The EU AI Act: Legal Compliance, Risks & Strategic Guidance for Businesses

Why the EU AI Act Matters for All Companies

The EU Artificial Intelligence Act is the first major regulatory framework for AI—and its impact will extend far beyond the tech sector. Whether you're using AI to screen job candidates, forecast supply chain needs, personalize marketing, or automate logistics, your company is already exposed to AI compliance obligations.

Even if you’re not building AI systems yourself, you are still responsible for their use. That means risk management, legal documentation, and oversight cannot be left to chance.

Business Risks of Non-Compliance with the EU AI Act

Under the EU AI Act, companies face serious consequences if they fail to meet compliance obligations:

• Fines of up to €35 million or 7% of global annual turnover

• Suspension of AI systems

• Legal claims from customers or employees

• Reputational damage due to unethical or opaque AI use

• Loss of trust among partners, suppliers, and investors

Practical Compliance Strategies for Businesses

To reduce risk and ensure readiness, companies should:

• Map current AI use across all departments — from HR to operations

• Review all third-party AI systems for hidden compliance risks

• Update contracts to include AI-related warranties and audit rights

• Train legal, procurement, and IT teams on AI governance and documentation

• Establish internal AI policies defining approval processes and responsibilities

AI Compliance Clauses: A Must-Have in Contracts

To protect your business legally and financially, contracts with AI vendors and service providers should include:

✅ AI Compliance Warranties

• Vendor confirms EU AI Act compliance

• Risk assessments conducted

• Prohibited AI practices excluded

✅ Audit and Transparency Rights

• Right to request documentation

• Regular audits allowed

• Real-time explanation of AI decisions

✅ Liability Provisions

• Vendor assumes liability for non-compliance

• Indemnification clauses for damages and fines

• Immediate contract termination for violations

These clauses are particularly critical in regulated sectors such as finance, health, insurance, and logistics.

What Boards Should Discuss About AI Risk and Governance

The responsibility doesn’t end with legal and compliance teams. Boards must take an active role in AI oversight and risk mitigation. Here are 5 key questions every board should ask:

1. What AI systems are we currently using?

2. Are our vendors contractually bound to comply with the EU AI Act?

3. Do we have an internal process to identify and manage AI risks?

4. Are our teams trained on the risks and obligations of AI use?

5. Do we have a clear policy on responsible and ethical AI?

Board-level leadership is crucial in building long-term trust and resilience in an AI-powered business landscape.

Conclusion: Turning Compliance Into Competitive Advantage

AI can transform your business—but only if used responsibly and compliantly. The EU AI Act isn’t just a legal requirement; it’s an opportunity to embed trust, ethics, and accountability into your operations.

At LKOS Law Office, we help companies navigate AI risks, revise contracts, and develop strategic compliance frameworks tailored to their industries and jurisdictions.

📩 Need support drafting AI-compliant contracts and safeguarding your business?
Our legal team at LKOS Law Office is here to help you navigate the EU AI Act and embed compliance into every agreement.

👉 Contact us today to ensure your contracts protect—not expose—your business.

Contract Strategies for a Volatile World | Tariffs & Trade

🌍 Tariffs & Trade: Contract Strategies for a Volatile World

In today’s volatile global trade landscape, tariffs are more than just taxes—they’re geopolitical tools that can significantly impact international supply chains and cross-border business relationships.

What Are Tariffs?

Tariffs are customs duties imposed on goods that cross international borders. While they can apply to both imports and exports, they are most commonly imposed on imports—as seen in recent U.S. trade policy. Tariffs are often product-specific, but they can also be geographically targeted. Whether used to raise revenue or serve strategic political goals, tariffs directly influence the cost and flow of international trade.

How Do Tariffs Affect Cross-Border Trade?

Tariffs directly affect your cost base, pricing structure, and delivery schedules. If your goods become more expensive to import, the impact will ripple through your supply chain—and potentially your customer base.

But here’s the key: who actually pays the tariff may depend on your contract, not just customs regulations. Without clear terms, the importer may be left with the burden. Well-structured contracts, however, can shift, share, or control that cost exposure.

What Contract Clauses Can Mitigate Tariff Risk?

Here's how to protect your business from tariff-related shocks through thoughtful contract design:

✅ Cost Allocation & Incoterms®

Start with delivery terms. Incoterms® 2020 are internationally recognized trade terms that define who pays what during international delivery—including tariffs and duties.

For example:

• Under EXW (Ex Works) or FCA (Free Carrier), the buyer bears import costs.
• Under DDP (Delivered Duty Paid), the seller takes on those duties.

Be explicit about:

• Who is the importer of record
• Whether prices are inclusive or exclusive of duties
• What happens if new duties are imposed mid-contract

This avoids confusion and ensures that risk is aligned with commercial intent.

✅ Price Adjustment Clauses

Tariff fluctuations can blow up profit margins overnight. A price adjustment clause provides relief by allowing changes to the contract price in response to new duties or increased costs.

These mechanisms can take several forms:

• Automatic adjustments, based on a formula or index
• Renegotiation triggers, activated when tariff changes exceed a certain threshold
• Cost-sharing arrangements, where increases are split between parties

Such clauses offer commercial flexibility, reduce the risk of disputes, and help maintain business continuity when unexpected costs arise.

✅ Force Majeure

Force Majeure provisions excuse non-performance due to unforeseeable, uncontrollable events—but they typically apply when performance becomes impossible, not just more expensive.

Tariffs rarely qualify unless the clause is drafted to include:

• Governmental actions,
• Trade restrictions, or
• Specific references to economic events like sudden tariff surges.

Review your Force Majeure clause to confirm what it covers—and consider broadening the scope to include trade-related disruptions if relevant to your sector.

✅ Hardship Clauses

Unlike Force Majeure, hardship clauses address situations where performance is still possible but has become excessively burdensome or uneconomic due to unforeseen events—like dramatic tariff increases.

A robust hardship clause should:

• Define what constitutes a hardship (e.g. tariff increase >10%)
• Allow for renegotiation of pricing or other key terms
• Include a fallback mechanism if no agreement is reached (e.g. termination or third-party decision)

This clause provides a structured, contract-based path to flexibility without breaching the agreement.

✅ Termination Rights

When all else fails, having a clear termination clause can be a vital safety net.

Consider including:

• A termination for convenience clause (with or without a notice period)
• Termination rights linked to cost thresholds
• Exit triggers tied to supply disruptions or economic shifts

These provisions allow both parties to part ways without unnecessary legal risk if the contract becomes commercially untenable.

✅ Resilience in Future Contracts

To build long-term protection into your supply chain, consider these drafting best practices:

• Be explicit about tariff responsibilities and cost-sharing
• Choose the right Incoterms® rule
• Include dynamic pricing and renegotiation mechanisms
• Broaden your Force Majeure and hardship clauses to reflect real-world trade risks
• Define clear termination pathways in case of prolonged disruption

🔍 With international trade facing increasing uncertainty, businesses must review existing contracts, renegotiate where needed, and build protective clauses into new deals. The goal? Maintain agility and fairness in the face of rising trade complexity.

📌 Need support navigating tariffs, trade risks, or cross-border contract terms?

Our team at LKOS Law Office is here to help. Whether you're reviewing existing agreements, drafting new international trade contracts, or allocating tariff-related costs—we’ll ensure your contracts are resilient and future-proof.

🔍 Questions about tariffs, supply chain clauses, or international trade law?
Contact Oscari Seppälä for expert legal advice tailored to your business needs.

HOW IS AN EMPLOYMENT CONTRACT TERMINATED ON A PERSONAL BASIS

Options for terminating employment contract | Termination | Trial period annulment | Treated as annulled

Grounds for termination based on personal reasons | Employment contract

Regarding personal grounds | How to terminate an employment contract on personal grounds

When are the employer’s reasons for dismissal sufficient | How is an employment contract terminated on personal basis

Other conditions for terminating the employment relationship when citing personal reasons

* * *

Contact our employment law expert, who is on this subject field Oscari Seppälä. We will be happy to tell you more about our expertise and how we can successfully solve your challenges related to business law and employment related disputes.

About us | LKOS Law Office | A leading business law service provider in Finland

LKOS Law Office regularly assists its clients in Mergers and Acquisitions, Corporate law, Contracts law and Transport law matters. We are a reliable and internationally awarded business law office and Mergers and Acquisitions in our industry. 

Get in touch, we’ll be happy to tell you more.

** The article is intended for information and is not intended as a legal advice.

Employment Law in Finland: A Comprehensive Guide

Employment law in Finland

Employment law in Finland is designed to balance the rights and responsibilities of both employers and employees, ensuring fair practices and workplace equality. With a well-regulated legal framework and extensive collective bargaining agreements (CBAs), Finland boasts one of the most structured labor markets globally. This guide provides an in-depth overview of key aspects of Finnish employment law.

Legislation Governing Employment in Finland

The legal foundation of employment relationships in Finland is built upon several statutes. These laws ensure that employees enjoy robust protection while enabling employers to manage their workforce effectively:

• Employment Contracts Act (55/2001, as amended): The cornerstone of employment law, governing employment contract formation, terms, and termination.
• Working Hours Act (872/2019): Regulates standard working hours, overtime, rest periods, and flexible work arrangements.
• Annual Holidays Act (162/2005): Defines employee rights to paid annual leave, public holidays, and holiday pay.
• Codetermination Act (1333/2021): Ensures employee participation in decision-making processes within larger organizations.
• Occupational Safety and Health Act (738/2002): Establishes employer obligations to provide a safe and healthy working environment.
• Equality between Women and Men Act (609/1986): Promotes gender equality and prohibits gender-based workplace discrimination.
• Non-Discrimination Act (1325/2014): Covers broader anti-discrimination measures, including protections based on age, religion, disability, ethnicity, and sexual orientation.

