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Changes to the FAI Arbitration Rules 2024 explained

Key amendments to the FAI Arbitration Rules 2024 enhance the arbitration process, streamline costs, and ensure fair, efficient outcomes. Learn how.

Arbitration, an alternative to state court litigation, is a preferred method for resolving disputes particularly in commercial settings. Its key advantages include:

  • Efficiency: Faster than state court litigation.
  • Flexibility: Parties shape the process to meet their needs.
  • Expertise: Allows nomination of arbitrators with specific qualifications.
  • Confidentiality: Conducted in private, ensuring discretion.
  • Finality: Conclusive and non-appealable awards.
  • Enforceability: Awards are enforceable in most states globally.

Effective 1 January 2024, the Finland Arbitration Institute (FAI) implemented amendments to its Arbitration Rules and Rules for Expedited Arbitration. According to reports by the FAI, the revisions aim to update and simplify cost structures, revise selected provisions under both sets of rules, and modernise terminology.

Standardised Filing Fee and Cost Structures

In all FAI arbitrations, the party commencing the arbitration must pay a standardised filing fee when filing its request for arbitration with the FAI. As of 1 January 2024, the FAI has applied a filing fee of EUR 3,000 in all its arbitrations.

The costs of the arbitration, including the FAI administrative fee and the fees(s) and costs of the arbitrator(s), are finally fixed in the final award or, if the arbitration is terminated before the rendering of a final award, in a consent award or in an order for the termination of the arbitration. In contrast to its prior application of separate cost tables, under the amended 2024 Arbitration Rules and Rules for Expedited Arbitration, the FAI applies the same updated cost tables determining the administrative fee and the fee(s) of the arbitrator(s) in proceedings under both sets of rules.

Aligning the filing fee and the cost tables under the current Arbitration Rules and Rules for Expedited Arbitration aim to simplify cost structures, providing parties with a clearer understanding of the financial commitment associated with FAI arbitration.

Selected Revisions to the FAI Process

The FAI has introduced selected revisions to the arbitration process in the update of its rules. Key insights from the amended provisions include the following.

Separation of Arbitrations: New subsections introduced to Article 15.2 of the FAI Arbitration Rules address situations where claims are made under multiple arbitration agreements in the same arbitration, but all claims cannot proceed in that same arbitration due to, e.g., contradictory provisions in the arbitration agreements in question. The new subsections give the FAI the mandate to separate the arbitrations if all claims cannot proceed together in one proceeding. This has been seen as a welcome addition to the rules, enhancing legal certainty for the parties, as well as helping eliminate unnecessary legal costs, as parties do not have to file separate arbitrations from the start just to be on the safe side if their claims are based on multiple contracts and multiple arbitration agreements.

Time Limit for Nomination of Sole Arbitrator: Under the amended rules, where the parties have agreed that the dispute shall be referred to a sole arbitrator, they may jointly nominate the sole arbitrator for confirmation within 10 days from the date on which the respondent’s answer to the request for arbitration was received by the claimant. This revised time limit under Article 18.1 of the FAI Arbitration Rules for joint nomination allows parties to have an equal footing, as both parties will have submitted their written statements before the nomination deadline, and give them a bit more time to nominate the sole arbitrator for confirmation by the FAI compared to the previous rules.

Impartiality and Independence of Arbitrators: New provisions introduced to Articles 21.5–21.6 of the FAI Arbitration Rules require parties to disclose third-party funding arrangements and changes in party representation. The purpose of the newly added provisions is to safeguard the impartiality and independence of arbitrators throughout the arbitral process.

Flexibility in Remote Hearings: Clarifications regarding the use of remote connections in hearings introduced to Articles 36.1 and 36.3 of the FAI Arbitration Rules offer improved flexibility and cost control to the parties.

Modernised Terminology: The final notable change introduced by the FAI is the adoption of new gender-neutral terminology in the Finnish and Swedish versions of its 2024 Arbitration Rules and Rules for Expedited Arbitration. While this terminology update can be seen as reflective of a wider commitment towards equality, its practical impact lies in fostering an environment that is increasingly considerate of diverse parties involved in arbitration.

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Sanna Kaistinen

Legal Business Partner | Head of Conflict Management and Dispute Resolution

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