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19.09.2023
KHO:2023:73 – Yearbook decision from the Supreme Administrative Court reverses current practice of applying building permits for wind turbine generators in building permit applications
The Supreme Administrative Court rules in a recent yearbook decision KHO:2023:73 that the building permit application regarding a wind turbine generator must contain exact key dimensions of the structure (i.e. tip height and hub height/rotor diameter). Presenting only the maximum tip height and providing the final dimensions before start of construction will not be sufficient.
Background
As a result of the constant technological development of wind turbine generators (“WTGs”), it is often challenging for project developers to present the exact dimensions and technical specifications the WTGs at the time when building permits are applied. It is not uncommon that the WTG model based on which the building permit applications have been prepared is no longer available on the market at the time when all necessary permits and approvals needed for start of construction have gained legal force and the WTGs are ordered, meaning that constructing the WTGs will either require a deviation from the original drawings presented in the building permit application or a revision of the permit altogether.
As an attempt to tackle this challenge, some permit applicants have adopted a practice of presenting certain maximum dimensions, often only the maximum tip height of the WTG, in the building permit applications, and delivered the exact dimensions and technical specifications of the WTGs before the start of construction works, when the final WTG model has been selected and ordered. Such practice was based on an interpretation of Section 134 Subsection 2 of the Finnish Land Use and Building Act (Fi: maankäyttö- ja rakennuslaki, 132/1999), which allows, in the lack of exact drawings, the permit authority to assess the general conditions for granting a building permit based on other available data, provided that the exact drawings are presented, and subsequently approved, by the authority prior to start of construction.
Decision
However, on 25 August 2023, the Supreme Administrative Court (“the Court”) ruled in a yearbook decision (KHO:2023:73) that the practice described above is unlawful and revoked the building permits. According to the Court, since neither the building permit decision nor the drawings attached to it indicate the key dimensions of the WTGs (i.e. tip height an rotor diameter), it is not possible to establish what construction measures the permit applicant is entitled to or what the actual effects on the neighborhood are. The Court further stated that it could not be ensured that the data presented in the noise and flicker modeling’s attached to the building permit application correspond to the maximum effects of the WTGs on the neighborhood when the key dimensions were left open.
The Court argued that whereas the Land Use and Building Act does not require that the technical identification information of the project, such as a specific WTG model of a wind turbine manufacturer, should be presented when deciding on building permits for WTGs, the identification information of the WTG presented in building permit applications and master drawings must nevertheless be sufficiently precise so that it is possible to reliably assess whether the conditions for granting a building permit exist. Correspondingly, the permit regulations to be included in building permit decisions must be sufficiently precise to ensure the conditions for granting the permit. In this case, presenting the mere maximum tip height of the WTGs was not considered sufficient, since it could not be established that the noise and flicker modellings conducted for a specific WTG type, which the applicant had presented in connection with the building permit applications, would categorically depicture the maximum impacts for all theoretical alternative rotor dimensions allowed under the 240-metre maximum tip height. The Court gave no relevance to the fact that the permit applicant had included a statement in the building permit application declaring that the modeling’s were conducted to estimate the maximum effects caused by the project and that the applicant would present new modellings if the WTG to be built were to differ from the type used in the impact assessment.
Implications
This decision from the Court is a good reminder of how cautious one must be in interpreting the re-quirements set out in general construction laws in connection with renewable energy projects. Structures such as 240-metre high WTGs or e.g. solar panel fields covering hundreds of hectares of land are simply very different from, and involve different legal issues than, the traditional construction projects for which such laws were originally designed. The decision sets out tougher requirements for wind power developers, as it will no longer be sufficient to only determine the maximum tip height for the WTGs in the building permit applications. As a result of this decision, the permit applicant will have to determine exact dimensions of at least two main factors (tip height + either hub height or rotor diameter) of the WTG, even though there is no certainty of whether there will be a WTG-model with those specific dimensions available on the market at the time when the WTGs are ordered.
We further note that the decision does not take a position on whether it is still possible to present several different turbine model alternatives (and noise and flicker modelling reports for each and every turbine model) in the building permit application, and then, at a later stage specify which model is chosen from the options in the building permit conditions.
For more information, please contact:
Marius af Schultén
+358 40 565 7034
marius.schulten@hpp.fi
Isabella Häggblom
+358 50 918 4857
isabella.haggblom@hpp.fi
13.09.2023
The governing law of the arbitration agreement – Finnish and International perspectives on the prevailing ambiguity
The renewal process of the 1992 Finnish Arbitration Act has been pending for a while now, and with the recent reformation of the Finnish Government, it seems to be taking steps ahead. According to the new government programme from June 2023, the Finnish Government plans to investigate the needs for the renewal of the Finnish Arbitration Act and to prepare the necessary legislative changes to promote the competitiveness of Finnish arbitration.
The discussion on the renewal of the Finnish Arbitration Act has revolved around making the Arbitration Act align with contemporary needs of international arbitration. Namely, many contributors to the discussion have called for the Arbitration Act to be more compatible with the standards of the UNCITRAL Model Law.
In addition to ensuring the general compatibility of the Finnish Arbitration Act with the UNCITRAL Model Law, the possible redrafting of the Finnish Arbitration Act would also provide an opportunity for the Finnish legislature to address various legal issues which have arisen in international arbitration practice. One such issue is the question of the applicable law to the arbitration agreement. So far, this issue has not been considered in the Finnish discussion concerning the potential redrafting of the Arbitration Act.
In this article, I put forward the basic principles and problems which have arisen in international arbitration practice regarding the determination of the proper law of the arbitration agreement. Further, I reflect on the opportunities to address these issues in the prospective redrafting of the Finnish Arbitration Act.
In England, the issue of the applicable law to the arbitration agreement has been quite extensively addressed in recent case law as well as in the proposed amendments to the 1996 English Arbitration Act. Therefore, in my reflections on the Finnish legal situation, I especially focus on recent developments in England as a point of comparison.
Starting points and main issues in the choice of law consideration
The jurisdiction of any arbitral tribunal rests on the arbitration agreement, and therefore it is the foundation of the arbitral proceedings. As such, the law governing the arbitration agreement is not an irrelevant consideration, as it determines, e.g., the relevant rules of substantive contract law under which the validity of the arbitration agreement is decided.
As a general starting point, the New York Convention contains a choice of law rule applicable to arbitration agreements, Article V(1)(a). According to the Article, the en-forcement of an arbitral award can be refused if the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made (i.e., the law of the seat). The choice of law rule is virtually universally recognized and has been adopted in, e.g., Articles 34 and 36 of the UNCITRAL Model Law.
The generally accepted principles established in the Convention as well as the UNCITRAL Model Law call for the mutual intention of the parties to take precedence in the choice of law consideration regarding the arbitration agreement. However, in practice, the determination of the parties’ intention is in many cases open to serious interpretative difficulties.
The problems can be seen to ultimately stem from the so-called separability doctrine. Following this almost universally recognised legal doctrine, the arbitration agreement is viewed as a separate (or at least, separable) agreement from the so-called main contract. The main contract is the commercial contract between the parties, which includes material provisions concerning, for example, the price and delivery of the goods. In contrast to the main contract, the arbitration agreement provides the process by which disputes arising from the main contract are to be resolved. The separability doctrine is generally seen to apply regardless of how the arbitration agreement is included in the main contract, thus applying even in cases where the arbitration agreement and the main contract are contained in the same document.
Further, the arbitration agreement is typically included in the main contract along with a choice of law clause, specifying the law to be applied to the contract. However, the law applicable to the arbitration agreement itself is in practice very rarely considered or specifically mentioned in the arbitration agreement or in the main contract.
Because of the separability doctrine, the lack of an explicit specification of the law governing the arbitration agreement in a contract containing a choice of law clause raises the question whether the choice of law clause sufficiently extends to the arbitration agreement. If there are no other considerations to take into account, the answer would in many cases be positive.
However, the choice of law difficulties are emphasised when the arbitration agreement specifies a certain seat of arbitration, and the seat is in a different country than the law of which has been chosen to apply in the choice of law clause. The problem that arises in this case is whether the choice of seat or the law specified in the choice of law clause determines the law applicable to the arbitration agreement.
Indeed, even though it would seem to call for an internationally uniform choice of law approach for arbitration agreements, the choice of law rule in the Convention does not decide the question of whether the law of the main contract or the law of the seat takes precedence in determining the proper law of the arbitration agreement in situations where the contract is silent on the matter. As such, the issue is ultimately in the hands of courts and tribunals to solve.
Courts in different jurisdictions as well as arbitral tribunals and academics have approached the question in a multitude of ways, which cannot be thoroughly outlined in this article. As an example, however, in the courts of common law countries, the law chosen to apply to the main contract has usually been considered decisive when evaluating the question of the law governing the arbitration agreement. In contrast, in certain civil law countries, such as France and Sweden, the question has been approached differently, with decisions ruling that the law applicable to the arbitration agreement is the law of the chosen seat.
Either approach could be credibly argued for. The application of the law of the main contract could be seen in many cases to be in line with the parties’ mutual intentions and reasonable expectations. However, the law of the seat has been considered to apply, e.g., as it provides the lex arbitri, which by default governs the arbitration proceeding and, in the usual case, certain aspects of the arbitration agreement itself.
In short, the relevant forums in which the issue arises are free to apply any choice of law rules that they deem applicable to the arbitration agreement. Due to the lack of truly uniform choice of law rules or principles, the rules applied can vary greatly between courts in different jurisdictions and between courts and tribunals.
Ultimately, these discrepancies can lead to serious problems, especially when instances in different jurisdictions rule on the choice of law question within the course of a single dispute. This is precisely what happened in the Kabab-Ji saga, which is discussed below.
The Kabab-Ji saga – a choice of law tragedy
The issues regarding the law applicable to the arbitration agreement are highlighted in the quite recent series of decisions in English and French courts in the matter Kabab-JI SAL v. Kout Food Group (KFG). The latest and final judgements in the matter are the decision by the UK Supreme Court from October 2021 and the decision by the highest instance in France, the Cour de cassation, from September 2022.
The case concerned a dispute regarding franchise agreements. The franchise agreements all had an arbitration clause, designating disputes to be solved in an ICC arbitration seated in Paris and a choice of law clause in favour of English law. The relevant legal question was whether KFG was bound to the arbitration clauses in the franchise agreements even though the party to the franchise agreements was originally a company that became a subsidiary of KFG through a corporate restructuring.
The ICC tribunal found that the question of the validity of the arbitration agreement was a matter of French law and as a matter of French Law, KFG was bound to the arbitration agreement. The tribunal awarded nearly USD 7 million in damages and other costs to the claimant, Kabab-Ji SAL.
In France, KFG had filed for the setting aside of the arbitral award. The matter ended up in the Cour de cassation, which held (as did the previous instance in the Paris Cour d’appel and the arbitral tribunal) that the law applicable to the arbitration agreement was French law and as a matter of French law, the arbitration agreement bound KFG. Thus, the award was not set aside.
In England, the matter was also brought before the courts, which had to decide on the enforceability of the arbitral award against KFG. The instances from the Com-mercial Court to the UK Supreme Court found that English law as the law of the main contract applied to the arbitration agreement. According to English law, the arbitration agreement was not binding on KFG and thus the award could not be enforced.
The Kabab-Ji saga is an example case of a key uncertainty arising from the multi-tude of different approaches to the law applicable to the arbitration agreement, described above. As the jurisdiction of the arbitral tribunal to render enforceable awards relies on the arbitration agreement, situations can arise in which an arbitral award, valid in one instance, is then set aside or denied enforceability in another instance due to the arbitration agreement being found invalid under a “new” applicable law, determined by distinct choice of law rules. These potential approaches in different forums can be very difficult to predict by the parties.
In the Kabab-Ji saga, the arbitral award was denied enforceability in the English courts due to the arbitration agreement being found invalid under English law, which was not applied by the arbitral tribunal. Thus, the arbitration, along with all the costs already incurred, became essentially futile.
Difficult problems – simple or more difficult solutions?
As stated, the mutual intention of the parties is primary in determining the applicable law to the arbitration agreement. Despite the above-established confusion, it is virtually universally recognized that a sufficient declaration of such intention would be an explicit stipulation on the law governing the arbitration agreement made by the parties.
Thus, the choice of law issue would, in principle, be quite easily solved if commercial parties would simply start adopting a provision explicitly stipulating the applicable law to arbitration agreements in their contracts. The provision could be included in the arbitration agreement itself, and stipulated, e.g., in the form: “This arbitration agreement shall be governed by the law of [State X]”. Indeed, arbitral institutions like the HKIAC and AIAC have provided such optional additions to be included in their model arbitration clauses. Time will tell whether such a practice would become the norm. So far however, it has not.
Further, as the law applicable to the arbitration agreement can have wide-ranging legal effects, any choice of law should always be carefully considered. As there is no generally established commercial practice which the parties could rely on in choosing such a law, this could decrease the willingness of the parties to adopt such provisions. Thus, other solutions should be considered.
The current situation in which courts in different jurisdictions apply varying choice of law rules to arbitration agreements is not adequate. As seen above, this can lead, and has led, to problems which are unnecessary and unwanted considering the ideal of international arbitration as an efficient dispute resolution mechanism by which enforceable awards should be rendered. Thus, it should be considered whether a universal solution to the choice of law issue could be made. This would mean, e.g., making relevant amendments to the New York Convention and/or the UNCITRAL Model Law, specifying how the law applicable to the arbitration agreement should be addressed by courts in light of the issues established above.
However, the universal approach would be a long haul. It is difficult to see delegates from different countries arriving at a consensus on the matter, at least in the foreseeable future. Thus, one option that could be considered would be making express stipulations in the national arbitration legislations, addressing how the applicable law to the arbitration agreement is to be determined. Preferably, such rules should be formulated to leave as little room for interpretation as possible. They should also be drafted keeping in mind the compatibility of the legislation with the principles established in international arbitration practice as well as those applied in other relevant countries. This would benefit legal certainty, as parties would have hard and fast rules which they could rely on being applied to their arbitration agreement in the relevant forums.
The legislative approach is considered below from the English and Finnish perspectives and put in context by the relevant legal background in both countries.
Possible legislative developments in England
The difficulties in establishing a fixed choice of law rule for arbitration agreements is highlighted in English legal practice even before the above-described Kabab-Ji saga. In the past, English courts have switched between rules favouring the application of the law of the main contract and rules favouring the application of the law of the seat.
However, with its landmark judgement from 2020 in the so-called ENKA v. Chubb case, the UK Supreme Court established a set of seemingly concrete principles regarding the determination of the proper law of the arbitration agreement. The Supreme Court held that where the law applicable to the arbitration agreement is not specified by the parties, a choice of governing law for the main contract will generally apply to an arbitration agreement which forms part of the contract. The ENKA v. Chubb decision was subsequently referred to in the above-described Kabab-Ji v. KFG decision by the Supreme Court.
However, far from being completely settled, the principles established by the Su-preme Court have been subject to some criticism in the international arbitration sphere. Indeed, in March 2023, in its second consultation paper on the review of the English Arbitration Act, the English Law Commission proposed an approach in opposition to the one taken by the Supreme Court in ENKA v. Chubb.
In the consultation paper, the English Law Commission proposed a provision for the proper law of the arbitration agreement to be adopted in the Arbitration Act. Accord-ing to the Law Commission’s proposal, the arbitration agreement should be by default governed by the law of the seat in absence of the parties’ explicit choice of law governing the arbitration agreement itself.
The proposal by the Law Commission in the second consultation paper sparked criticism of its own. The critique was based on the requirements of party autonomy and party expectations, among other things. However, in the final report by the Law Commission published 6 September 2023, the Law Commission maintained their position, stating that “a clear rule, like our proposal, would help establish expectations. Parties could reliably expect our proposal to apply the law of the seat by default.”
Reflections on the issue from the Finnish perspective
The issue of the proper law applicable to the arbitration agreement can be considered unresolved in Finland. The Finnish 1992 Arbitration Act contains a choice of law provision in Section 53, similar to the one in the New York Convention, Article V(1)(a). However, like the article in the Convention, the provision in the Finnish Arbitration Act does not specify whether the law of the main contract or the law of the seat would take precedence in determining the law applicable to the arbitration agreement in absence of the parties’ explicit choice of law.
There have so far been two Finnish Supreme Court decisions where the choice of law problem has been addressed, namely the decisions KKO 2007:39 and KKO 2020:89. In these decisions, the Supreme Court confirmed the effect of the separability doctrine in the determination of the applicable law to the arbitration agreement – the law chosen by the parties to govern the main contract does not necessarily extend to the arbitration agreement even when it is contained in the main contract.
However, in both cases the parties’ choice of seat as well as the choice of law clause pointed at the law of the same country. Thus, the hierarchy between the seat of arbitration and the choice of law clause remained unsettled.
The potential future redrafting of the Finnish Arbitration Act would provide an oppor-tunity for the Finnish legislature to address the issue by adopting an express provision on the proper law of the arbitration agreement in the Arbitration Act. As established above, after past confusion, such an approach has already been suggested to be taken in the revision of the English Arbitration Act.
Further, such a provision has long been legislated in Sweden. According to the Swedish Arbitration Act, Section 48(1), if the parties have not reached an agreement on the law applicable to the arbitration agreement, the arbitration agreement is governed by the law of the country where, in accordance with the parties’ agreement, the arbitration had or will have its seat.
A choice of law provision for arbitration agreements in the Finnish Arbitration Act would pre-emptively address some of the unnecessary issues which have arisen in international legal practice. In drafting such a provision, it should be assessed and settled whether applying the law of the main contract or the law of the seat constitutes the default rule in absence of the parties’ explicit choice of law governing the arbitration agreement. Solid arguments can be made for either approach under pre-existing Finnish legislation, case law and literature. In addition, the methods of comparative law should be used, and relevant international sources should be considered. In the interest of legal certainty and the effectiveness of arbitration, the end result should be a reasonably definite and well-justified choice of law provision for arbitration agreements.
Time will tell whether these considerations will play a role in the possible redrafting of the Finnish Arbitration Act or in future Supreme Court practice. HPP is following any developments in the arbitration sphere with a keen interest.
Mikko Mäkelä
Associate
+358 40 057 0521
mikko.makela@hpp.fi
Key Contact:
Mikko Leppä
Partner
+358407505663
mikko.leppa@hpp.fi
02.05.2023
An Introduction to Real Estate market and current hot topics in Finland
The Post-COVID-19 Finnish Real Estate Market amidst European Energy Crisis and the War in Ukraine
The COVID-19 pandemic, the war in Ukraine and the following rise of energy prices have all affected economic activity and added uncertainty to real estate markets around the world. Despite that, there are noticeable reforms and developments leading the green transition in the Finnish real estate market. In many ways, the post-pandemic issues, such as rising interest rates and energy prices, have boosted sustainable projects and activities. High energy prices have affected industrial properties in particular. Many have resorted to sustainable measures to conserve energy. This has attracted investments in renewable energy, energy efficiency and smart functions in the real estate market and construction as the payback period of these investments has been reduced considerably.
Despite the rising interest rates and high inflation, real estate investments tend to perform well in the changing business environment. Currently, investors and buyers are seeking economic stability by investing in properties with high and steady returns and with relatively low risks. Real estate can overcome inflation-inflicted pressure while preserving and building value which can be seen as an advantage of investing in real estate.
Health and Social Services Reform and EU Taxonomy
At the beginning of 2023, the organisation of public healthcare, social welfare and rescue services were reformed in Finland. Consequently, the responsibility for organising these services was transferred from municipalities to wellbeing services counties. This reform has attracted investments on social infrastructure premises and service properties.
Social infrastructure premises and service properties have been a subject of interest for investors for a long time. However, the national reform has accelerated the trend. Social infrastructure and healthcare properties are in demand among investors, as they are seen as relatively safe investments regardless of the world situation. Long-term leases usually generate steady rental income at low risk. Finnish and international investors specialising in public healthcare, social welfare and rescue services have established new real estate funds for public services properties.
The changes in the social and health services reform have coincided with EU taxonomy and ESG-related factors. The Taxonomy Regulation (EU) 2020/852 is one of the measures taken by the European Union to meet its objective of Climate Neutrality by 2050. The regulation indirectly affects real estate operators seeking financing for their investments from the market. In addition, the regulation has implications for the construction industry regarding the construction of new buildings and the renovation of existing buildings. Taxonomy compatibility of target properties is of growing interest for investors. Accordingly, Taxonomy Due Diligence plays a significant role in current and future Due Diligence processes, a trend prominent especially in social infrastructure and health services investments.
Smart Readiness Indicator (SRI) – A Proposed Unified EU Framework for Evaluating the Smart Readiness of Buildings
The smart readiness indicator or SRI is a system developed under the European Commission to evaluate the readiness of new buildings for the implementation of smart features. The aim of the development of the SRI is to make the energy usage of buildings more flexible and demand-based, which can be achieved, for instance, by using automation to direct the usage of resources to places where they are needed, storing energy with smart storage systems and acquiring different kinds of data from the smart systems of the building and utilising such data to conduct maintenance and upkeep more efficiently. In practice, the smart readiness indicator consists of 54 individual smart ready services that are evaluated in accordance with functionality levels ranging from 0 to 4. The evaluated services are then summed with pre-set weights to arrive at an SRI score ranging from 0% to 100%.
The smart readiness indicator is a similar concept to the already implemented energy performance certificate (EPC) and it is intended that the two will form a combined system for the evaluation of the energy performance of buildings. The experts currently in charge of issuing EPCs are also most probably the ones that will be competent for issuing SRI certificates. The potential implementation of the SRI framework could be viewed as a burden for the parties partaking in the construction projects of new buildings, but as smart buildings and energy conservation seems to be a global megatrend, it might be worthwhile to take the initiative and start evaluating the smart readiness of new buildings even before there is any legal requirement to do so. Such evaluations could also potentially lead to new innovations and developments in the field of energy performance.
As of now, the SRI is in a testing phase wherein different EU membership countries are researching the applicability of the indicator to the local building regulations, methods and conditions and are also running tests of the practical usage of the SRI to evaluate existing buildings. Finland is one the countries that are carrying out testing of the SRI along with Austria, the Czech Republic, Denmark, France and Croatia. According to the proposal to be the new European Union directive on the energy performance of buildings (EPBD), the testing phase of the SRI shall be finished by the end of the year 2025, after which a requirement for conducting such assessment for new buildings of certain types may be implemented if the testing phase yields successful results.
Finnish Merger Control Thresholds and the Rise of Real Estate Transactions
By way of an amendment to the Finnish Competition Act, effective from 1 January 2023 onwards, Finnish merger control turnover thresholds have been lowered significantly. The new thresholds will relate exclusively to turnover achieved in Finland, and thus align the jurisdictional rules with those applied in Sweden and Norway respectively, where only national turnover is considered for establishing jurisdiction over an otherwise notifiable transaction.
Turnover Thresholds
Prior to the amendment, a transaction was notifiable if the parties’ combined, aggregate worldwide turnover exceeded EUR350 million, and the turnover achieved in Finland by each of at least two parties exceeded EUR20 million.
With the new thresholds in place, a transaction is notifiable where the parties’ combined, aggregate turnover generated in Finland exceeds EUR100 million, and the turnover achieved in Finland by each of at least two parties exceeds EUR10 million.
As previously, prior transactions completed within a timeframe of two years between the same parties will be assessed as a single transaction for the purposes of determining the notification obligation.