In addition to statutory regulations, collective bargaining agreements (CBAs) play a crucial role in shaping employment conditions. Many industries have generally binding CBAs, meaning they apply even if the employer is not a member of an employer association.

Employers must also consider international choice-of-law rules for cross-border employment relationships. The Rome I Regulation (EC 593/2008) applies to employment contracts signed after December 17, 2009, allowing parties to choose governing law while ensuring minimum protections under Finnish labor law.

Termination of Employment and Redundancy in Finland

Grounds for Termination

Employment contracts can be terminated based on:

• Personal Grounds – Serious misconduct, failure to meet work expectations, or other substantial contract breaches.
• Economic or Production-Related Grounds – Layoffs due to financial difficulties, reorganization, or redundancy. Employers must demonstrate that alternatives, such as retraining or reassignment, were considered before termination.

Notice Periods

Notice periods vary depending on the duration of employment:

• Less than one year: 14 days
• 1–4 years: One month
• 4–8 years: Two months
• 8–12 years: Four months
• Over 12 years: Six months

Employees may also terminate their contracts but must follow the agreed notice period unless otherwise specified.

Consultation Obligations

Under the Codetermination Act, employers with at least 20 employees must engage in consultation procedures before layoffs or major contractual changes. These discussions allow employees to express their views and influence decision-making.

Types of Employment Contracts in Finland

Employment contracts in Finland can take several forms, offering flexibility to both employers and employees. Regardless of the contract type, clear and comprehensive documentation is essential.

Indefinite and Fixed-Term Contracts

• Indefinite Contracts: The default form of employment, offering stability and security.
• Fixed-Term Contracts: Allowed only for legitimate reasons, such as project-based work or temporary substitutions. Without valid justification, fixed-term contracts are considered indefinite.

Written and Oral Contracts

While oral contracts are legally valid, written contracts are highly recommended to prevent disputes. Employers must provide written documentation outlining key employment terms, including:

• Names and domiciles of the employer and employee.
• Job title and description of duties.
• Start date and, for fixed-term contracts, the end date or justification for the term.
• Working hours and remuneration details.
• Holiday entitlements and applicable CBAs.
• Notice periods and trial periods (if any).

This written information must be provided within seven days of employment commencement, with additional details supplied within one month.

Trial Periods

A trial period of up to six months may be agreed upon. During this time, either party may terminate the contract without notice, provided it is not discriminatory or otherwise unlawful.

Working Hours and Annual Leave

Working Hours

The Working Hours Act sets the framework for employees' regular working hours, which are typically:

• Regular Hours: Eight hours per day, 40 hours per week.
• Flexible Arrangements: Agreements may allow varied working hours based on operational needs.

Employees are entitled to rest periods, including at least 11 consecutive hours of daily rest and 35 hours of weekly rest.

Annual Leave

Employees accrue annual leave based on their length of service:

• Less than one year: Two days of leave per month.
• Over one year: 2.5 days of leave per month.

The Annual Holidays Act ensures employees receive their full salary during annual leave and guarantees compensation for unused leave if employment ends.

Employee Salaries and Fringe Benefits

Salaries in Finland are typically agreed upon in the employment contract and must comply with the minimum standards set by CBAs. Employers must pay salaries on time, usually on a monthly basis.

In addition to monetary compensation, many employees receive fringe benefits, such as:

• Meal vouchers or subsidized lunches.
• Company cars or mobile phones.
• Health insurance or wellness allowances.

Performance-based bonuses and commissions are also common, particularly in sales and senior roles.

Workplace Equality and Non-Discrimination

Equality is a fundamental principle of Finnish employment law. Employers must ensure fair treatment and equal opportunities for all employees, regardless of gender, age, ethnicity, religion, disability, or sexual orientation.

Equality Measures

• Gender Equality: The Equality between Women and Men Act mandates equal pay for equal work and promotes gender balance in the workplace.
• Broader Equality: The Non-Discrimination Act prohibits unfair treatment during recruitment, employment, and termination processes.

Violations of these principles can result in legal sanctions, including compensation for affected employees.

Employee Representation and Collective Agreements

Employees in Finland have the right to representation, particularly in larger organizations. The Codetermination Act grants employees the ability to appoint representatives to participate in company decision-making processes.

Collective Bargaining Agreements

CBAs often define sector-specific employment terms and conditions, superseding individual employment contracts when to the employee's benefit. Employers are obligated to adhere to these agreements, which may cover:

• Minimum salaries and bonuses.
• Work hours and overtime compensation.
• Workplace dispute resolution procedures.

Immigration and Employment Permits in Finland

Foreign nationals wishing to work in Finland must comply with immigration and residence requirements:

• EU/EEA Citizens: No work permit needed but must register residence if staying over three months.
• Non-EU Citizens: Require an employee residence permit. Processing times vary, with fast-track options available for urgent cases.
• Nordic Citizens: Enjoy simplified procedures with no work permit requirements.
  

Get Expert Legal Guidance on Employment Law in Finland

Navigating Finnish employment law can be complex, especially when balancing compliance with business needs. Whether you're hiring employees and need an employment agreement, your business is undergoing changes, or you're a foreign company expanding to Finland and want to understand Finnish employment law, our team of experienced legal professionals is here to assist you.

📞 Contact us today for personalized advice and support (+358 40 672 4285).
📍 Töölönkatu 4, 00100, Helsinki, Finland

**This article is for informational purposes only and does not constitute legal advice. 

SANCTIONS: A LEGAL LABYRINTH FOR BUSINESS LAWYERS

Don’t Let Sanctions Uncertainty Put Your Business at Risk

Business lawyers dislike uncertainty. Nevertheless, many business lawyers describe various sanction regimes as vague and inconsistent. In addition, conflicting sanction regimes create headaches for international businesses operating across borders.

Despite the common belief that sanctions are primarily a concern for the financial sector, they have quietly evolved into a significant business risk for companies across all industries. As a result, businesses of all sizes must identify and manage the various applicable sanction regimes to minimize both financial risks and the reputational damage caused by sanctions violations.

Further complicating compliance, sanction lists are frequently updated—sometimes daily—and are issued by different governmental and international bodies. These lists are not always harmonized across different regimes, adding yet another layer of complexity.

Navigating the legal labyrinth of sanctions has become a daily reality for multinational and multi-jurisdictional companies. To support businesses in tackling this challenge, we have compiled a brief guide addressing key questions about sanctions and how to comply with them.

What are sanctions? | Introduction

Sanctions are preventive measures designed to influence the policies or actions of certain high-risk individuals, groups, or states when such policies or actions pose a threat to international peace and security.

Sanctions may target the government of a specific state, as well as individuals or entities affiliated with that government. They may also target specific groups or industries. In addition to these, sanctions can restrict the availability of certain products, services, materials, technologies, or know-how that might otherwise contribute to the targeted activity.

Sanction regimes | Legal labyrinth

Checklist for businesses. Sanctions Compliance Process | Key to mastering multiple regimes

1. Screen Business Partners

2. Assess the Product or Service

• Verify whether the goods, services, or technology being traded are restricted or require special licensing.
• Check for dual-use goods (products with both civilian and military applications).
• Ensure compliance with sector-specific sanctions (e.g., energy, defense, telecommunications).

3. Evaluate the Destination and End-Use

4. Review Financial Transactions and Payment Flows

5. Establish a Compliance Policy and Ongoing Monitoring

• Implement a Sanctions Compliance Policy that sets clear internal procedures.
• Train employees, sales teams, and suppliers on sanction risks and compliance obligations.
• Continuously update sanction lists and screen transactions to remain compliant with changing regulations.

Our recommendations | To-Do list

When drafting and implementing a Trade Compliance Policy, companies should:

✅ Review all applicable sanction regimes relevant to your business activities.
✅ Draft and implement a comprehensive Sanctions Compliance Policy—and update it frequently.
✅ Integrate sanction screening tools into operational processes.
✅ Follow best practice principles, including strong documentation to support compliance decisions.
✅ Adopt a conservative interpretation of sanction rules to reduce legal risk.
✅ Engage with a trusted business law partner for legal guidance and industry-specific know-how.

LKOS Law Office Wins Finland’s Best Transport Law Firm Award 2025

LKOS Law Office Recognized as Transport Law - Law Firm of the Year in Finland 2025 

We are pleased to share that LKOS Law Office has been awarded the "Transport Law – Law Firm of the Year in Finland – 2025" by Global Law Experts (GLE).

This recognition highlights our firm's expertise in transport law, a field where precision, strategic thinking, and industry knowledge are essential. The GLE awards are based on independent research, client feedback, legal rankings, and the impact of law firms in their respective practice areas.

At LKOS Law Office, we are committed to helping businesses navigate the complexities of transport law, ensuring compliance, risk management, and strategic legal solutions that drive success.

