Supreme Court considers international jurisdiction of Finnish courts - International Law Office

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Litigation - Finland

Supreme Court considers international jurisdiction of Finnish courts

December 06 2011

Introduction
Background
Decisions


Introduction


In a recent case the Supreme Court considered, among other issues, the international jurisdiction of the Finnish courts.(1) In its judgment, the court concluded that the defendant had withdrawn a choice of forum agreement by stating to the court that it did not contest the jurisdiction of the Finnish court in the matter. Therefore, the court considered that the Finnish courts were competent to consider the case despite the existence of a choice of forum agreement, which granted sole territorial jurisdiction to the Californian courts. The court also held that a decision delivered by a foreign court is no absolute obstacle to having the same matter considered by a Finnish court.

Background

The case related to a surety obligation in a contractual relationship between two foreign (ie, non-Finnish) companies. The surety obligation included a provision regarding the legal venue (ie, a forum clause) on the basis of which the US court with territorial jurisdiction in California had delivered a judgment granting affirmative relief regarding the claim under the surety bond. The question at hand regarded a claim related to the same receivable in the Finnish court, as well as civil procedure and judgment by default. This update focuses on the international aspects of the decision.

Decisions

The Kotka District Court dismissed the plaintiff's claim regarding the claim under the surety bond as groundless by a default judgment. The plaintiff appealed against the default judgment, requesting that the matter be returned to the district court. The appeal court found that the parties to the dispute had entered into a binding choice of forum agreement granting the Californian courts sole territorial jurisdiction. The court also held that the plaintiff had referred to the fact that the claim was based on the decision given by the Californian court confirming the claim under the surety bond. However, the court considered that the judgment could not be set as the basis for a judgment to be given by a Finnish court and that the Kotka District Court was therefore not competent to deal with the claim. The appeal court dismissed the claim.

The Supreme Court considered, among other things, whether the choice of forum agreement granting sole jurisdiction to the Californian courts prevented it from considering the claim in the Finnish courts.

The provisions regarding a choice of forum agreement included in the Code of Juridical Procedure allow the parties to withdraw, with no formalities, from a choice of forum agreement. In this case the defendant had explicitly stated to the appeal court that it did not contest the jurisdiction of the Finnish court in the matter. Therefore, the Supreme Court considered that the defendant had withdrawn from the choice of forum agreement and that the matter could be considered by the Finnish courts. The appeal court should not have dismissed the matter because of the choice of forum agreement.

The Supreme Court also had to consider the question of whether the judgment given by the foreign court prevented it from considering the matter in Finland. Unlike agreements on the legal venue, parties may not agree on which country and in what conditions the judgment given by the agreed court may be enforced. For this matter, the court's jurisdiction, as well as recognition of a judgment given by a foreign court and the conditions for enforcing a judgment, form a starting point based on international agreements binding the country in question. No agreement regarding the courts' international competence or recognition and enforcement of judgments exists between Finland and the United States. In the case at hand the judgment given by the Californian court regarding the claim under the surety bond could not be enforced in Finland either on the basis of international procedural law principles applied in Finland. Therefore, the plaintiff's chances of receiving payment for its receivable based on the decision of the Californian court rested on the possibility of the case being considered by a Finnish court. Otherwise, the plaintiff would have had no means, in practice, to realise its rights based on the choice of forum agreement.

The Supreme Court considered that a decision handed down by a foreign court cannot be deemed to form an absolute obstacle the same matter being considered in a Finnish court. Therefore, the decision regarding the claim under the surety bond does not hinder the Finnish court from considering the case.

For further information on this topic please contact Jussi Ikonen or Tiina Järvinen at Merilampi Attorneys Ltd by telephone (+358 9 686 481), fax (+358 9 6884 8484) or email (jussi.ikonen@merilampi.com or tiina.jarvinen@merilampi.com). The Merilampi Attorneys website can be accessed at www.merilampi.com.

Endnotes

(1) Decision 2011:74.


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