Practical Effects of the Amendment
According to the Finnish Competition and Consumer Authority (“FCCA”), the change in the thresholds will double the number of transactions caught by the national merger control rules. Prior to year 2023, between 20-40 transactions were notified annually to the FCCA. Following the amendment, the FCCA expects some 60-70 transactions to be notified annually. The FCCA has indicated a need for an addition of five officials to handle the increase in the authority’s merger control workload.
As regards Finnish real estate sector, a typical real estate transaction carried out in the Finnish real estate market is still likely to fall below the threshold figures. However, we do at times see real estate portfolio transactions in the Finnish market with purchase prices in the hundreds of millions of euros, meaning that the net operating income may also lie above the now applicable EUR10 million threshold.
The newly adopted notification figures may be especially relevant for professional real estate investment funds and other institutional real estate investors who make real estate investments on a regular basis. In particular, as consecutive transactions are being assessed as one, investors who frequently trade amongst each other will need to monitor the fulfilment of the notification criteria more carefully than in the past.
Whether the more frequently met filing obligation will have an actual impact on the Finnish real estate market remains an open question. Depending especially on the definition of the relevant geographical market, a transaction that meets the turnover thresholds may fall under further scrutiny (should it for example result in overlaps in the supply or demand side). Thus, it may be of even greater importance that competition filings are done professionally and carefully to maximise the likelihood of the desired outcome.
Upcoming Changes in Tax Legislation and the Taxation of Capital Gains
Currently Finland does not tax capital gains on Finnish properties if held via a real estate company or holding company structure and the shares in the holding companies are disposed in the exit. This applies to all foreign investors. The respective tax treaty is not relevant as the tax exemption is based in Finnish tax legislation and respective tax treaty cannot enlarge the scope of tax for Finnish purposes.
The Finnish government has initiated a change in law according to which the said tax exemption for foreign investors will be abolished. The tax treatment of capital gains is then dependent upon the applicable tax treaty. As a result, investors from, for example, Sweden and Germany would become liable to tax in Finland on capital gains. Certain tax treaties would still enable tax exemption. Such tax treaties include Luxemburg, which is a country of choice for the structuring of Finnish real estate properties.
The government has stated publicly that the proposed new legislation should not result in material tax revenue and the other Nordic countries would continue to grant tax exemption for foreign property investments. Taking into account the need to change a number of tax treaties, the new legislation should not be effective and impact the competitiveness of Finland going forward. The new tax legislation may come into force during 2023.
Acquisition Permit Process and Legislative Amendments
At the beginning of 2020, a set of legislation concerning real estate transactions took effect covering, to varying degrees, both asset and share deals. For instance, the new permit system, purporting to offer the Finnish state a means of protecting national security, contains a pre-emptive right and redemption which applies to asset deals executed with non-EU/EEA-domiciled purchasers only. As a part of this legislative package, real estate purchasers with a domicile outside the EU or the EEA, and those owned by at least 10% or factually influenced by such, need to apply for a permit to acquire Finnish real estate from the Ministry of Defence (this does not apply to share deals). However, the permit does not need to be applied individually per each transaction as it stays valid for as long as the ownership and the actual beneficiaries remain unchanged.
The functionality of the acquisition permit regulation has been evaluated and new legislative amendments entered into force on 1 January 2023. The new amendments have tightened the real estate acquisition permit process and increased the authorities’ discretion and the Ministry of Defence’s access to information. The aim of the amendments is to prevent real estate transactions if the transfer is deemed to endanger national security. In addition, the Ministry of Defence can reject the permit application if it is obvious that the property to be acquired would not be suitable for the stated purpose or if the property is acquired by a person who has been issued a deportation decision and is staying in the country illegally. The applicant also has the obligation to contribute to the investigation of the case under the threat of a negative decision. The Ministry of Defence has the right to find out the financing of the acquisition of the property and its origin.
More information:
Leif Laitinen
Partner
+358 44 750 5610
leif.laitinen@hpp.fi
Jari Tuomala
Partner
+358 40 553 1010
jari.tuomala@hpp.fi
02.05.2023
An Introduction to Energy & Natural Resources market and current hot topics in Finland
The Journey Towards Renewable Energy and Climate-Friendly Solutions Continues
The goal set by the Finnish Government as stated in the 2019 Government Programme is that Finland will become carbon neutral by 2035 and carbon negative shortly thereafter. As a result, the political atmosphere is in general aiming towards more environmental and climate-friendly solutions in every political and industrial sector. The Russian aggression in Ukraine has further accelerated the green transition, as the ability to produce energy from CO2-free sources has become vital not only from a climate point of view, but also from the perspectives of energy self-sufficiency and security of supply.
More efficient energy production with lower emissions is required to adapt to climate change and green transition, which in general will require new technologies and raw materials. Thus, green transition impacts the mining of minerals, which to some extent are considered critical for the green transition. Recent crises and the uncertainty caused by them have increased the importance of availability of raw materials and self-sufficiency in them as well as the need to diversify supply chains.
Finland will hold parliamentary elections in the Spring of 2023, as a result of which many of the pending legislative reforms are currently on hold. As the importance of the green transition has widely been recognised across the political spectrum, however, it is expected to remain one of the top priorities on the political agenda even during the upcoming period of governmental change.
Renewable Energy – the Rise of Offshore Wind Power, Solar Power and Hydrogen
According to statistics provided by Finnish Energy, wind power production increased by 41% in 2022 compared to 2021, setting a new record for annual production at 11.56 TWh, which amounts to 14.1% of the total electricity production in Finland. The rising trend of wind power production in Finland is, however, better illustrated by the installed overall capacity, which increased by as much as 76% in 2022. Also on a more general level, the share of renewable energy sources amounted to 54% and the share of carbon-neutral energy sources to 89% of the total electricity production in 2021: both new records. The lack of a subsidy scheme for wind power has driven a rapid growth of the market for long-term private Power Purchase Agreements (PPAs), which is constantly expanding and now includes a broad spectrum of off-takers, from industrial operators to municipal utilities.
The vast majority of Finnish renewables projects are still onshore wind projects. However, 2022 saw an important milestone for offshore wind power development, as Metsähallitus (the Finnish State-owned enterprise that administers State-owned land and water areas), subsequent to a bidding contest involving some of the major European offshore wind power developers, entered into a joint venture with the Swedish utility Vattenfall regarding the co-development of a 1.3 GW offshore wind power project situated within State-owned waters in the municipality of Korsnäs in Western Finland. Finland has vast offshore areas with a significant, yet unexploited, wind power production capacity, and the Korsnäs project is the first step in what is generally expected to become the next breakthrough in the Finnish energy sector. The shallow nature of the Baltic Sea would make it an attractive location for large-scale offshore wind projects. Offshore wind power has also been recognised by the Finnish Government as one of the key elements in Finland’s climate strategy, and accordingly further State-owned offshore areas (administered by Metsähallitus) will be leased out for wind power development through an auction process. The first auction round is anticipated to be launched in the fall of 2023. The winner(s) of the auction(s) would be granted a lease right to the area(s) for a period of 40 to 50 years and exclusivity on project development, permitting, construction and production of electricity in the area. Offshore wind power developers are also showing an increasing interest in the economic zone, which, however, lacks wind power-specific legislation as concerns, for instance, securing an exclusive right to develop.
One of the obstacles for the development of Finnish offshore wind thus far has been that the property tax applicable to wind power plants is calculated based on the construction costs, which are significantly higher for offshore wind farms when compared to onshore wind farms, resulting in a higher property tax burden compared to onshore wind farms. However, in order to make offshore wind projects commercially viable, the Finnish Government aims to correct the situation, and a Government Proposal has been issued according to which the replacement value of offshore wind power plants would be lowered to 35% of their original construction costs (compared to 75% for onshore wind power). If adopted by the new government, the amendment would significantly reduce the tax burden of offshore wind power and further accelerate investments in the sector.
The development of the solar PV sector has so far lagged behind wind power partly due to the Finnish climate. However, the first signs of a transition from small-scale test projects to industrial-scale commercial projects have been seen during the past two years. In addition to rooftop solutions, which have been applied in connection with, for example, large retail facilities, an increasing number of larger solar farms are currently being planned on former industrial sites and even on forest-based areas. The acceleration of solar power development will also require certain legislative reforms, notably with regard to the taxation of solar power plants.
As in most European countries, green hydrogen is a widely discussed topic in Finland, and the Finnish Government has recently adopted a resolution according to which it aims to make Finland become a leading European hydrogen power by producing at least 10% of the EU’s greenhouse emissions-free hydrogen by 2030. There are several significant hydrogen projects in the pipeline, which are scheduled to be commissioned within the next few years and will require significant finance raising in the coming years. The legislation regarding green hydrogen is still under development, and to a large extent driven by the European Union. The most critical legal questions, such as the criteria of green hydrogen, taxation and possible State aid mechanisms, will therefore depend on the development of the legislation at the EU level.
As a final thought, as many Finnish cities are still dependent on coal for heating especially in winter, thermal energy storages (that store surplus energy generated in the summer for use during the winter) as well as small modular reactors (SMRs) are currently investigated as a potential solution for accelerating the transition to carbon-free heating. Vantaa Energia, the municipal utility for the Vantaa city region is currently developing the world’s largest cavern thermal energy storage of 1,000,000 m3 in size, which will have a storage capacity of 90 GWh of energy – the annual heat consumption of a medium-sized town. The total project cost is approximately EUR100 million. In addition, the Finnish Radiation and Nuclear Safety Authority is currently conducting a study on how to simplify the permitting processes of SMRs, as the current nuclear safety legislation has been designed with regard to large-scale nuclear power plants and is therefore poorly applicable to SMRs. The current estimate is that the first SMRs in Finland would be operational within ten years.
Mining sector – Reform of the Mining Act and the new Mining Tax Act taking effect
According to the statistics published by the Finnish Safety and Chemicals Agency (Tukes) in March 2023, in 2022 there were 9 metallic mineral mines, 26 industrial mineral mines and 8 industrial rock or other mines operating in Finland. Metal ore, carbonate rock, industrial minerals and industrial rock mining was in total 49.6 million tonnes (3.5% increase from year 2021). The total amount of investment into Finnish mines was EUR304 million. Ore exploration received EUR80.4 million in investments, which means a 17.4% increase from year 2021. This shows that there is a lot of interest in Finland’s mineral potential (such as battery minerals). In the report on the mining industry published by the Ministry of Employment and the Economy in October 2022, Finland was reported to be the only country in the EU with mines producing chrome and cobalt and within the EU by far the most significant producer of platinum group metals, clearly the most significant producer of nickel and, among Bulgaria and Sweden, the most significant producer of gold.
The Parliament has on 20 February 2023 approved the Government Proposal on reform of the Mining Act which will take effect on 1 June 2023. The aim of the reform is to improve the level of environmental protection and ensure the operating conditions of mines, while also improving opportunities for local input (for example from municipalities and landowners). It will take effect simultaneously with the new Nature Protection Act. Changes to the Mining Act include, inter alia, changes to the validity period of reservation and reservation fees, changes to prerequisites to extend the validity of an exploration permit and changes to the prerequisites for the award of a mining permit as well as stricter regulations on mining collaterals and changes to regulations regarding closure of the mine.
The Parliament has on 10 February 2023 approved the Government Proposal on the Mining Tax Act which will take effect on 1 January 2024. The Mining Tax Act will be applied for mining of minerals referred to in the Mining Act, except minerals found in gold panning. The mining company, as a holder of the mining permit, will be liable to pay mining tax. The obligation to pay mining tax will arise for metallic minerals (Ag, Co, Cr, Au, Cu, Li, Ni, Pd, Pt, Zn, Pb, U) at the time when the mining mineral is delivered for enrichment and for other mining minerals at the time of extraction. The tax for metal ore is 0.6% of the ore’s taxable value. The Tax Administration will assess taxable values annually based on arithmetic means on previous years, with international prices using sources such as LME Monthly Overview and S&P Capital IQ. Tax for other mining minerals will be EUR 0.20 per ton. The Mining operators must register with the Finnish Tax Administration before starting activities subject to the mining tax. Existing operators must register as mining operators by 1 March 2024. The tax period of the mining tax is the calendar year and therefore the first tax return must be filed, and the tax paid by 12 March 2025.The revenue collected from the mining tax is estimated to be around EUR25 million annually, of which 60% will be directed to municipalities where the mines are located and 40% to the State.
More information:
Kari Marttinen
Partner
+358 40 779 7878
kari.marttinen@hpp.fi
Tarja Pirinen
Partner
+358 40 350 7797
tarja.pirinen@hpp.fi
Marius af Schultén
Partner
+358 40 565 7034
marius.schulten@hpp.fi
Björn Nykvist
Partner
+358 40 753 7387
bjorn.nykvist@hpp.fi
02.05.2023
An Introduction to Banking and Finance market and current hot topics in Finland
Some Current Hot Topics
As in many other countries, sustainability, sustainable finance, and the measures needed to reach the climate and sustainability objectives are significant topics in Finland. Finland is committed to implementing the UN’s 2030 Agenda for Sustainable Development and the Finnish government has outlined a plan for Finland to be carbon-neutral by 2035, becoming the world’s first fossil-free welfare society. Significant financing and investments are needed to address different sustainability challenges and to support environmentally friendly initiatives. Also, for example, the EU Taxonomy Regulation, a classification system, establishing a list of environmentally sustainable economic activities, has been widely discussed in Finland. Originally Finland voted against the EU Taxonomy Climate Delegated Act due to its potential impact on the country’s forest industry. However, as the majority of the other member states voted in favour, the Act entered into force at the beginning of 2022. The second Delegated Act, mainly related to the assessment of specific nuclear and gas energy activities, has been adopted by the Commission in July 2022 and has entered into force as of January 2023.
Generally, the demand for climate- and planet-friendly solutions and innovations is high. The Finnish financing sector is engaged and closely following in this development and the sustainability indicators and ESG policies are being developed and introduced. Major Finnish banks have committed to the UN’s Principles for Responsible Banking and their strategy and practice will have to be aligned with sustainability goals and, for example, the Paris Climate Agreement. In practice, these sustainability-related principles are currently applied in the due diligence process and new financial products, such as green bonds and loans and, for example, margin grids are already based on sustainability indicators such as carbon dioxide emission levels. This progress and development will continue and increasing expertise in the field is needed. Some guidelines, principles and models already exist but it still remains to be seen how the EU regulation and for example Loan Market Association guidelines develop and shape the finance sector and practices around sustainability and related requirements and recommendations.
Recently, another topic gaining increasing attention has been sanctions compliance and clauses related to sanctions in financing agreements. EU sanctions are directly applicable law in Finland. In addition, many financing agreements include references to UK and US sanctions, and in some cases they might also become applicable in relation to a Finnish company, otherwise through a supply chain. Both financiers and borrowers are, and they need to be, increasingly cautious and aware of the applicable sanctions and the details and background or their counterparties. This has been visible in the market and this development will most probably continue. Sanctions related-clauses should always be carefully considered in order to avoid unintentional breaches and different adverse consequences, both on the borrower and lender side.
Legal Issues Related to the Finnish Banking and Finance Market
Financial assistance/corporate benefit
Like many other countries, Finland has rules regarding the prohibition of financial assistance and a requirement of corporate benefit. According to the Finnish Limited Liability Companies Act (statute 624/2006, as amended) a limited liability company shall not provide loans, assets or security for the purpose of a third party acquiring shares in the company or its parent company. Further, transactions which, in breach of the provisions of the Companies Act, reduce the assets of a company or increase its liabilities without any corporate benefit or a sound business reason for the company, constitute an unlawful distribution of assets.
The concept of corporate benefit is always evaluated from the perspective of the company granting loans or security and the assessment is made on a case-by-case basis. Finnish company law does not recognise any group benefit. Pursuant to the general principles of the Companies Act, it is the management’s obligation to assess the existence of corporate benefit or a sound business reason for entering into any particular transaction. However, ultimately the determination is made by an insolvency administrator and/or the court. Finnish market practice in situations where the applicability of the financial assistance prohibition or the existence of a corporate benefit for the company is not clear or is open for interpretation, is to include generic limitation language in the finance documents applying to both guarantees and security. The limitation states that a guarantee and/or security will only be provided to the extent this does not violate the financial assistance or distribution of assets provisions of the Companies Act. There is, however, no Finnish case law on such limitation language, and therefore the significance a Finnish court would assign to such a clause cannot be fully determined.
Floating Charge
In Finland, common security in financing transactions is a floating charge (also called a business mortgage). A Finnish floating charge covers all movable assets of a company, including all fixed assets (eg, machinery, equipment and trade marks), current assets (eg, raw materials, consumables and finished products and goods) and liquid assets (eg, cash at hand and receivables).
A new floating charge is created by entering into a pledge agreement regarding mortgage notes and delivering an application to the relevant authority for the issuance of new mortgages notes with instruction to deliver such new mortgage notes directly to the secured party. If mortgage notes over the assets of a company already exist, a pledge is created by entering into a pledge agreement regarding these mortgage notes and delivering them to the secured party.
Mortgage notes evidencing a floating charge are bearer notes, hence the transfer of a floating charge is executed by delivering the mortgage notes to the possession of the secured party. Although it is not mandatory, it is possible (and recommendable) to register the current holder of the mortgage notes in the Finnish Floating Charge Register. By registration, the secured party (pledgee) in practice ensures that it is contacted by the administrator in an insolvency situation and by the bailiff in case of enforcement of a floating charge granted to a third party. An original copy of the mortgage note needs to be presented in connection with the enforcement of the floating charge.
In an insolvency scenario, floating charges entitle to a priority over 50% of the enforcement proceeds of the relevant assets. The priority is limited to the nominal amount of the mortgage notes plus interest and enforcement costs as determined in the mortgage note.
Some assets (such as shares and receivables) can be separately pledged in spite of the existence of a floating charge. If a separate pledge has been created over an asset, such asset is not covered by the floating charge. In addition, separate mortgages may be created over certain asset classes (eg, large vehicles and aircraft) under Finnish law. These assets are not covered by a floating charge even if such assets have not been separately mortgaged.
Pledge of Receivables and Bank Accounts
A pledge over receivables and a pledge over bank accounts are essential to a Finnish security package, particularly in project finance. In Finland, both may be created by entering into a pledge agreement between the pledgor as the creditor of the relevant receivable or the holder of the bank account and the pledgee as the creditor against the pledgor. In order to create protection against third parties, the debtor/the bank should be notified of the pledge and instructed not to make any payments to the pledgor.
In practice, it is sometimes agreed that although a pledge agreement is executed, the pledgor is free to collect the receivables or to use the pledged bank account until a default occurs. In such cases, perfection measures are incomplete until the default and instructions to the debtor/the bank that no payments can be made to the pledgor and therefore the pledge is also subject to claw-back risk. This is relatively common practice but also something that needs to be consciously considered when entering into financing arrangements that are, at least partially, secured by a pledge over receivables and bank accounts.
Guarantee as for One’s Own Debt
When a guarantee is required for payment obligations, in the Finnish market it is common to require and give such guarantee as a guarantee as for one’s own debt. This form of guarantee is covered by the Finnish Act on Guarantees and Third-Party Pledges (statute 361/1999, as amended). Under such guarantee, a guarantor is liable for the principal debt in the same manner as for its own debt (as the name suggests). The creditor is entitled to demand payment from the guarantor immediately after the principal debt (in full or in part) has fallen due and payable. Contrary to a demand guarantee, a guarantee as for one’s own debt is related to the underlying debt obligation and subject to the same defences.
When entering into a guarantee as for one’s own debt, it is essential to identify the guarantee as such in the guarantee documentation. If nothing has been indicated in the relevant agreement, a guarantee is taken to create a secondary guarantee which does not place the creditor in as strong a position as a guarantee as for one’s own debt would. References to the applicable (and excluded) sections of the Finnish Act on Guarantees and Third-Party Pledges are commonly included.
Mankala Energy Companies
A specific concept in the field of electricity production in Finland is the so-called ‘Mankala principle’, which is based on the Finnish Supreme Administrative Court ruling from the 1960s. It establishes that a limited liability company, instead of paying dividends, may produce affordable energy for its shareholders as set out in its articles of association. The shareholders have the obligation to bear the operating costs in proportion to their shareholding in the company and have the corresponding right to a proportion of the electricity produced. The purpose of a Mankala company is to produce electricity for its shareholders at the lowest possible cost, whether as an independent energy producer or as an energy procurement company. The shareholders may, in turn, use the electricity for their own purposes or sell it onwards. The purpose of a Mankala company is not to make a profit; the lower procurement costs constitute the benefit received by the shareholders. The Mankala principle must be followed carefully or tax may become payable. In energy financing, the impact of Mankala structures should always be carefully considered.
More information:
Antti Rintakoski
Partner
+358503445606
antti.rintakoski@hpp.fi
Teija Lius
Partner
+358405599872
teija.lius@hpp.fi
12.04.2023
HPP ranked again among the leading Finnish law firms in Legal 500 2023
Once again, HPP has been highly ranked in 8 key categories of the latest edition of the Legal 500 2023.
We warmly thank our customers and colleagues for their recommendations and their trust in our teams and expertise.
Real estate and construction (Tier 1)
“HPP team has great communication. Cases move quickly and everything is solution oriented. Clients of HPP benefit from the experience of the team, they have faced and solved the majority of challenges in previous cases.”
“Leif Laitinen understands how real estate business works. He has the ability to recognise relevant matters and focus on them. There’s minimal need for briefing thanks to his high level of understanding and good listening skills. He is highly driven and result oriented and that radiates to his team.”
“Fast, uncomplicated and easy-going.”
“Business oriented mindset when comparing to other practices. Ability to provide concrete recommendations for difficult negotiations. Really good understanding for customers business.”
“Leif Laitinen and the team is highly motivated to resolve client cases. Good understanding of customers business and quick responses with high quality. Really good problem solvers with decent charges.”
Maritime and transport (Tier 1)
“A suitable variety of professionals for all kinds of purposes.”
“Strong, calm and confident professionals that take the time to familiarise themselves with the cases every time.”
“HPP is genuinely interested in its customers. Always available and has a huge experience and knowledge of issues. The lawyers’ replies are precise and reliable.”
“HPP is a treasure for our company. No need to even try any others. The specific reports and teams with the lawyer have been our huge support.”
“The team at HPP provides a professional and personable service, all while maintaining a collaborative approach. HPP goes the extra mile, highlighting a unique level of dedication and passion for what they do.”
“Nora Gahmberg-Hisinger exhibits professionalism through her unrivaled attention to detail. She is always available and responsive, making her very reliable. She has been a true pleasure to work with.”
TMT (Tier 1)
“Seamless co-operation, willingness to help and react at very short notice. The wide knowledge has given us an infinitely great advantage.”
“We have our country’s most valued GDPR know how with long experience but not forgetting other areas.”
“Fearlessness and expertise. This is a people business.”
“Representing the client in negotiations, being one of our team instead of handing out suggestions or advice.”
EU and competition (Tier 2)
“Broad team with expertise in all areas.”
“Quick to react when needed. Good expertise in key areas.”
“Very solution-oriented mindset. Good co-operation between practices in substance matters.”
“Partner Tuomas Saraste is definitely among the top competition professionals in the country.”
“Tuomas Saraste is client oriented and has an amazing ability to present difficult law terms so that everyone understands, serious matters spiced with a good sense of humour.”
“Agile team with great leadership on top.”
“Commitment to the delivery. Clear communication on results, challenges and opportunities.”
Banking and Finance (Tier 2)
“Excellent service with reasonable pricing and efficient attitude.”
“Straight forward and businesslike approach.”