🔹 What this means for our clients? This award reinforces our ability to deliver reliable, business-focused legal support in transport and logistics law, whether it’s contract structuring, dispute resolution, or regulatory compliance.

"A big thank you to our clients, partners, and team for their trust and collaboration. We look forward to continuing to serve the transport and logistics sector with dedication and expertise", said Oscari Seppälä.

📍 Read more about our legal services: www.lkoslaw.fi

Sanctions Legislation Changes | Sanctions Crime and Sanctions Violation | Finland

Sanctions Legislation Changes | Finland
New Legislative Amendments – Sanctions Crime and Sanctions Violation

The Finnish government is proposing amendments to the Criminal Code to implement the obligations of the EU Sanctions Crime Directive at the national level. The directive aims to ensure that violations of sanctions are punishable in all member states and that penalty provisions meet the common EU minimum standard.

Proposed New Provisions on Sanctions Crimes

The following new criminal offenses are proposed to be added to the Finnish Criminal Code:

• Aggravated Sanctions Crime
• Sanctions Crime
• Negligent Sanctions Crime
• Sanctions Violation

At the same time, provisions related to regulatory offenses would be amended so that they no longer cover violations of sanctions.

Entry into Force

The proposed legal amendments are intended to take effect on May 20, 2025, which is the latest deadline for implementing the Sanctions Crime Directive.

What Are Regulatory Offenses in Practice?

Regulatory offenses mainly relate to violations of export and import bans. Typical cases include:

• Providing incorrect information in customs declarations
• Exporting sanctioned goods without customs clearance
• Circumventing export bans through third countries
• Hiding products in vehicles
• Transporting money or goods on behalf of others

There have also been cases where individuals have been misled with false information regarding control and ownership structures. Recently, the methods and channels for violating sanctions have become increasingly complex.

Corporate Criminal Liability and Fines

Corporate criminal liability would apply to sanctions crimes, aggravated sanctions crimes, and negligent sanctions crimes. The maximum corporate fine would be set at five percent of the entity’s turnover, with a minimum of €850,000and a maximum of €40 million.

Exception to the Dual Criminality Requirement

The amendments introduce an exception to the dual criminality requirement. This means that a Finnish citizen or a person equivalent to one could be convicted of a sanctions crime even if the act was not criminalized in the country where it was committed.

Sanctions Violation and Its Significance

A sanctions violation refers to minor infractions, such as violations involving low-value assets or procedural breaches, which serve more administrative than criminal law purposes.

Whistleblower Protection for Reporting Sanctions Violations

Individuals who report sanctions violations would be protected under the Whistleblower Protection Act, which guarantees certain rights and safeguards against potential retaliatory actions.

Objective of the Amendments

The goal of these legal amendments is to strengthen compliance with sanctions and enhance their enforcement both nationally and at the EU level.

***

Our international trade law experts, Liene Krumina and Oscari Seppälä, are available to assist you. Please feel free to get in touch.

Security Rights and Aircraft Liens in Finland

Lien Rights Under Finnish Law

The exact equivalent of a lien under Finnish law remains unclear. In Finland, the term is often used to describe security rights arising from retention rights, explicit statutory provisions, or hypothecation/pledge. For this article, a lien under Finnish law refers to a statutory right entitling a creditor to a preferred claim over the value of a specific object. This right is protected against title changes without requiring a declaration of intent from involved parties. Our air law specialists will guide you through every aspect of aircraft liens and aviation law.

Distinction Between Lien and Right of Retention

Theoretically, a lien and a right of retention differ. The latter allows a party to retain possession of an object as security for payment of claims related to that object. Similar to a lien, the right of retention remains unaffected by title changes and, under certain conditions, enables the sale of the retained property to meet the claim. This closely aligns with the legal effects of a lien.

Aircraft Liens in Finland

Definition of Aircraft and Registration Requirements

Under the Finnish Aviation Act (864/2014), an aircraft is defined as a device deriving lift from air reactions rather than ground or water surfaces. Aircraft with Finnish nationality must be registered in the Finnish Transport Register, managed by Traficom. Registration requirements include clear identification, even for aircraft under construction.

Priority Claims and Security Rights

The Aircraft Mortgage Act (211/1928) prioritizes claims, such as:

1. Claims secured by a creditor's right of retention.
   
2. Damage claims under the Aviation Act.
   

Such rights, while not matching the strict legal definition of a lien, produce similar legal effects and are treated as liens in this context.

Registration of Aircraft Liens

While Finland lacks a specific registration mechanism for aircraft liens, certain rights, like unpaid service charges, can be recorded in the Aircraft Register. Priority liens as defined in the Mortgages on Aircraft Act automatically outrank registered mortgages without requiring further registration.

Salvage Liens on Aircraft

The Aviation Act mandates search and rescue operations, with the state compensating participants for injury or damage under the Damages Act (412/1974). However, inconsistencies in legislative updates mean salvage costs no longer enjoy a lien under the current framework.

Contractual Liens and Hypothecation

Finnish law does not recognize contractual liens per se, but hypothecation provides a comparable security arrangement. Hypothecary rights are formalized through registered mortgages, which create valid security only when entered into the Aircraft Register with the owner's written consent.

Enforcement and Priority of Aircraft Liens

Priority Order of Claims

The Mortgages on Aircraft Act establishes the priority order:

1. Retention rights with accrued interest.
   
2. Damage claims under the Aviation Act.
   
3. Registered mortgages, ranked by filing order.
   

Enforcement Mechanisms

Retention rights can be enforced through public auction without court intervention. For damage liens or mortgages, a court judgment is required before selling the aircraft via public auction or voluntary sale. The proceeds are distributed based on statutory priorities.

Unpaid Airport Charges: Detention Rights

Airport operators can detain aircraft for unpaid fees but cannot sell them without a court order. While departure on scheduled international flights cannot be prevented for non-payment, detention serves as leverage for fee collection.

Contact aircraft lien specialist in Finland

Secure Expert Guidance on Finnish Aircraft Liens Today.

Navigating the complexities of aircraft liens in Finland requires precise legal knowledge. Our team offers tailored advice to safeguard your interests and optimize your legal strategy. 

Contact us today for expert support in aviation law!

Disclaimer: This article is for informational purposes only.

Lien of an Aircraft in Finland: A Comprehensive Guide

Understanding Liens Under Finnish Law

In Finnish legal context, the concept of a lien does not have a direct equivalent. However, it is often used to describe security rights arising from statutory provisions, rights of retention, hypothecation, or pledges. For this guide, we define a lien as a statutory right that entitles creditors to preferred payment from the value of a specific object, protected against changes in title without requiring a declaration of intent by the involved parties.

Distinguishing Lien Rights and Rights of Retention

What is a Right of Retention?

A right of retention allows creditors to retain possession of an object as security for claims associated with that property. Like liens, rights of retention remain unaffected by changes in ownership. Under certain conditions, these rights include statutory permission to sell the retained property to settle claims.

Lien vs. Right of Retention

Although similar in effect, liens arise directly from statutory provisions, while rights of retention often relate to possession. In Finland, security rights through hypothecation, based on agreements, also share similarities with liens.

Aircraft Liens in Finland: Definition and Context

Defining an Aircraft Under Finnish Law

The Aviation Act (864/2014) defines an aircraft as a device deriving its elevating power from air reactions. All Finnish aircraft must be registered in the Finnish Transport Register, including those under construction, provided they can be identified.

Legal Framework for Aircraft Liens

The Aircraft Mortgage Act (211/1928) provides priority to certain claims over registered mortgages, such as:

• Claims secured by retention rights.
  
• Damage claims under strict liability as per the Aviation Act.
  

Liability Under the Aviation Act

Aircraft owners, possessors, and operators are jointly liable for damages caused by aviation activities. This strict liability applies only to tort-based claims and excludes contractual obligations.

Registration of Aircraft Liens in Finland

While no statutory mechanism exists for registering aircraft liens, unpaid service charges can trigger a notification in the Aircraft Register, preventing the aircraft's departure. The Finnish Transport Register (Traficom) manages lien-related recordings.

Salvage Liens: A Legislative Oversight

Historical Perspective

Previously, salvage costs enjoyed lien status under the 1964 Aviation Act. However, legislative updates in 1996 inadvertently omitted corresponding provisions, effectively removing salvage liens from aircraft in Finland.

Contractual Aircraft Liens in Finland

Although Finnish law does not explicitly recognize contractual liens, hypothecation allows security rights over aircraft. A mortgage registered in the Aircraft Register establishes such rights, including security for the aircraft, equipment, and insurance claims.

Priority of Aircraft Liens in Finland

The Mortgages on Aircraft Act outlines the priority order:

• Claims secured by retention rights.
  
• Damage claims under the Aviation Act, ranked by occurrence.
  
• Registered mortgages, prioritized by filing date.
  

Enforcement of Aircraft Liens

Rights of Retention Enforcement

Creditors with retention rights can sell the aircraft under the Act on Entrepreneur’s Right to Sell Goods Left Uncontrolled (688/1988). Public auctions are typically used to settle claims, with court proceedings necessary only in disputed cases.

Enforcement of Damage Claims

Enforcement of damages liens requires a court judgment. Execution authorities facilitate aircraft sales, distributing proceeds to lien holders per their statutory priority.

Mortgage Enforcement

Mortgages necessitate court judgments for enforcement. The procedures mirror those used for damage liens, including public or voluntary sales.

