Subject Matter: Liability in damages of an arbitrator

 

Finding: An arbitral award had been set aside due to bias of an arbitrator discovered subsequent to the proceedings. The Supreme Court of Finland held that the arbitrator was liable for any damage caused in line with traditional contract law.

 

Parties to the Arbitral Proceedings:

Claimant / Defendant: Sellers of entire stock in Finnish construction corporation (three private Persons)

Defendant / Claimant: Buyer of the shares of Finnish construction company

 

Parties to the Court Proceedings:

Claimant: Sellers, three private persons

Defendant: X, Chairman of the arbitral proceedings

 

Applicable Law: Finnish material law and arbitration law

 

SUMMARY

Private persons sold all the shares of construction company to a competitor in 1993. The agreement of sale was governed by an arbitration clause. Disputes between the parties arose and were submitted to arbitration under Finnish Arbitration Act in Helsinki. Both parties appointed one arbitrator and the two arbitrators elected X, a professor of law to act as the chairman. Both parties filed claims in the arbitration. The elected chairman did not disclose a potential bias at any stage in the proceedings.