“We have worked with one Senior Counsel in the team. She has excellent background and expertise on international financial institutions and impact investment funds that is crucial for us.”
“The Senior Counsel we’ve worked with has such a relevant background and expertise on matters important for us that she was the number one choice. She’s also very responsive and easy to work with, and communicates well and on timely manner.”
Corporate and M&A (Tier 3)
“They have very in-depth knowledge in specific areas such as W&I insurance and energy. In terms of client communication, they are very down-to earth and approachable.”
“I’ve worked with Andrew Cotton and was surprised how proactively and confidently he steered the assignment to the client’s benefit.”
“Lead partner Antti Säiläkivi makes the difference. His approach to transactions and ability to focus on relevant matters as well as capability to run a transaction process are of an extremely high level.”
“Antti Säiläkivi is one of the best corporate legal professionals in Finland. His understanding of Finnish company regulation is thorough and he can combine that with business aspects delivering great solutions. Broad knowledge and long experience are a superb combination for the benefit of his clients.”
“Good availability of the advisers at any time; professional preparation of documents, especially during a very fast and hectic closing procedure.”
“Very competent in drafting and negotiating contracts in English even under time pressure or during a conference call.”
Dispute resolution (Tier 3)
“Huge knowledge and experience, deep thinking about the case, out of the box thinking. Effective communication and guidance of the client.”
“Very client friendly firm. Down to earth attitude and clear advice. Very practical approach handling disputes.”
“Mikko Leppä is a true professional. Very analytical way to approach a case but still easy to understand the reasoning behind and communication towards the client.”
“Team is very forthcoming and always up the task.”
“Been working with two individuals: Mikko Leppä and Risto Sandvik. Both do exceptional work.”
“The team is unique in terms of their business mindset and understanding of customer needs. They are also very efficient in the way they process the case making it very easy for the customer.”
“Strong knowledge and experience in dispute resolution combined with a unique touch of customers business understanding.”
“HPP’s dispute resolution team stands out because of their client-orientated approach. I have been working with the team on several complex matters, and they have always succeeded to distinguish relevant matters to make decision making easy for the client and present the case successfully in court. HPP is clearly more capable to use their own initiative when resolving the cases, and have a commercial understanding of the client’s business.“
Tax (Tier 3)
“Jaakko Klemettila’s service has been outstanding.”
“Very knowledgeable about the subjects in scope. Advice received of highest standard. Local expertise, always available if needed, quick turnaround, highly motivated.”
“Awake, listening and reflect upon that. Respond quickly with suggestions, which is utterly important for entrepreneurs.”
Employment (Firms to watch)
Legal 500 notes, that “HPP has continued the growth of its employment practice, which was kick started in 2019 following the recruitment of Henna Wiklund (née Kinnunen), with notable expansion at the associate level“.
06.04.2023
Real estate management cartel fined following a judgment of the Finnish Market Court
In a judgment delivered on December 15, 2022, the Finnish Market Court imposed an aggregate fine of closer to 5 million euros on the Finnish Real Estate Management Federation (“Suomen Isännöintiliitto ry”, hereinafter the “Federation”) and six companies active in the provision of real estate management services that held board memberships in the Federation during the infringement period. According to the Market Court, the Federation and the companies involved engaged in prohibited horizontal cooperation, including price-fixing. More specifically, the participants had colluded to increase prices and to unify their pricing policies through the Federation’s press releases and price recommendations, which were preceded by communications amongst the participants, inter alia, at the Federation board meetings. The companies also otherwise engaged in the bi- and multilateral exchange of commercially sensitive information. As regards the Federation, in addition to having facilitated the coordination of conduct between the competing service providers, the Federation was found to have had an independent and active role in the infringement insofar as it had published press releases on pricing also on its own initiative and actively raised pricing issues amongst the participating companies. Interestingly, the infringement was appraised solely on the basis of Section 5 of the Finnish Competition Act (the national equivalent of Article 101 of the Treaty on the Functioning of the European Union) as the conduct did not affect intra-EU trade given the local nature of the services provided.
The infringement lasted from 2014 to 2017 when the Finnish Competition and Consumer Authority (“FCCA”) initiated its investigation into the suspected infringement. As part of its investigation, the FCCA conducted searches at the companies’ premises and issued in February 2021 its findings on the infringement, together with a proposal for an aggregate fine of 22 million euros.
The Market Court reduced significantly the fines proposed by the FCCA
The Market Court confirmed in its judgment delivered in December 2022 to a large extent the findings issued by the FCCA in 2021. The Market Court concurred with the FCCA that the practices amounted to a serious infringement by object, which were aimed at affecting the pricing development for real estate management services nation-wide and they were therefore of significant economic value. At the same time, the Market Court considered that anti-competitive conduct could not be established with respect to some meetings, and overall considered that in light of the evidence presented the conduct lacked the intensity and scale that the FCCA had presented.
In light of these findings, the Market Court significantly reduced the aggregate fine from the FCCA’s proposal: from the aggregate proposed 22 million euros to a total aggregate fine of 5 million euros for all participants. While the FCCA’s proposals were premised on the 10 per cent legal maximum for all participants, including the Federation, the Market Court’s decision set the fines at significantly lower levels. The single biggest fine was reduced from the proposed 13.9 million euros to 3 million euros, while none of the remaining sanctions exceeded one million euros. In many instances liability was joint and several and various acquisitions had taken place in the industry since the infringing practices took place, which raised issues of successor liability.
It is somewhat difficult to reconcile the fine level with the Market Court’s findings of a serious infringement that had lasted for three years. The level of fines is also difficult to reconcile with other recent cases, for instance sanctions imposed on the expanded polystyrene (EPS) insulation materials suppliers in July 2022 by the Finnish Supreme Administrative Court. In that case, the fines confirmed by the Supreme Administrative Court amounted to around 8 per cent of the participants’ respective turnover, while in the case of real estate management services, the single largest fine imposed by the Market Court represents some 2 per cent of the company group’s total turnover. It remains to be seen whether the Market Court’s judgment is indicative of fine levels in the future, despite the fact that the FCCA has expressed a firm intention to increase the level of fines for serious competition law infringements, to which testifies also the FCCA’s proposal in the real estate management services case. It bears observing that the ECN+ Directive, in particular as regards the legal maximum level of fine for associations of undertakings, were not applicable at the time of the FCCA’s proposal.
Based on publicly available information, the FCCA and most of the companies involved have appealed against the Market Court’s judgment. It is understood that the FCCA will defend its initial proposal for a total fine of 22 million euros for the companies involved.
Other competition law infringements involving trade associations
In recent years, there have been several instances of infringements by industry associations in Finland. Other industries where trade associations have been found to have engaged in anti-competitive practices include driving schools, bakery products and hairdressers. The FCCA’s growing interest in practices conducted under the auspices of industry associations, which interest may be further bolstered since the implementation of the ECN+ Directive and the more significant fining powers, may evidence continued uncertainty among a number of industry associations as to the requirements of competition rules.
Anna Roubier
Partner
+358 40 519 2978
anna.roubier@hpp.fi
04.04.2023
HPP Attorneys recommended in the Legal 500 EMEA Green Guide
HPP Attorneys has been noted for its work and engagement with sustainability among key law firms in Finland in the Legal 500 EMEA Green Guide. According to the Green Guide, European countries have taken a leadership role in adopting sustainable finance and establishing ESG disclosure policy, and there has been a robust growth in clean energy across the region. The advanced political ESG agenda in Europe has meant that ESG has also become a set part of law firms’ business across the region with ESG work spanning a host of practice areas, and many players realising they need to look inward too and complement their external practice with internal sustainability measures and initiatives.
HPP Attorneys is recommended for its large environmental law practice and the Guide notes, that HPP frequently demonstrates “its deep expertise in complex issues surrounding the green transition”. Kari Marttinen, who heads up the environmental team, has a longstanding track record in the renewables space having assisted renewable energy clients since the 1990s. The Guide describes, that “The team has a strong foundation advising in the wind sector and has expanded its expertise across a range of renewable technologies”. It also mentions Björn Nykvist, who recently advised VSB group on the sale of the Karahka and Juurakko wind farms with a combined installed capacity of 190 MW, and Marius Af Schultén, who is assisting Danish solar developer Better Energy with legal matters associated with its expansion into the Finnish solar market. The Guide also recognises HPP notably advising Vantaa Energy regarding tendering, contractual, permitting and zoning issues concerning the development of the world’s largest underground seasonal thermal energy storage facility.
24.03.2023
New Act on Interim Profit Tax for Electricity Sector has entered in force in Finland
New Act on Interim Profit Tax Act for Electricity Sector (“Profit Tax”) has entered into force on 24 March 2023 in Finland. The Profit Tax is currently in force only in FY 2023.
The Profit Tax is 30% of FY 2023’s profit of the relevant company’s electricity business which exceeds 10% annual return calculated on 2022 equity. The Profit Tax is calculated practically in a similar manner as normal corporate tax, but e.g. Finnish interest deduction limitation rules are not applied. The 30% Profit Tax is paid separately and in addition to the normal 20% corporate tax.
The relevant electricity business includes respective production and distribution (sale and resale). However, retail sale of electricity is excluded from the Profit Tax if neither the relevant company itself, nor a group company, has any electricity production activities. Additionally, electricity business between group companies, transmission of electricity and small-scale electricity business is excluded from Profit Tax.
More information:
+358 40 536 0963
jaakko.klemettila@hpp.fi
+358 44 758 2475
marko.koski@hpp.fi
16.03.2023
HPP highly ranked in Chambers Europe 2023
HPP continuously serves its clients at top European level. Our key practices and practitioners are recommended and ranked high again in Chambers Europe 2023.
The ranking is based on law firm and client interviews about different firms and their lawyers.
Chambers and Partners has ranked eight of our departments. In addition, Marko Wainio has been recognised as the Most in Demand Arbitrator in Dispute Resolution, Henna Wiklund (nee Kinnunen) has been ranked in Employment and Jaakko Klemettilä in Tax. Altogether, 15 of HPP’s lawyers have been ranked in their respective fields.
HPP has been recommended in the following key practice areas:
Banking & Finance
HPP Attorneys is noted for its presence on real estate and project finance transactions. The law firm is also experienced in acquisition and corporate finance matters, in addition to refinancing mandates. The lawyers frequently act for domestic and international banks on cross-border deals.
Clients describe the lawyers: “They were available when needed and performed well.”
Antti Rintakoski is particularly active on real estate finance transactions. He is also knowledgeable in corporate and acquisition finance deals, as well as refinancing arrangements. He is appreciated, because “We are very happy with his level of service, commercial awareness and competence.”
Competition/European Law
HPP Attorneys offers a broad competition law practice, advising clients on both behavioural investigations and merger clearance mandates. The law firm further assists with state aid matters and competition compliance queries. Team members provide additional experience in EU regulatory matters, particularly regarding legislation on biocidal products and chemicals. The team has a number of clients from the energy and transportation sectors.
One client says ”I was very pleased with the advice, which considered our issue from more viewpoints than I could have wished for and from both an EU and national competition regulatory perspective.”
Tuomas Saraste frequently represents clients in cartel investigations, both before the Finnish Supreme Court and the European Commission. He also assists with merger clearance matters and state aid mandates, as well as general compliance topics. He is appreciated, because “He provides a good service”, “He is very polite, skilled and effective” and “He has very strong expertise coupled with flexible service and good business mindset.”
Corporate and M&A
HPP Attorneys has a notable practice advising corporates, investment companies, private equity houses and industrial clients. The department acts on a variety of mandates, including tender offers and auction processes. The lawyers also assist with corporate governance topics. The team has a particular focus on transactions in the energy sector.
One client describes: ”They were very knowledgeable of the law, and able to explain it in a simple and accessible manner to non-lawyers and overseas clients. They could juggle lots at once and provided very quick responses at all times and were very available.”
Notable practitioners Antti Säiläkivi and Andrew Cotton are key contacts for clients.
Dispute resolution
HPP Attorneys Ltd is an established outfit assisting with a range of commercial disputes. The law firm boasts notable expertise in damages, bankruptcy, and construction. The firm advises on both litigation and arbitration proceedings, especially concerning construction and shipping-related disputes.
Clients remark that “HPP’s approach was very customer-oriented” and ”Their work was admirably effective throrough and diligent. They were able to produce simple, straightforward and understandable responses to our complicated questions.”
Marko Wainio is an acclaimed lawyer who handles construction disputes and other commercial disputes. He is also a highly regarded arbitrator.
Mikko Leppä is a well regarded lawyer who co-leads HPP’s dispute resolution practice and is adept in acting for both domestic and international clients in commercial disputes and arbitration proceedings. He is respected, because “Mikko has been absolutely great in handling our matters.”
Energy & Natural resources
HPP Attorneys is renowned for its strength in environmental and permitting matters, particularly in relation to the natural resources sector, with notable experience in mining projects. The firm offers further expertise across renewables, notably advising on several wind farm projects. It is particularly active in financing matters within the sector, with an impressive roster of clients including international investors and corporations, as well as domestic energy producers and infrastructure operators.
Clients note that “HPP demonstrates proactivity, reactiveness and clarity in their recommendations” and ”They have a very good commercial sense supported by extensive experience in practical business situations and negotiations.”
Kari Marttinen advises on permitting and project development across a range of areas, including in relation to energy storage facilities, oil refineries and wind farms.
Tarja Pirinen is noted for her particular expertise in mining, in which regard she assists clients with permitting and exploration matters. Client notes “She is able to provide and deliver clear, concise answers and service.”
Björn Nykvist is a highly experienced partner who advises clients on power purchase agreements and wind farm transactions. Client says”Björn Nykvist strongly defends the interests of his clients whilst also having a commercial and pragmatic approach.”
Real estate
HPP Attorneys assists clients with a variety of real estate deals, including portfolio transactions and M&A involving property-owning companies. The law firm has additional experience in lease negotiations. The department is knowledgeable in mandates relating to a range of office, retail and residential assets.
Clients describe: “HPP has a practical and deal-oriented approach to transactions” and “They have super quick response times and a high service level.”
Jari Tuomala is a respected lawyer who frequently advises on transactions involving commercial properties, including the acquisition of property-owning companies. He also has experience in the buying and selling of leaseholds. Clients note “He has a strong level of knowledge, is experienced and very pleasant to work with” and “Jari is a great lawyer and he has remarkable negotiation skills.”
Leif Laitinen joins the rankings as an up-and-coming practitioner following notable market recognition. He advises funds, asset managers and investors on real estate transactions, including the acquisition of shares in housing companies. Client notes“Leif Laitinen is an eager, service- and solution-oriented lawyer, who handles pressure situations in style.”
Restructuring & Insolvency
HPP Attorneys’ respected insolvency practice often acts as administrator in bankruptcy proceedings. The firm’s lawyers also have experience as supervisor and administrator in restructuring programmes. The firm offers additional expertise representing creditors in proceedings relating to security arrangements and the realisation of assets, and is also well versed in wider contentious work.
Sami Uoti is often instructed as an administrator in restructuring and bankruptcy proceedings and is well regarded in this field and client says “Sami Uoti has a wealth of experience of insolvency matters.”
Klaus Majamäki has considerable experience acting for creditors in bankruptcy and restructuring proceedings, as well as acting as an administrator.
TMT
HPP Attorneys possesses a strong TMT practice. The department is noted for its expertise in contract negotiations. The team also advises on IT outsourcing and procurement matters.
Clients describe:“The team of HPP Attorneys has a deep knowledge in IT contract law” and “HPP Attorneys’ service and response time have always been exemplary.”
Kari-Matti Lehti assists technology sector clients with procurement and outsourcing matters, as well as advising on contract negotiations. Clients say “Kari-Matti Lehti has a deep knowledge in IT-legislation and excellent negotiation skills” and “Kari-Matti Lehti understands business very well, has a great knowledge of the international IT industry, and he is a very good negotiator.”
Pekka Raatikainen is known for his expertise in IT procurement and outsourcing matters. He also represents clients in contractual negotiations in the technology sector.
Henna Wiklund (nee Kinnunen) was ranked in Employment and she regularly handles employment disputes, as well as assisting with the employment aspects of M&A transactions: “Henna is a great expert who went above and beoyond for us.” Another confirms “Henna’s client service is always good.”
Jaakko Klemettilä Newly ranked lawyer Jaakko Klemettilä of HPP Attorneys regularly assists clients with tax audits, transactional tax structuring and tax exemption assessments. One client says “Jaakko Klemettilä is available to help us to get things done and responds well to evolving projects.”
We are humbled by the continued recognition in the latest Chambers Europe rankings for 2023. We thank our clients and employees for helping us to be consistently recognised as one of the leading Finnish law firms comprising of leading lawyers.
15.03.2023
HPP participated in a pro bono project by contributing to the development of the European Banking Guide
HPP is pleased to have contributed the Finnish chapter of the European Banking Guide, a global pro bono project Guide launched by ECNL (European Center for Not-for-Profit law) and PILnet, which connects civil society organisations with pro bono lawyers.
The Guide helps organisations expanding their activities to other countries, by providing information for the different countries covered by the Guide, concerning issues to be taken into account when an organisation wishes to open a bank account, as well as other banking activities, such as customer due diligence requirements, and the monitoring criteria for suspicious transactions as well as obligations and reporting requirements related to such bank accounts.
HPP welcomes the opportunity to contribute to these kinds of projects which align with our core values of trust, equality and partnership. If you would like to propose a future pro bono project for HPP to consider getting involved in, please send an e-mail to andrew.cotton@hpp.fi.
16.02.2023
HPP lawyers and departments ranked in Chambers Global 2023
HPP’s lawyers and departments have once again been recognised in their respective specialist areas by the prestigious international legal directory Chambers Global in its annual guide.
HPP’s Banking & Finance, Corporate/M&A and Dispute Resolution teams were all ranked, with HPP Partners Antti Rintakoski, Andrew Cotton and Marko Wainio singled out as leading lawyers in the respective fields.
We are honoured by the recognition and see it as a reflection of the excellent teamwork and co-operation both within the respective HPP departments between HPP lawyers, as well as with our clients and peers in other leading firms.
This year’s Chambers Global rankings for HPP are as follows:
Banking & Finance
HPP Attorneys is noted for its presence on real estate and project finance transactions. The law firm is also experienced in acquisition and corporate finance matters, in addition to refinancing mandates. The lawyers frequently act for domestic and international banks on cross-border deals.
“They were available when needed and performed well.”
Our notable practitioner Antti Rintakoski is praised by clients: “We are very happy with his level of service, commercial awareness and competence.”
Corporate/M&A
HPP Attorneys has a notable practice advising corporates, investment companies, private equity houses and industrial clients. The department acts on a variety of mandates, including tender offers and auction processes. The lawyers also assist with corporate governance topics. The team has a particular focus on transactions in the energy sector.
“They were very knowledgeable of the law, and able to explain it in a simple and accessible manner to non-lawyers and overseas clients. They could juggle lots at once and provided very quick responses at all times and were very available.”
Dispute Resolution
HPP Attorneys Ltd is an established outfit assisting with a range of commercial disputes. The law firm boasts notable expertise in damages, bankruptcy, and construction. The firm advises on both litigation and arbitration proceedings, especially concerning construction and shipping-related disputes.
“Their work was admirably effective, thorough and diligent. They were able to produce simple, straightforward and understandable responses to our complicated questions.”
“HPP’s approach was very customer-oriented.”
15.02.2023
Finnish Government sets a goal to make Finland the European leader in the hydrogen economy
The ambitious target was announced in a resolution on the development of the hydrogen industry adopted by the Finnish Government on 9 February. According to the resolution, the Government aims to produce at least 10% of EU’s greenhouse emissions -free hydrogen by 2030, enabling Finland to become a leading European hydrogen power throughout the value chain. This will require massive investments in the Finnish hydrogen sector, as currently, only approximately 140,000 – 150,000 tonnes of hydrogen are produced in Finland annually (accounting for approximately 1.5% of all hydrogen production in the EU), 99% of which is produced from natural gas through steam methane reforming.
The Government anticipates that the fast-growing domestic renewable energy sector, in particular the onshore and offshore wind power sectors, will act as a catalyst for the green hydrogen industry in Finland over the next few years. A continuous growth of the renewable energy production combined with increased investment in electricity transmission capacity will enable a significant overproduction of greenhouse emissions -free electricity compared to the current demand. The Government expects that the prospect of an abundant supply of green electricity over the next decade will spark investments in the Finnish hydrogen sector throughout the value chain. Other competitive advantages for hydrogen production in Finland mentioned in the resolution include the predictability and legal security of the operating environment, in particular with regard to permit procedures and land use planning.
In order to further increase the potential for the production of green hydrogen, the Government resolution includes an extensive list of measures that should be taken in various sectors to create a competitive and predictable investment environment for the hydrogen economy. Such measures include:
- developing both the existing electricity grid, as well as the national hydrogen transmission infrastructure (in respect of which the responsibility for the latter has been allocated to the state-owned transmission system owner Gasgrid Finland Oy and its hydrogen transmission subsidiary);
- ensuring appropriate resourcing of permitting authorities and that green hydrogen projects enjoy priority in the permitting processes as part of the new “fast track” permitting system (please see our previous article on the fast-track system for more information);
- examining Carbon Contracts for Difference (CCfD) or similar cost-sharing agreements as potential incentives that could be used at a national level to foster a low-carbon industry;
- piloting of hydrogen use in traffic and a target of at least of 3% of all fuels to be electrofuels by 2030.
Government resolutions are political statements that guide preparation of matters but have no binding legal effect. Finnish parliamentary elections will take place in April 2023, and it remains to be seen whether, and to what extent, the resolution will be taken into account in the programme of the new government formed based on the results of the election, which will take office in the fall. However, the timing of the adoption of the resolution at the very end of the period of the current Government suggests that the opportunities related to hydrogen economy as part of the green transition have widely been recognised across the political spectrum, and it would consequently be surprising if hydrogen was not among the priorities on the political agenda of the next government as well.
HPP’s market-leading Energy & Infrastructure team will continue to monitor the development of hydrogen-related initiatives, and are to answer any queries that you may have. It should be anticipated that such developments will present significant business and investment opportunities for both domestic and international funds with an interest in the funding, development or operation of businesses focused on this rapidly-developing sector.
Marius Schultén
Partner
+358 40 565 7034
marius.schulten@hpp.fi
16.01.2023
The Foreign Subsidies Regulation has entered into force on 12.1.2023
The Foreign Subsidies Regulation (EU) 2022/2560 (‘FSR’), entered into force on January 12, 2023. The Regulation addresses distortions caused by foreign (non-EU) subsidies granted to companies operating in the EU. The FSR applies to all economic activities in the EU.
The FSR gives the European Commission the power to investigate financial contributions granted by non-EU countries to companies engaging in an economic activity in the EU. This power, as well as the obligations for companies under the FSR, are based on financial thresholds laid down in the Regulation. The thresholds regarding concentrations are based on turnover and the amount of the foreign financial contribution, and regarding public procurement procedures, the thresholds are based on contract value and the amount of foreign financial contribution. The concentrations notified under the FSR cannot be completed and public procurement contracts where the bidder is being investigated, cannot be awarded pending an investigation by the European Commission. If the European Commission finds the foreign subsidy to distort the Single Market, it may impose redressive measures on companies, or accept commitments to remedy the distortion. The European Commission can also prohibit the completion of a subsidised concentration or the award of a public procurement contract to a subsidised bidder.
The FSR will be applied as of July 12, 2023. The notification obligation for companies will be effective as of October 12, 2023.