Addressing Unpaid Airport Charges

Detention Rights Without Sale

Airport operators can detain aircraft for unpaid charges without court orders, although sales require legal intervention. Scheduled international flights are exempt from detention for unpaid charges, ensuring continuity in regular operations.

Joint Liability

Aircraft owners, possessors, and operators share responsibility for unpaid charges incurred during their registration period, emphasising collaborative accountability.

Call to Action: Partner With Legal Experts in Finnish Aviation Law

Navigating the complexities of Finnish aviation law requires expertise and precision. Whether you are a creditor, operator, or owner, understanding aircraft liens and their enforcement is essential for safeguarding your interests.

At LKOS Law Office our experienced aviation law team provides:

• Tailored advice on aircraft liens and mortgages.
  
• Representation in lien enforcement and aviation disputes.
  
• Guidance on compliance with Finnish aviation regulations.
  

Ready to secure your rights? Contact us today for a consultation and let our experts help you navigate the skies with confidence.

Get in touch now to ensure your legal matters are in trusted hands!

Disclaimer: This article is for informational purposes only.

Finland Maritime | Transportation and Freight Forwarding Legislation

Overview of Transportation volumes in Finland

Finland’s transportation infrastructure is integral to its role in international trade. Over 90% of Finnish exports and 70% of imports rely on maritime transport, while domestic goods are predominantly moved by road. Rail transport plays a vital role in domestic traffic and trade with Russia, while air transportation mainly focuses on passenger services. The legal framework for transportation in Finland is based on international conventions, with distinct laws governing each mode of transport.

Maritime Transportation: Finnish Maritime Code

The Finnish Maritime Code (674/1994) forms the backbone of Finland's maritime law. Developed collaboratively with Nordic countries, this legislation ensures uniformity across Sweden, Norway, Denmark, and Finland. The Maritime Code governs various aspects of sea transport, including:

1. Carriage of Goods: Liability for goods loss or damage is primarily based on the Hague-Visby Rules, supplemented by elements of the Hamburg Rules.
   
2. Chartering of Vessels: While carriage of goods adheres to mandatory provisions, vessel chartering operates under freedom of contract.
   
3. Liability and Limitations: Carriers are liable for damages caused by negligence, with limitations on liability unless gross negligence or willful misconduct is proven.
   
4. Maritime Liens and Salvage: Rules ensure equitable treatment of claims against vessels.
   
5. Special Shipping Terms: The Finnish Standard Shipping Terms (2008) apply to deliveries at Finnish ports and define responsibilities for carriers and consignees.
   

The Maritime Code also addresses passenger transportation liability based on the Athens Convention framework, although with notable exceptions.

Road Transport Regulations: Road Transport Agreements Act

Road transportation is Finland’s primary mode for domestic goods movement. The Road Transport Agreements Act (345/1979) and the Act on Commercial Road Transport (693/2006) govern road transport. Key aspects include:

• Permit Requirements: Commercial road transport generally requires permits, with exemptions for small vehicles and non-commercial purposes.
  
• Liability Framework: Carriers are strictly liable for goods under their care, with force majeure being one of the few defenses.
  
• Successive and Sub-Carrier Liability: All involved carriers in a shipment share liability, with primary carriers bearing ultimate responsibility.
  
• Statute of Limitations: Claims must be filed within one year from delivery.
  

These laws incorporate principles of the CMR Convention, ensuring consistency with international standards while accommodating local nuances.

Air Transportation: International Conventions

Air transport in Finland is governed by a series of international conventions, forming a robust legal foundation:

• Warsaw Convention of 1929: Established liability for air carriers in international flights.
  
• Montreal Convention of 1999: Harmonizes air transport rules and introduces stricter liability limits for carriers.
  
• Domestic Regulations: The Act on Transportation on Aircrafts (1937) and subsequent legislation adapt international standards to Finland’s needs.
  

Key principles include carrier liability for goods during transit, limitations of liability based on cargo weight, and strict statutes of limitation (usually two years).

Rail Transport: Domestic and International Laws

Railway transport is governed by distinct legal frameworks for domestic and international carriage:

• Domestic Rail Transport: The Act on Railway Transports (1119/2000) outlines the rights and responsibilities of carriers and customers.
  
• Finland-Russia Rail Traffic: A bilateral agreement governs railway traffic between the two nations.
  
• International Carriage: The COTIF Convention and its appendices (CIM and CIV) regulate cross-border rail transport.
  

Liability rules are similar to road transport, with strict carrier responsibility for goods. The liberalization of rail freight in 2007 allowed competition, but state-owned VR retains exclusive rights to rail freight with Russia.

Multimodal Transport: Unified Yet Diverse

Multimodal transportation involves combining two or more transport modes under a single contract. In Finland, no specific legislation governs multimodal transport. Instead, existing statutes for individual modes apply as follows:

• Road Transport Act: Governs carriage when goods remain in a vehicle during sea transport.
  
• Montreal Convention: Applies only to the air segment of a multimodal journey.
  
• COTIF Convention: Includes limited provisions for multimodal transport.
  

Efforts to address regulatory gaps include adopting standard terms such as the UNCTAD/ICC Rules for Multimodal Transport Documents (1991) and the Nordic Association of Freight Forwarders’ General Conditions ("NSAB").

Freight Forwarding: Managing Multimodal Logistics

Freight forwarding in Finland is guided by the NSAB 2000, created by the Nordic Association of Freight Forwarders. These general conditions establish:

• Forwarder Liability: Freight forwarders may be liable as carriers if they use their own means of transport or issue transport documents under their name.
  
• Risk Allocation: Liability depends on the transport mode used during loss or damage.
  
• Special Provisions: NSAB 2000 aligns with the Road Transport Act, offering clarity on packing, defective goods, and customer obligations.
  

Sustainability in Transportation Laws

Finland’s transportation laws also reflect the nation’s commitment to sustainability. By aligning with international conventions and promoting rail over road transport, Finland encourages environmentally friendly practices.

Key Takeaways

1. Comprehensive Legislation: Finland’s transportation laws are harmonized with international conventions to ensure clarity and consistency.
   
2. Mode-Specific Rules: Each transportation mode operates under distinct regulations, balancing liability and operational freedom.
   
3. Freight Forwarding Flexibility: Nordic conditions provide robust frameworks for multimodal and cross-border logistics.
   
4. Sustainability Focus: Legal frameworks align with Finland’s commitment to reducing environmental impact.
   

Finland’s transportation laws offer a cohesive yet adaptable framework, supporting its role as a global trade hub.

Call to Action: Expert Legal Assistance for Transportation and Freight Forwarding

Navigating the complexities of Finland’s transportation and freight forwarding laws can be challenging. Whether you're dealing with maritime, road, air, or multimodal logistics, having the right legal partner ensures compliance, minimizes risks, and streamlines operations.

Contact Us Today!

📞 Call us: +358 (0)40 672 4285
📧 Email us: office(at)lkoslaw.fi
🌐 Visit us: LKOS Law Office

Our expert legal team specializes in transportation law, freight forwarding agreements, and liability management. We provide tailored advice to help you operate confidently in Finland's dynamic trade environment.

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Arbitration in Finland | A Comprehensive Guide

Introduction to Arbitration in Finland

Finland has a long-standing tradition of resolving commercial disputes through arbitration. Both domestic and international businesses frequently include arbitral clauses in their agreements, leading to a high number of commercial disputes being referred to arbitration. The Finnish Arbitration Act, while reflecting the substance of the UNCITRAL Model Law on International Commercial Arbitration, has its unique features tailored to the Finnish legal environment. The Finland Arbitration Institute (FAI), operating under the Finland Chamber of Commerce, serves as the sole arbitral institution in the country, supplementing the Arbitration Act with its own set of rules (FAI Rules).

Arbitrability and Arbitration Agreements in Finland

What Disputes Can Be Arbitrated?

Under the Finnish Arbitration Act, any dispute that parties can settle by agreement is arbitrable. The decisive factor is whether the recourse sought can be achieved without the intervention of public authorities. This broad scope allows a wide range of commercial disputes to be resolved through arbitration in Finland.

Formal Requirements for Arbitration Agreements

For an arbitration agreement to be enforceable in Finland, it must be in writing. Modern means of communication, such as emails and electronic documents, satisfy this requirement as long as they provide a written record of the agreement. When drafting an arbitration agreement, it is advisable to explicitly determine the following:

• Parties to the Agreement: Clearly identify all parties involved.
  
• Scope of the Agreement: Define the disputes covered.
  
• Governing Law: Specify the law applicable to the main agreement.
  
• Seat of Arbitration: Determine the legal place of arbitration.
  
• Type of Arbitration: Choose between ad hoc or institutional arbitration.
  
• Applicable Institutional Rules: State the rules governing the arbitration proceedings.
  
• Number of Arbitrators: Agree on whether there will be a sole arbitrator or a panel.
  
• Appointment of Arbitrators: Outline the method for selecting arbitrators.
  
• Language of Proceedings: Decide on the language to be used.
  
• Confidentiality Provisions: Address the confidentiality obligations between the parties.
  

Selection of Arbitrators in Finnish Arbitration

Eligibility and Qualifications

In Finland, any natural person with legal capacity can act as an arbitrator. This means they must be of legal age and not under guardianship or bankruptcy. Arbitrators must also be independent and impartial, possessing sufficient expertise in the relevant field.

