Arbitration in Finland and the Proposed Reform of the Finnish Arbitration Act

29.4.2026

1. Arbitration in Finland: institutional and ad hoc proceedings

Arbitration is an established method of resolving commercial disputes in Finland. In practical terms, Finnish arbitration may be divided into two main categories: institutional arbitration administered by the Arbitration Institute of the Finland Chamber of Commerce (FAI) and ad hoc arbitration, where the proceedings are not administered by an arbitral institution.

Where the seat of arbitration is Finland, Finnish arbitration legislation applies as the lex arbitri regardless of whether the arbitration is administered by the FAI or conducted on an ad hoc basis.

1.1 FAI arbitration

The principal arbitral institution in Finland is the Arbitration Institute of the Finland Chamber of Commerce. The FAI is an autonomous arbitration body of the Finland Chamber of Commerce. It administers arbitrations and mediations under its rules.

FAI arbitrations are conducted under either the Arbitration Rules of the Finland Chamber of Commerce or the Rules for Expedited Arbitration of the Finland Chamber of Commerce. The current versions of both sets of rules entered into force on 1 January 2024. More information of FAI Rules and procedure can be found www.arbitration.fi

The FAI Rules are modern institutional arbitration rules and are broadly comparable to the rules of other leading Nordic and international arbitral institutions, including the SCC Arbitration Institute and the ICC International Court of Arbitration

The ordinary FAI Arbitration Rules are used for standard and more complex commercial disputes. The Expedited Rules are intended for less complex or lower-value disputes. The target duration is approximately 12 months under the FAI Ordinary Rules and approximately six months under the Expedited Rules, although actual duration depends on the case.

The FAI may also act as an appointing authority in ad hoc arbitration. In that role, it appoints one or more arbitrators but does not administer the proceedings.

1.2 Ad hoc arbitration under the Finnish Arbitration Act

The second main category is ad hoc arbitration. In an ad hoc arbitration, no arbitral institution administers the case. If the seat is Finland, the proceedings are governed by the Finnish Arbitration Act and by the parties’ arbitration agreement.

Ad hoc arbitration gives the parties broad procedural flexibility, but it also places greater weight on the statutory framework. For this reason, the forthcoming reform of the Finnish Arbitration Act is particularly important for ad hoc proceedings. The reform is also relevant to FAI arbitrations seated in Finland, because the Act forms the mandatory and supplementary legal framework for all arbitrations seated in Finland.

1.3 Arbitration Cases in Finland

The number of FAI-related cases has generally been in the range of approximately 75–100 cases per year, although annual volumes fluctuate. In 2024, the FAI recorded 75 cases: 65 under the Arbitration Rules, nine under the Expedited Rules and one ad hoc matter in which the FAI acted as appointing authority.

There are no comprehensive public statistics on ad hoc arbitrations seated in Finland. It is estimated that ad hoc arbitration in Finland may therefore be described as unrecorded but is estimated to be broadly comparable to, or somewhat lower, than the institutional caseload.

2. The proposed reform of the Finnish Arbitration Act

The Finnish Arbitration Act is currently being reformed. The Ministry of Justice working group proposes that the current Act be replaced by a new Arbitration Act. The reform is designed to modernise Finnish arbitration law, align it more closely with the UNCITRAL Model Law on International Commercial Arbitration, reflect international developments and digitalisation, and strengthen Finland’s position as a seat of arbitration.

The new Act is currently expected to enter into force in 2027, depending on the legislative process.

A terminology point is relevant. The reform would make the Finnish-language terminology gender-neutral. The English terminology would not change: the relevant English terms remain arbitration, arbitral tribunal, arbitrator and award.

3. Main shortcomings of the current Act and proposed amendments

3.1 Structure and UNCITRAL Model Law alignment

The current Finnish Arbitration Act entered into force in 1993. It has provided a stable framework for arbitration in Finland, but it has been amended only to a limited extent. Although the Act is influenced by the 1985 UNCITRAL Model Law, it does not follow the Model Law closely in structure and drafting style. As a result, Finland is not classified by UNCITRAL as a Model Law jurisdiction.

The proposed reform would replace the current Act with a new Arbitration Act structured closely around the UNCITRAL Model Law. The objective is to make Finnish arbitration legislation more recognisable and predictable for international users and to improve Finland’s competitiveness as a seat of arbitration.