04.01.2023
The Finnish Merger Control Thresholds To Be Revised Downwards – The Number Of Notifiable Transactions Is Expected To Double
Further to a Government Bill presented to the Finnish Parliament in June 2022, the Finnish merger control thresholds have been revised recently. A proposal lowering the national, turnover-based thresholds has been approved by the Finnish Parliament in late November 2022, with entry into force in the beginning of 2023, and applicable to transactions signed on, or after, January 1, 2023.
The change will introduce lower turnover thresholds for the application of the Finnish merger control regime. The new thresholds will relate exclusively to turnover achieved in Finland, and thus align the jurisdictional rules with those applied in Sweden and Norway, respectively, where only national turnover is considered for establishing jurisdiction over an otherwise notifiable transaction.
Significantly lower turnover thresholds
Prior to the amendment, a transaction (the acquisition of control, the acquisition of whole or part of business operations, the creation of a full-function joint venture and a merger) has been notifiable if the parties’ combined, aggregate worldwide turnover exceeded 350 million euros, and the turnover achieved in Finland by each of at least two parties exceeded 20 million euros.
The amendment will see the thresholds altered so that a transaction is notifiable where the parties’ combined, aggregate turnover generated in Finland exceeds 100 million euros, and the turnover achieved in Finland by each of at least two parties exceeds 10 million euros.
The “all parties’ turnover”-criterion will thus relate as of the beginning of 2023 exclusively to turnover generated in Finland and be significantly lower than previously (350 million euros worldwide). This rule seeks to establish a clearer and closer nexus to Finland for notifiable transactions. It is likely to mean that M&A activities by companies with a close(r) nexus to Finland are more likely to be caught by the new rules even where the overall business activities are smaller. At the same time, the “party-specific turnover”-criterion will be lowered to 10 million euros (pre-amendment each of two parties had to achieve an individual turnover in Finland exceeding 20 million euros). This change will catch transactions between smaller parties than before. Indeed, the Finnish Competition and Consumer Authority (“FCCA”) has made no secret of its disappointment that certain transactions in recent years were not caught by the jurisdictional thresholds, and they were therefore not reviewed. These transactions include an acquisition in the veterinary services market (Evidensia/Omaeläinklinikka, 2019), an acquisition in the long-distance bus services market (Koiviston Auto/Onnibus, 2018) as well as various acquisitions in the Finnish healthcare sector of local service providers in, inter alia, private and occupational healthcare services as well as infertility services, where the targets’ turnovers remained below the 20 million euros threshold.
Effect of the proposed change
According to the FCCA, the change in the thresholds will double the number of transactions caught by the national merger control rules. At present, between 20-40 transactions are notified annually to the FCCA. In 2018, 39 clearance decisions were issued, in 2019 the corresponding number was 34, while in 2020 and 2021 clearance decisions totaled 21 and 31, respectively. At present, and based on public information, the number of staff dedicated to merger control review corresponds to some 16 officials (excluding stagiaires), of whom seven (7) are economists.
Following to the proposed amendment, the FCCA expects some 60-70 transactions to be notified annually. The FCCA has indicated a need for an addition of five (5) officials to handle the increase in the authority’s merger control workload.
It remains to be seen how well this increment in staff will address the expected (significant) growth in the number of cases. Those familiar with the workings of the Finnish national competition authority are well versed in the relatively lengthy proceedings, including the pre-notification phase, and the relatively high number of Phase II cases. A recent example is the notification of a transaction in data and electricity networks market that was signed already in June 2022, but the notification of which was accepted as complete only in December 2022, signaling a very lengthy pre-notification phase.
Adoption of a new notification form
Simultaneously, though not entirely linked to, or contingent on, the revision of the turnover thresholds, the Finnish merger control notification form has also been subject to a revision. The new form, laid down by a ministerial decree, has already entered into force and will be applied to transactions notified as of January 1, 2023.
The new notification form seeks to simplify and reduce information requirements in unproblematic cases. This will include the submission of limited market information in cases of limited horizontal overlaps or verticals links, as well as foregoing market testing altogether in perceived unproblematic cases. At the same time, in standard cases, market information needs to be submitted for all plausible markets, a concept that the FCCA has applied already in the past, but which will only now be codified in the new notification form. Further, the FCCA has indicated the adoption of shorter form of clearance decisions, though it remains unclear whether a decision format akin to the European Commission’s simplified decisions will apply.
Thus, while the FCCA’s explicit objective is to fast-track a larger number of (unproblematic) cases to address the expected increase in the number of notifiable transactions, reasonable doubts persist as how these objectives will turn out in practice. Much will depend on the FCCA’s restraint on requiring information (again, those acquainted with the FCCA’s practice, the authority has not been restrictive with considering notifications incomplete, even at advanced stage of formal proceedings) and its ability to adopt shorter form of decisions.
No right to require notification in the absence of jurisdiction
Finally, some good news. While the FCCA had appraised the possibility to be accorded with the right to request a notification where the jurisdictional thresholds are not met, this change was not included in the final Government Bill. Unlike the European Commission’s new policy on Article 22 of the European Merger Control Regulation (Regulation (EC) 139/2004) referrals, the FCCA’s envisioned right to request a notification would have been subject to separate turnover thresholds (the parties’ combined turnover generated in Finland to have exceeded 50 million euros). As noted, this proposition was not presented to the Finnish Parliament, and hence the FCCA will continue to have jurisdiction only in clearly defined cases.
Conversely, the European Commission’s new policy on Article 22 of the European Merger Control Regulation will also apply in Finland. It remains to be seen whether and to what extent the referral mechanism will be invoked by the FCCA.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Anna Roubier
Partner
+358 40 519 2978
anna.roubier@hpp.fi
Johanna Kauppinen
Associate
+358 44 500 1901
johanna.kauppinen@hpp.fi
Maria Metso
Associate
+358 50 535 6234
maria.metso@hpp.fi
02.01.2023
Experienced Banking & Finance lawyer Teija Lius joins HPP partnership
HPP Attorneys Ltd is pleased to announce that it has invited Senior Counsel Teija Lius to join the partnership effective 1 January 2023. Teija has been working at HPP from 2020 and she is a highly qualified finance lawyer with significant and wide-ranging experience in particular of advising on debt financing and equity investments in relation to projects, enterprises and funds, within Finland and internationally. She has assisted banks and other financiers as well as various private and public sector parties in complex financing arrangements, investments and other transactions.
Commenting on her partnership Teija said: “We have been growing our financing and transactional capability systematically in recent years and my partnership brings continuity to rapidly-growing Banking & Finance team to strengthen our ability to advise lenders, investors, funds and other parties involved in complex financing arrangements. I fully intend to continue to work internationally, building on my own, as well as HPP’s, connections to financial institutions, funds and leading law firms around the world and continuing HPP’s growth in advising clients in the finance sector. ”
HPP’s Head of Banking & Finance, Antti Rintakoski, commmenting on partership, said that it is also part of team’s long-term growth planning: “We have been systematically developing our team’s versatility and Teija has excellent experience which can only strengthen the Banking & Finance team’s capability and make us even better choice for large, complex financing arrangements in a wide range of sectors and industries. Teija’s strong international experience is particularly impressive and complements the international work HPP is increasingly engaged for.”
“We are delighted to have Teija as a new Partner at HPP within the firm’s Finance department. We are specialised to high value-added legal solutions to help customers to meet their business targets with our expertise. In line with HPP’s growth strategy Teija’s experience in both domestic and international financing matters will strenghten our financing and banking team, and enables us to serve our customers better also in transactions and corporate M & A team“, says Managing Partner Markku Mäkinen.
In addition to Antti Rintakoski and Teija Lius, also Senior Associate Ida Sandholm ja Associate Tobias Sundman will serve our customers in financing and banking matters.
Teija Lius
Partner
+358 40 559 9872
teija.lius@hpp.fi
02.01.2023
Dispute Resolution lawyer Tatu Jaarinen joins HPP partnership
HPP Attorneys Ltd is pleased to announce that it has invited Senior Counsel Tatu Jaarinen to join the partnership effective 1 January 2023. Tatu has been working at HPP since 2017, when he started as a Senior Associate in our Dispute Resolution team.
Tatu is specialised in commercial dispute resolution. He represents our clients in domestic and international arbitrations, litigations, settlement negotiations and in other conflict management projects. Tatu has acted as counsel in disputes related to, inter alia, large projects, IT agreements, construction, real estate, acquisitions, shareholders’ agreements and distribution agreements.
Commenting on his partnership Tatu said: ”I am happy and proud that I’ve been invited to join the partnership of HPP. HPP is a high quality law firm, and our dispute resolution group is an elite practice in the Finnish market. It is nice to continue working with clients and colleagues in this new role.”
HPP’s Dispute Resolution Partner, Marko Wainio, commenting on partnership, said that the appointment widens the expertise of the practice: “Tatu has been successfully handling domestic and international dispute resolution assignments of a very demanding level for a long time. He has proven himself to be a skilled, persistent lawyer who understands the commercial legal aspects in business. Tatu will without a doubt be in the top chain of dispute resolution lawyers in Finland.”
“Our dispute resolution team is one of the largest in Finland. In the Team, the dispute resolution skills of our experts are combined with an in-depth understanding of specific industry sectors and a specialisation in a particular legal field. Inviting Tatu as partner will further strenghten the competence of the team as the leading dispute resolution team in Finland”, says HPP’s Managing Partner Markku Mäkinen.
Read more about our expertise and dispute resolution services.
Tatu Jaarinen
Partner
+358 50 321 0307
tatu.jaarinen@hpp.fi
22.11.2022
The Finnish Government Proposes Fast-tracking of Green Transition Projects – How Will this Impact the Renewable Energy Sector in Finland?
Lengthy permit and appeal processes have generally been considered as one of the main factors undermining investments into large infrastructure projects, including renewable energy projects. The Finnish Government is now attempting to address the challenge by issuing a law proposal that would create a temporary fast-track system for environmental and water permit procedures and certain appeal processes related to projects that benefit the green transition. The proposal was passed on 9th November 2022, and subject to approval of the Parliament, it is scheduled to enter into force as from 1 January 2023. The fast-track process is envisaged to be backed up by a budget increase of EUR 37.3 million in total during 2022-2026 earmarked for permit authorities and administrative courts.
The fast-track system is proposed to apply to permit processes that are pending in the national environmental and water permit authority (the Regional State Administrative Agency AVI) between 2023 and 2026, and to appeal processes that are pending in the administrative courts between 2023 and 2028. In order for the fast-track process to apply to a project, the project must concern at least one of the following activities:
- Renewable energy plants (e.g. wind, solar PV, hydro, biomass etc.)
- Industrial electrification projects to replace fossil fuels or fossil raw materials
- Manufacturing and utilisation of green hydrogen
- Carbon capture, storage, and utilisation; or
- Battery factories or production, recycling and re-use of battery materials (excluding, however, extraction of battery minerals).
In addition, however, the applicant must also prove that the project is in line with the Do No Significant Harm principle (DNSH). The DNSH principle is new to the Finnish environmental legislation and derives from the EU’s new sustainable finance framework. In order for a project to fulfill the DNSH criteria, it must not have significant adverse effects on the following six environmental objectives: (i) climate change mitigation and (ii) adaptation; (iii) the sustainable use and protection of water and marine resources; (iv) transition towards a circular economy; (v) pollution prevention and control; and (vi) the protection and restoration of biodiversity and ecosystems.
Environmental and water permit applications concerning projects that fall under the scope of the fast-track system shall be prioritised by permit authorities over other applications. Furthermore, administrative courts will have an obligation to prioritise both appeals that have been filed against such permits, as well as appeals regarding local detailed plans for renewable energy plants and partial master plans concerning wind farms.
Key Takeaways for the Renewable Energy Sector
Although the proposed fast-track system raises expectations of faster permitting timelines, and will presumably shorten the timeline required for project development in some of the project types to which the fast-track applies, the potential positive impacts may vary significantly for different project types, depending on the extent and nature of the licensing required. Project developers and investors in the renewable energy sector should be mindful of certain features and conditions of the fast-track system, that may restrict, or in some cases even undermine, the desired positive effects of the proposed new system on the level of individual projects:
- Environmental and water permits are often not required for renewable energy projects (such as onshore wind power projects and solar PV projects). Moreover, to the extent that a renewable energy project requires an environmental permit, the competent permit authority is often the municipal environmental authority (not AVI), to which the fast-track process does not apply. Consequently, the onshore wind and solar sector will only benefit from the fast-track system in connection with appeals against the relevant land use plan (detailed plan or local wind power master plan). Furthermore, if a solar PV project is carried out based on some other type of land use plan than a detailed plan, the fast-track process does not apply.
- Will the application of the DNSH-principle create a new bottleneck in permit authorities and courts? The introduction of the DNSH-principle creates an entirely new layer of assessment in the permit and appeal processes, as it requires that whenever a permit applicant has demanded a fast-track process, before being able to start the actual evaluation of the matter, both permit authorities and courts will first have to determine, on a project-by-project basis, whether the matter qualifies for prioritised processing. As the DNSH-criteria are completely new in a permitting context, this assessment will, at least initially, most likely cause further delays in the processing times of all permits and related appeal processes – including those that will eventually qualify for the fast-track system. As it typically takes years before a standardised interpretation of a criterion is formed through administrative and court practice, the DNSH-principle therefore risks watering down at least a part of the positive impact of the fast-track system on the project timelines. The Ministry of the Environment is currently preparing guidelines for the application of the DNSH-principle in the fast-track process and the guidelines are expected to be published at the latest in January.
- The fast-track does not extend to building permits regarding renewable energy plants or expropriation permits regarding high-voltage power lines. This means that an important (and due to appeal processes, often time-consuming) part of the development of renewable energy projects will not benefit from expedited handling times. On the contrary, as mentioned above, we can expect that the prioritisation of appeals against environmental and water permits in projects that fulfill the criteria listed above will likely increase the processing times of non-prioritised appeals, such as appeals against building permits and expropriation permits, in administrative courts. At the same time, the appeal right against building permits has recently been widened to encompass NGOs in cases where the building permit concerns a project that requires an Environmental Impact Assessment, which will likely increase the number of appeals against building permits, in particular in wind power projects.
Even in projects that could benefit from an expedited water permit process (such as offshore wind power projects), the building and water permit processes will likely be, to a large extent, overlapping. Since both a water permit and building permits are required in order to enable the construction of the project, this means that expediting the water permit process (and the related appeal process) alone may not significantly shorten the timeline required for project development if the building permit processes remain outside of the fast-track process.
- Will the fast-track apply exclusively to appeals against the final approved land use plan? There have been some individual cases in Finland landowners have filed appeals against non-appealable decisions in the early phases of the land use planning process of a wind power project (e.g. the decision of the municipality to initiate the land use planning process) with the presumed intention of delaying the project development. Based on the wording of the Government Proposal, it is unclear whether the fast-track process can be applied also to such unfounded appeals filed during the phase preceding the actual land use plan decision.
HPP’s energy team will continue to monitor the status of the proposal and will be happy to answer any queries you may have.
Marius Schultén
Partner
+358 40 565 7034
marius.schulten@hpp.fi
08.11.2022
Expanded Polystyrene (EPS) Insulation Materials Cartel: Judgment Of The Finnish Supreme Administrative Court Clarifies The Assessment Of Evidence And The Level Of Antitrust Fines
In its judgment delivered on July 1, 2022, the Finnish Supreme Administrative Court (“SAC”) reviewed on appeal the prior judgment issued by the Finnish Market Court in 2021 regarding anticompetitive practices between three competing EPS insulation materials manufacturers. One of the companies involved in the infringement had been granted full immunity from fines, as it had informed the Finnish Competition and Consumer Authority (“FCCA”) of the anticompetitive practices. An aggregate fine of 3.2 million euros was imposed on the other two companies.
The SAC confirmed on appeal the finding of a serious infringement. The SAC found that the three main Finnish EPS insulation materials manufacturers had agreed on prices, including the timing and manner of executing price increases for their products. The geographic scope of the anticompetitive practices was held to have covered the whole of Finland and the practices had lasted from November 2012 to summer of 2014.
The SAC judgment is focused on two specific legal issues, which were raised by the defendant company. First, the probative value of oral statements made by a leniency applicant’s representative, and second, the reasonableness of the amount of the fine imposed in the specific case.
On the probative value of oral leniency statements
The SAC found that by virtue of the principle of free assessment of evidence, the Market Court was allowed to base its assessment of the credibility and significance of evidence on all issues presented to the court in the case. When evaluating the value of a leniency applicant’s oral statements, the court could rely on criteria, including for high probative value evidence, established in the European Courts’ jurisprudence. However, such criteria should not be applied in a mechanical way according to the SAC, and thus the probative value of a leniency applicant’s oral statements could be considered high even if not all criteria were met. At the same time, given the principle of free assessment of evidence, it does not follow that where the criteria are met, a leniency applicant’s statement has higher probative value as evidence than other evidence presented in the case.
According to the SAC, in the specific case the Market Court’s findings were not entirely based on the leniency applicant’s oral evidence but also on other, written, evidence. The Market Court had in its judgment assessed which other pieces of evidence, and to what extent, corroborated the leniency applicant’s oral statements. The SAC confirmed that the Market Court was allowed to hold, when considering the overall body of evidence, that the leniency applicant’s statements were more credible than statements made on behalf of the other two companies involved in the anticompetitive practices.
On the level of fines imposed
The SAC held in its judgment that in accordance with national competition law, the level of fines is based on the nature of the infringement and the infringing company’s conduct. The SAC considered that notwithstanding the requirements of legal certainty (predictability) and equal treatment, the judicial praxis on the level of fines may develop over time and the actual level imposed depends on the specificities of the individual case as well as the general requirements for deterrence. In the present case, the SAC confirmed that a fine of 1.2 million euros imposed on the defendant company was appropriate, having regard to the nature of the anticompetitive practices and the prior judicial praxis.
The SAC judgment indicates that the assessment of evidence and the level of fines in antitrust cases in Finland have moved closer to the practice of the European Commission and the European Courts’ jurisprudence. The SAC judgment also confirms that even though a leniency applicant’s oral statements may have a strong probative value, the Finnish courts apply the principle of free assessment of evidence in antitrust cases.
The SAC’s judgment also underlines the importance of the leniency policy in the national antitrust enforcement, in particular to uncover evidence on secret, anticompetitive practices. In Finland, only the first company to reveal the existence of anticompetitive practices to the FCCA may benefit from immunity from fines. This acts as an incentive for companies to uncover illegal practices to the enforcement authority. At the same time, other participating companies may benefit from a reduction in the level of fines, in return for cooperation with the FCCA, most notably by providing additional and novel information and evidence on the suspected infringement.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Anna Roubier
Partner
+358 40 519 2978
anna.roubier@hpp.fi
Maarika Joutsimo
Senior Advisor
+358 50 338 8495
maarika.joutsimo@hpp.fi
22.09.2022
Proposed Change To Capital Gains Tax For Foreign Real Estate Investors
In 2023 capital gains tax exemption will be applied only on limited basis to Finnish real estate investments. Foreign real estate investors are urged to take the change into account in deal structuring as the impact the change in law is dependent on the applicable tax treaty.
Current legislation
Foreign real estate investors, having place of business outside of Finland, are subject to tax in Finland only on Finnish sourced income. As regards capital gain, Finland is able to levy 20% capital gains tax (for corporate investors) on Finnish real estates and shares in Finnish limited liability companies, which assets consist mainly of Finnish real estates. As Finnish real estates are mainly traded as share transactions, the key interest in tax planning has been to evaluate, what kind of real estate holding structures are subject to tax at exit. The above-mentioned wording of Income Tax Act (ITA) section 10 subsection 10 only refers to trading of shares in a Finnish company with direct Finnish real estate holdings. As a result, all indirect Finnish share transactions by the foreign real estate investors are tax exempted. Thus, Finnish real estate holdings are typically structured by incorporating a Finnish holding company to hold the shares in the target real estate company. When the shares in the holding company are sold at exit, the holding company typically does not have any direct real estate holdings and thus such an exit would be capital gains exempted in Finland. This interpretation was confirmed to be applicable in Supreme Administrative Court case law KHO 2013:101.
The use of a holding company structure adds another corporate layer, which may be seen as an issue by future purchaser. However, this issue is typically solved by decreasing the number of corporate layers by way of tax neutral mergers. The survival of tax losses is a key issue to ascertain in connection to a post-closing merger. Administration of a holding company is typically relatively simple in Finland.
In the Finnish real estate market, the target real estate companies are commonly so-called mutual real estate companies. In such a company, the shareholder has the right, pursuant to articles of association, to possess the premises of the respective real estate. From a tax perspective, this means that the shareholders will be taxed for the lease income. The holding company can thus facilitate a debt push down to the structure in addition to making exit tax exempt.
The proposal
Finnish Government has announced a proposal for consultation to add subsection 10a to the section 10 where Finland is granted the right to tax capital gains from all real estate investments including indirect holding structures. The proposal is part of Government’s plan to close loopholes in the Finnish tax system. As a result of the new wording, the use of a holding company structure would not in all cases be available to enjoy the capital gains exemption. The new law will presumably be passed by the end of 2022 and be in force from 1 January 2023. It is expected that there will be no material changes to the proposal or its timetable.
Tax treaties and fund taxation
Finland applies the golden rule of taxation according to which tax treaties will be applied if they are more favorable to Finnish internal tax legislation. Finland has tax treaties with over 70 countries. The older tax treaties do not allow Finland to tax capital gains resulting from sale of shares in holding companies with no direct real estate holdings. These include tax treaty with Luxembourg, which is a very popular holding jurisdiction for foreign real estate investors. This then means that the change in Finnish law would not change the Finnish exit tax position of real estate investors using Luxembourg holding structure. The wording of the Luxembourg tax treaty is similar to the current wording of section 10 subsection 10 of ITA allowing tax exempt exit. On the contrary, the newer tax treaties allow Finland to tax capital gains resulting from indirect real estate exits. This includes tax treaties with Germany and Sweden, which both are a material source of foreign real estate investments in the Finnish market.
Finland exempts lease income and capital gain for domestic real estate funds. As regards foreign real estate funds, the tax exemption is, under specified criteria, limited to contractual based funds only. European Court of Justice ruled in April 2022 (C-342/20) that Finnish tax legislation is in infringement with EU’s free movement of capital and thus also other forms of eligible foreign funds than contractual are able to enjoy Finnish tax exemption. The discussed new subsection 10a of section 10 of ITA does not impact the tax exemption concerning real estate funds.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Jaakko Klemettilä
Partner
+358 40 536 0963
jaakko.klemettila@hpp.fi
24.08.2022
HPP’s Energy team authored the Finland Chapter in the Chambers Alternative Energy & Power Guide 2022
Three of HPP’s Energy team, Andrew Cotton, Björn Nykvist, Marius af Schultén and Santeri Järvelä have co-authored the Finland Chapter of the recently published Chambers Alternative Energy & Power Guide 2022.
The guide covers the latest regulation of different aspects of the energy sector in Finland and will be a useful read for energy industry professionals, investors and lawyers from other jurisdictions assisting clients contemplating undertaking projects or investments in the Finnish energy sector.
HPP’s Energy team is one of the leading energy teams in the Finnish legal market, as reflected by its ranking as a Tier 1 energy firm in each year in which leading global law firm directory, Chambers, has issued rankings for the ‘Energy & Natural Resources’ category.