Appointment Procedures

Ad Hoc Arbitration

In ad hoc arbitrations, parties have the freedom to choose the number of arbitrators and the method of their appointment. If the parties do not specify these details, the default is a tribunal of three arbitrators. Each party selects one arbitrator, and the two arbitrators then appoint a third to act as the Chairman.

Institutional Arbitration under FAI Rules

In institutional arbitrations administered by the FAI, arbitrators are selected according to the FAI Rules. If the parties have not agreed on the number of arbitrators, the default is a sole arbitrator unless the FAI Board decides that a panel of three is more appropriate, considering factors like the dispute's complexity and amount in controversy. For multi-party proceedings, the FAI Rules provide specific procedures to ensure fair representation.

Qualifications for Chairmen and Sole Arbitrators

Only lawyers are qualified to serve as Chairmen or sole arbitrators in Finland, unless the FAI decides otherwise for particular reasons. This requirement ensures that the person leading the arbitration has the necessary legal expertise.

Conduct of Arbitral Proceedings in Finland

Procedural Flexibility and Party Autonomy

The Finnish Arbitration Act provides a flexible framework for arbitral proceedings, with only one mandatory provision: the principle of audiatur et altera pars (hear the other side). This ensures that both parties have a sufficient opportunity to present their case, including filing written pleadings, presenting evidence, and responding to the other party's submissions.

Arbitrators' Obligations

Arbitrators are obliged to ensure the impartiality and expediency of the proceedings while respecting the parties' autonomy. They must balance the need for efficiency with the parties' rights to a fair hearing.

FAI Rules and Expedited Arbitration

The FAI Rules complement the Arbitration Act, aligning with international best practices. For less complex disputes, the FAI offers rules for expedited arbitration intended to conclude within three months, providing a faster resolution alternative.

Rules Applicable to the Substance of the Dispute

Applying the Chosen Law

Arbitral tribunals in Finland must decide disputes according to the rules of law. If the parties have specified the law of a particular state, the tribunal is bound to apply that law. This choice of law provision ensures that the arbitration reflects the parties' contractual expectations.

Deciding Ex Aequo et Bono

Tribunals may decide a case based on principles of fairness and equity (ex aequo et bono) only if the parties have expressly authorized them to do so. This allows for more flexible, justice-oriented outcomes when appropriate.

Setting Aside Arbitral Awards in Finland

Finality of Arbitral Awards

Arbitral awards issued in Finland are final and not subject to judicial review on their merits. However, parties can seek to set aside an award on limited grounds outlined in the Arbitration Act.

Grounds for Setting Aside an Award

An arbitral award can be set aside if:

• Excess of Authority: The tribunal exceeded its authority.
  
• Improper Appointment: An arbitrator was not duly appointed.
  
• Disqualification Issues: An arbitrator should have been disqualified, but a challenge was not accepted before the award was issued.
  
• Due Process Violations: The tribunal did not give a party sufficient opportunity to present its case.
  

An award is also considered invalid if:

• Non-Arbitrable Issues: It decides on matters not subject to arbitration.
  
• Public Policy Violations: It violates Finnish public policy (ordre public).
  
• Formal Deficiencies: The award is unclear, incomplete, not in writing, or not signed by the arbitrators.
  

Confidentiality in Finnish Arbitration

Arbitrators' Confidentiality Obligations

While arbitration proceedings in Finland are not public, there are no statutory provisions ensuring confidentiality. However, it is generally accepted that arbitrators must not disclose information obtained during the proceedings. Arbitrators who are members of the Finnish Bar Association are bound by professional confidentiality obligations.

Parties' Confidentiality

For the parties involved, the confidentiality obligations are less clear-cut. To ensure confidentiality, it is advisable for parties to enter into separate confidentiality agreements explicitly outlining their obligations.

Enforcement of Arbitral Awards in Finland

National Awards

All arbitral awards made in Finland are subject to the same enforcement rules, regardless of whether the dispute is national or international. Enforcement proceedings are initiated in the competent District Court, usually where the unsuccessful party is domiciled or has assets. The application must include the original arbitration agreement and the arbitral award.

Recognition and Enforcement of Foreign Awards

Finland is a signatory to the New York Convention since 1962 and has not made any reservations regarding reciprocity. This means that foreign arbitral awards are recognized and enforceable in Finland even if they originate from non-signatory countries.

Conditions for Enforcement

A foreign arbitral award is recognized and enforceable in Finland if:

• Valid Arbitration Agreement: It arises from an arbitration clause that meets Finnish legal requirements.
  
• Public Policy Compliance: The award does not violate Finnish public policy.
  

Grounds for Refusal

Recognition or enforcement may be refused on grounds that largely correspond to the New York Convention, including:

Invalidity of the Arbitration Clause: The arbitration agreement is not valid.

• Due Process Violations: The party against whom the award is invoked was not given proper notice or was otherwise unable to present their case.
  
• Excess of Authority: The tribunal exceeded its jurisdiction.
  
• Irregularities in Composition or Procedure: The tribunal was not composed according to the agreement, or the procedure was not in accordance with the parties' agreement or the law.
  
• Award Not Yet Binding or Set Aside: The award is not yet binding or has been set aside in the country where it was made.
  
• Public Policy Violations: Enforcement would be contrary to Finnish public policy.
  

Conclusion

Arbitration in Finland offers a robust and flexible framework for resolving commercial disputes, characterized by respect for party autonomy, procedural efficiency, and adherence to international standards. The Finnish Arbitration Act, supplemented by the FAI Rules, provides clear guidelines for arbitrability, arbitration agreements, selection of arbitrators, conduct of proceedings, and enforcement of awards. While confidentiality provisions for parties may require additional agreements, the overall system ensures that arbitration remains a viable and effective alternative to court litigation in Finland.

Ready to Resolve Disputes Effectively? Let Us Help!

Arbitration is a powerful, efficient, and confidential way to resolve commercial disputes in Finland. Whether you're drafting an arbitration agreement, navigating proceedings, or enforcing an arbitral award, our experienced legal team is here to guide you every step of the way.

Here's How We Can Support You:

• Drafting and Reviewing Arbitration Agreements: Ensure your agreements are clear, enforceable, and tailored to your business needs.
• Representation in Arbitral Proceedings: Count on our expertise to safeguard your interests and secure fair outcomes.
• Enforcement of Arbitral Awards: Navigate the complexities of enforcement with confidence, both in Finland and internationally.

📞 Contact Us Today!

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Disclaimer: This article is for informational purposes only.

How to Litigate in Finland: A Comprehensive Guide

How to Litigate in Finland

Civil litigation in Finland operates under a structured and precise framework governed by the Code of Judicial Procedure. This article provides a detailed overview of the key stages and principles of litigation in Finland, focusing on the general courts. Whether you are a business owner, legal counsel, or an individual navigating the Finnish legal system, understanding these steps is crucial for effective litigation.

1. Introduction to Civil Litigation in Finland

Civil litigation in Finland involves a structured process designed to ensure fairness, efficiency, and clarity. The proceedings typically comprise two main stages: the Preparatory Stage and the Main Hearing. This guide covers the key aspects of each stage, from filing the initial statement of claim to the final judgment.

2. The Preparatory Stage

The preparatory stage sets the foundation for the case, involving the exchange of written pleadings and initial hearings.

2.1 Exchange of Written Pleadings

Civil proceedings begin with the statement of claim, which is submitted to the competent District Court. This document initiates the case and must include:

• A specified claim.
• An account of the facts supporting the claim.
• Evidence (written and oral) with an explanation of its relevance.
• Claims for litigation costs.
• The basis for the court's jurisdiction, unless it can be inferred from the attached documents.

The court reviews the statement for completeness. If incomplete, the court will request the plaintiff to amend it. Non-compliance can lead to dismissal. Once approved, the court issues a summons to the defendant, granting 30–60 days to respond.

2.2 The Defendant’s Response

The defendant must submit a written response outlining:

• Agreement or opposition to the plaintiff’s claim.
• Grounds for opposition (if applicable).
• Evidence they intend to submit.
• A claim for litigation costs.

Failure to respond within the time limit entitles the plaintiff to a default judgment. The court may request additional written submissions if necessary.

2.3 Undisputed Matters

Certain cases, such as debt collection or tenancy disputes, follow a simplified process. These cases proceed swiftly, provided the claim is undisputed. If the defendant contests the claim, standard procedural requirements apply.

2.4 The Preparatory Hearing

In cases requiring further clarification, the court holds a preparatory hearing before a single judge. This stage aims to:

• Clarify claims, grounds, and disputed issues.

• Identify and assess evidence.

• Explore the possibility of settlement.

Settlements reached at this stage are confirmed by the court. Once the preparatory hearing concludes, parties cannot introduce new evidence unless justified by exceptional circumstances.

3. The Main Hearing

If the case remains unresolved after the preparatory stage, it proceeds to the main hearing.

3.1 Conduct of the Main Hearing

The main hearing is an oral proceeding typically presided over by a panel of three judges, including the judge from the preparatory stage. Key elements include:

• Presentation of claims and arguments by both parties.

• Examination and cross-examination of witnesses.

• Closing arguments.

While written statements cannot be read aloud, parties may use notes for reference. Technical data and legal precedents may also be cited during the proceedings.

3.2 Judgment

The court’s judgment is based solely on the claims and facts presented by the parties. The judgment includes:

• The final ruling.