3.2 Arbitrability and arbitration agreements

Under the current Act, a dispute is arbitrable if it is a private-law dispute that can be settled by agreement. The reference to “private-law” disputes has been considered problematic, particularly where public entities act in contractual, outsourced or corporatised structures.

The proposed Act would simplify the test. A dispute would be arbitrable if it can be settled by agreement. The reference to the private-law nature of the dispute would be removed.

The current Act also requires an arbitration agreement to be made in writing. This is increasingly seen as outdated and inconsistent with modern commercial practice. The proposed Act would abolish the written-form requirement. The parties could agree to arbitration without a statutory form requirement, although a party relying on an arbitration agreement would still need to prove its existence and content if disputed.

The proposed Act would also introduce a rule on the law applicable to arbitration agreements. The arbitration agreement would primarily be governed by the law chosen by the parties. If no choice has been made, the law of the seat of arbitration agreed by the parties would apply, and secondarily the law applicable to the underlying legal relationship.

3.3 Constitution of the arbitral tribunal and challenges to arbitrators

The current Act refers to national rules on judicial disqualification when dealing with the impartiality and independence of arbitrators. This is not ideal for international users. In addition, a challenge of an arbitrator can generally be brought before a court only after the award has been made, as part of setting aside proceedings.

The proposed Act would remove the reference to judicial disqualification rules. An arbitrator could be challenged if circumstances exist that give rise to justifiable doubts as to the arbitrator’s impartiality or independence. If a challenge is rejected, the issue could be brought before a court already during the arbitration. The arbitral tribunal could nevertheless continue the proceedings and make an award while the court matter is pending.

The proposed Act would also include clearer rules for multi-party appointment situations. Where several parties are on the same side, they would normally appoint one arbitrator jointly. If they fail to do so, the court could appoint the arbitral tribunal on behalf of all parties.

3.4 Competence-competence and separability

The current Act does not expressly state that the arbitral tribunal may rule on its own jurisdiction. Nor does it expressly codify the separability of the arbitration clause from the main contract, although these principles are recognised in Finnish case law and international arbitration practice.

The proposed Act would expressly recognise both principles. The arbitral tribunal would have the competence to rule on its own jurisdiction, including questions concerning the existence, validity and scope of the arbitration agreement. An arbitration clause forming part of a contract would also be treated as independent from the other terms of that contract.

The reform would further introduce clearer rules on court review of jurisdictional rulings. A party could bring before a court both a positive jurisdictional ruling and a negative jurisdictional ruling. The time limit would be 30 days from service of the relevant decision or award.

3.5 Interim measures

The current Act does not regulate the power of arbitral tribunals to order interim measures. Courts may order interim measures, but the tribunal’s own powers are not addressed.

The proposed Act would give arbitral tribunals the power to order interim measures concerning the dispute, unless otherwise agreed by the parties. The tribunal’s power would operate in parallel with the court’s power. A Finnish court could, upon application, declare an interim measure ordered by an arbitral tribunal in Finland enforceable, unless a statutory ground for refusal exists.

3.6 Conduct of proceedings, remote hearings and evidence

The current Act recognises party equality and the right to present one’s case, but the relevant provisions are limited. It also lacks several procedural rules commonly found in modern arbitration legislation and institutional rules.

The proposed Act would expressly require equal treatment of the parties and a reasonable opportunity for each party to present its case. It would also include clearer rules on the tribunal’s control over the proceedings, the duty to conduct the proceedings efficiently, the parties’ obligation to contribute to an efficient process, and the communication of submissions and materials to the other party.

The Act would also regulate party default. If the claimant fails to submit a statement of claim without a valid reason, the tribunal must terminate the proceedings. If the respondent fails to submit a statement of defence, the tribunal must continue the proceedings without treating the failure as an admission. In other default situations, the tribunal may continue the proceedings and make an award on the material before it.

The reform would also expressly permit remote hearings. After hearing the parties, the arbitral tribunal could order that an oral hearing be held in full or in part via remote connection, or that a party, witness or expert be heard remotely.

The rules on evidence would also be supplemented. The arbitral tribunal could refuse clearly irrelevant or late evidence, or evidence that would be inappropriate having regard to its content or the manner in which it was obtained. The tribunal could also draw appropriate inferences from a party’s unjustified failure to comply with evidentiary orders.