Chambers Alternative Energy & Power Guide 2022
(the Finnish section starts on page 163)
31.05.2022
HPP contributed to a pro bono project by 28 Too Many about FGM legislation across Europe
Ahead of the report’s publication online in June, HPP is pleased to announce that it has contributed to a global pro bono project put together by 28 Too Many, a non-profit research organisation aiming to end Female Genital Mutilation (FGM). The project is seeking to provide strategic frameworks in the report to enable in-country anti FGM organisations to successfully make sustainable change and end FGM. The report details how the law in each jurisdiction across Europe deals with FGM. HPP was pleased to have contributed the Finland chapter to this important work. The pro bono work was undertaken as part of HPP’s commitment to helping highlight and address important and challenging topics of concern or benefit to wider society, both on a local level and, as with 28 Too Many, on topics of global importance.
HPP welcomes the opportunity to contribute to projects such as this, our contribution to which reflect our core values of trust, equality and partnership. If you would like to propose a pro bono project for HPP to consider getting involved in, please send an e-mail to andrew.cotton@hpp.fi.
12.04.2022
HPP ranked among the leading Finnish law firms in Legal 500 2022
Once again, HPP has been highly ranked in 7 key categories of the latest edition of the Legal 500.
We warmly thank our customers and colleagues for their recommendations and their trust in our teams and expertise.
Real estate and construction (Tier 1)
“The HPP Real Estate team provides very good value for money: they understand the business and are experienced people with a “no nonsense” attitude.”
“Leading partner Jari Tuomala is an experienced and capable real estate lawyer with a long history within the business.”
“HPP’s team is highly driven and solution-oriented. They communicate well before the actual deal phase and clearly present how they could help in the deal. The team led by Leif Laitinen is willing to work hard to achieve the goals and timelines set. Always reachable by mail and phone with good energy and team spirit. So far every single deadline has kept well. No unnecessary invoicing, solid estimates of the costs.”
“Leif Laitinen has been very eager and determined to win deals. His great attitude influences the whole team. Potential cases have been discussed before the actual deal phase and Leif has been able to illustrate how we could benefit from his experience in the field.”
“The key persons of the team have a long experience and pragmatic approach always aiming to solve the clients issues efficiently and with high quality. They are always reachable and willing assist with high quality regardless of the complexity or size of the assignment. They never miss the deadlines and based on my experience they use their resources very efficiently which from client’s perspective leads to lower fees compared to their peer group.”
“Jari Tuomala truly stands out with his broad experience in real estate, construction and environmental issues. His pragmatic approach, outstanding problem-solving skills and excellent availability makes him our preferred legal adviser in real estate related issues in Finland.”
“Professional, swift and not complicating things. High value for money.”
Maritime and transport (Tier 1)
“A creative team that is determined and dedicated to understanding and connecting legal issues within the maritime sector to state and governmental way of handling these issues.”
“Calm and assertive, determined, civil and polite in manners.”
“‘Nora Gahmberg-Hisinger is calm and very professional. Great negotiation skills and large-scale detail competence.”
“‘It is a pleasure to work with HPP as they don’t prioritise professionalism over kindness – but make these go hand in hand perfectly. This is key to why they are unique – as their excellent service and quick responses do not compromise the quality of their work, and they are excellent collaborators when conducting business.”
‘”Norah Gamberg-Hisinger and Matti Komonen have been helpful, professional and kind when assisting with an aircraft law legal review. They are good at considering other people’s schedules when conducting business, and they have coordinated appointments and worked around schedules with the utmost professionalism.”
‘”Wide range of knowledge from different modes of transportation; Practical and solution-orientated approach; Easy communications.”
“‘Nora Gahmberg-Hisinger is not only an expert on her field: She is also very co-operative, easy to approach and has good project management skills. She works one step ahead which reduces last-minute stress.”
TMT (Tier 1)
“Kari-Matti Lehti is a very practical and approachable professional with deep expertise in IT contracts and IT law.”
EU and competition (Tier 2)
“HPP is our trusted point of contact when it comes to cases in which Finland as a jurisdiction is involved. We fully rely on their extensive knowledge and experience in competition law.”
“Anna Roubier provided us with clear and to-the-point advice in the past. She always gave us a comfort of swift and efficient cooperation.”
“The team has very strong competences and individuals have complementary strengths making the team stronger than the sum of individuals. Impressive networks in Finland and internationally.”
“Tuomas Saraste is certainly one of the best in this segment. His deep and broad knowledge of the scope of the practice combined with his extraordinary networks makes him superb head of operations. He has carefully picked the members of the team and nurtured them and enables great individual competence development.”
Corporate and M&A (Tier 2)
“Björn Nykvist is a very skilled lawyer who understands the commercial dynamics.”
“Antti Säiläkivi is a brilliant lawyer – very innovative and dynamic, always up for the client.’
“HPP are incredibly commercial, pragmatic and sensible. They give clear and easy to understand advice, which is direct and to the point. Their written and spoken English is exceptional. As a client who is based outside Finland (in the UK) I could not be more impressed with both their level of service and the quality of the advice they give and the manner in which it is given. I have instructed many law firms over the years where English is not their first language, and none have come close to the legal advice received from HPP.”
“Andrew (Andy) Cotton and Joska Rytkönen in the Corporate/M&A team are exceptionally talented lawyers. They led on a recent acquisition for us and they gave such sound and sensible advice. They respond very quickly, turn things around quickly while also giving proper consideration to the issues. They do not take points for the sake of it, and are pragmatic and commercially minded. They offer sensible solutions to reach agreement on open issues. They were available 24/7 and always with a positive attitude and constructive approach and manner.”
“Andrew Cotton – Demonstrates outstanding commercial acumen. Gets to know the client’s business, commercial desires and risk appetite within a short time and is therefore able to drive deals through speedily and prudently.”
Banking and Finance (Tier 2)
“HPP’s financing team is very experienced and reliable. Their delivery times are second to none and quality is very good.”
“Antti Rintakoski is the leading partner and he is very business minded and solution oriented.”
“They have a very strong market knowledge and very broad expertise. They are well integrated between regulatory and M&A/finance.”
Dispute resolution (Tier 2)
“Very professional and competent team members showing great expertise and experience. Dedicated to customer specific needs. Output very clear and spot on as requested. Easy, fun and fluent to work with.”
“Mikko Leppä is probably the best dispute lawyer I have ever encountered.”
“As a customer, we are pleased with the extensive expertise and in-depth commitment to our cause. “
“On the HPP side, our cause has been driven by several people whose internal cooperation and expertise have convinced us as a customer.”
“The team is very business minded and is able quickly to understand the needs of the customer and come up with sensible proposals.”
“The individuals are very innovative and solution oriented which makes the communication with the individual team members smooth. It is also easy to see as a customer that the communication between the individuals works well which creates further efficiencies.”
08.04.2022
Changes in Taxation of Renewable Energy Projects
Reform of the Finnish Act on Real Estate Taxation
The Ministry of Finance has submitted a draft of a government proposal for reform of real estate taxation legislation concerning the valuation methodology of renewable energy projects. The reform applies to all buildings and structures subject to real estate tax, as well as land, and aims to replace obsolete valuation criteria for real estate taxation to better reflect today’s cost and price levels and regional price differences.
The tax value of wind farms and solar power plants would continue to be based on the actual construction costs of the power plant in question. However, according to the proposal, the basic value of these power plants would be only 50% of the construction costs instead of the current 75%. On the other hand, a property tax of up to 4.65 percent could be levied in the future instead of the current 3.1 percent.
To date, current tax legislation has resulted in significantly higher property taxation for offshore wind farms than for onshore wind farms due to higher construction costs and thus higher tax values, which has reduced interest in offshore wind construction and, consequently, slowed the pace of achieving environmental and energy policy objectives.
However, the draft government proposal submitted by the Ministry of Finance addresses this issue, as the draft would consider only 25% of construction costs to be the tax base for offshore power plants instead of 50% for other power plants. The precondition is that the construction of the power plant has started during2023–2027.
The amendments are expected to enter into force on November 1st, 2022, so that the amended legislation would be first applied to the calculation of real estate taxation for financial year 2024. However, in relation to offshore wind farms, the reduction in property tax would already apply in 2023 taxation.
HPP will follow the progress of the preparation and will be happy to answer customer questions about the impact of the new legislation.
New instructions on the taxation of solar power plants as well as wind farms
For the first time, the new instructions, in addition to wind power farms, also deal with the taxation of solar power plants.
According to the new instructions, property tax must be paid on the foundations and support structures of the solar power plant but not the panels, motors and movable structures which are exempt from property tax. How the support structures of the solar power plant are anchored to the ground is not decisive, but whether the solar power plant serves the use of the property on a permanent basis will decide whether a piece of equipment is taxable or not. According to the instructions, solar panels installed on the roof or wall of a building are part of the building and are not taken into account separately when calculating the tax value of the building.
As also set out in the new instructions of the FTA, the taxable value of wind power and solar power plants must also consider the operating and any shared costs of the construction site related to construction costs, the construction costs and interest during construction and the cost of insurance during construction.
It is favourable that the FTA has now issued instructions on the taxation of solar power plants although, there is a risk that some of the statements will increase the tax burden on power plants.
For further information or an assessment of the taxable value of a renewable energy project under development, please contact HPP’s tax team, which has significant experience of the taxation issues arising from the planning, development, construction and operation of renewable energy projects.
Marko Koski
Senior Advisor
+358 (0)44 758 2475
marko.koski@hpp.fi
24.03.2022
Finnish capital gains tax exemption concerning foreign real estate investors is expected to become more restricted
Finnish tax legislation currently provides a capital gains exemption for foreign investors with Finnish indirect real estate holdings. The Finnish Government is now planning to advance its intention to abolish this tax exemption, which was announced in January 2022. HPP estimates that Ministry of Finance will publish the related proposal for the new legislation required to abolish the exemption during 2022 and the new law would presumably come into force from the start of 2023.
It should be noted that HPP is not aware of any pending processes to change any current tax treaties, which may limit the effectiveness of the change in law. Foreign investors are urged to revisit their current structures for holding Finnish real estate investments in order to evaluate the impact of the change in law. The capital gains tax exemption set out in the tax treaty between Finland and Luxembourg should continue to be applicable in most cases, whereas the law will presumably be changed to be aligned with the Nordic tax treaty resulting in Finland having the right to levy capital gains tax as set out above.
HPP will follow the legislative process.
18.03.2022
HPP highly ranked again in Chambers Europe 2022
HPP continues to serve its clients at top European level. Our key practices and practitioners are recommended and ranked high.
The ranking is based on law firm and client interviews about different firms and their lawyers.
Chambers and Partners has ranked eight of our departments. In addition, Marko Wainio has been recognised as a Most in Demand Arbitrator in Dispute Resolution and Henna Kinnunen has been ranked in Employment. Altogether, 13 of HPP’s lawyers have been ranked in their respective fields.
HPP has been recommended in the following key practice areas:
Banking & Finance
HPP Attorneys is noted for its presence on real estate and project finance transactions. The law firm is also experienced in acquisition and corporate finance matters, in addition to refinancing mandates.
Clients describe the lawyers as “proactive and solution-driven.”
Antti Rintakoski is appreciated, because “He is very skilled, solution-oriented and very easy to work with.”
Competition/European Law
HPP Attorneys has significant experience assisting clients with antitrust compliance and training mandates. The lawyers are also knowledgeable in abuse of dominance and cartel investigations. The law firm is additionally well-versed in the notification of corporate transactions, including phase II investigations.
Tuomas Saraste has proven experience in cartel and abuse of dominance investigations carried out by the FCCA. His broad practice also encompasses merger filings, work on the defendant side of private enforcement actions and ongoing competition compliance or training mandates. Clients say that “He has both a broad knowledge and a sense of the details.”
Corporate and M&A
HPP Attorneys has a notable practice advising corporates, investment companies, private equity houses and industrial clients. The department acts on a variety of mandates, including tender offers and auction processes. The lawyers also assist with corporate governance topics. The team has a particular focus on transactions in the energy sector.
Notable practitioners Antti Säiläkivi and Andrew Cotton are key contacts for clients.
Dispute resolution
The firm boasts notable expertise in employment, bankruptcy, and construction and real estate matters.
One client remarks that “HPP Attorneys provided tailor-made advice” that was “very detailed and comprehensive.”
A client describes Marko Wainio that “He’s always a pleasure to deal with. He understands our needs and business. Marko Wainio handles post-M&A and construction litigations, being also well versed in domestic arbitration matters.
Energy & Natural resources
HPP Attorneys is renowned for its strength in environmental and permitting matters, particularly in relation to the natural resources sector, with notable experience in mining projects.
One client notes that HPP Attorneys “has very good experience and competence in the energy sector,” adding that the team is able to draw upon “the entire law firm’s expertise to solve complex issues.”
“They have experts in different areas and their approach is excellent,” confirms another source.
Kari Marttinen ”has a good knowledge of administrative issues.” He advises on the development of projects across a range of areas, including power plants, smelters and mines.
Tarja Pirinen has “negotiation skills, and ability to listen and understand.”
Björn Nykvist advises clients on power purchase agreements and wind farm transactions. Clients enthuse: “ ”We consider him to be among the best in his field of expertise.”
Real estate
HPP Attorneys assists clients with a range of real estate deals, including land acquisitions. The firm has additional experience in lease negotiations. It is knowledgeable in mandates relating to a range of office, retail and residential assets and also advises on planning issues. HPP is also particularly noted for its expertise in environmental law issues linked to construction ventures, such as infrastructure projects.
Jari Tuomala is a respected lawyer who frequently advises clients on transactions involving commercial properties. He has a particularly strong track record acting for developers.
Restructuring & Insolvency
HPP Attorneys’ respected insolvency practice often acts as administrator in bankruptcy proceedings. The firm’s lawyers also have experience as supervisor and administrator in restructuring programmes.
Sami Uoti is instructed as an administrator in restructuring and bankruptcy proceedings. Sources laud his “Top-level expertise and experience in all insolvency-related matters.”
Clients appreciate Klaus Majamäki because of “His ability to open up the situation in an understandable language for non-legal experts.”
Juho Lenni-Taattola assists creditors with the restructuring and bankruptcy processes of distressed companies.
TMT
HPP Attorneys possesses a strong TMT practice. The department is noted for its expertise in the acquisition of IT systems, including contract negotiations. The team also advises on outsourcing and service agreements.
Kari-Matti Lehti assists clients with contract negotiations and the purchase of IT systems. One source describes him as “excellent and innovative,” adding: “He is able to understand the commercial realities and find solutions.”
Pekka Raatikainen is known for his expertise in contract negotiation and IT litigation, with one client enthusing: “He has the skills to look at the bigger picture and find the best strategy.”
Henna Kinnunen was ranked in Employment and she regularly handles employment disputes, as well as assisting with the employment aspects of M&A transactions.
A client reviews her glowingly: “I have been really happy with all the support we’ve received through her expertise; Henna is a very good listener, easy to approach and brilliant at explaining legal issues in an understandable way, which creates the right level of trust and confidence.” Another client says: “Henna is a professional with very high customer service skills.”
We are humbled by the continued recognition in the latest Chambers Europe rankings for 2022. We thank our clients and employees for helping us to be consistently recognised as one of the leading Finnish law firms comprising of leading lawyers.
02.03.2022
HPP lawyers and departments ranked in Chambers Global 2022
HPP’s lawyers and departments have once again been recognised as leaders in their respective specialist areas by the prestigious international legal directory Chambers Global in its annual guide.
HPP’s Banking & Finance, Corporate/M&A and Dispute Resolution teams were all ranked, with HPP Partners Antti Rintakoski, Andrew Cotton and Marko Wainio singled out as leading lawyers in the respective fields.
We are honoured by the recognition and see it as a reflection of the excellent teamwork and co-operation both within the respective HPP departments between HPP lawyers, as well as with our clients and peers in other leading firms.
This year’s Chambers Global rankings for HPP are as follows:
Banking & Finance
“HPP Attorneys is noted for its presence on real estate and project finance transactions. The law firm is also experienced in acquisition and corporate finance matters, in addition to refinancing mandates. The lawyers frequently act for domestic and international banks on cross-border deals.”
“Antti Rintakoski is particularly active in real estate finance transactions. He is also knowledgeable in corporate and acquisition finance deals, as well as refinancing arrangements. Clients say: ‘He is very skilled, solution-oriented and very easy to work with.’”
Corporate/M&A
”HPP Attorneys has a notable practice advising corporates, investment companies, private equity houses and industrial clients. The department acts on a variety of mandates, including tender offers and auction processes. The lawyers also assist with corporate governance topics. The team has a particular focus on transactions in the energy sector.
“Andrew Cotton is qualified to practise in England and Wales as well as Finland. He advises investors and corporates on cross-border transactions.”
Dispute Resolution
“HPP Attorneys Ltd is an established outfit assisting with a range of commercial disputes. The firm boasts notable expertise in employment, bankruptcy, and construction and real estate matters The firm advises on both litigation and arbitration proceedings concerning construction and shipping-related disputes. The firm also has further experience in handling tax-related cases.”
”Marko Wainio handles construction disputes and other commercial disputes. He is also a highly regarded arbitrator. ‘He’s always a pleasure to deal with. He understands our needs and business,’ a client says.”
Marko Wainio is also listed as one of the Most in Demand Arbitrators in the Dispute Resolution spotlight table.
08.02.2022
Proposal to lower Finnish merger control thresholds raises issues of legal certainty and risks burdening for smaller companies
In June 2021, the Finnish Competition and Consumer Authority (hereinafter the “FCCA”) published a report, according to which the current turnover thresholds for the Finnish merger control are too high in relation to the size of the Finnish economy. In the FCCA’s view, the jurisdictional thresholds should therefore be revised downward to capture transactions by smaller companies, in the aim of ensuring, and even increasing, consumer benefit. The Ministry of Economic Affairs and Employment (hereinafter the “Ministry”) published in mid-January 2022 its own assessment report on the matter. In essence, the Ministry agrees with the FCCA’s proposal. However, the lowering of turnover thresholds, and in particular the possible introduction of a right to require notification raises concerns about legal certainty and predictability, which need to be carefully assessed by the legislator.
At present, the FCCA is competent to review transactions where the combined aggregate worldwide turnover of all parties exceeds 350 million euros and each of at least two of the parties achieved an individual turnover in Finland of over 20 million euros. According to the FCCA, these thresholds are too high, as entire industry sectors (by way of an example, long-distance road passenger transportation, optician services, cinemas, and technical testing of motor vehicles) as well as product and geographic markets remain below the turnover thresholds.
The FCCA considers that the applicable turnover thresholds should both be national, with the new, proposed upper limit being the parties’ combined, aggregate turnover in Finland exceeding 100 million euros and the lower threshold remaining unaltered. In addition, the FCCA has proposed that it should have the right to require the notification of a transaction where the parties’ combined, aggregate turnover in Finland exceeds 50 MEUR, with, at present, no proposal of other (party-specific minimum) threshold. This would allow the authority to require a notification (and review) based on a single party’s turnover alone.
The amendment would bring the Finnish turnover thresholds closer to the other Nordic countries
A few observations are warranted. First, the merger control thresholds applied in Finland have differed from those applied in other Nordic countries insofar as the upper limit has applied to worldwide turnover. Both in Sweden and Norway, the thresholds are linked to national turnover, while in Denmark, one of the two alternative thresholds is based on purely national turnover. While the FCCA seems to draw inspiration from these Nordic countries, the discussion fails to mention that the process, for unproblematic cases, is less burdensome and costly in Sweden, for instance, where “simplified form” decisions are issued, and the parties’ information obligations may be less onerous.
Inspiration from recent amendments by the European Commission?
Second, while the FCCA’s interest in lowering thresholds is not new, and such interest has in fact regularly featured in the national competition policy discussions, the timing is of some interest. The FCCA’s report was published only a few months after the European Commission informed of its change in policy, endorsing the referral of below-the-thresholds transactions by national authorities. The FCCA’s proposal to require notification is reminiscent of the European Commission’s extension of competence, with the exception that the FCCA’s competence is framed (by turnover threshold) though leaves significant discretion to the regulator also in the case of the FCCA.
The FCCA’s proposal has been endorsed by the responsible Ministry
Further to the FCCA’s report, the Ministry of Economic Affairs and Employment (hereinafter the “Ministry”) published in mid-January 2022 its own assessment report on the matter. In essence, the Ministry agrees with the FCCA’s proposal insofar as it recommends an amendment to the applicable merger control thresholds in the Finnish Competition Act.
In its assessment report, the Ministry endorsed the FCCA’s view that lowering the thresholds would be beneficial to competition by preventing harmful market concentrations. In part, this would be achieved by bringing more (smaller value) industries and smaller product and geographic markets within the scope of the national merger control. At the same time, the right to review transactions that are not presently caught would allow the FCCA to intervene in so-called killer acquisitions.
As a measure to ensure legal certainty, the Ministry advocates for a timeframe within which the FCCA can invoke its competence to require notification (3 month-period is presently being discussed) as well as a proposal for a voluntary notification, which would allow companies to address the uncertainty and risks arising from the FCCA’s new competence. Further, following to the Ministry’s assessment report, a party-specific minimum turnover threshold in case of the FCCA requiring a notification is being discussed (all parties’ combined, aggregate turnover in Finland exceeds 50 million euros, and the target’s turnover in Finland exceeds 3 million euros).
Proposed amendment to be coupled with the strengthening of due process rights
Overall, if the proposal were adopted, it would move the goalpost in Finnish merger control. The initial feedback from the industry and legal community alike is less than enthusiastic and is rather marked by concerns. First, questions arise as to whether the claimed consumer benefits will outweigh the costs associated. The FCCA has identified, based on OECD figures, an increase in consumer benefit that corresponds to several millions of euros annually, which according to the authority, would outweigh the cost of the change to the industry. Transactional expenses (including legal fees) aside, a real concern is whether some transactions will remain undone altogether by reason of the change. Specific considerations are likely to apply to private equity and other investors, particularly as regards the proposal to allow the FCCA to require a notification. An investment involving a small target, even if a minimum threshold of 3 million euros were introduced, could potentially be subject to merger control clearance and it would add a further risk-factor even if no notification is ultimately required. Further, while the FCCA seeks to downplay the importance of costs associated with the merger control process, following to the proposed changes, such costs will be borne by smaller companies.
Second, the FCCA’s right to require a notification should be balanced with sufficient protection of defense rights. At present, the Finnish Competition Act provides for no review of procedural decisions, such as, stop-the-clock, incomplete notification, time-limits to reply to requests for information. Thus, an increase in authority competence should be matched with the strengthening of companies’ procedural safeguards.
The concerns raised must also be seen more generally against the background that the FCCA’s merger review is already heavy even in unproblematic cases, and around 10% of notified transactions face a Phase II scrutiny. Pre-notification discussions tend to be fairly long, and sometimes reflect available resources. Thus, at the very least, the Ministry and the FCCA should ensure that the latter has sufficient, and trained, staff to respond to the increase in the number of notifiable transactions. It would be unbearable if the move were to stifle transactions that could benefit the society at large, particularly in innovation and start-up markets. Further, as regards the FCCA’s competence to require a notification, the FCCA should issue some guidance as to the circumstances in which that competence may be invoked (it is to be noted that the European Commission has sought to clarify the circumstances of referrals in a Guidance issued in 2021). This would contribute, on the one hand, to legal certainty and predictability for the industry, while one the other hand, place some confines to the authority’s discretion.
According to the Ministry, the revised and new merger control thresholds could enter into force already at the start of 2023. The Ministry has indicated (an ambitious) timetable of a government bill before the parliamentary summer recess 2022, which will not allow for a stakeholder working group. This is unfortunate indeed, given the focal concerns raised already now by the industry and the legal community.