• Grounds for the ruling, detailing the legal reasoning and facts considered.

Judgments are either delivered immediately after the hearing or scheduled for a later date.

4. Special Provisions and Best Practices

4.1 Specialized Cases

For disputes involving undisputed claims, such as debt collection, Finnish courts provide an expedited process. Plaintiffs must indicate the undisputed nature of the claim in their initial filings.

4.2 Role of Evidence

Both written and oral evidence play a critical role in Finnish litigation. Parties must ensure the relevance and sufficiency of their evidence, as late submissions are typically not allowed.

4.3 Settlement Encouragement

Finnish courts actively encourage settlement during the preparatory stage. Parties are advised to consider this option to avoid the costs and uncertainties of a full trial.

5. Practical Tips for Litigating in Finland

• Engage a Skilled Lawyer: Navigating the Finnish legal system requires expertise in local laws and procedures.

• Prepare Thoroughly: Ensure your statement of claim or response is complete and well-supported by evidence.

• Adhere to Deadlines: Missing deadlines can lead to adverse outcomes, including default judgment.

• Be Open to Settlement: Exploring settlement options can save time and resources.

• Understand the Costs: Be aware of potential litigation costs and their allocation, as the losing party is typically required to cover the winner’s costs.

6. Conclusion

Litigation in Finland is governed by principles of transparency, fairness, and efficiency. By understanding the procedural stages and adhering to best practices, parties can navigate the system effectively. Whether pursuing or defending a claim, preparation and compliance with the Code of Judicial Procedure are key to achieving favorable outcomes.

7. Call to Action: Get Expert Legal Support for Your Case

Navigating the Finnish litigation process can be complex, requiring detailed knowledge of local laws and procedures. Whether you're initiating a claim or defending one, having the right legal support is essential.

Contact Us Today 

Our experienced team specializes in Finnish civil litigation, offering comprehensive legal advice and representation tailored to your needs. With expertise in commercial disputes, cross-border cases, and more, we ensure your case is handled with professionalism and precision.

• 📞 Call us at: +358 (0)40 6724285
• 📧 Email us at: info(at)lkoslaw.fi
• 🌐 Visit us: Töölönkatu 4, 00100 Helsinki, Finland

Take the first step toward a successful resolution—reach out to us for a consultation today!

Disclaimer: This article is for informational purposes only.

How to Conduct Mergers & Acquisitions in Finland: A Comprehensive Guide

How to Conduct Mergers & Acquisitions in Finland

Mergers and acquisitions (M&A) are strategic moves that can significantly impact businesses. In Finland, the M&A landscape combines robust legal frameworks with specific regulatory considerations. Whether you're considering a share purchase, business acquisition, merger, or joint venture, understanding the nuances of the Finnish M&A process is essential for success.

Structuring an M&A Deal in Finland

The structure of an M&A deal in Finland depends on transaction goals, legal, tax, and commercial factors. Common structures include:

Share Sales

This is the simplest way to secure ownership of a company’s assets and liabilities. Key benefits include:

• Automatic transfer of intellectual property and contracts (unless restricted by change-of-control clauses).
  
• Minimal formalities for asset transfer.

However, buyers may assume unknown liabilities tied to the target company.

Business Sales

1. Business acquisitions allow buyers to selectively acquire assets and liabilities, reducing risk exposure. Challenges include:

• The need for third-party consent to transfer contracts.
  
• Specific identification and transfer of assets, which can be time-intensive.

Mergers and Demergers

These can simplify legal structures but involve lengthy procedures due to creditor notification and regulatory approvals.

Joint Ventures and Strategic Alliances

Flexible arrangements governed by Finnish contract and company law, ideal for collaborative ventures.

Takeovers

For listed companies, takeovers are often the only option, governed by stringent securities laws.

Private Share Purchases: The Finnish Approach

Private share purchases dominate the M&A landscape in Finland due to their simplicity and efficiency.

Key Steps in Private Share Purchases

Preliminary Agreements

1. Letter of Intent (LOI): Outlines preliminary terms, non-binding by nature.
2. Confidentiality Agreement: Protects sensitive information during due diligence.

1. Purchase Price Adjustments: Often based on locked-box accounts or closing accounts.
2. Conditions Precedent: Regulatory approvals, consents, and material adverse change (MAC) clauses.
   
3. Warranties and Indemnities: Seller guarantees on asset ownership and liabilities.
   
4. Remedies and Escrows: Protect against breaches.
5. Warranty & Indemnity Insurance: Mitigates risks identified during due diligence.

Regulatory Compliance

Articles of association may restrict share transfers, requiring board or shareholder approval.

Business Acquisitions: Tailoring Risk in Finland

Business acquisitions allow buyers to acquire specific operations or assets, reducing exposure to liabilities. However, these transactions require comprehensive due diligence to ensure business continuity.

Labor Considerations in Business Transfers

Under Finnish labor law, employees automatically transfer to the buyer in a business transfer. Key statutes include:

• Employment Contracts Act: Prohibits terminations solely due to transfer.
• Cooperation Act: Requires detailed communication and negotiations with employees.

Failure to comply with these obligations can result in legal and financial penalties.

Mergers in Finland: Navigating Complexity

Mergers are less common for initial market entry but are effective for post-acquisition restructuring. Finnish merger procedures are governed by the Limited Liability Companies Act and require a minimum six-month timeline.

Types of Mergers

1. Absorption Merger: One company absorbs another.
   
2. Combination Merger: Two or more companies form a new entity.
3. Subsidiary Merger: Parent and subsidiary merge seamlessly.

Process Highlights

1. Draft and file a merger plan.
2. Notify creditors and obtain approvals.
3. Secure shareholder votes (two-thirds majority required).
4. File and register the merger with the Trade Register.

Upon completion, all assets and liabilities transfer to the receiving company, and the merging entity dissolves.

Joint Ventures and Strategic Alliances in Finland

Finnish law provides flexibility for joint ventures (JVs), allowing parties to design governance structures through shareholder agreements and corporate vehicles. Key considerations include:

• Ensuring minority protections under the Limited Liability Companies Act.
• Establishing clear terms for control and decision-making.

Merger Control and Competition Regulation

M&A transactions in Finland are subject to merger control rules under the Finnish Competition Act. Transactions requiring notification include:

• Acquisitions where the combined Finnish turnover exceeds € 100 million.
• Cases were at least two parties generate over € 10 million in Finland.

The Finnish Competition and Consumer Authority (FCCA) assesses whether a transaction significantly impedes competition, especially by creating or strengthening a dominant position. The same rules apply to foreign-to-foreign acquisitions.

Sector-Specific Considerations

Certain industries, like financial institutions and insurance companies, have specific rules for turnover calculation and merger notifications. Additionally, labor-related arrangements are exempt from competition law scrutiny, ensuring fair employee treatment.

Conclusion

M&A in Finland requires careful planning and adherence to legal and regulatory frameworks. From selecting the right transaction structure to conducting due diligence and securing approvals, each step is vital for a successful deal. By understanding Finnish labor laws, merger control rules, and sector-specific requirements, businesses can navigate the complexities of M&A with confidence.

Ready to Navigate Mergers & Acquisitions in Finland?

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Let us support your journey

At LKOS Law Office, we specialize in M&A transactions, combining deep legal expertise with a strategic business mindset. From initial structuring to final execution, our team ensures every step is aligned with your objectives.

📞 Contact us today to schedule a consultation and learn how we can help streamline your M&A process. Together, we’ll build a solid foundation for your next business move.

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What is Contract Law in Finland

What is Contract Law in Finland?

Contract law in Finland provides a structured framework for the formation, enforcement, and regulation of agreements between parties. Governed by multiple statutes, Finnish contract law emphasizes fairness, good faith, and the freedom of parties to define the terms of their agreements. This comprehensive guide outlines the key principles, legislation, and international influences shaping contract law in Finland.

Overview of Finnish Contract Legislation

Contract law in Finland is decentralized, comprising various statutes addressing specific contractual relationships. The Contracts Act (228/1929) is the cornerstone of Finnish contract law, regulating the formation, invalidity, and legal representation of contracts. However, there is no overarching legislation covering all aspects of contract content, breaches, remedies, or disputes.

Key legislative Acts include:

• Consumer Protection Act (38/1978): Focuses on safeguarding consumer interests with mandatory provisions.
• Sale of Goods Act (355/1987): Governs the sale and purchase of goods.
• Agency Act (417/1992): Regulates commercial agents and sales representatives.
• Real Estate Code (540/1995): Deals with real estate transactions.
• Employment Contracts Act (55/2001): Covers employer-employee relationships.
• Insurance Contracts Act (543/1994): Pertains to insurance agreements.
• Residential Leases Act (481/1995): Regulates residential rental agreements.
• Commercial Leases Act (482/1995): Addresses leases of business premises.

International influences include EU regulations on contracts, the United Nations Convention on Contracts for the International Sale of Goods (CISG), and Nordic legal traditions, which emphasize harmonized drafting across Nordic countries.

Key Principles of Finnish Contract Law

1. Freedom of Contract

Finnish contract law is rooted in the principle of contractual freedom, allowing parties to freely decide whether to enter into agreements and to determine their content. However, statutory limitations apply:

• Unreasonable Terms: Section 36 of the Contracts Act permits courts to adjust unreasonable contract terms, though this is rarely applied in business-to-business contexts.