3.7 Joinder, consolidation and multiple contracts

The current Act does not regulate joinder of additional parties, consolidation of arbitrations or claims arising under multiple contracts. This is a practical deficiency in complex commercial disputes, including construction projects, M&A disputes, shareholder disputes and supply-chain disputes.

The proposed Act would introduce rules on joinder, consolidation, separation of consolidated arbitrations and claims based on multiple contracts. These provisions would facilitate the efficient handling of related disputes involving several parties or several contracts, provided that the statutory requirements are met.

3.8 Applicable law and form of the award

The current Act does not sufficiently regulate how the law applicable to the merits is determined if the parties have not chosen it. Nor does it expressly address the possibility of applying non-state rules of law.

The proposed Act would allow the parties to agree on the law or other rules of law applicable to the substance of the dispute. If the parties have not made such an agreement, the arbitral tribunal would apply the law of the state, or other rules of law, that it considers most justified.

The current Act is also partly outdated in relation to awards. It does not contain an express general rule requiring reasons for an award and does not fully reflect modern practice regarding electronic awards and electronic signatures.

The proposed Act would require the award to state reasons, unless the parties have agreed otherwise or the award records a settlement. With the consent of the parties, an award could also be made in electronic form and signed electronically.

The proposed Act would also add a mechanism for interpretation of awards. A party could request correction, interpretation or an additional award within 30 days from service of the award.

3.9 Costs

The current Act refers to the cost rules of the Finnish Code of Judicial Procedure. This is not an ideal fit for arbitration.

The proposed Act would introduce more autonomous rules on the allocation of arbitration costs. The tribunal could take into account the outcome of the case, a party’s failure to contribute to an efficient process and other circumstances. The reform would also clarify rules on arbitrators’ fees, expenses, advances and security for costs.

3.10 Setting aside and removal of the nullity regime

One of the most important proposed changes concerns challenges to awards. The current Act distinguishes between grounds for nullity and grounds for setting aside an award. Nullity may be invoked without a time limit. This has been considered problematic for legal certainty, finality and Finland’s attractiveness as a seat of arbitration.

The proposed Act would abolish the separate nullity regime. Challenges to awards would instead be handled through time-limited setting aside proceedings. The grounds for setting aside would be aligned more closely with the UNCITRAL Model Law and the New York Convention. The time limit for bringing an action to set aside an award would be 60 days from service of the award.

3.11 Recognition and enforcement

The current Act applies different regimes depending on whether the award was made in Finland or abroad. This makes the rules less clear and less consistent with the Model Law.

The proposed Act would create a more uniform regime for recognition and enforcement of awards made in Finland and abroad. As a starting point, the same grounds for refusing recognition and enforcement would apply to both. However, where an award made in Finland has not been challenged within the time limit, or where a setting aside proceedings has been finally dismissed, enforcement could generally be refused only on the basis of non-arbitrability or conflict with the public policy of Finland.

3.12 Centralisation of arbitration-related court matters

Under the current Act, arbitration-related court matters are handled by several courts. This is not optimal from the perspective of specialisation, efficiency and predictability.

The proposed Act would centralise key court matters. Setting aside proceedings, enforcement matters, challenges to arbitrators, jurisdictional matters and enforcement of tribunal-ordered interim measures would be handled by the Helsinki Court of Appeal. Matters relating to the constitution of the arbitral tribunal, removal of arbitrators, certain joinder issues and arbitrators’ fees would be handled by the Western Uusimaa District Court.

4. Conclusion

The proposed reform would substantially modernise Finnish arbitration law. Its core objective is to make the statutory framework more recognisable, predictable and competitive in international arbitration.

The most significant changes concern closer alignment with the UNCITRAL Model Law, removal of the written-form requirement for arbitration agreements, express recognition of competence-competence and separability, tribunal-ordered interim measures, remote hearings, electronic awards, multi-party and multi-contract disputes, abolition of the current nullity regime and centralisation of arbitration-related court matters.

For FAI arbitrations seated in Finland, the reform would strengthen the statutory framework supporting proceedings already conducted under modern institutional rules. For ad hoc arbitrations, the reform would be even more significant, because the Arbitration Act provides the core procedural framework in the absence of institutional administration.

When implemented as proposed, the new Act would make arbitration in Finland more flexible, more internationally familiar and more supportive of the finality of arbitral awards. It could also strengthen Finland’s position as a credible Nordic seat of arbitration.

Jari Sotka,
Attorney-at-Law, MBA