HPP’s Competition Team continuously monitors legislative intitiatives and the progress of government bills. We are at your disposal to discuss the effects of any proposed legislative changes on your business operations, please contact:
Anna Roubier
Partner
+358 40 519 2978
anna.roubier@hpp.fi
27.01.2022
Experienced Tax lawyer Jaakko Klemettilä joins HPP partnership
Jaakko Klemettilä will join the partnership at HPP Attorneys as of 1 January 2022. Jaakko specialises in tax law and tax structuring and is HPP’s first partner specialising in tax matters. Jaakko’s promotion to partner will further broaden HPP’s service offering to include first class tax advice.
“We are delighted that Jaakko will be taking a new role within the firm’s tax department. Jaakko’s wide-ranging experience in tax matters and his client and solution-centric way of working will continue to bring added value to our clients. Jaakko’s pragmatic hands-on attitude has proven to be of benefit in a vast amount of client cases ranging across HPP service areas“, says Managing Partner Markku Mäkinen.
Jaakko has over 20-years’ experience in advising on high-value and complex tax-related issues. His prior work experience covers a 15-year tenure at two Big Four accounting firms and a leading international law firm as the head of their Finnish tax practice. This builds on his prior employment at the Finnish Tax Administration as a Tax Clerk and as in-house tax counsel in a large Finnish listed company.
Jaakko focuses on tax issues related to transactions, transaction structuring, pre- and post-deal reorganizations, corporate restructurings including W&I and tax policy related advisory. His experience also covers a broad spectrum of tax issues including management participation and incentivisation, payroll tax, VAT and day-to-day tax advisory across multiple sectors.
Jaakko Klemettilä
Partner
+358 40 536 0963
jaakko.klemettila@hpp.fi
26.01.2022
Supreme Administrative Court denies land use plan for wind farm on reindeer herding area – jeopardises wind power development in Northern Finland
The Supreme Administrative Court has, on 17 January 2022, issued a yearbook decision KHO:2022:12 whereby it rejected, through a final decision, the partial master plan of a wind power project on the basis that the conditions for reindeer husbandry in the area could not have been sufficiently secured if the plan had been approved. The decision constitutes a strong statement that the interests of reindeer husbandry prevail over those of wind power production and cannot be reconciliated if studies indicate that a wind power project would cause a harmful impact on reindeer.
The City Council of Kuusamo had approved a partial master plan allowing the construction of 54 wind turbines with a tip height of 250 metres in areas allocated for wind power. Most of the land areas covered by the partial master plan were located in an area that was also allocated for wind power in the regional plan. At the same time, however, the entire partial master plan was also located within a reindeer husbandry area, and the regional plan contained a provision according to which the operating and development conditions of reindeer husbandry and other natural livelihoods were to be secured within the reindeer husbandry area. The partial master plan decision was appealed by the local reindeer herding cooperative based on adverse impacts on reindeer herding.
The studies conducted in connection with the partial master plan process indicated that wind power construction would cause significant adverse effects on reindeer husbandry, even though the partial master plan area and, in particular, the area required for the structures of the wind power project overlapped with only a minor part of the total land area used for reindeer grazing by the local reindeer cooperative. According to the studies, the grazing areas that overlapped with the partial master plan area were of key importance for regional reindeer husbandry. Furthermore, implementing the plan was considered to have a negative impact on rotational grazing and other living conditions of reindeer and the adverse impacts could not be mitigated in a material sense when implementing the partial master plan.
The Supreme Administrative Court concluded that the partial master plan did not meet the requirements of the regional plan with regard to securing reindeer husbandry in the area, and the decision on the partial master plan made by the City Council was therefore considered to be unlawful.
Reindeer husbandry areas are established in the Reindeer Husbandry Act (848/1990), and they cover land areas north from the line between Kuivaniemi and Suomussalmi – in practice the whole of Northern Finland. The decision of the Supreme Administrative Court is significant as it implies a change in the established understanding of the legal status of reindeer husbandry areas. Reindeer husbandry areas have so far been considered to fall under strict protection only in cases where they have been situated within the Sami homeland (which covers a much more limited area in the northernmost part of Finland). In this case, however, the decision of the Supreme Administrative Court implies that even reindeer husbandry areas located outside the Sami homeland are subject to strict protection. We also note that the decision of the City Council to adopt the component master plan was finally and irrevocably rejected due to the perceived impossibility of reconciliating the two activities within the master plan area (i.e. the reason for rejecting the partial master plan was not the inadequacy of the studies, in which case the matter would have been returned to the City Council for re-processing).
The decision is a landmark ruling that could potentially hinder, or even prevent, the future planning and construction of wind farms in Northern Finland whenever a wind power project is considered to have a significant negative impact on reindeer husbandry. Whilst the risk is particularly material in large-scale wind power projects consisting of tens of wind turbine positions, the decision underlines the importance of conducting careful studies of the potential impacts of wind power production on reindeer husbandry even in smaller-scale wind power development projects. Maintaining a constant dialogue not only with the relevant municipalities, but also with the main reindeer herding cooperatives, of the planned project area as from the earliest development stages of a wind power project becomes increasingly important in order to anticipate and manage potential issues relative to reindeer husbandry.
Suvi Kurki-Suonio
Associate
+358 44 712 1541
suvi.kurki.suonio@hpp.fi
Suvi Kurki-Suonio is specialised in environmental law. Her areas of expertise include environmental and land use issues related to renewable energy projects as well as waste legislation and circular economy. She also advises clients in environmental permit processes, administrative judicial procedures as well as in legal questions related to environmental liabilities and nature conservation.
Marius af Schultén
Partner
+358 40 565 7034
marius.schulten@hpp.fi
Marius af Schultén is a member of the HPP Energy & Infrastructure team. He specialises in energy law and environmental law, with a particular focus on the development and financing of renewable energy projects as well as transactions in the energy & infrastructure sector.
Marius has extensive experience in advising both domestic and international project developers, investors, specialist funds, utilities and financial institutions in their investments into Finnish renewable energy projects. His expertise also includes providing strategic advice regarding the development of renewable energy projects, notably with regard to land use planning, permitting and land use agreements. Marius also has a broad experience in assisting a wide range of industrial clients in environmental administrative court procedures.
20.01.2022
Experienced Energy & Infrastructure lawyer Marius af Schultén joins HPP partnership
HPP Attorneys has strengthened its 15 lawyer strong Energy & Infrastructure team with the appointment of Marius af Schultén as a Partner from 17 January 2022. Marius is a highly experienced lawyer focusing on the energy & infrastructure sectors, handling a broad spectrum of energy transactions, energy projects and energy finance matters, with a strong focus on renewable energy and energy transition mandates.
Marius advises specialist funds, domestic and international utilities, financial institutions and project developers on the acquisition, financing and development of significant energy projects and assets, with a significant cross-border element. He mixes strong transactional skills with a thorough understanding of the permitting and land use issues arising in relation to high-value long-term Finnish energy and infrastructure projects. Before joining HPP, Marius worked for another leading Finnish law firm for nine years.
Announcing af Schultén’s appointment, HPP’s Head of Energy, Björn Nykvist commented: “Marius’ arrival adds further depth to the HPP Energy team’s offering to clients operating and investing in the energy sector. His experience in advising international clients entering into the Finnish energy market will be increasingly important to help HPP’s clients involved in the acceleration of the development of the Finnish energy, and particularly the renewable energy, sectors. This acceleration will require significant investment in the sector, and has already created a significant need for high quality, bespoke and pragmatic legal advice on the multitude of legal issues arising in relation to the energy sector. His arrival will definitely help us continue to address that need”.
Commenting on his move, Marius stated: ”HPP has had one of the leading energy teams in Finland for many years and has shown strong determination to continue as a front-runner on this highly dynamic market. A comprehensive understanding of the energy sector and anticipating its future development are key factors in helping clients seize the various opportunities that the energy transition has to offer, and this is clearly a guiding mindset at HPP. I am thrilled to join a law firm that has a genuine ambition towards continuous development and growth – both within the energy sector and elsewhere.”
HPP is consistently ranked as a leading law firm by legal ranking directories and league tables for the firm’s energy and infrastructure work, covering energy & infrastructure transactions, energy & infrastructure projects and related administrative proceedings. Our team is ranked as a Tier 1 Energy & Infrastructure firm by Chambers Europe and our individual lawyers in the team are recognised by both their peers and the legal directories as leading experts in the field. The team contributes to the development of the Finnish renewable energy sector through its pro bono work for the Finnish Wind Power Association and has recently contributed to Finnish Government’s study on the means of advancing wind power construction in Finland.
Marius af Schultén
Partner
+ 358 40 565 7034
marius.schulten@hpp.fi
19.01.2022
Two new Finnish precedents concerning the tax treatment of debt pushdown structures in M&A transactions
Foreign acquirers typically acquire Finnish businesses through the purchase of shares, commonly establishing a Finnish acquisition vehicle to carry out the acquisition. As a result, the interest on the acquisition debt can be offset against profit of the target company by utilizing the Finnish tax consolidation scheme or after a legal merger. Tax deductibility of acquisition debt relating to such an arrangement was already approved by the Supreme Administrative Court in the 1980s and related structures have been widely utilized ever since.
The Supreme Administrative Court recently published a precedent (KHO 2021:179) which confirms that this tax treatment is still applicable. The tax authorities had challenged the tax treatment based on case law (KHO 2016:72 and related cases) according to which the tax deductibility of interest on acquisition debt was refused in connection with the acquisition of shares in a Finnish company. However, this case law concerned the usage of a Finnish branch of a foreign company as the acquisition vehicle and the tax deductibility was refused based on the acquired shares not being attributable to the Finnish branch and the arrangement was deemed as tax avoidance (due to the fact the branch enabled the acquiring group to deduct interest twice, both in Finland and in its country of establishment). The Supreme Administrative Court held that these cases are not applicable to a debt pushdown arrangement where the acquisition is executed via a limited liability company.
The Supreme Administrative Court also recently published a precent (KHO 2021:178) with application to debt pushdown arrangements in cross-border M&A transactions. The non-Finnish target group indirectly held shares in a Finnish operating company. Three years after closing of the transaction, the shares in the Finnish operating company were sold internally to a group Finnish holding company. The Supreme Administrative Court refused deduction of the acquisition loan interest on the ground that the primary reason for the share transfer was tax avoidance i.e. pushing debt to Finland by means of a group internal transfer for the primary purpose of obtaining tax deduction on the interest. The court denied the EU law-based arguments relating to free movement of capital. This ruling has been heavily criticised as it seems that the Supreme Administrative Court is applying Finnish anti-avoidance rules more strictly than EU law seems to require.
Jaakko Klemettilä
Partner
+358 40 536 0963
jaakko.klemettila@hpp.fi
Jaakko Klemettilä specialises on transactional tax matters, with a strong focus on cross-border M&A and investment cases. Jaakko’s client base comprises private equity and strategic investors, specialist funds and transaction insurance underwriters to whom he offers the full range of advice on tax issues arising from the planning, structuring and execution of transactions involving Finnish targets, both on sell-side and buy-side mandates. He has significant experience of advising on the tax issues across a wide range of sectors, with a focus on real estate transactions.
01.12.2021
Recovering unlawful State aid after recipient´s transfer of business: New developments
The goal of the State aid rules is to ensure that there are no distortions in competition between undertakings. Consequently, the primary requirement of recovery of unlawful State aid is to recover it effectively and immediately. For this reason, the recovery of unlawful aid may require the recovery to be extended to an undertaking to which an undertaking that originally received the aid has transferred or sold part of its assets.
The purpose of the article is to examine in which circumstances the recovery may be extended to an undertaking to which an undertaking that originally received the aid has transferred or sold part of its assets. Also, the main legal principles and doctrines behind the recovery process are briefly examined. Especially, the article looks into the recent Commission decisions and EU case law concerning Finnish bus services and Slovakian chemical industry.
In conclusion remarks, it is argued that the buyer should be able to demonstrate, instead of the Commission, that the business transaction certainly takes place at market price. As price of the transfer is just one of the factors that may be taken into consideration, even the market price does not automatically preclude economic continuity if the assets are purchased in their entirety and used in the same manner as before.
Article by associate Tatu Kärhä has been published in Europarättslig tidskrift´s publication 4/2021.
Tatu Kärhä
Associate
+358 44 989 9277
tatu.karha@hpp.fi
02.09.2021
HPP lawyers participated in Government study on advancing wind power construction
In Finland, the Government regularly coordinates joint analysis, assessment and research activities on various topics in order to produce information that supports decision-making and improves working practices. By using research, foresight, assessment and monitoring data more effectively, the knowledge base underlying policy decisions becomes more solid which, in turn, facilitates quality and efficiency.
During the summer, the Finnish Government’s analysis, assessment and research division (VN TEAS) published a study on the means of advancing wind power construction in Finland. The study was undertaken by the Ministry of the Environment, the Ministry of Economic Affairs and Employment, the Ministry of Justice and the Ministry of Defence in cooperation with HPP, FCG Finnish Consulting Group Oy, VTT, the Finnish Meteorological Institute FMI and KPMG. HPP’s team members in the working group included, among others, Senior Associate Jesse Viljanen and Associate Suvi Kurki-Suonio.
The report and policy recommendations of the project “Promotion of Wind Power Construction – Ways for Smooth Project Development and Coordination of Different Objectives” describes the current state of wind power construction and related legislation and examines three key issues in more detail:
1) streamlining regulatory procedures,
2) improving the profitability of offshore wind power: and
3) coordinating wind power construction and issues of concern to the Defence Forces.
Each subject area consists of a description of its current state, as well as of proposals for measures which are subsequently presented as conclusions. The proposals for streamlining the regulatory procedures include improving the dialogue between authorities and operators as well as detailed proposals concerning the EIA procedure, land use planning, impact assessments and some other permit and statement procedures.
One of the proposals that has received most attention in the media is the proposal to coordinate the interests of the Defence Forces relating to territorial surveillance and the interests of wind power developers by regulating the process regarding the need to obtain an approval from the Defence Forces for the construction of a wind farm by law.
The study concludes that since the wind power sector is developing rapidly it is crucial that legislation keeps pace with the technological and other developments in the sector. Currently several projects to amend legislation applicable to construction of wind farms are pending, such as amendments to the Finnish Land Use and Building Act and the Act on Real Estate Tax. The study presents the current status of these projects as well as options on how to take them forward.
“As a Tier 1 firm in the Energy sector, we are very pleased to use our expertise to support this initiative to progress the development of wind power in Finland and contribute to a smoother process in developing projects in the future,”, says Björn Nykvist, HPP’s Head of Energy and an experienced lawyer advising on the development, construction and operation of Finnish wind farms.
“Working with different ministries and other experts was very interesting and provided new perspectives on wind power projects”, says Senior Associate Jesse Viljanen, who participated in the study.
25.08.2021
The decision of the Supreme Administrative Court clarifies the determination of the duration and limitation period of the antitrust infringement
On 20 August 2021, the Supreme Administrative Court delivered a significant judgment (KHO:2021:112) in the power transmission line installation cartel case. By its judgment, the Supreme Administrative Court confirmed that the Finnish Competition and Consumer Authority (FCCA) had failed to submit timely a fine proposal to the Market Court in the said case. The Supreme Administrative Court ruled that the FCCA had also otherwise failed to provide sufficient legal evidence on the participation of Eltel Networks and Eltel Group Oy in the alleged infringement.
Background and the Preliminary ruling of the ECJ
The FCCA appealed to the Supreme Administrative Court the decision of the Market Court of 30 March 2016, by which the FCCA’s proposal for a fine was dismissed on grounds of limitation period. Following a reference from the Supreme Administrative Court for a preliminary ruling, the Court of Justice of the European Union (“ECJ”) rendered on 14 January 2021 (Case C-450/19) an interpretation on the duration of the infringement period in case of bidding cartels.
The Supreme Administrative Court had to adjudicate on whether the FCCA had submitted its fine proposal to the Market Court within the five-year limitation period that runs from the end of an infringement, as provided for in the Competition Act. A key consideration in the appraisal was the ECJ’s interpretation that an infringement relating to work contracts is considered to have lasted up and until the date on which the undertaking involved in the alleged infringement and the contracting authority have signed the contract relating to the rigged tender. According to the ECJ, such works contract shall specify the essential characteristics of the works in question, in particular, the total contract price. At the same time, the fact that the completion of the contract and the payment thereof were staggered over time was irrelevant to the assessment of the duration and the end of the alleged infringement.
The Decision of the Supreme Administrative Court
The Supreme Administrative Court held that in the present case the essential features of the contract for the allegedly rigged works and the total price thereof had been definitively determined by the parties when the contract was signed on 19 June 2007. The FCCA’s proposal for a fine was made to the Market Court on 31 October 2014, well after the five-year limitation period provided for in the Competition Act. Given that the fine proposal was time barred, it was not necessary for the Supreme Administrative Court to examine whether the bid in question involved a prohibited restriction of competition. The Supreme Administrative Court confirmed that the FCCA had also otherwise failed to provide legally sufficient evidence of the alleged infringement and its duration. The Supreme Administrative Court dismissed the FCCA’s appeal and considered that the Market Court had reached a correct conclusion when the latter held the FCCA’s fine proposal to be time barred.
Significance of the Decision of the Supreme Administrative Court
The Supreme Administrative Court’s decision, together with the preliminary ruling of the ECJ, provide clear legal guidance on the end date of an infringement relating to a tender for a works contract. The duration of such an infringement may extend up and until the time when the contract between the tenderer and the contracting authority is signed and the final contract price is agreed upon. Consequently, the duration of the infringement cannot be extended until the completion of the contract works or the date when payment is made in full, as claimed by FCCA. Such an interpretation could lead to a situation where an undertaking’s infringement could, in some cases, continue for years after an undertaking has withdrawn from the anti-competitive conduct. Such an interpretation would risk legal certainty and equal treatment of companies. The Supreme Administrative Court’s ruling and the related judgment of the ECJ ensure that the duration of bid rigging infringements is determined solely by the participating companies’ own anti-competitive conduct.
Maarika Joutsimo
Senior Advisor
+358 50 338 8495
maarika.joutsimo@hpp.fi
Maarika Joutsimo specialises in EU and competition law. Maarika’s special expertise includes competition law-related processes instigated by competition authorities and courts, such as cartel investigations. She has also acted as counsel in public procurement processes in the Market Court.
In addition, Maarika advises her clients in various questions of European and competition law; for example, agreements or other arrangements between companies, pricing, merger control and state aid issues.
22.06.2021
Amendments to the Finnish Competition Act approved by the Parliament
Amendments to the Finnish Competition Act were approved by the Parliament on 28 May 2021 and the revisions will enter into force on 24 June 2021. The amendments transpose EU’s ECN+ Directive, which aims at improving and harmonizing the application and enforcement of competition law by national authorities in the EU Member States. The proposed draft amendments were reviewed in HPP’s blog post of 6 November 2020, though at the time in draft form while the legislative process was still on-going.
The final form of the amendments corresponds by and large to what had been proposed in the initial Government Bill (HE 210/2020), though some changes were introduced during the Committee Hearing, to improve, in particular companies’, rights.
The most significant changes to the Competition Act are as follows. The Finnish Competition and Consumer Authority (“FCCA”) is granted the right to impose fines on individual members of company associations, such as industry associations, for antitrust infringements committed under the auspices of the association and to require payment of fines by such association members. In addition, the FCCA is given the competence to impose structural remedies on companies, such as the sale of shares or business, to remedy a restriction on competition.
The decision imposing a fine on an association member is made by the Market Court upon the FCCA’s proposal. According to the initial proposal, such a decision would have been taken by the FCCA. The change to the initial proposal now aligns this process with the general division of competences in competition law matters, that is, the Market Court decides upon the FCCA’s proposal. The FCCA is also given the right to refrain from proposing a fine to an association member if the fine is small; the member has been granted immunity from fines; or if the imposition of a fine would result in the loss of business.
Based on observations made by the Parliament’s Commerce Committee, clarifications were introduced to the elements that the FCCA must consider when proposing the imposition of a fine on an association and its members. Consequently, the Competition Act requires the FCCA to take into account the legal principles set out in Section 6 of the Administrative Procedures Act (such as proportionality and equality); the role of an individual association member in the infringement; and the duration that the member company has been active on the market. These clarifications improve companies’ legal rights, as the FCCA will have to reason its proposals for fines in light of individual member’s role in an infringement.
As regards companies’ obligations to provide information to the FCCA in the course of an investigation into a suspected competition restriction, already part of the Competition Act, the FCCA is now explicitly required to respect the confidentiality of correspondence between an external legal counsel and its client company. It is paramount that this well-established principle of EU law will now be can clearly incorporated into national law.
Further, following to comments made during the Committee stages, the interim order, which the FCCA may issue to a company to bring to an end a competition restriction, may be imposed for a maximum period of one year. After that, the FCCA may extend the interim order by a maximum of one year at any one time. This change clearly improves companies’ legal rights, given that the initial proposal did not foresee any limitation to the duration of interim measures.
The amendments to the Competition Act significantly extend the FCCA’s competence to investigate competition restrictions. At the same time, the abovementioned amendments introduced during the Committee stages seek to ensure companies’ legal protection, and legal certainty, both during investigative phase and when sanctions are imposed.
Press release
Ministry of Economic Affairs and Employment
Maarika Joutsimo
Senior Advisor
+358 50 338 8495
maarika.joutsimo@hpp.fi
Johanna Kauppinen
Associate Trainee
johanna.kauppinen@hpp.fi
19.04.2021
The European Commission’s Guidance on the referral mechanism for merger investigations from Member States to the Commission gives rise to legal uncertainty
Background
The EU Merger Regulation (No 139/2004, hereinafter “ECMR”)) contains rules on the EU merger control process, including also the competence between the European Commission (“the Commission”) and the Member States to examine the competitive effects of notifiable transactions. Article 22 ECMR allows one or more Member States’ competition authority(/-ies) to request the Commission to examine a concentration, which lacks EU dimension but affects trade between the Member States and threatens to significantly impede competition within the territory of the Member State(s) having made the referral request.
A referral request has in practice been considered possible also in situations where a Member State does not have jurisdiction to investigate a merger because national thresholds are not met.
At the same time, the Commission’s policy has been to discourage referral requests in circumstances where a merger has not triggered national thresholds. The Commission’s approach to the referral mechanism has now been revised significantly. On 26 March 2021, the Commission published a Guidance on the application of the referral mechanism set out in Article 22 of the Merger Regulation (2021/C 113/01). In the Guidance, the Commission gives instructions on the use of the referral mechanism and now rather encourages Member States to use the referral mechanism in situations where a merger, regardless of the size of the parties involved, is considered to have an impact on future competition in Member States’ markets.
What is the practical significance of the Commission Guidance?
The Commission intends to intervene in mergers where the strategic purpose could be to eliminate an innovative and potentially significant new competitor from the market at an early stage (so-called “killer acquisitions”). In such a situation, the turnover of the target company is often small compared to its market value and the purchase price, which better indicate the competitive significance of the target company in the future. Such companies are present, in particular, in the digital economy, pharmaceutical and health technology sectors.
If a notification is required under national merger control rules, the national competition authority must submit a referral request to the Commission under Article 22 ECMR within 15 working days of the merger having been notified. Following a referral request, the merger may not be concluded until the Commission has examined the merger or rejected the referral request.
