The Finnish Supreme Court And The Liability Of Arbitrators

2228 words - 9 pages

Journal of International Arbitration 23(1):95--]00,2006. © 2006 Kluwer Law International. Printed in The Netherlands.
The Finnish Supreme Court and the Liability Of
Gustaf MoLL1 R*
On January 31, 2005, the Finnish Supreme Court gave its judgment in a case con¬cerning arbitrators' liability.; An arbitral award had been set aside as the chairman of the arbitral tribunal could have been challenged on grounds of which the parties, at whose request the award was set aside, had not been aware before the award was rendered. The arbitrator was found liable to compensate these parties, who had been claimants in the arbitral proceedings, for the costs and expenses they ...view middle of the document...

In support of their application, they alleged that after the award had been rendered they had become aware of circumstances which were grounds for challenging ProfessorTepora.The grounds

for challenge were that he had, both before and during the arbitral proceedings, provided legal opinions to Puolimatka, the banks, and companies belonging to the same group of companies, and thus had acted as their consultant.
In its judgment of October 10, 1997, the Helsinki Court of Appeal found that Pro¬fessor Tepora had been disqualified to act as an arbitrator in the case and therefore set aside. the award on the basis of section 41(1) of the Finnish Arbitration Act.3 The fact that the legal opinions given by Professor Tepora concerned issues totally unrelated to the case decided by the arbitral tribunal was considered irrelevant. Leave to appeal to the Finnish Supreme Court was not requested within sixty days and thus the judgment of the Court of Appeal became final.
The Ruolas then brought a direct claim for damages against Professor Tepora to recover the costs and expenses they had incurred in connection the arbitral proceedings,4 plus interest.
The District Court and the Helsinki Court of Appeal found that the question of whether Professor Tepora was disqualified to act as an arbitrator had been finally decided, with binding effect, by the October 10, 1997,judgment of the Helsinki Court of Appeal. Thus the matter of whether Professor Tepora was disqualified or not could not be raised in the proceedings concerning Professor Tepora's liability. The courts held that under section 9 of the Arbitration Act,5 Professor Tepora should have disclosed to the parties his activities as consultant for Puolimatka, the banks and the companies belonging to the same group, but found that there was no contractual relationship between the parties and Professor Tepora in. his capacity as chairman of the tribunal. Professor Tepora's alleged liability, therefore, could not be contractual; the legal basis for his possible liability could only be in tort.
The courts found that whether the Ruolas' claim was justified should be decided
pursuant to the Tort Liability Act,6 Chapter 5, section 1, of this Act provides that com¬pensation for economic loss (other than compensation related to.personal injury or to damage to property) may be granted only where there are especially good and substantial reasons. The courts found, however, that Professor Tepora's conduct was only to be regarded as slightly negligent (culpa Levis) and that there were no particularly important reasons that would have made it possible to hold Professor Tepora liable in tort.
' "An arbitral award may be set aside by the court upon request of a party if (1) the arbitral tribunal has exceeded its authority."
a EUR166,725.70.
"(1) An arbitrator shall be impartial and independent. (2) When a person is approached in connection with his possible...

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