Date when decision was rendered: 1.12.1999

Judicial body: Vaasa Court of Appeal = Vasa hovrätt = Vaasan hovioikeus

Reference: Report No. 1387; S98/463

Reference to source

Registry of the Vaasa Court of Appeal

Vasa hovrätts registratorskontor

Vaasan hovioikeuden kirjaamo

Date of publication:

Subject

access to court, arbitration,
rätt till domstolsprövning, skiljedom,
oikeus tuomioistuinkäsittelyyn, sovittelu,

Relevant legal provisions

section 16 of the Constitution Act

= regeringsformen 16 §

= hallitusmuoto 16 §.

ECHR-6

Abstract

A had a franchising agreement with a company administering a chain of pizza bakeries.It turned out later that A was allergic to wheat flour.Because of the occupational disease she had to give up running the bakery.She wanted to transfer the bakery and the franchising agreement to another person.The pizza company accepted the person as a new entrepreneur but not the direct transfer of the bakery by A to this person.A new agreement should have been made directly with the pizza company.A became bankrupt.She brought the dispute before the court of first instance and claimed that the inflexible policy of the pizza company had contributed to her bankruptcy.The pizza company referred to the franchising agreement which provided that any dispute arising from the agreement should be settled by arbitration.According to A, the arbitration clause was unreasonable.The court agreed with the pizza company and did not consider the case.

A appealed to the Vaasa Court of Appeal which in its decision referred to the principle of access to justice as provided for in section 16 of the Constitution Act and Article 6 of the ECHR.The court noted that A had voluntarily given up her right to have her case examined by a court when she accepted the franchising agreement including the arbitration clause.However, under the circumstances of the case, the arbitration clause could be regarded as unreasonable.When signing the agreement, it had not been possible for A to try to amend the standard terms of the agreement.A was bankrupt and insolvent.Arbitration proceedings were fairly expensive, whereas it was possible that A will be granted free legal proceedings before the court of first instance.A's bankruptcy and insolvency were caused by circumstances beyond her control.The court of appeal concluded that the arbitration clause is disregarded and returned the case to the lower court which, according to the appeal court, had jurisdiction over the matter.The Supreme Court did not grant the pizza company leave to appeal.

24.10.2002 / 27.3.2003 / LISNELLM

Date when decision was rendered: 23.1.2001

Judicial body: Supreme Court = Högsta domstolen = Korkein oikeus

Reference: Report No. 130; S 99/694

Reference to source

KKO 2001:11.

Decisions of the Supreme Court 2001 I January-June

Avgöranden av Högsta domstolen 2001 I januari-juni

Korkeimman oikeuden ratkaisuja 2001 I tammi-kesäkuu

Place of publication: Helsinki

Publisher: The Supreme Court

Date of publication: 2001

Pages: pp. 54-58

Subject

fair trial, independent and impartial tribunal, arbitration,
rättvis rättegång, oavhängig och opartisk domstol, skiljedom,
oikeudenmukainen oikeudenkäynti, riippumaton ja puolueeton tuomioistuin, sovittelu,

Relevant legal provisions

sections 9, 10, 40 and 41 of the Arbitration Act

= lag om skiljeförfarande 9 §, 10 §, 40 §, 41 §

= laki välimiesmenettelystä 9 §, 10 §, 40 §, 41 §.

ECHR-6

Abstract

A dispute between advocate C and his clients A and B concerning C's fee had been resolved in arbitration at the request of A and B.The procedure had been carried out according to the rules of the Finnish Bar Association (The Finnish Bar Association By-Laws, 24 April 1959/191).The arbitrators had dismissed the case.A and B then brought action against C before a court of first instance.They asked the court to set aside or declare null and void the arbitration award on the grounds that there was reason to doubt the impartiality of two of the arbitrators.They were members of the Board of the Chapter of the Bar Association to which C also belonged.In addition, all three were advocates, and they lived and practiced their profession in the same town.A and B had found out about these circumstances only after the arbitration procedure had been completed.The court of first instance dismissed the claim.It noted that when A and B had chosen the arbitration procedure, they were aware of the rules of the Finnish Bar Association and of the possibility that advocates appointed as arbitrators could belong to the same Chapter of the Bar Association as the defendant C.According to the court, the other circumstances which A and B had referred to in their claim did not give cause to doubt the impartiality of the arbitrators.

A and B took the case to the court of appeal.The appeal court referred to Article 6-1 of the ECHR and to the provisions on impartiality in sections 9 and 10 of the Arbitration Act.It concluded that the procedure of appointing the arbitrators from among the members of the Board of the Chapter to which the defendant C also belonged, did not fulfill the requirement of impartiality and independence of arbitrators.The appeal court set aside both the decision of the first instance court and the arbitration award.C appealed to the Supreme Court.