The situation is more ambiguous and complex if the merger requires no notification to a national competition authority under national law. Pursuant to paragraph 28 of the Guidance, a Member State must submit the referral request within 15 working days of the merger having been made known to it. According to the Commission, the expression ‘made known‘ should be interpreted as implying sufficient information to make a preliminary assessment as to the existence of the criteria relevant for the assessment of the referral. This is a very loose description and leaves the Member States and the Commission a significant discretion and, conversely, uncertainty for the parties to a transaction.
If the merger has already been concluded before a formal referral request and more than six months have elapsed, the Commission will not, in principle, review the merger. However, this indicative timeline would not bind the Commission in exceptional situations, which are assessed on the basis of, for example, the magnitude of the potential competition concerns and the potential detrimental consumer effects.
If the formal referral request is made prior to the closing of a merger, the merger may not be completed prior to the Commission’s approval or its decision not to review the merger.
The Commission´s Guidance creates legal uncertainty into the merger control process, including for implementation and timing of transactions. Companies will have to assess in advance the risk that the transaction’s competitive effects could be reviewed by the Commission even if the EU or national thresholds are not met. Parties to a transaction should account for this risk, for example, when negotiating the closing terms.
Anna Roubier
Partner
+358 40 5192 978
anna.roubier@hpp.fi
Anna Roubier specialises in competition and EU law. Her areas of expertise also include legal issues and administrative processes regarding the regulation of chemicals and products in the EU.
Tatu Kärhä
Associate
+358 44 9899 277
tatu.karha@hpp.fi
Tatu Kärhä assists clients in questions related to public procurement and competition law.
15.04.2021
HPP ranked among the leading Finnish law firms in Legal 500 2021
Once again, HPP has been highly ranked in 7 key categories of the latest edition of the Legal 500:
Banking and Finance (Tier 2)
“Great partner attention, solid advice and very prompt in getting back.”
“Very capable and professional team, matching anyone in professionalism in complex financing agreements. Fast and effective.”
“Antti Rintakoski is very experienced and full of energy. His ability to solve complex situations and find solutions is first class.”
“Antti Rintakoski is an outstanding lawyer with a deep understanding of the financial sector.”
Corporate and M&A (Tier 2)
”Hands-on approach.”
Dispute resolution (Tier 2)
“The key persons and teams possess a high level of professionalism, experience and contacts in their field of business. For me as a customer, I seem to get assistance in every matter concerned plus HPP also actively suggests points to be considered beyond my own awareness, if any.”
“Solid and to-the-point advice on litigation strategy and tactics. Team was easy to work with.”
“Mikko Leppä, partner. Highly skilled litigator, excellent in reading the situation and experience has good intuition on how the litigation is expected to progress.”
EU and competition (Tier 2)
“The practice certainly deserves to be noted for its diligence and professionalism thanks to a highly knowledgeable and helpful team.”
“Practice leader Tuomas Saraste is highly skilled and experienced; a brilliant and truly business-focused lawyer.”
“Deep and broad understanding of the segment combined with great team building. Partners personal commitment to the assignments and quick response and channel through times are excellent without compromising the quality of deliverables.”
“Human touch and specialist for all types of problems we have to solve.”
Maritime and transport (Tier 1)
“Nora Gahmberg-Hisinger is the most flexible and committed lawyer I know.”
“The support we have received from Nora Gahmberg-Hisinger has always been professional, solution-seeking and with that support we have avoided a number of risky situations. We value her ability to commit to long projects and the fact that we always feel we are an important customer to her.”
“They have a strong expertise in transport-related matters and are very thorough in their evaluations.”
“Easy to contact, always ready to assist formally and informally.”
Real estate and construction (Tier 1)
“Experienced team with great ability to manage complicated processes, especially when the counterparty is difficult. Wide enough team so you can trust that they have needed resources at any time.”
“Very practical, hands-on and effective team.”
“Mr Jari Tuomala is an experienced and effective partner. His style is smooth and doesn’t unnecessarily complicate transactions.”
“They are quick, solution oriented and have a broad knowledge of real estate development and construction related matters. They are also accustomed to work with counterparties with different backgrounds.”
“Leif Laitinen has an excellent understanding of the sector and can always find and negotiate a solution in matters arising during transaction process.”
“Jari Tuomala has a great knowledge of land-use related matters and has assisted us in many challenging situations in this area.”
TMT (Tier 1)
“Their team understands our business and our markets very well and are very efficient in their work.”
18.03.2021
HPP highly ranked in Chambers Europe 2021
HPP has been ranked high again in the latest edition of Chambers Europe 2021. Our key practices and practitioners are recommended and ranked high. We are happy to continue to support our clients to reach their business goals with high value-added legal solutions.
HPP has been recommended in the following key practice areas:
Banking & Finance
Clients appreciate that they “get assistance in every matter concerned,” while adding that the team “also actively suggests points to be considered beyond the client’s awareness.”
Antti Rintakoski is highlighted by clients for his “excellent knowledge and experience in financial deals,” and is further described as a “sharp and intelligent problem solver.” He regularly advises lenders on credit facilities and financing arrangements across infrastructure, renewable energy and real estate projects.
Competition
Clients say that the firm is “large enough to have sufficient resources but is still agile.”
Tuomas Saraste has proven experience in cartel and abuse of dominance investigations carried out by the FCCA. His broad practice also encompasses merger filings, work on the defendant side of private enforcement actions and ongoing competition compliance or training mandates. Clients say that “he leads the team from the front” and highlight his “superb dedication and responsiveness.”
Corporate and M&A
Clients appreciate that the team is “very flexible in its availability and very constructive when preparing feedback on the issues to be covered, making the process very smooth.”
Andrew Cotton is a key point of contact for clients.
Dispute resolution
A market source praises the lawyers for being “easy to collaborate with,” adding: “It feels that we are a team with the same targets and full ownership of the issue at hand.”
Marko Wainio is lauded by clients for his “excellent combination of theoretical and pragmatic approach.” He handles post-M&A and construction litigations, being also well versed in domestic arbitration matters.
Energy & Natural resources
A client enthuses: “HPP’s environmental team is very experienced and I appreciate the pragmatic and business-oriented approach.”
Kari Marttinen is described by clients as “one of the leading environmental law specialists in Finland.” He advises on the development of projects across a range of areas, including power plants, smelters and mines.
Tarja Pirinen “has good knowledge in her field of expertise,” according to a client, who adds: “She provides clear solutions and answers to problems, and is also able to provide fast answers.” Sources note her expertise in mining, and she assists clients with permitting and exploration matters.
Björn Nykvist advises clients on power purchase agreements and wind farm transactions. Clients enthuse: “His ability to look at topics from multiple angles really helps. He is always on time, even with tight schedules.”
Employment
Henna Kinnunen is “extremely competent, precise, reliable and hard-working,” according to clients. She enters the rankings this year and regularly handles employment disputes, as well as assisting with the employment aspects of M&A transactions.
Real estate
A client describes the lawyers as “flexible, quick and productive,” adding: “It feels that we are a team with the same targets and full ownership of the issue at hand.”
Jari Tuomala advises private and public entities on transactions involving commercial properties. He is described by clients as “experienced, straightforward, easy to work with and solution-oriented.”
Restructuring & Insolvency
One impressed client describes the team as being “very capable” and consisting of “talented lawyers.”
Juho Lenni-Taattola assists creditors with the restructuring and bankruptcy processes of distressed companies. He is also frequently appointed as bankruptcy administrator.
Sami Uoti is instructed as an administrator in restructuring and bankruptcy proceedings. Sources laud his “long experience in litigation and also insolvency matters.”
TMT
Strong TMT practice, representing clients from the IT, software and pharmaceutical sectors. Acts on outsourcing and service agreements, and advises on systems procurement, regulatory and contractual issues. Additionally handles regulatory data protection developments and GDPR implementation. Offers comprehensive advice on complex digitalisation projects.
Kari-Matti Lehti is an “experienced person to help you manoeuvre negotiations with customers,” according to one client, who also recommends him for outsourcing mandates, as well as related litigation. He further advises on large IT projects and contract negotiations.
Pekka Raatikainen is known for his expertise in contract negotiation and IT litigation, with one client enthusing: “He has been providing excellent feedback; he is a very skilled person who turns the strategy in your favour in complex disputes, and has good knowledge and experience.”
HPP wishes to thank its peers and clients for helping us be consistently recognised as a leading Finnish law firm comprising of leading lawyers.
18.03.2021
Dispute Resolution 2.0 Seminar Series: To mediate or not to mediate?
Dispute Resolution 2.0 Seminar Series is focusing on dispute resolution.
In our seminar series, HPP’s experienced dispute lawyers as well as experienced guest speakers, both from Finland and abroad, will address topical issues in dispute resolution with a pragmatic view to effectively managing and resolving disputes.
To mediate or not to mediate? 17 March 2021
Agenda
13.00 – 13.05
Welcome words; introduction to the topic
Mikko Leppä, Partner, HPP Attorneys Ltd
13.05 – 13.20
Introduction to mediation in Finland
Julia Pekkala, Senior Counsel, HPP Attorneys Ltd
13.20 – 13.40
Alternative approaches to mediation – getting to yes
Marc Palay, Senior Partner, Sidley Austin LLP, Geneva, Switzerland
13.40 – 14.00
U.S. type of mediation – extension of commercial negotiations
Pirita Virtanen, Mediator and Founder, Private Mediator Ltd
14.00 – 14.20
Client perspective to ADR; ICC scaled down to ADR
Artem Dudin, Legal Counsel / Head of Legal Support, RAOS Project Oy,
a ROSATOM State Atomic Energy Corporation Company
14.20 – 15.00
Panel discussion
You can see all previous and upcoming seminars and webinars of Dispute Resolution 2.0 Seminar Series from this link.
22.02.2021
HPP lawyers and departments ranked in Chambers Global 2021
HPP’s lawyers and departments have again been recognised as leaders in their respective specialist areas by leading global law firm directory, Chambers Global. HPP’s Banking & Finance, Corporate/ M&A and Dispute Resolution teams were all ranked, with HPP Partners Antti Rintakoski, Andrew Cotton and Marko Wainio all being recognised as leading lawyers in the respective fields. The recognition is a reflection of the excellent teamwork and co-operation both within the respective HPP departments between HPP lawyers, and also with with our clients and peers in other leading firms, for which we are grateful.
The latest edition of Chambers Global’s specific rankings for HPP are as follows:
Banking & finance
Newly ranked team noted for its presence in energy-related financing. Advises lenders on financing arrangements and credit facilities, including in healthcare, technology and real estate. Also assists with refinancing mandates and handles project finance deals.
Notable practitioner – Antti Rintakoski is highlighted by clients for his “excellent knowledge and experience in financial deals,” and is further described as a “sharp and intelligent problem solver.” He regularly advises lenders on credit facilities and financing arrangements across infrastructure, renewable energy and real estate projects.
Corporate/M&A
Notable practice advising corporates, investors, private equity houses and industrial clients. Particular focus on transactions in the energy and infrastructure sectors, including deals linked to renewable energy. Additionally assists technology companies with cross-border investments and sales. Also oversees divestments and limited partnership agreements.
Notable practitioner – Andrew Cotton is praised by a market commentator for being “very good at bridging what international investors are looking for and what Finnish companies are looking for.” The same market commentator adds: “It is like having a London City lawyer who happens to be based in Helsinki.” Cotton advises investors and corporates on cross-border transactions.
Dispute resolution
Established outfit assisting with a range of disputes. Boasts notable expertise in cases involving environmental, infrastructure and corporate law. Also active in matters related to competition law. Advises on both litigation and arbitration proceedings concerning construction disputes, maritime issues and transportation-related disputes. Further experience in handling tax-related cases.
Notable practitioner – Marko Wainio is lauded by clients for his “excellent combination of theoretic and pragmatic approach.” He handles post-M&A and construction litigations, being also well-versed in domestic arbitration matters.
Marko Wainio is also listed as one of the Most in Demand Arbitrators – Finland in the Dispute Resolution spotlight table.
19.02.2021
HPP Real Estate partner wins Europe Rising Star Award
HPP is delighted that real estate partner Leif Laitinen has been announced as the winner of the 2020 Euromoney Legal Media Group Rising Star Award in the practice area awards for real estate, the only Finnish real estate lawyer to make the shortlist of four leading real estate lawyers from around Europe. Mr. Laitinen was given the award at a virtual ceremony held on 18 February 2021.
The annual Rising Star Awards recognize Europe’s leading up-and-coming lawyers across 25 practice areas and 33 jurisdictions. The winning individuals and firms were decided by senior Euromoney Rising Stars Awards editorial staff following an extensive research process, including a series of interviews with practitioners across multiple areas of law and jurisdictions who described the accomplishments of key practitioners. According to Euromoney, winners were selected based on their professional accomplishments, advocacy and influence within their specialism, as well as peer review and referee commentary.
Mr. Laitinen has significant experience in domestic and, in particular, complex cross-border real estate transactions, including real estate portfolio and real estate fund investments and sale and leaseback arrangements. He represents international, Nordic and Finnish real estate funds, major investors and private and public companies. Mr. Laitinen has earlier been highlighted as a Next Generation Partner and a recommended real estate lawyer in Legal 500 EMEA 2020.
14.01.2021
Foreign companies with a place of effective management in Finland are fully subject to tax as of 1 Jan 2021
Prior to 2021 only companies incorporated in accordance with the Finnish Companies’ Act were deemed to be liable to corporate income tax in Finland. Foreign companies with a Finnish permanent establishment (PE) are also liable to pay Finnish income tax, but only concerning income attributable to the PE only. Foreign companies’ Finnish-sourced income is also subject to tax in Finland, but only on a limited basis. Under the new legislation also foreign companies with a place of effective management in Finland are deemed to be liable to tax in Finland and this liability would concern world-wide income of such a foreign company.
As a matter of principle, the new legislation broadens the potential Finnish tax liability of foreign companies. The new tax legislation applies to foreign companies which will be deemed as corporations for Finnish tax purposes i.e., which legal characteristics are comparable to a Finnish limited liability company. Under the new legislation, the starting point upon deciding whether the place of effective management is deemed to be in Finland is the physical location of the key decision-making body. However, such assessment is made taking all relevant factors into account including e.g. organization of the business of a foreign company based on actual control over the business in question. The new legislation also covers a number of practical points to take into account when assessing the potential taxation of a foreign company in Finland.
From a practical point of view, the proposed legislation should not result in material changes to the taxation of foreign companies in Finland. The same end result as achieved by the new legislation is already being achieved through the system of PE taxation in Finland. The key difference is that a foreign corporation would be deemed to be taxed on its world-wide income whereas a Finnish PE is subject to tax in Finland on its Finnish-related income only. This change may turn out to be irrelevant in practice, given that, in accordance with Finnish tax treaties, Finland has agreed to credit foreign tax. The establishment criteria for a place of effective management is largely already applied in Finland as regards PE taxation, but the new legislation lays down a somewhat more distinct set of rules. Finnish tax treaties also include tiebreaker rules, based on which, if challenged by another country, Finland may not be able to successfully defend its position as to the effective place of management being located in Finland (although Finnish internal legislation would solely allow Finland to do so). Overall, the new legislation should not impact the Finnish taxation of current Finnish-related structures of multinational groups, but it raises the profile of the place of effective management from a tax perspective and, accordingly, it may be worthwhile to revisit existing structures and take the new legislation into account in future corporate and tax planning.
For more detailed info please contact HPP’s tax team.
Jaakko Klemettilä
Special Counsel
+358 40 536 0963
jaakko.klemettila@hpp.fi
Marko Koski
Senior Advisor
+358 44 758 2475
marko.koski@hpp.fi
12.01.2021
As of 1 January 2021 employee share issue of a private company can be priced at net asset value without tax implications
SUMMARY
As of 1 Jan 2021 Finnish tax legislation allows employees to subscribe for shares in their employing company at net asset value without giving rise to any tax liability on either employee or employer at subscription. The key requirement is that shares are offered to the majority of the employees and allocated amongst the employees based on each individual’s value added to the company.
This is a welcome change which will enable employee participation on affordable terms. The key tax benefit is the postponement until exit of taxation on the benefit received at subscription.
BACKGROUND
Prior to 2021 Finnish tax legislation required that employee share subscriptions were to be made at fair market value. Any discount was taxed as salary. Only where shares are offered to the majority of employees, can a 10% discount on the subscription price be applied on a tax exempt basis. The key downsides of previous legislation were that fair market pricing is often out-of-reach for many employees and the determination of fair market pricing has turned out to be subject to interpretation by the Finnish tax authorities.
KEY CHARACTERISTICS OF NEW LEGISLATION
As of 1 Jan 2021, Finnish tax legislation allows share subscriptions to be made at net asset value under the following criteria:
- Shares subscribed in respect of private companies only
- Share subscription has to be made available to the majority of employees excluding existing at least 10% holding individuals
- Share subscription is available to direct employees only i.e. not to subsidiary employees and not to board members
- The number of shares must be allocated between the employees based each individual’s added value to the company e.g. salary or other justified and objective criteria
- Net asset value is calculated using latest financial statements taking into account certain tax adjustments and subsequent material changes
The advantages of the change are clear. Share subscription at net asset value should promote participation by an average employee as an affordable investment. In addition, the calculation of the subscription price should be much more easily determined, because the share subscription price can be based on the net asset value. This significantly reduces the uncertainty around share valuation under the previous regime. With the tax benefit for key employees postponed until exit it allows employee shareholders to realise a gain and receive funds before tax becomes due, easing the financial burden on and removing one of the main barriers to employee participation. Employees are also able to become shareholders at a low value, but still receive partly tax-exempt dividends during the holding period. The applied discount at subscription tax is taxed fully as capital gain at exit and not partly as earned income at subscription.
This change is another welcome move by the Finnish tax authorities to make Finland an attractive location, especially for start-up and growth companies, and to find ways to make it easier for companies and their employees to share in the upside of successful growth.
EXAMPLE
Current net asset value 20
Current market value 100
Exit value in 2 years 150
Assuming an employee will subscribe for shares at 20.
Prior to 2021 an employee was taxed at subscription for 80 as earned income and 50 for capital gain at exit.
Under the new law, an employee is taxed for 130 as capital gain at exit, no tax at subscription.
For more detailed info please contact HPP’s tax team.
Jaakko Klemettilä
Special Counsel
+358 40 536 0963
jaakko.klemettila@hpp.fi
Marko Koski
Senior Advisor
+358 44 758 2475
marko.koski@hpp.fi
18.12.2020
HPP Real Estate partner recognised as Rising Star
HPP is delighted that real estate partner Leif Laitinen has been shortlisted for the 2020 Euromoney Legal Media Group Europe Rising Stars Awards in the practice area awards for real estate, the only Finnish real estate lawyer to make the shortlist of four real estate lawyers.
The Awards recognize some of the most promising emerging talents internationally in specialist practice areas. The individuals shortlisted have been widely praised by peers and clients in their markets, as well as played key roles on influential projects and transactions during 2020. They are among the next generation of partners at law firms.
This recognition rewards the hard work of Leif and his real estate team colleagues, for whom 2020 has been a record year in terms of numbers of real transactions advised on as well as aggregate deal value of the deals the HPP real estate team has assisted either buyer or seller on. It also recognizes the excellent international capability Leif and his team has in assisting foreign investors and acquirers on large, complex and high value Finnish real estate transactions.
The winning individuals and firms will be decided by senior Euromoney Rising Stars Awards editorial staff following an extensive research process. The award ceremony will take place on 18 February 2021.
14.12.2020
Recent ECJ preliminary ruling concerning Sweden will affect the deductibility of value added taxation of Finnish real estate divestments
Currently, the deduction of value added tax (VAT) incurred in a real estate which is in VATable use (typically VAT charged on construction or major renovation costs) must be monitored separately for ten years. In a typical real estate divestment, this adjustment responsibility passes to the buyer of the real estate where the real estate remains in VATable use after completion of the divestment. If the real estate is sold for a purpose that is not subject to VAT, the seller of the real estate is obliged to refund the input VAT included in the real estate investment. A similar rule is in force in Sweden. A recent ECJ decision has now altered this position.
On 26 November 2020, the European Court of Justice (ECJ) gave a preliminary ruling C-787/18, that the current regulation is contrary to EU law. The preliminary ruling concerned a situation in which the VAT included in the construction costs of the real estate had been deducted by the original owner of the real estate from whom the Swedish company Sögård Fastigheter had purchased the real estate. Both original owner and the new owner used the real estate for a purpose subject to VAT. When Sögård Fastigheter sold the real estate to two private persons who didn’t use the real estate for a taxable purpose, Sögård Fastigheter had to pay a VAT adjustment to the Swedish tax authority.
According to the preliminary ruling of the ECJ, this VAT adjustment could not be recovered from Sögård Fastigheter because the relevant corresponding VAT which the adjustment related to had been deducted by the original owner of the real estate. Based on the preliminary ruling, the obligation to pay the adjustment amount can only be assigned to the seller if the seller himself has made and received the benefit of the VAT deduction in respect of the real estate investment.
The preliminary ruling will probably lead to a change in legislation in Finland, but the judgment also has a direct interpretive effect on current Finnish VAT legislation. Based on the judgment, it should also now be possible in Finland for a seller to avoid the liability to pay the adjustment to the extent that the real estate is being sold for a purpose that is not subject to VAT, and the seller has not made a VAT deduction regarding the real estate investment itself.
The judgment leaves many questions unanswered. For example whether there is a possibility to allocate the VAT refund liability to the original owner who actually made the VAT deduction and the fulfilment of the audit responsibility based on the VAT utilization rate, if the audit responsibility has passed to the new owner of the real estate during the real estate transaction. In our view, it would be prudent for sellers to protect themselves from the VAT refund obligation in situations where the VAT utilization rate of the real estate decreases because of the buyer’s post-completion actions.
In Finland, real estates which are subject to VAT are often owned by a mutual real estate company. In our view, the ECJ ruling will not apply to the sale of shares owned by a mutual real estate company, when the MREC itself has made a real estate investment and made a similar VAT deduction.
More information:
Marko Koski
Senior Advisor
+358 44 758 2475
marko.koski@hpp.fi
Jaakko Klemettilä
Senior Counsel
+358 40 536 0963
jaakko.klemettila@hpp.fi
04.12.2020
Anna-Stephanie Roubier and Klaus Majamäki appointed as Partners
HPP Attorneys Ltd is pleased to announce that it has invited attorneys Anna-Stephanie Roubier and Klaus Majamäki to join the partnership effective 1 January 2021.
Anna Roubier has extensive, over 17 years’ experience in the field of competition law at EU and national level, and unique expertise in EU’s chemicals and product regulation.
“Anna’s strong expertise and experience support HPP’s vision to offer high value added services to our clients and to create excellent customer experiences. Anna’s contribution to HPP’s success in the future is significant”, says Managing Partner Markku Mäkinen.
Roubier has studied inter alia at the College d’Europe (Bruges) and practiced, among others, in Cleary Gottlieb Steen & Hamilton LLP’s Brussel’s office, and in the European Chemicals Agency as a Legal Adviser. Her expertise covers widely legal and procedural issues related to EU chemicals and products legislation.
Klaus Majamäki has strong and versatile expertise in the field of insolvency law. He has independently and successfully handled domestic and international insolvency assignments over many years. Along with insolvency law, Majamäki’s expertise covers widely dispute resolution and public procurement assigments.
“We are extremely pleased to see Klaus take an increasingly responsible role in our Insolvency team. Klaus’ extensive expertise and experience, together with his client- and solution-oriented manner , adds real value to our clients in the future as well. Over the years, Klaus has shown excellent collaborative skills and a resolute, customer-focused approach, which strengthens HPP’s goal to achieve the status of preferred business partner among clients”, says Managing Partner Markku Mäkinen.
