Crises and Arbitration – From the Great Depression to the COVID-19 Pandemic
When the new YACF board started its work in March 2020 COVID-19 had just been declared a pandemic. The outbreak of the virus and the related lockdown measures naturally came to influence the activities of YACF, including YACF’s annual springtime seminar. This year, the seminar was organized in the form of a webinar, which was held on 28 May 2020. The pandemic also came to influence the topic of YACF’s first-ever webinar – “Crises and Arbitration”. Mr. Risto Ojantakanen (Partner, Itäinen & Ojantakanen) functioned as speaker, and gave a highly interesting presentation covering the effects of earlier financial crises as well as the impact of the on-going health crisis on arbitration.
As a general starting point, Mr. Ojantakanen set forth that financial crises, which tend to occur within intervals of 7–12 years, always result in litigation and the creation of new case law. Amidst these crises, which all have their own characteristics in terms of implications on dispute resolution, both new financial instruments and new legislation tend to become the subject of legal scrutiny. In terms of case law emanating from financial crises, Mr. Ojantakanen noted that it is generated by courts and not by arbitration, as the arbitral awards most often are not publicly available. However, Mr. Ojantakanen considered that the views and interpretations taken by learned panels in complex legal matters may, at least in smaller jurisdictions, end up being reflected in academic discussion and become part of jurisprudence.
Mr. Ojantakanen subsequently moved on to examine three earlier financial crises and their implications on arbitration. To start with, Mr. Ojantakanen addressed the Finnish Great Depression which lasted from 1991 until 1994. The Great Depression resulted in litigation emanating from new clawback legislation, a new act on the restructuring of enterprises and board liability based on negligence of the duty of care. Several cases concerning clawback and the validity of securities were finally settled by arbitration, often through ad hoc arbitration. The dotcom crash in 2000, on the other hand, generated disputes relating to, inter alia, board liability for the contents of offering circulars and more generally, disputes concerning the disclosure obligation on the securities markets. Lastly, Mr. Ojantakanen discussed the financial crisis of 2008. He noted that the crisis of 2008 occurred in an environment which, compared to the previous crises, was more prepared to tackle financial hurdles by the means of, among other things, a more sophisticated equity market.
In terms of the current COVID-19 health crisis and its impact on arbitration, and on society in general, Mr. Ojantakanen deemed that the crisis presumably will result in dramatic consequences. The number of insolvencies, both bankruptcies and restructuring proceedings, is set to increase and some business models may end up becoming obsolete. In terms of dispute resolution, Mr. Ojantakanen assessed that a boom in legal action may be expected within 9–12 months. Due to the already on-going adjournment of hearings at the district courts, the parties of disputes could end up favoring arbitration. Expedited arbitration might also become widely used in more simple matters.
Special thank you to Mr. Ojantakanen as well as all of the webinar’s attendants. YACF wishes everyone a relaxing summer holiday and hopes to see as many members as possible (be it in person or virtually) again next fall!
Associate, Krogerus Attorneys Ltd
Springtime News of YACF
As we are nearing summer, it is a good time to have a quick look back on Young Arbitration Club Finland’s (YACF) activities during the beginning of the year and introduce you the new board members as of 11 March 2020.
On 6 February 2020, the FAI invited YACF for an afterwork excursion to have a meet and greet with the FAI staff and to hear a presentation on the amended FAI arbitration rules. The event was welcomed with enthusiasm among the YACF membership and gathered a large group of interested YACF members to hear about the recent amendments to the FAI rules.
On 5 March 2020, YACF held the traditional Pre-Moot Seminar at the premises of the University of Helsinki on the topic “Arbitration Agreements – Hurdling the Obstacles to Functional Proceedings”. The seminar was held on the eve of the Willem C. Vis Helsinki Pre-Moot. Panellists of the seminar were Sonja Heiskala (Associate, Roschier Attorneys Ltd), Markus Muurman (Senior Associate, Castrén & Snellman Attorneys Ltd), Oskar Toivonen (Senior Associate, Dottir Attorneys Ltd) and was moderated by Tiia-Maria Ripatti (Associate, Itäinen & Ojantakanen Attorneys Ltd).
The panel discussed many interesting topics and questions related to asymmetric arbitration clauses, which were the focus of the procedural issues in the Willem C. Vis Moot case this year, and looked at the reasons and difficulties that pathological arbitration clauses may raise. In addition, the panel looked at the time when arbitration clauses are drafted and discussed the possible situations that may affect the drafting of an arbitration clause and eventually shape it to end up being asymmetric. The seminar attracted a large and active audience from the Pre-Moot participants and YACF members alike.
After the seminar, a cocktail event was held at the premises of Roschier, where the teams competing in the Pre-Moot had an opportunity get to know each other and prepare for the Pre-Moot weekend in Helsinki. This proved to be an even more valuable opportunity for the student teams participating than expected, as during the weekend the unfortunate news were received that due to the global COVID-19 outbreak, the final hearings in Vienna had to be cancelled this year and were moved to be organised online instead.
On Wednesday 11 March 2020, YACF had its Annual Meeting where the new board was elected. The new board is composed of Sanna Kaistinen of Avance Attorneys Ltd (Chair), Dr. Alexander Gurkov of the University of Helsinki, Eero Kärki of Bird & Bird Attorneys Ltd, Jasmin Janné of Lindfors & Co Attorneys at Law Ltd, Jerker Pitkänen of Castrén & Snellman Attorneys Ltd, Susanna Derefalk of Krogerus Attorneys Ltd and Tiia-Maria Ripatti of Itäinen & Ojantakanen Attorneys Ltd.
The new board is very much looking forward to the upcoming year of activity of YACF despite the unexpected beginning to the year due to COVID-19.
The new board would like to wish everyone a beautiful springtime!
Associate, Itäinen & Ojantakanen Attorneys Ltd