The Supreme Court also referred to sections 9 and 10 of the Arbitration Act as well as to Article 6-1 of the ECHR.It noted that in the case law interpreting Article 6 distinction was made between voluntary and compulsory arbitration.In this case, A and B had voluntarily chosen arbitration and had thus given up the possibility of a court procedure and the due process guarantees relating to a court procedure.By accepting arbitration according to the rules of the Finnish Bar Association, they had also accepted the fact that the arbitrators are advocates and that members of the Board of a Chapter of the Bar Association could be appointed as arbitrators.Consequently, they had given up the possibility to request the disqualification of the arbitrators on these grounds.On the other hand, they were not necessarily aware, that Board members of the Chapter to which C also belonged would be appointed as arbitrators in this case, nor that the arbitrators would live and practice their profession in the same town as C.However, according to the Supreme Court, these circumstances alone did not mean that the arbitrators and C would have a close relation or share the same interests in this particular matter.Therefore, there was no objective and justifiable cause to doubt the impartiality of the arbitrators on these grounds either.The Supreme Court upheld the decision of the court of first instance.

29.10.2002 / 10.3.2003 / LISNELLM

Date when decision was rendered: 31.1.2005

Judicial body: Supreme Court = Högsta domstolen = Korkein oikeus

Reference: Report no. 0152; S2003/993

Reference to source

KKO 2005:14.

Decisions of the Supreme Court 2005 I January-June

Avgöranden av Högsta domstolen 2005 I januari-juni

Korkeimman oikeuden ratkaisuja 2005 I tammi-kesäkuu

Place of publication: Helsinki

Publisher: Edita

Date of publication: 2005

Pages: pp. 76-92

Subject

arbitration, fair trial, independent and impartial tribunal,
skiljedom, rättvis rättegång, oavhängig och opartisk domstol,
sovittelu, oikeudenmukainen oikeudenkäynti, riippumaton ja puolueeton tuomioistuin,

Relevant legal provisions

sections 9 and 10 of the Arbitration Act; Chapter 13, section 1 of the Code of Judicial Procedure

= lag om skiljeförfarande 9 § och 10 §; rättegångsbalken 13 kapitel 1 §

= laki välimiesmenettelystä 9 § ja 10 §; oikeudenkäymiskaari 13 luku 1 §.

ECHR-6

Abstract

The court of appeal had set aside an arbitral award on the grounds that there were justifiable doubts as to the impartiality of the chairman of the arbitrators, X.A party to the arbitration proceedings, A, sued X for damages caused by the setting aside of the arbitral award.The court of first instance and the court of appeal ruled that X was not liable, but the Supreme Court took a different view.

According to section 9 of the Arbitration Act, a person who is to be appointed as an arbitrator shall immediately disclose any circumstances likely to give rise to justifiable doubts as to his or her impartiality and independence.The provision offers the parties to an arbitration the possibility to review matters which may cause an arbitrator to be disqualified.Under section 10, an arbitrator may be challenged by a party, if the arbitrator had been disqualified to handle the matter as a judge, or if circumstances exist that give rise to justifiable doubts as to the arbitrator's impartiality and independence.In the opinion of the Supreme Court, these provisions correspond to the requirements concerning the impartiality of judges set in Article 6 of the ECHR and in the case law of the European Court of Human Rights, covering both subjective and objective impartiality.

The Arbitration Act does not include provisions on liability for damage.The lower courts had decided the case on the basis of the Tort Liability Act, whereas the Supreme Court ruled that the question of an arbitrator's liability was to be resolved on the basis of principles applicable to contractual relations.In the Supreme Court's view, an arbitrator may be liable to pay damages in exceptional cases only.In this way it is possible to guarantee the independence of arbitrators and to prevent any efforts to influence their decision.On the other hand, the fact that the arbitral award is final underlines the requirements set for the independence and thoroughness of the arbitrators.Therefore, neglect or clear procedural faults must be coupled with liability for damage.

In this case, two banks had intervened in the arbitration proceedings on behalf of A's adverse party, Company B, and in fact one of the banks held the entire share capital of Company B.During the proceedings, X had given several expert opinions to both banks albeit in matters not directly related to the arbitration in question.For his expertise X had received a considerable compensation from the banks.X had not brought these circumstances to A's knowledge.In the Supreme Court's view, X should have understood that his actions would give A justifiable grounds to doubt X's impartiality and independence.X had thus neglected his duty to inform the parties under section 9 of the Arbitration Act.The Supreme Court ruled that X was liable for the possible damage caused to A.The case was returned to the court of first instance in order for the lower court to consider the amount of possible damages.

26.5.2006 / 26.5.2006 / RHANSKI