Why Finland should adopt the UNCITRAL Model Law on International Commercial Arbitration
Finland has excellent attributes to serve as a place for an international arbitration, being widely recognized for its political neutrality and stability, respect for the rule of law and freedom from corruption. Few other countries can compare to Finland in these respects. It is a modern, socially advanced and highly democratic country with first class hotels and excellent transportation and telecommunication facilities. It has an outstanding and well established (founded in 1911) arbitral institution in the Arbitration Institute of the Finland Chamber of Commerce (the "FAI"). Finland is also, like Sweden, exceptionally well located to attract disputes between parties from Eastern Europe, Russia, China and Asia, on the one hand, and parties from Western Europe and the Americas, on the other.
Yet, Finland has failed to attract users of international arbitration and has, instead, lost to other countries, notably Sweden, the economic and reputational benefits that hosting those disputes generate, obliging many Finnish companies to resolve their disputes abroad. A major reason for this failure is, undoubtedly, a lack of confidence by foreigners and international arbitral institutions (whether justified or not) in Finland’s legal infrastructure for arbitration, that is, Finland’s arbitration law and court system and their ability and willingness to facilitate and support arbitration and recognize and enforce arbitral awards.
This paper will focus on the first of these points, namely, the need for Finland to modernize its arbitration law and to make it attractive to foreign users of international arbitration and international arbitral institutions. Specifically, this paper will explain why Finland should adopt, without significant change, the UNCITRAL Model Law on International Commercial Arbitration (1985), as amended in 2006 (the "UNCITRAL Model Law" or "Model Law"), by answering the following ten questions:
- What is international commercial arbitration?
- What is the importance of international commercial arbitration today?
- Why is the seat or place of an international arbitration important?
- What criteria do parties and arbitral institutions use in selecting a seat or place of arbitration?
- Why should Finland want to be a popular place or seat for arbitration?
- What is wrong with Finland's arbitration law?
- How can a country become attractive as a place for international arbitration?
- How can Finland become a more attractive place for international arbitration?
- What are the benefits for Finland of adopting the UNCITRAL Model Law?
- Why should Finland adopt the UNCITRAL Model Law without significant change?
While this paper does not focus on the Finnish court system and the need for it to support arbitration and to recognize and enforce arbitral awards, help by the Finnish judiciary in these respects is essential and should go hand-in-hand with legislative change. Accordingly, the Finnish judiciary should be actively involved in any reform of Finnish arbitration law and be persuaded—hopefully—strongly to support such change.
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This article was originally published in a slightly different form in Liikejuridiikka, Vol. 3, 2016.
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