Finland
In your jurisdiction, are there any formal ADR procedures available for resolving commercial disputes other than litigating (or arbitrating) to a final hearing?
The main types of ADR in Finland are court mediation, voluntary meditation, determination by an Appeal Board and Online Dispute Resolution.
Court mediation (and confirmation of settlement agreement) applies to mediation in civil matters and contested petitionary matters in general courts, where a judge who has undergone court mediation training acts as mediator (Act on mediation in civil matters and confirmation of settlements in general courts -394/2011, in Finnish “Laki riita-asioiden sovittelusta ja sovinnon vahvistamisesta yleisissä tuomioistuimissa”).
If the parties reach a settlement in mediation, the court may, at the request of parties, confirm the settlement. In that case, the confirmed settlement agreement constitutes an enforceable decision. The Act also provides for confirmation of enforceability of a settlement reached in out of court mediation. According to the Act, a settlement reached in or out of court mediation can be confirmed as enforceable, provided that formal requirements imposed by the Act, concerning an inter alia form of the settlement agreement, are fulfilled. Court mediation may also be commenced based on the application by the parties, without the dispute having been initiated by an application for a summons. In addition, there is a provision in the Finnish Code of Judicial Procedure which requires the court to determine in the preparatory phase whether there are grounds for settlement. Therefore, the courts enquire with the parties, whether amicable solution would be possible to reach and encourage the parties to hold settlement negotiations.
Mediation: the Finnish Bar Association has launched a voluntary mediation scheme to resolve disputes that would otherwise be part of the normal civil process. There are numerous private mediation schemes and bodies in the business world to resolve different types of disputes.
Various regional and national appeals boards have been set up to deal with income security cases, which can issue binding and enforceable decisions, and whose decisions are usually appealed to the Insurance Court. These include the Unemployment Insurance Board, the Accident Board, the State and Municipal Pension Boards, the Regional Social Insurance Boards and the Board of Appeal for Study Grants. Some boards, such as the Consumer Disputes Board and the Traffic and Patient Compensation Board, issue only recommendations which do not prevent the case from going to court. Generally, the parties tend to comply with the recommendations very well.
Cross-border ADR and ODR in EU: consumers can get help from the European Consumer Center. The Center will first try to settle the dispute between the parties. If a settlement cannot be reached, the center will guide the consumer to take action in the right ADR forum, which will vary with the type of the dispute. When a dispute concerns a product or service bought online, the ODR (Online Dispute Resolution) forum can be used to take legal action. The parties have 90 days to reach an agreement. The consumer or trader can withdraw from direct negotiations at any time.
Does engaging in ADR have any effect on potential or existing litigation or arbitration?
Engaging in ADR does not affect statutory limitation periods. For example, according to the Finnish Limited Liability Companies Act, a claim concerning the liability of a member of the board of directors must be brought within five years from the end of the financial year during which the decision forming the basis of the claim was made, or the measure giving rise to the claim was taken.
The right to litigate or arbitrate is not affected by engaging in ADR. If mediation fails, the parties may choose to take their dispute to court. If a court case is already pending, it will be continued. The judge at the trial is different from the judge at the mediation (in the case of court mediation). A settlement proposal made by the other party in mediation may not be invoked in the court. The recommendations of certain national boards, such as Consumer Disputes Board may be taken into account by the court, but the courts are not bound by the recommendations.
Is ADR compulsory and if so are there any consequences if a party fails to engage in ADR? If it is not compulsory are there any plans for this to change?
No. The Act on mediation in civil matters and confirmation of settlements in general courts (394/2011) applies to mediation in civil matters and contested petitionary matters in general courts and allows an out-of-court settlement to be confirmed in court. In section 26 (595/1993) of the Finnish Code of Judicial Procedure in a matter amenable to settlement, the court shall try to persuade the parties to settle the matter. When the court deems it expedient in order to promote a settlement, taking into account the wishes of the parties, the nature of the matter and the other circumstances, the court may also make a proposal to the parties for the amicable settlement of the matter. ADR is not compulsory in Finland and there are no plans for that to change. For context, in the early 2000s Finland made court mediation possible because there were worries that the resolution of conflicts between people is becoming too much a matter for out-of-court bodies.
Can the parties agree, in advance of any potential dispute, to engage in ADR?
Yes. Freedom of contract is a strong principle in Finland. The parties may agree in advance to settle all disputes in ADR. If an amicable solution is not reached, the parties are entitled to take the matter to court or arbitration.
As to the consequences if a party fails to adhere to an ADR clause, we consider it very unlikely that a Finnish court or arbitral tribunal would stay proceedings solely due to the existence of an ADR clause. However, a breach of such an obligation may result in a claim for damages or other contractual remedies.
When does ADR generally take place?
Usually, the parties have agreed that in the event of a dispute, the matter can be referred to ADR. Court mediation can be started at the request of the parties after the dispute has arisen or while the dispute is already pending in the court. The different boards operate when the damage or event in question has already occurred.
Is ADR subject to without prejudice privilege and/or confidential? If not, is there any other means to protect confidential information?
Everything that falls under the Act on the Openness of Government Activities is not confidential. This includes court mediation and appeal boards. A rule of thumb is that all means of dispute resolution provided by the state are subject to the Act on the Openness of Government Activities and the Act on the Publicity of Court Proceedings in General Courts, and are therefore not confidential. Private ADR methods are on the other hand, subject to the parties freedom of contract, so non-disclosure agreements (NDAs) are common but not automatic nor mandatory.
According to section 12 of the Act on mediation in civil matters and confirmation of settlements in general courts, the court mediation may, at the request of the parties, be closed to the public, if the proper and orderly conduct of the mediation or some other weighty reason does not require that the proceedings be open. For example, if publicity hinders the mediation process, the parties may request that the process should be closed to the public. The mediator may also negotiate with a party without the other parties being present, if the parties agree.
Mediation organized by the Finnish Bar Association is confidential. The mediator is bound by the lawyer’s duty of confidentiality and is obliged to keep confidential everything they learn about the parties and their circumstances, as a result of the mediation. The parties are obliged to keep the mediation and its outcome confidential, unless they agree otherwise.
Does the output from ADR create precedents?
No, it does not create a precedent. Decisions of the various boards, such as Consumer disputes board are only recommendations, and the courts are not bound by them.
Who bears the costs of ADR?
The parties can agree on the costs as they wish and usually do so at the same time as agreeing on the proceedings. The parties usually tend to share the costs in the case of a private ADR method. If the ADR method is provided by the state, such as in the case of the consumer disputes board, the proceedings are free of charge for the parties except for a court fee which is currently EUR 270. In general, the parties bear their own legal expenses relating to ADR.
Is your jurisdiction subject to any specific rules for cross border ADR?
Finland is subject to the ADR and ODR of the European Consumer Center as described previously. Finland has not signed the United Nations Convention on International Settlement Agreements Resulting from Mediation (Singapore Convention).
Are there any particularly unusual features of ADR in your jurisdiction that you are aware are different to other jurisdictions?
In court mediation, the mediator is a district judge who has undergone court mediation training. Under the rules of the Bar Association, a lawyer trained in mediation may act as a mediator. In the case of voluntary (out-of-court) mediation, there are no conditions as to who can act as a mediator.
In Finland, there are disputes and applications where use of ADR is limited, principally disputes that relate, inter alia, to family matters such as custody, paternity and guardianship matters.
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