2. Binding Nature of Contracts (Pacta Sunt Servanda)

Contracts in Finland are legally binding once agreed upon. This principle promotes trust and ensures enforceability through courts or execution authorities. Exceptions exist in areas like consumer protection, where mandatory provisions may override binding agreements.

3. Good Faith and Loyalty

Parties in a contractual relationship must act in good faith, providing relevant information and minimizing potential damages during performance or breach of the contract. The duty of loyalty varies based on the relationship:

• Consumer Contracts: Stronger duties apply to protect weaker parties.
• Business-to-Business Contracts: Duties are balanced but less stringent compared to consumer contracts.

4. Fairness in Contractual Relationships

Contracts in Finland are guided by the principle of fairness, ensuring a mutual exchange of value. Courts may intervene to modify unfair terms under specific circumstances, as outlined in the Consumer Protection Act and the Contracts Act.

Formation of Contracts in Finland

Legal Formalities

Finnish law does not mandate specific formalities for most contracts. Both written and oral contracts are considered binding. However, practical challenges in proving oral agreements often lead parties to prefer written contracts.

Key Rules under the Contracts Act

• Offer and Acceptance: Contracts are typically formed when an offer is accepted.
• Oral offers require immediate acceptance unless otherwise stated.
• Written offers must be accepted within the stipulated timeframe or within a reasonable period.
• Binding Nature of Offers: Offers become binding upon receipt by the offeree.

While the Contracts Act lays down basic rules, specific contracts like real estate transactions and arbitration agreements may have additional formal requirements.

International and EU Influences on Contract Law

Finnish contract law is influenced by international conventions and EU regulations, ensuring alignment with global and regional standards.

• United Nations Convention on Contracts for the International Sale of Goods (CISG): Applicable to international trade agreements.
• EU Regulations: Cover areas such as consumer protection, competition, product liability, and insurance.

Consumer Protection in Finnish Contract Law

Consumer protection is a significant aspect of Finnish contract law. The Consumer Protection Act includes mandatory provisions to ensure fair treatment of consumers. Businesses cannot derogate from these provisions to the detriment of the consumer.

Enforcement and Remedies

Contracts in Finland are enforceable through judicial and administrative channels. Remedies for breach of contract depend on the nature of the agreement and the circumstances of the breach. Courts may grant:

• Specific Performance: Requiring the breaching party to fulfill their contractual obligations.
• Damages: Compensation for financial losses arising from a breach.
• Adjustment of Unfair Terms: Modifying unreasonable clauses to ensure fairness.

Practical Considerations for Contracting in Finland

1. Document Agreements: Written contracts provide clarity and ease of enforcement.
2. Understand Mandatory Provisions: Ensure compliance with mandatory laws, particularly in consumer and employment contracts.
3. Seek Legal Advice: Engaging legal professionals familiar with Finnish contract law ensures robust agreements and mitigates risks.

Conclusion

Contract law in Finland is a well-balanced framework emphasizing fairness, freedom, and good faith. With its robust legislative base and international alignment, Finnish contract law provides a reliable foundation for domestic and international business transactions. For businesses and individuals engaging in contracts in Finland, understanding these principles and seeking professional guidance can help navigate the complexities and ensure successful outcomes.

Take the Next Step with Confidence

Whether you're drafting a business agreement, navigating consumer rights, or managing cross-border contracts, understanding Finnish contract law is essential. Contact our legal experts today to ensure your contracts are clear, compliant, and tailored to your needs. 

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**Disclaimer: This article is for informational purposes only.

Your Legal Partner in Finland: Excellence in Corporate and Business Law

Legal partner in Finland | LKOS Law Office

In today’s complex and evolving global business environment, having a trusted legal advisor is not just an advantage—it’s a necessity. LKOS Law Office, headquartered in Helsinki, Finland, stands as a beacon of legal excellence, offering unparalleled expertise and comprehensive legal services that align with your business strategy and operational goals.

With a global reputation and multiple international awards, our firm delivers innovative and client-focused solutions in corporate law, contract law, dispute resolution, arbitration, employment law, international trade, sanctions, maritime, transport law, and M&A transactions.

At LKOS Law Office, we don’t just solve legal problems; we empower businesses to thrive.

A Foundation Built on Expertise and Trust

At LKOS Law Office, our strength lies in our ability to combine deep legal knowledge with a keen understanding of the business landscape. Our lawyers are not just legal experts; they are strategic partners to your business, equipped to anticipate challenges, mitigate risks, and seize opportunities.

Recognized Excellence

Our commitment to excellence is reflected in the prestigious international awards we have received. These accolades underscore our dedication to providing world-class legal services that meet the highest standards of quality and professionalism.

Client-Centric Philosophy

Every client’s needs are unique. We tailor our services to fit your specific requirements, ensuring that our solutions are not only legally sound but also aligned with your business objectives. Our goal is simple: to guide your company toward sustainable growth and success through practical and actionable legal advice.

Comprehensive Legal Services

1.     Corporate and Commercial Law

We assist businesses at every stage, from formation and structuring to daily operational legalities and corporate governance. Our expertise covers:

• Drafting and negotiating shareholder agreements.
• Advising on compliance with Finnish corporate laws.
• Structuring entities to optimize legal and financial efficiency.

Whether you're a startup or an established corporation, our lawyers ensure your business operates within a robust and compliant legal framework.

2. Contracts and Agreements

Contracts are the backbone of any business relationship. Our seasoned team excels in drafting, negotiating, and reviewing contracts, including:

• Supply and distribution agreements.
• Service contracts.
• Non-disclosure and confidentiality agreements.
• International trade contracts.
• Transport contracts.

With an emphasis on clarity and enforceability, we ensure your agreements protect your interests while fostering strong partnerships.

3. Dispute Resolution and Arbitration

Disputes are an unfortunate but inevitable part of business. At LKOS Law Office, we specialize in both litigation and alternative dispute resolution, including arbitration. Our approach is proactive, aiming to resolve disputes efficiently and effectively with minimal disruption to your business.

We have represented clients in high-stakes cases across industries, earning a reputation as one of Finland’s leading firms in dispute resolution.

4. Employment Law

Navigating Finland’s stringent employment regulations requires expertise. We provide guidance on:

• Drafting employment contracts.
• Resolving workplace disputes.
• Ensuring compliance with Finnish labor laws.
• Terminating employment relationships.

Our advice helps employers foster a fair, compliant, and productive workplace while avoiding costly disputes.

5. International Trade and Sanctions

Operating in international markets presents unique legal challenges. Our firm is well-versed in:

• Finnish and EU trade regulations.
• Customs and import/export compliance.
• Advising on international sanctions regimes, helping businesses remain compliant while mitigating risks.

With a global perspective, we help you navigate complex cross-border trade issues with confidence.

6. Maritime and Transport Law

With Finland’s reliance on maritime trade and logistics, our expertise in maritime and transport law is indispensable. We advise clients on:

• Charter parties and bills of lading.
• Freight and logistics agreements.
• Maritime insurance and claims.

Our understanding of the industry ensures that we provide practical and effective solutions tailored to the unique needs of shipping and transport businesses.

7. Mergers & Acquisitions (M&A)

Whether buying, selling, or merging companies, our M&A lawyers provide strategic guidance throughout the transaction process. Our services include:

• Legal due diligence.
• Structuring and negotiating deals.
• Drafting acquisition agreements.

We help our clients navigate complex M&A processes, ensuring smooth transitions and successful outcomes.

Innovating Legal Solutions with the NewLaw Concept

At LKOS Law Office, we embrace innovation in legal practice through the NewLaw concept. This approach combines technology, collaboration, and efficiency to deliver legal solutions that go beyond traditional methods.

What is NewLaw?

NewLaw emphasizes agility, cost-efficiency, and client-focused service delivery. By leveraging technology and fostering a culture of innovation, we provide services that are:

• Scalable for businesses of all sizes.
• Transparent and predictable in pricing.
• Designed to meet the fast-paced demands of modern businesses.

Through NewLaw, we empower your company to respond to legal challenges with confidence and agility.

Why Choose LKOS Law Office?

1. Internationally Recognized Expertise

Our team comprises lawyers with extensive experience in both Finnish and international legal frameworks. Having earned multiple global awards, we are a trusted legal partner for businesses across industries.

2. Tailored Legal Strategies

We understand that no two businesses are alike. By taking the time to understand your specific needs, we craft solutions that drive growth, minimize risks, and align with your strategic goals.

3. Commitment to Excellence

Excellence is at the heart of everything we do. From continuous education to staying ahead of legal and business trends, our lawyers are committed to delivering the highest quality of service.

4. Sustainability in Legal Practice

As champions of sustainable business practices, we integrate environmental, social, and governance (ESG) principles into our legal advice. We believe that legal solutions should not only benefit businesses but also contribute to a better future.

Supporting Business Success Through Strategic Legal Services

Whether you are navigating a complex transaction, resolving a dispute, or ensuring compliance with regulations, LKOS Law Office is your trusted legal partner in Finland. Our services are designed to:

• Enhance your decision-making with actionable legal insights.
• Protect your interests through robust legal strategies.
• Support your growth by aligning legal solutions with your business objectives.

Let’s Shape Your Success Together

At LKOS Law Office, we are more than just lawyers—we are partners in your business journey. With a focus on excellence, innovation, and client success, we are here to help you achieve your goals in an increasingly competitive and regulated business environment.

