Finland is set to modernise its arbitration framework with a comprehensive reform of the Finnish Arbitration Act. The Ministry of Justice’s working group has issued a report proposing a new Arbitration Act to replace the current legislation from 1992. The reform aims to align the Finnish Arbitration Act with the UNCITRAL Model Law on International Commercial Arbitration, reflect digitalisation and evolving international practice, and strengthen Finland’s position as an attractive place for international arbitration.
Key takeaways of the proposal
Gender-neutral terminology adopted
Terminology of the Arbitration Act is proposed to be made gender-neutral (arbitration = välitysmenettely; arbitral tribunal = välitysoikeus; arbitrator = välitysoikeuden jäsen). The language is modernised to reflect contemporary drafting standards. English terminology remains unchanged in the draft.
No requirement of written form and clear provisions on governing law
The current requirement for the arbitration agreement to be in writing is proposed to be abolished, reflecting the 2006 partial reform of Model Law and prevailing international practice.
The new Arbitration Act also introduces an explicit rule on the law governing the arbitration agreement, by proposing the agreement to be governed by the law of the state agreed on by the parties. If no choice is made, the law of the place of arbitration shall apply primarily, and the law applicable to the legal relationship secondarily. This change, addressing a long-standing legal gap, is particularly welcome from the point of view of legal certainty.
Kompetenz-Kompetenz and separability codified
The well-established principles of Kompetenz-Kompetenz and separability are proposed to be expressly codified in the new Arbitration Act. Accordingly, the tribunal decides its own jurisdiction, including the existence, validity and scope of the arbitration agreement. Jurisdictional decisions made during the proceedings or in the final award, whether positive or negative, can be referred to the Court of Appeal within 30 days. The arbitration may continue whilst the jurisdictional challenge is pending. Whereas the possibility to challenge a positive ruling on jurisdiction is widely adopted in national arbitration legislations, Finland would, by virtue of the new Arbitration Act, become the first Nordic country to allow negative ruling on jurisdiction to be directly challenged in court.
The proposal also codifies the well-established separability principle suggesting that an arbitration clause within a contract is treated as independent from the other terms when determining the existence and validity of the arbitration agreement.
Multi-party and multi-contract arbitration
The proposed new Arbitration Act introduces explicit, generally non-mandatory rules for multi-party and multi-contract situations. These include provisions on joinder of third parties, consolidation of proceedings, multi-contract claims, and multi-party appointment rules. Such provisions are new to the Finnish law and do not appear in the Model Law.
A third party may be joined to pending proceedings if (i) all parties and the third party consent, or (ii) the same arbitration agreement binds all parties and the tribunal (or court, if arbitral tribunal is not yet constituted) finds justified cause for joinder. All parties must be heard before the decision.
Two or more arbitral proceedings may be consolidated if (i) all parties consent to the consolidation, or (ii) the proceedings have the same arbitral tribunal, the parties to all the arbitral proceedings are bound by the same arbitration agreement, the consolidation is based on this agreement, and the arbitral tribunal deems that there are justifiable reasons for the consolidation. The parties to all arbitral proceedings to be consolidated must be heard before consolidation.
Claims arising from several contracts may be heard in a single arbitration if the claims relate to the same or substantially related legal relationships and are based on the same arbitration agreement or several non-conflicting arbitration agreements.
In case of multiple claimants or respondents, one member shall be jointly appointed to a three-member tribunal, unless otherwise agreed. If joint appointment is not made within 30 days of the request, a party may request a court to appoint the arbitrators on behalf of all parties and to remove any already appointed. A court decision removing an arbitrator may not be appealed against.
Interim measures: concurrent tribunal and court powers
Arbitral Tribunals gain concurrent authority with courts to order interim measures. Upon a party’s application, the arbitral tribunal may order any interim measure it considers necessary, and such measures bind the parties. In deviation from the provisions of the Model Law recognising ex parte interim measures, it is proposed that an application for an interim measure may not be granted without giving the opposing party an opportunity to be heard. Courts retain concurrent power to order interim measures despite the existence of an arbitration agreement.
An interim measure ordered by a tribunal seated in Finland can be declared enforceable by the court upon application. The competent court for such applications is the Helsinki Court of Appeal. The court does not reassess the underlying preconditions for the interim measure, but the application can be refused only on certain limited statutory grounds.
Digital-ready procedure
The arbitral tribunal may order that oral hearings be conducted via remote connection. Awards may be issued electronically and signed using advanced electronic signatures (eIDAS or equivalent) with the consent of the parties.
Streamlined annulment: “null and void” regime abolished
A peculiarity of the current Finnish Arbitration Act is that it allows a party to challenge the arbitral award on two distinct grounds: a final award can be declared null and void without a time limit. Moreover, an arbitral award may be set aside if an action for annulment is filed within the statutory time limit. This dual regime is internationally exceptional and has been considered particularly problematic from the point of view of legal certainty as an arbitral award can be challenged as null and void without any time limit.
The proposal abolishes this dual regime. Going forward, set-aside proceedings remain the sole mechanism for challenging arbitral awards and the grounds for doing so are harmonised with the Model Law and the New York Convention. Public policy and non-arbitrability are considered ex officio, as under the Model Law. An action for setting aside an award must be brought before the Helsinki Court of Appeal within 60 days from receipt of the award.
Unified recognition and enforcement standards
The same grounds for refusing recognition and enforcement of award apply to awards made in Finland and abroad. However, a special limitation applies to awards made in Finland: enforcement of an award made in Finland cannot be refused if an action to set aside the award has been finally dismissed. If no set-aside action was brought within the statutory time limit, enforcement may only be refused on grounds of non-arbitrability or public policy.
Dedicated courts for arbitration matters
The proposal suggests that all arbitration-related court proceedings would be concentrated in two court instances. Set-aside actions, appeals on arbitral tribunals’ jurisdictional rulings, challenge procedures, applications on enforcement of interim measures ordered by an arbitral tribunal and enforcement matters would in the future be handled by the Helsinki Court of Appeal. Appointment and removal of arbitrators, fee matters as well as applications on joinder and consolidation would be handled by the Western Uusimaa District Court. Centralising jurisdiction in arbitration-related matters to specific courts is expected to support the efficiency of court proceedings in arbitration-related matters and to increase the predictability of court practice.
Concluding remarks
The proposed reform of the Finnish Arbitration Act is welcome as it would bring the Finnish Arbitration Act firmly in line with the UNCITRAL Model Law in both structure and substance, positioning Finland as a Model Law jurisdiction. The reform adds clarity on pivotal issues such as form-free arbitration agreements, law governing the arbitration agreement, interim measures, and a unified set-aside regime aligned with international practice.
Collectively, these reforms are designed to secure UNCITRAL’s Model Law classification and make Finland a more compelling, reliable and internationally competitive seat for arbitration.
The working group has published an English draft text of the Act, reflecting the reforms summarised above.
Next steps
The report is currently open for public consultation until 6 February 2026, after which legislative drafting will continue. The Act is intended to enter into force approximately six months after it has been adopted and confirmed.
Link
https://urn.fi/URN:ISBN:978-952-400-738-2 – New Arbitration Act – Working group report
