Construction and Installation Projects in Finland: Dispute Resolution

Companies involved in large-scale construction or installation projects often face complex disputes that require effective resolution mechanisms.

Arbitration

Arbitration is a preferred method for resolving business-to-business disputes in Finland, especially in international transactions. It offers several advantages over regular court proceedings. Arbitration is generally faster than court litigation, with final decisions often reached within a year. Arbitral awards are final and not subject to appeal, ensuring a swift resolution. Unlike public court proceedings, arbitration is confidential, protecting business secrets. Finally, arbitral awards are widely enforceable under the New York Convention, making them effective across borders.

Arbitration proceedings can only be initiated if both parties have agreed to it, typically through an arbitration clause in the contract. Standard arbitration rules provided by arbitration institutions are often used to streamline procedures. The Arbitration Institute of the Central Chamber of Commerce of Finland (FAI) is commonly used in Finland. For international disputes, institutions like the International Chamber of Commerce (ICC) or the Swedish Chamber of Commerce (SCC) are also widely used.

Arbitration procedures are flexible, allowing parties to define many aspects themselves. Typically, proceedings involve oral hearings where witnesses may be heard. Since arbitrators cannot compel witnesses to appear, parties should secure witness cooperation early. The procedural principles often mirror those of national courts but are influenced by the arbitrator’s background.

Alternative Dispute Resolution (ADR)

ADR aims to settle disputes amicably without resorting to binding arbitration or court orders. It is particularly useful in large projects and long-term contractual relationships, helping to prevent disputes from escalating. ADR techniques include:

Mediation: A neutral mediator facilitates settlement negotiations through individual and joint meetings, without offering opinions on the merits of each party’s position.

Neutral evaluation: An expert provides a non-binding opinion on the disputed matter.

Dispute advisors/boards: Appointed at the start of a project, these advisors help mitigate disputes early and provide neutral recommendations.

ADR participation is voluntary, and the procedures are subject to agreement between the parties. It is essential to include ADR clauses in contracts, specifying the techniques to be used and the qualifications of the neutral evaluator. Standard rules from organizations like the ICC or the International Federation of Consulting Engineers (FIDIC) provide a stable procedural framework and access to a network of experts.