Contact Us Today

Ready to take your business to the next level? Reach out to LKOS Law Office and discover how our expert legal services can drive your success. Visit our office at Töölönkatu 4, Helsinki, or contact us through our website for a consultation.

Your success is our priority—let’s achieve it together.

Litigation in Finland

Overview of Litigation in Finland

Litigation in Finland is conducted through general courts or via arbitration, reflecting a robust legal framework grounded in material and procedural law. Material law outlines the rights and obligations of legal or natural persons, while procedural law dictates the processes for enforcing those rights. Importantly, procedural law only specifies how a dispute must be conducted; it does not resolve the substantive outcome of the case. Procedural law exists to support the application of material law, ensuring proper legal processes are followed.

Legal Protections and Rights

The Finnish Criminal Code (39/1889) prohibits self-help, emphasizing state protection of legal and natural persons to secure their rights. According to Section 21.1 of the Constitution of Finland (731/1999): 

"Everyone has the right to have their case dealt with properly and without undue delay by a competent court or authority, as well as to have decisions regarding their rights or obligations reviewed by an independent judicial body."

Finnish Procedural Legislation

The Code of Judicial Procedure (4/1734) contains the core procedural rules for litigation in Finland. Certain procedural doctrines, such as Res Judicata (legal finality of a judgment) and the prohibition of reformatio in peius (worsening the appellant's position), are recognized even if not explicitly codified.

The Criminal Procedure Act (689/1997) governs procedural aspects of criminal cases, incorporating civil procedural principles by reference. Additionally, international regulations like the Brussels I Regulation (44/2001) and the Lugano Convention also influence procedural rules applicable to Finnish courts.

General Courts in Finland

Under the Courts Act (673/2016), the general courts consist of district courts, courts of appeal, and the Supreme Court as the highest instance. The Finnish court system also includes administrative courts, with the Supreme Administrative Court as the highest judicial body in administrative matters. Specialized courts such as the Market Court, Labour Court, and Insurance Court handle specific types of cases.

Each district court comprises a chief judge, district court judges, and, when applicable, lay judges. Military members may also participate in cases within their jurisdiction.

Arbitration in Finland | Alternative Dispute Resolution

The Finnish Arbitration Act (967/1992) provides the legal basis for arbitration in Finland. Although not entirely modelled after the UNCITRAL Model Law, the Act reflects some of its principles. The Finnish government is currently reviewing potential amendments to enhance the Act's scope. The current version is minimalistic, but arbitration under the Finland Arbitration Institute offers detailed procedural rules widely recognized in practice.

It is to be noticed that an arbitration clause under Finnish law must be in written form, however email correspondence can satisfy this requirement and the written form requirement is flexible and relatively easily fulfilled. However, only civil law disputes can be arbitrated, as per the Act, which mandates that arbitration awards are final and binding on the parties.

Right to Appeal

The Constitution of Finland ensures the right to appeal, but this right is not absolute. The Court of Appeal evaluates whether an appeal permit is justified for each case. Appeals to the Supreme Court are contingent on a granted review permit, although direct appeals from district courts are possible in cases involving precedents, provided the opposing party agrees to this appeal option.

Class Action in Finland

The Act on Class Action (444/2007) outlines the regulations for class actions in Finland. The scope is limited, typically allowing only the Consumer Ombudsman to initiate such actions. Individual claims must be distinct and cannot be aggregated. These restrictions have, so far, prevented any class actions from being filed in Finland.

For a case to qualify as a class action, it must meet specific criteria:

1. Multiple claimants must have claims against the same defendant based on similar circumstances;
2. The case must be suitable for class action handling considering the class size, claims, and evidence;
3. The class must be adequately defined.

Class actions are initially heard by the District Court of Helsinki. The Act also stipulates rules on class action funding, prohibiting funders with competitive interests or dependencies on the defendant. Funders cannot unduly influence the plaintiff's decisions in ways that harm consumer interests, and courts may require detailed funding disclosures.

Conclusion

Litigation in Finland, with its comprehensive legal framework and procedural safeguards, emphasizes fairness and efficiency. Whether engaging in traditional court litigation or business orientated arbitration, understanding these laws is crucial for parties involved in legal disputes to succeed.

For further information, please contact our specialists.

Disclaimer: This article is for informational purposes only.

HOW TO ANNUL EMPLOYMENT CONTRACT DURING A TRIAL PERIOD

Options for terminating employment contract | Termination | Trial period annulment | Treated as annulled

About the purpose of the trial period | How employment contract is annulled during the trial period

Applicable legislation

Trial period a special institution of employment law | About the conditions of the trial period

How to annul the employment contract in practise during the trial period

How to execute the trial period annulment

Compensation for illegal rescind | How the employment contract can be annulled

LKOS Law Office Receives Prestigious Global Award for Excellence in Transport Law

LKOS Law Office chosen as Transport Law - Law Firm of the Year in Finland - 2025

We are thrilled to announce that LKOS Law Office has been honored with the prestigious title of "Transport Law - Law Firm of the Year in Finland - 2025" by Corporate INTL Magazine as part of their 18th Global Awards.

This international recognition highlights the firm’s outstanding expertise and leadership in transport law. Corporate INTL, a well-respected business publication, conducted a rigorous nomination and research process, gathering confidential nominations through their website and evaluating law firms worldwide. The evaluation process focused on the credibility of nominators, the quality of work delivered, firm rankings, the caliber of partners and directors, previous accolades, network affiliations, and contributions to the legal field through publications and speaking engagements.

The award recognizes LKOS Law Office for its consistent excellence in the transport law sector, which includes complex cases involving international transportation regulations, logistics, and compliance matters. The firm's clients have benefited from its tailored legal solutions, expert advice, and commitment to achieving favorable outcomes. This achievement reflects LKOS Law Office’s dedication to maintaining the highest standards of legal service and its leading role in the industry.

Statement from LKOS Law Office

"We are incredibly proud to receive this esteemed recognition as the leading transport law firm in Finland", said Managing Partner Liene Krumina.

“This award reflects the hard work and dedication of our entire team, who are committed to delivering exceptional legal services and supporting the success of our clients in the transport and logistics sectors. We would like to extend our heartfelt thanks to our clients, peers, and everyone involved in the nomination process for their trust and continued support.”

This accolade further solidifies LKOS Law Office’s reputation as a go-to firm for businesses seeking top-tier legal counsel in transport law, both in Finland and internationally. The firm looks forward to continuing its work with clients to navigate the complexities of transport law, ensuring their business operations remain efficient, compliant, and competitive in the global market.

For more information about LKOS Law Office and its award-winning services, please visit www.lkoslaw.fi.

ARBITRATION IN FINLAND - The Arbitration Institute of the Finland Chamber of Commerce (FAI)

Arbitration in a Nutshell in Finland

The Arbitration Institute of the Finland Chamber of Commerce (FAI) provides both arbitration and mediation services for resolving domestic and international disputes. The FAI itself does not resolve disputes but administers proceedings in accordance with its arbitration and mediation rules. In 2023, the FAI received 71 requests for arbitration under its rules.

Finnish Arbitration Act

The Finnish Arbitration Act ("FAA") is influenced by the UNCITRAL Model Law, and it takes into account the requirements of the New York Convention. The Act is currently under review, with amendments expected in the near future to reflect the latest legal and business developments impacting arbitration.

The FAA has broad territorial applicability, covering disputes between Finnish parties as well as cases where parties have agreed to arbitrate in Finland, even if they are international parties.

When Arbitration is Used

Arbitration is based on a contractual agreement between the parties, which must be in written form. The requirement for written form is satisfied if the arbitration clause is included as a term in the contract or in the correspondence between the parties. Therefore, if parties have agreed in writing to resolve disputes through arbitration, the matter cannot be brought before a general court if the respondent objects before filing a response to the claim.

Role of the FAI

The FAI is an impartial institution responsible for administering domestic and international arbitrations. It provides two sets of rules: the Arbitration Rules and the Rules for Expedited Arbitration. The FAI can also support ad hoc arbitrations. In such cases, a party must submit a written application to the FAI for the appointment of the arbitral tribunal. Before making an appointment, the FAI allows the respondent an opportunity to be heard. The FAI rules also allow for Emergency Arbitration.

Filing Fees for FAI Proceedings

The fees for FAI arbitration proceedings are as follows:

• EUR 3,000 per payment for cases conducted under the Arbitration Rules or the Rules for Expedited Arbitration.
• EUR 3,000 for the appointment of arbitrators in ad hoc arbitrations.
• EUR 25,000 as the Application Deposit for Emergency Arbitrator proceedings.

These fees are applicable from 2024.

History of the FAI

The history of the FAI dates back over 100 years. In 1909, the Vaasa Tradesmen’s Association proposed the establishment of an arbitration board in Helsinki. By 1910, the rules for the new arbitration institution were drafted, and in 1911, the Helsinki Arbitration Board of Commerce, Industry and Shipping began operations.

The most recent revision of the Arbitration Rules and Rules for Expedited Arbitration of the FAI came into force on 1 January 2024.

***

Our specialist on this field is Liene Krumina and Oscari Seppälä. Please contact for further information. 

** The article is for information and not as a legal advice.

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Fulfilling EU's Fit for 55 Targets

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