Finland: The Supreme Court Of Finland Considered The International Jurisdiction Of A Finnish Court

Introduction

In its decision 2011:74, the Supreme Court of Finland considered, inter alia, the international jurisdiction of Finnish courts. The Supreme Court concluded that the defendant, by stating that it did not contest the Finnish court's jurisdiction over the matter, had waived its right to invoke a choice of court agreement. Therefore, the Supreme Court found that the Finnish courts were competent to decide the case in spite of the choice of court agreement granting sole territorial jurisdiction to the courts of California. The Supreme Court also concluded that a decision given by a court of a foreign country does not absolutely preclude a Finnish court from considering the same matter.

Background

The case related to a surety obligation in a contractual relationship between two foreign (non-Finnish) companies. The surety obligation included a choice of court agreement granting sole territorial jurisdiction to the courts of California. On the basis of the choice of court agreement, a Californian court granted affirmative relief in relation to a claim under the surety bond. The question was about considering a claim related to the same receivable in the Finnish court as well as civil procedure and judgment by default. This case summary, however, addresses only the international aspects of the decision.

Decisions

The District Court of Kotka had dismissed the plaintiff's claim under the surety bond as groundless by a default judgment. The plaintiff appealed against the default judgment, requesting the matter to be returned to the District Court. The Court of Appeal concluded that the parties to the dispute had entered into a binding choice of court agreement, granting the courts of California sole territorial jurisdiction. The Court of Appeal also concluded that the plaintiff had referred to the fact that the claim was based on the decision given by the Californian court. The Court of Appeal, however, held that the California judgment could not be set as the basis for a judgment to be given by a Finnish court and that the Finnish District Court of Kotka was thus not competent to resolve the claim. The Court of Appeal dismissed the claim.

The Supreme Court considered, inter alia, whether the choice of court agreement granting sole jurisdiction to the courts of California precluded Finnish courts from considering the claim.

The provisions regarding a choice of court agreement included in the Finnish Code of Juridical Procedure allow the parties to withdraw, even without any formalities, from such an agreement. In this case, the defendant had explicitly stated to the Court of Appeal that it did not contest the jurisdiction of the Finnish court in the matter. Therefore, the Supreme Court found that the defendant had waived its right to invoke the choice of court agreement and held that the matter could be considered by the Finnish courts. The Court of Appeal, it reasoned, should not have dismissed the matter because of the choice of court agreement.

The Supreme Court also had to consider whether a judgment given by a court of a foreign country precludes consideration of the same matter in Finland. Unlike agreeing on the legal venue, the parties may not agree on the country in which—and the conditions under which—a judgment is enforced. For this part, the court's jurisdiction as well as recognition of a judgment given by a foreign court and the conditions for enforcing a judgment are, as a starting point, based on international agreements binding the country in question. No agreement regarding courts' international competence or recognition and enforcement of judgments exists between Finland and the USA. In this case, the judgment given by the California court granting affirmative relief cannot be enforced in Finland on the basis of international procedural law principles applied in Finland. Therefore, to obtain payment for its receivable based on the decision of the California court, the plaintiff must bring the case to a Finnish court. Otherwise the plaintiff would have no means, in practice, to realize its rights based on the choice of court agreement.

On basis of the above stated, the Supreme Court held that a decision given by a court of a foreign country cannot be deemed to absolutely preclude consideration of the same matter in a Finnish court. Therefore, the California court's decision regarding the claim under the surety bond does not hinder the Finnish court's consideration of the case.

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