated by the claimant. The time limit is thus no longer calculated from the confirmation of the arbitrator nominated by the claimant, as it was under the 2013 Rules (Section 19 of the Arbitration Rules).

Harmonising the terminology on the confirmation of arbitrators

The 2020 Rules make it explicit that all arbitrators are subject to confirmation by the Institute. This includes arbitrators nominated by the parties or by party-nominated arbitrators, and arbitrators appointed by the Institute. The mandate of an arbitrator shall begin upon such confirmation. The change is terminological and corresponds to the established practice of the Institute (Section 22 of the Arbitration Rules; Section 21 of the Rules for Expedited Arbitration).

An indicative time limit for arranging a case management conference

In order to promote the expeditiousness of the arbitration proceedings, the 2020 Rules place increased emphasis on the requirement to hold the case management conference as soon as possible after the transfer of the case file to the arbitral tribunal.

The 2013 Rules did not set any time limit for the arbitral tribunal to arrange a case management conference. According to the 2020 Rules, the arbitral tribunal shall arrange a case management conference in principle within 21 days from the date on which the arbitral tribunal received the case file from the Institute (14 days in proceedings under the Rules for Expedited Arbitration). The purpose of the case management conference is to agree on the conduct and timetable of the proceedings so as to ensure the fairness, expeditiousness and cost-efficiency of the arbitration (Section 30 of the Arbitration Rules; Section 29 of the Rules for Expedited Arbitration).

Tribunals explicitly empowered to issue confidentiality orders

As of 2013, the Rules have required that the parties undertake to keep confidential the documentation related to the proceedings, subject to certain exceptions. However, the powers of the arbitral tribunal to issue confidentiality orders have not previously been explicitly regulated. Now, the 2020 Rules state that upon the request of a party, the arbitral tribunal may issue orders concerning the confidentiality of the arbitration proceedings or any other matters in connection with the arbitration (Section 51 of the Arbitration Rules; Section 49 of the Rules for Expedited Arbitration).

For example, the presentation of evidence in an arbitration may sometimes require broader or more detailed regulation of confidentiality than is provided for directly in the Rules. In these situations, ensuring due process may require issuing a confidentiality order. The 2020 Rules clarify that the arbitral tribunal has the power to issue such orders.

The clause leaves much discretion to the arbitral tribunal in deciding whether to issue a confidentiality order. Ultimately, the arbitral tribunal’s decision will be based on a balancing of interests.

Failure to comply with orders of the arbitral tribunal and allocation of the costs of the proceedings

The 2020 Rules stress more clearly that the parties have a duty to promote the efficient management of the case. Now, the 2020 Rules explicitly state that where a party has failed to comply with the orders or other directions of the arbitral tribunal, the tribunal may take such failure into account in its allocation of the costs of the arbitration (Section 49 of the Arbitration Rules; Section 47 of the Rules for Expedited Arbitration).

The revised wording does not constitute a substantive change since the arbitral tribunal continues to be entitled to take into consideration all relevant circumstances when deciding on the allocation of costs.

Posted in News |