Finland: A Timeless Topic: The Enduring Importance of Mandatory Rules in International Commercial Arbitration


by Iina Tornberg, Senior Associate, Lindblad & Co.


Mandatory rules persist in introducing uncertainties into what is typically a straightforward choice of law by international commercial arbitrators, leading to increased expenses to manage this uncertainty. Mandatory rules can override and displace the chosen set of rules selected by the parties to arbitration for those parts that conflict with the specific mandatory rules in question. They can among others result in the rejection of recognition and enforcement of an arbitration award on grounds of public policy.


The varied approaches to mandatory rules, which depend on the arbitral tribunal and its connections to various legal systems, result in undesirable inconsistency. In its practice, one tribunal may focus solely on principles it deems to reflect transnational public policy, while another conducts thorough examinations of even domestically mandatory rules of connected legal systems. From a global perspective, the inconsistent, case-based application of mandatory rules by arbitral tribunals presents a genuine challenge for legal advisers dealing with cross-border cases. Regarding the client’s best interests, the question then is what is a reasonable allocation of time, effort, and financial resources for drafting legal reviews regarding mandatory rules that could impact the client's case in the context of commencing or ongoing arbitration proceedings.


The Finnish ADVOC Member, Lindblad & Co.’s latest addition Senior Associate Iina Tornberg is passionate about mandatory rules and international commercial arbitration. Her doctoral thesis that examines Article 101 of the Treaty on Functioning of the European Union (TFEU) as a mandatory rule in choice of law before the Chinese International Economic and Trade Arbitration Center (CIETAC) in Mainland China has been approved for a public defence, indicating that the defence will take place no longer than one year from now.


In her work, she studies whether CIETAC arbitrators might apply Article 101 TFEU as a mandatory rule to resolve disputes also against the parties’ clear choice of a non-EU Member State law in international commercial arbitrations conducted in mainland China under the CIETAC Arbitration Rules. After all, in its Eco Swiss case (Eco Swiss China Time Ltd v Benetton International NV, Case C-126/97, EU:C:1999:269), the Court of Justice of the European Union affirmed that this competition law provision as a fundamental provision for achieving the objectives of the European Union is a public policy rule within the meaning of the New York Convention (the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done in New York, 10.6.1958, 330 UNTS 38).


Consequently, the study focuses on analysing how mandatory EU law can affect parties with connections to the Union, such as companies doing business in the Union and EU nationals, who have selected CIETAC arbitration as their dispute resolution method. The study strives to provide an answer to the burning question of whether parties to arbitration can effectively circumvent EU competition law by utilising CIETAC arbitration as their dispute resolution method.

It will also delve into the nature of international commercial arbitration, concluding that despite its apparent international character as well as its ambitious desciption as an autonomous and detached system from national legal systems, there are several variations of this alternative dispute resolution, all of which are equally appropriate and functional. Then from the legal adviser’s viewpoint, this again emphasises the importance of the arbitration clause and selection of the tribunal