Finland: Class Action In Finland

Last Updated: 23 July 2003
Article by Eva Nordman

This article first appeared in Focus Europe Summer 2002 - A Supplement to The American Lawyer

The Anglo-American class action is a product of the common law legal culture, introduction of which into the continental European legal culture is fundamentally challenging. Despite this, there seems to be a need to assess whether such measure should be accepted also under Finnish law. In Finland, in renewing the procedural system, the costs for taking legal action have risen considerably. Therefore, it is assumed that people are not taking matters into courts unless the object of the dispute is fairly significant. This is seen to reduce the impact of material laws. Since the purpose of class action is to be economical in procedure, reparative and preventive, and it has been in practice in the US for long, it has been under consideration to introduce it to the Finnish procedural system during the last decade.

Pros and Cons of Class Action

Several questions concerning the good and bad sides of class action have been discussed in the Finnish judicial literature and government’s working group material.

From the point of view of procedural economy, legal proceedings could become more efficient since a whole group of cases could be tried simultaneously in one trial. An individual, an official (e.g. the consumer ombudsman), or a registered association could act as claimants.

Legal protection would be enhanced if individuals could have a realistic possibility for recourse to courts in matters of limited monetary value for an individual, but significant value in its entirety. Class action could also act as a way to prevent conducting business inappropriately, and persuade companies to change their objectionable practices. This preventive function of class action has not been discussed in Finland as closely as, for instance, pure legal protection.

Closely linked to legal protection and access to justice is the formation of the group. Who would be bound by the court’s decision? Currently, it is conceived that the groups could form partly based on ‘opt-in’-membership (cases concerning affirmative relief), and partly on ‘opt-out’ (cases concerning a declaratory judgment). In other than cases of granting affirmative relief, the decision would be binding on all members of the group that have not ‘opted out’. Therefore, a member could be unaware of belonging to a group, and still be bound by the decision. This is in conflict with the Finnish principle of law that every person has the right to decide on how his/her rights are used. On the other hand the ‘opt-out’-system could be seen to be against the principles of the national legal system and the European Convention on Human Rights (access to justice, fair trial). The legal finality of the judgment, res judicata, is the question that the academic lawyers have felt has not been solved yet. Could members of the group, who have not participated in the class action, or simply been unaware of it, challenge res judicata?

A number of problems have been considered to exist in the relationship an attorney would have with the members of the group. Possible conflicts of interest, insufficient communication between the attorney and possibly several hundred clients etc. cannot be ignored. Concerns regarding a change of legal culture towards a ‘litigation oriented’ society, as the US, possibly introducing contingency fees of attorneys, even enabling so-called ‘legal blackmail’ towards corporations have been expressed. In connection to the fees of attorneys, also the responsibility for the legal expenses overall caused concern.

Further problems are seen in the possibility of forum shopping. As the international conventions and the EC provisions regarding legal forum would provide a possibility to try a case with minimal connection (for example a company with only has a real estate in Finland) to e.g. Finland, in a Finnish court, this is also seen as a problem.

Preparation of legislative Proposals

Introducing class action to the Finnish legal system has been twice tried already during the 1990’s. Following the Swedish example, a working group was appointed in 1992, to prepare a legislative proposal regarding class action. The working group delivered its report at the end of 1994. The working group’s proposal did not receive enough support to become a government’s legislative proposal because, inter alia, of questions concerning the protection of investors, and the possible consequences these issues might have on the international competitiveness of Finnish corporations, were criticized by the representatives of the industry. Concerns of certain significant companies leaving Finland because of the threat of class action were touched upon.

A few years later, another working group was appointed to prepare the matter further. This time the working group was commissioned especially to ensure that class action would fit into the Finnish legal system, and would not confer additional costs to the state. Preparing the legislative proposal proved very difficult as the working group dissented internally on many major issues. The working group’s proposal was confronted with criticism from representatives of different groups.

Among the critics, the Finnish Bar Association seriously questioned the effects class action could have on the professional ethics for lawyers. The minority of the second working group questioned, inter alia, whether Finland should pursue with the class action at this point for reasons of legal integration, i.e. since other Member States of the European Union had not introduced class action. Notwithstanding these concerns, the majority of the working group suggested that an act on class action should be passed. In May 1998, the Minister of Justice stated, however, that Finland would pursue other avenues for achieving the same result as with class action, including certain legal reforms, already existing officials who assist consumers, and the reformed criminal law that contains labor and environmental crimes, which can therefore be tried by the public prosecutor.

Future Prospects

After the second working group delivered its report in 1997, there have been no further legislative efforts to introduce class action in Finland. It, however, is not unlikely that the matter will become current again, since the Swedish government has in March 2002 given a legislative proposal to the parliament on class action (Regeringens Proposition 2001/02:107, Lagom grupprättegång). This will undoubtedly also start the debate in Finland again.

The content of this article does not constitute legal advice and should not be relied on in that way. Specific advice should be sought about your specific circumstances.

E VA N R D M A N , PART N E R

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