Anna Roubier
Partner
+358 40 519 2978
anna.roubier@hpp.fi
Anna Roubier holds LL.B (Hons) Degree from the UK and she has specialized in competition and EU law (LL.M, Bruges) at the College of Europe, Brugge. She also holds Master of Laws -degree from the University of Helsinki. Roubier has worked at HPP since 2018 and has been a member of the Finnish Bar Association between 2007-2010 and again since 2015.
Klaus Majamäki
Partner
+358 50 3737 283
klaus.majamaki@hpp.fi
Klaus Majamäki has graduated as a Master of Laws from University of Helsinki and has worked at HPP since 2008. Majamäki has been a member of the Finnish Bar Association since 2013.
23.11.2020
Non-competition agreements to become subject to compensation in Finland at the start of 2022
A proposed change to the rules on non-competition agreements in employment agreements in Finland should make companies think carefully before insisting on the inclusion of post-termination non-competition restrictions in their employment agreements. Should the new legislation enter into force as currently proposed, the new rules will result in employers being required to pay potentially significant sums to employees in order for such non-competition clauses to be enforceable.
The amendments to legislation are expected to enter into force on 1 January 2022. However, it is advisable to consider the potential financial impact of the proposed amendments now, in order for employers to:
- assess the potential financial burden that the non-competition clauses in their existing employment agreements could give rise to under the new rules.
- evaluate which non-competition restrictions they wish to maintain and those which they do not feel justify the financial burden of maintaining.
- take steps to waive those non-competition clauses for which they do not feel it is commercially beneficial to pay the additional costs.
- amend their hiring process to avoid including non-competition restrictions ‘as standard’ and adopt a more ‘case-by-case’ evaluation of the need for a non-competition restriction in relation to new employees or specific categories of employees.
Current compensation obligation is very limited
Under the current legislation an employer may under certain circumstances restrict an employee’s right to conclude an employment agreement with a competitor or to engage in competitive operations on his own after the employment between the parties has ended. For a non-competition agreement to be valid, a particularly weighty reason for the restriction must exist. A particularly weighty reason is typically the employer’s need to protect its business secrets which the employee becomes aware of during his employment.
Current legislation requires the employer to pay compensation for a post-termination non-competition obligation only, if the restriction exceeds six months. Compensation is payable for the part of the restriction exceeding six months. Compensation must be reasonable. However, the law does not specify what a reasonable compensation is.
Under the current legislation employees who, in view of their duties and status, are deemed to belong to the employer’s management are not entitled to a compensation for a non-competition obligation regardless of the length of the restriction.
All post-termination non-competition obligations to become subject to compensation
The proposed legislative amendments would require an employer to pay a fixed amount of compensation for all post-termination non-competition restrictions relative to the length of the non-competition restriction as follows:
- For non-competition obligations of a maximum of six months: 40% of the employee’s regular salary
- For non-competition obligations exceeding six months: 60% of the employee’s regular salary.
Compensation would be payable for the whole of the post-termination non-competition obligation. As the main rule, the payments would be made following the salary payment periods applicable during the employment.
It is proposed that the compensation obligation would relate also to the employers’ management, which would be a significant change compared to the present.
Under the proposed amendment the employer could waive its right to invoke a non-competition obligation by giving to the employee a notice to terminate the non-competition agreement with a notice period of at least one third of the length of the restriction period, and in any case two months at minimum. Thus, terminating a non-competition agreement of e.g. 12 months, will require a notice period of four months. Waiving the right to invoke a non-competition agreement is no longer possible after the employee has given a notice to terminate the employment.
The compensation obligation would apply until the end of the notice period relating to the non-competition agreement, even if the employment terminated earlier.
Amendments to enter into force on 1 January 2022
The new legislation is intended to apply from 1 January 2022 onwards. It would apply also to non-competition agreements that have been entered into before the said date. However, a one-year transition period during which employers will have time to take steps to adjust to the new legislation and, if needed, terminate non-competition agreements that have been entered into prior to 1 January 2022, is proposed. During the transition period non-competition agreements could be terminated without a notice period.
It is further proposed that the new legislation would not apply to non-competition restrictions exceeding six months that have been entered into prior to 1 January 2022, if the statutory reasonable compensation has been paid partly or in full before the new legislation enters into force.
Time for employers to prepare for the change
Should the new legislation on non-competition agreements enter into force as currently proposed, the financial impact on employers may be significant. Thus, employers with their HR teams should keep a close eye on the progress of the legislative proposal and consider what steps to take in order to mitigate its effect on their existing employment agreements, hiring processes and standard employment agreement templates.
It is advisable to start the process by examining, whether valid grounds for the non-competition agreements already concluded by the employer exist and whether it makes commercial sense to pay the necessary compensation to keep the non-competition restriction in force in respect of a specific employee.
HPP will provide further updates on the progress of the legislative proposal when available.
Get in touch
HPP’s employment law team would be delighted to discuss the impact of the proposed legislative amendments on your business. For any additional questions or need for advice on non-competition obligations, or other employment law advice please contact:
Henna Kinnunen
Partner, Head of Employment
+358 50 342 2245
henna.kinnunen@hpp.fi
Anna Nyberg
Associate
+358 41 501 9395
anna.nyberg@hpp.fi
16.11.2020
European Court of Justice: Transfer of services to the host municipality and the host municipality’s procurement of services from its own in-house unit
(Article in Defensor Legis 100th Anniversary Edition)
In its judgment of 16 June 2020, the Court of Justice confirmed that transfer of responsibilities under the Finnish Local Government Act did not constitute a public procurement contract. In addition, the host municipality, City of Pori, was allowed to acquire the services under the cooperation agreements from its own in-house unit.
Background
In 2012, City of Pori and some of its surrounding municipalities had entered into two cooperation agreements on transportation services. In the agreements, the municipalities transferred the responsibility for arranging the services in question to Pori under the provisions of the Local Government Act. In turn, Pori acquired the services in question from its own in-house unit, Porin Linjat Oy.
The case went to the Market Court, which considered the arrangements to be contrary to the Procurement Act. According to the Market Court, too little of Porin Linjat Oy’s turnover was acquired from City of Pori and too much from other entities. Consequently, according to the Market Court, the company was not an in-house unit of City of Pori.
City of Pori appealed the Market Court’s decision to the Supreme Administrative Court, which in turn ended up submitting a request for a preliminary ruling to the European Court of Justice (CJEU) on the interpretation of the Public Procurement Directive 2004/18/EC in force at the time of the event.
Judgement of the Court
In its judgment C-328/19 of 16 June 2020, the Court confirmed that the transfer of services did not constitute a public procurement contract within the meaning of the EU Public Procurement Directive, but a transfer of powers excluded from the Directive.
The Court had established the conditions for such a transfer of powers in 2016 in case C-51/15 Remondis concerning waste management services. According to the Court, such a transfer of competences concerning the performance of public tasks exists only if it concerns both the responsibilities associated with the transferred competence and the powers that are the corollary thereof, so that the newly competent public authority has decision-making and financial autonomy.
These two cases are the only ones in which the CJEU has taken a detailed position on the conditions under which the transfer of powers to a public entity does not constitute a public procurement contract.
In case C-328/19, the CJEU still had to take a stand on whether Pori could use its own in-house unit, not only to meet the transport needs of its own, but also those of its cooperation municipalities. The answer was affirmative and the CJEU also considered that the services Porin Linjat Oy produced in the areas of cooperation municipalities had to be included in Porin Linjat Oy’s so-called in-house activities.
The judgment of the CJEU could be considered clearly justified, and although the current Public Procurement Directive EU/2014/24 could not yet be applied in the case, the judgment may be considered as a valid legal rule also for its application. Transfer of powers to a host municipality to produce services is merely an internal arrangement of the administration, not a public procurement contract. It is equally clear that the host municipality may use its own in-house unit to produce those services.
Next, it is the Supreme Administrative Court’s turn to resolve the procurement dispute itself. It is obliged to comply with the interpretation issued by the CJEU, which in practice also applies to the interpretation of the Finnish Public Procurement Act.
Jouni Alanen
Partner, Head of Public Procurement
+358 40 775 7171
jouni.alanen@hpp.fi
This article is based on the author’s article, published in Finnish on October 7, 2020 in the Defensor Legis 100th Anniversary Edition; ”Julkisyhteisön tehtävien siirto – hallinnon sisäinen uudelleenjärjestely vai julkinen hankinta?” Link to the article.
03.11.2020
HPP appoints Teija Lius as Senior Counsel in Banking & Finance team
HPP Attorneys is pleased to announce the arrival of Teija Lius as Senior Counsel in HPP’s Banking & Finance team, effective as of 1 November 2020.
Teija is a highly qualified finance lawyer with significant and wide-ranging experience of advising on loan financing, equity investments and fund arrangements in relation to projects, enterprises and funds, within Finland, the wider Nordic region and internationally. Teija’s experience includes drafting, negotiating and completing transaction documents for various financing arrangements, private equity investments and M&A transactions advising the full range of parties involved in complex financing arrangements, with a particular emphasis on advising lenders.
Prior to joining HPP, Teija spent 5 years in Luxembourg with the European Investment Bank managing financing transactions in the Nordic countries. She has also worked in-house at Finnfund (the Finnish Fund for Industrial Cooperation) and as an attorney in leading Finnish law firms.
Commenting on her move, Teija said: “HPP is a firm which has grown its financing and transactional capability significantly in recent years and I am looking forward to joining their rapidly-growing Banking & Finance team to strengthen their ability to advise lenders, funds and other parties involved in complex financing arrangements. I fully intend to continue to work internationally, something which I have always found interesting and challenging, building on my own, as well as HPP’s, connections to financial institutions, funds and leading law firms around the world and continuing HPP’s growth in advising clients in the banking sector. ”
HPP’s Head of Banking & Finance, Antti Rintakoski, commenting on Teija’s arrival, said: “We are delighted that Teija has chosen HPP as the place to continue her career. She has excellent experience which can only strengthen the Banking & Finance team’s capability and make us even better choice for large, complex financing arrangements in a wide range of sectors and industries. Teija’s international experience is particularly impressive and complements the international work HPP is increasingly engaged for. We are very much looking forward to welcoming Teija to the team and HPP”
Teija’s working languages are Finnish and English.
Teija Lius
Senior Counsel
+358 40 559 9872
teija.lius@hpp.fi
14.10.2020
Three significant Market Court rulings regarding exclusion of a tenderer from a tender process
Market Court: The breach of a waste transport agreement was a lawful reason to exclude a tenderer from a new tender process – HPP represented the contracting entity (MAO:419/20)
Background
In 2018, a municipality-owned waste company, Rosk’n Roll Oy Ab, had been arranging a tender for shipment of waste, which falls under the responsibility of the municipality, for 2020-2022. Comparison criteria of the tenders were, in addition to the price, the environmental friendliness of the fuel used in trucks. The procurement was divided into two parts, Western and Eastern Uusimaa.
One tenderer announced that it would use 100% renewable diesel (so-called biodiesel) for transport. The company won both parts of the procurement. The requirement was also recorded in both the negotiation memorandum and – most substantially – in the service contract between the parties.
However, during the production of the service, it was discovered that the transport company used ordinary diesel fuel in more than 50% of the agreed transports, which Rosk’n Roll considered as a material breach of the contract. In addition to this, Rosk’n Roll considered the transport company to have breached the contract with respect to the reporting obligations of spent fuel.
However, the transport company considered that it had acted in accordance with the contract and did not agree to fix its operations as required by Rosk’n Roll. As a result, Rosk’n Roll cancelled the service contract.
Rosk’n Roll was therefore forced to re-arrange competitive tendering of shipment of waste. Rosk’n Roll ended up excluding the transport company from the tender process on the basis of the earlier material breach and the termination of the contract, as well as lack of trust in the company.
The transport company appealed the exclusion decision with the Market Court.
The Market Court’s ruling
The Market Court gave its ruling on 25 September 2020. The ruling and its reasoning were uncommonly detailed — the ruling was no less than 25 pages.
The Market Court confirmed that Rosk’n Roll had had the right to exclude the transport company from the invitation to tender on the basis of a serious breach of contract pursuant to point 9 of subsection 1 section 81 of the Procurement Act. The provision regulates one of the so-called discretionary exclusion criteria contained in section 81. According to the provision, the contracting entity may decide to exclude from competitive tendering a candidate or tenderer:
– whose performances in previous procurement agreements or concession contracts have involved significant or repeated shortcomings in implementing some key requirement; and
– the shortcomings led to premature termination, rescission, damages or other corresponding sanctions with respect to the previous agreement in question.
The Market Court emphasised in its reasoning that the quality of the fuel provided by the transport company to produce its services has been a key factor in the outcome of the tender.
There had been a significant shortfall in the implementation of the key requirement of the contract in the company’s procedure to use other than 100% biodiesel in the transport of the contracting entity. In addition, the contracting entity had been complaining about the breach of contract and the company had not agreed to correct its operations. According to the Market Court, the termination of the contract was not contrary to the principle of proportionality due to the significant shortfall in its implementation.
The Market Court thus ended up with the fact that
‘The contracting entity, taking into account its discretion in the application of section 81 of the Procurement Act, was able to consider the procedure of a transport company in an earlier similar contract as substantially and significantly deficient to the extent that it may have, after rescinding the earlier contract, assessed the exclusion criteria of point 9 of subsection 1 section 81 of the Procurement Act to be fulfilled in the procurement procedure now in question and exclude the appellant from the tender.’
Market Court: The exclusion of the tenderer was in accordance with the Procurement Act, although the breach of contract had not resulted in the rescindment of contract (MAO:420/20)
The Market Court’s second ruling regarding discretionary exclusion criteria involved the procurement of the maintenance services of the municipal areas by the municipality of Pyhtää for a five-year period from 1 June 2020 to 1 June 2025. By its decision of 8 January 2020, the municipality of Pyhtää excluded the tenderer, who had previously served as a service provider for maintenance services, from the tender, inter alia, due to the essential shortcomings of its previous contract performance.
During the proceedings in the Market Court, the municipality of Pyhtää presented a number of individual examples of previous inadequate contract performance by the excluded tenderer, such as the failure to do the winter maintenance of the roads and the reclamations they made as a result of the shortcomings during the five-year contract period. The Market Court ruled that the excluded tenderer had not denied all the shortcomings submitted by the municipality of Pyhtää and that there had been repeated shortcomings in the performance of the essential elements of the service contract concerning the previous contractual relationship. The previous procedure of the excluded tenderer had therefore questioned its reliability to successfully perform maintenance services in the areas covered by the procurement.
The Market Court ruled that the municipality of Pyhtää had been entitled to exclude the tenderer from the tender due to material shortcomings in contract performance under point 9 of subsection 1 section 81 of the Procurement Act. Contrary to the aforementioned Rosk´n Roll’s procurement case, the earlier contract had not been rescinded. However, the municipality of Pyhtää had imposed monetary sanctions on the excluded tenderer for inadequate contract performance, such as price reductions. The conditions for the exclusion of the tenderer due to the material shortcomings of the contractual performances were thus fulfilled.
Market Court: The tenderer could have been excluded from a tender process, although a litigation was pending in the District Court at the same time (MAO:421/20)
The Market Court’s third ruling involved the construction work of a sports park’s equipment storage of which the City of Vantaa had arranged a competitive tendering. The City of Vantaa had excluded the tenderer from the tender process on the grounds that the excluded tenderer, as the main contractor, had made substantially incomplete contract performance within the meaning of point 9 of subsection 1 section 81 of the Procurement Act in an earlier multi-purpose building expansion work where The City of Vantaa was also the contracting entity.
The construction work was completed due to these inadequacies a total of 58 working days late from the timetable agreed in the contract. The expansion of the multi-purpose building also included school’s teaching premises and due to delays in the construction work, a total of 500 students’ teaching had to be organized in temporary facilities at the beginning of the school term. The City of Vantaa withheld from the excluded tenderer a delay penalty of EUR 235,150 from the final instalment of the contract and also submitted a claim for damages of EUR 37,624. In addition, the case is pending in the Eastern Uusimaa District Court.
The Market Court ruled, in accordance with established case-law, that the exclusion of a tenderer under point 9 of subsection 1 section 81 of the Procurement Act does not require a court ruling in a breach of contract dispute. The City of Vantaa had documented the inadequacies on the site documents and also reported these to the excluded tenderer. The City of Vantaa had also informed the excluded tenderer that it was prepared to waive is claim for a delay penalty if the work was completed within the agreed timetable. The Market Court therefore considered that the completion of the work prior to the start of the schools had been a key requirement in the work process.
The Market Court therefore ruled that the City of Vantaa had been able to consider the excluded tenderer’s performance in an earlier similar contract to the extent that the tenderer could be excluded from the procurement procedure under point 9 of subsection 1 section 81 of the Procurement Act due to substantially incomplete contract performance.
Jouni Alanen
Partner, Head of Public Procurement
+358 40 775 7171
jouni.alanen@hpp.fi
Tatu Kärhä
Associate
+358 44 989 9277
tatu.karha@hpp.fi
14.09.2020
Non-competition restrictions in employment agreements ‘as standard’– a risk of significant cost increase ahead due to proposed change in legislation
A proposed change to the rules on non-competition agreements in employment agreements in Finland should make companies think carefully before insisting on the inclusion of post-termination non-competition restrictions in their employment agreements. Should the new legislation enter into force as currently proposed, the new rules will result in employers being required to pay potentially significant sums to employees in order for such non-competition clauses to be enforceable.
The amendments to legislation are expected to enter into force on 1 January 2021. However, it is advisable to consider the potential financial impact of the proposed amendments now, in order for employers to
- assess the potential financial burden that the non-competition clauses in their existing employment agreements could give rise to under the new rules
- evaluate which non-competition restrictions they wish to maintain and those which they do not feel justify the financial burden of maintaining
- take steps to waive those non-competition clauses for which they do not feel it is commercially beneficial to pay the additional costs
- amend their hiring process to avoid including non-competition restrictions ‘as standard’ and adopt a more ‘case-by-case’ evaluation of the need for a non-competition restriction in relation to new employees or specific categories of employees.
Current Regulation
Under the current legislation an employer may under certain circumstances restrict an employee’s right to conclude an employment agreement with a competitor or to engage in competitive operations on his own after the employment between the parties has ended. The current legislation provides that there must be a particularly weighty reason for an employer to enter into a non-competition agreement with an employee. A particularly weighty reason is typically the protection of the employer’s business secrets which the employee becomes aware of during his employment.
The current legislation does not require any compensation to be paid to the employee for the non-competition obligation provided that the restriction does not exceed six months. For restrictions longer than six months (the restriction shall never, however, exceed 12 months) the employee is entitled to reasonable compensation for the part exceeding six months. The legislation does not specify what a reasonable compensation is.
Under the current legislation employees who, in view of their duties and status, are deemed to belong to the employer’s management are not entitled to a compensation for a non-competition obligation regardless of the length of the restriction.
Proposed Amendments
The proposed legislative amendments would require an employer to pay a fixed amount of compensation for all post-termination non-competition restrictions relative to the length of the non-competition restriction as follows:
- For non-competition obligations of a maximum of six months: 40% of the employee’s regular salary.
- For non-competition obligations exceeding six months: 60% of the employee’s regular salary.
The compensation shall be paid following the same salary payment periods as during the employment, unless the parties agree otherwise (such agreement is possible only after a notice to terminate the employment has been given).
It is likely that under the new legislation the compensation obligation will extend also to the employers’ management, which would be another significant change compared to the present.
The proposed legislation does provide for the possibility for the employer to waive its right to invoke the non-competition obligation, if it discovers that the need for the restriction no longer exists. To waive its right to invoke the non-competition restriction, the employer must give a notice to the employee by following a notice period the length of which corresponds to the length of the non-competition obligation. Taking into account that the duration of a non-competition obligation may be as long as 12 months, it may, thus, take even 12 months for an employer to free itself from the non-competition agreement and related compensation obligation. If the employee has given a notice to terminate the employment, the employer’s waiver in unavoidably too late: it can no longer be given.
The compensation obligation applies until the end of the notice period without exception.
Transition Period
The new legislation is intended to apply from 1 January 2021 onwards, but it will apply also to non-competition agreements that have been entered into before the said date. However, a one-year transition period during which employers will have time to take steps to adjust to the new legislation and, if needed, terminate non-competition agreements that have been entered into prior to 1 January 2021, is proposed. During the transition period non-competition agreements can be terminated without a notice period.
It is further proposed that the new legislation shall not apply to non-competition restrictions exceeding six months that have been entered into prior to 1 January 2021, if the statutory reasonable compensation has been paid partly or in full before the new legislation enters into force.
Impact on Employers
From an employer’s point of view, should the new legislation on non-competition agreements enter into force as currently proposed, the financial impact on employers may be significant. Thus, employerss and their HR teams should keep a close eye on the progress of the legislative proposal and consider what steps to take in order to mitigate its effect on their existing employment agreements, hiring processes and standard employment agreement templates.
It is advisable to start the process by examining, whether valid grounds for the non-competition agreements already concluded by the employer exist and whether it makes commercial sense to pay the necessary compensation to keep the non-competition restriction in force in respect of a specific employee.
HPP will provide further updates on the progress of the legislative proposal when available.
Get in Touch
HPP’s employment law team would be delighted to discuss the impact of the proposed legislative amendments on your business. For any additional questions or need for advice on non-competition obligations, or other employment law advice please contact:
Henna Kinnunen
Partner, Head of Employment
+358 50 342 2245
henna.kinnunen@hpp.fi
Anna Nyberg
Associate
+358 41 501 9395
anna.nyberg@hpp.fi
17.08.2020
HPP’s Energy team authored the Finland Chapter in the Chambers Alternative Energy & Power Guide 2020
Three of HPP’s Energy team, Andrew Cotton, Laura Leino and Santeri Järvelä have co-authored the Finland Chapter of the recently published Chambers Alternative Energy & Power Guide 2020.
The guide covers the latest regulation of different aspects of the energy sector in Finland and will be a useful read for energy industry professionals, investors and lawyers from other jurisdictions assisting clients contemplating undertaking projects or investments in the Finnish energy sector.
HPP’s Energy team is one of the leading energy teams in the Finnish legal market, as reflected by its ranking as a Tier 1 energy firm in each year in which leading global law firm directory, Chambers, has issued rankings for the ‘Energy & Natural Resources’ category.
04.06.2020
HPP advises the City of Helsinki in the sale of the iconic restaurant Kappeli building
HPP advises the City of Helsinki in the sale of the restaurant Kappeli building in an open tender process to HOK-Elanto with a purchase price of MEUR 20. As a part of the arrangement, the City of Helsinki leases the land areas located under and beside the building to the purchaser with a long-term land lease agreement. The purchaser has operated in the building as of 1976.
Kappeli is a historical target located on the eastern side of the Esplanadi park and the oldest parts of the building were built in 1867. Kappeli has become known as the gathering place of famous late Finnish artists such as Eino Leino, Akseli Gallen-Kallela and Jean Sibelius.
HPP acts as the legal adviser to the City of Helsinki in the transaction while JLL Finland Oy acts as the financial adviser.
19.05.2020
Who pays for corona delays in construction projects?
The outbreak of the coronavirus continues to affect our daily lives in many ways despite the recently enforced gradual removal of various restrictive measures imposed by governments in different countries, including Finland. The restrictive measures continue to cause significant challenges, among others, to the construction industry. In many situations, the restrictive measures may (continue to) constitute a force majeure event or circumstance. For obvious reasons, much has been discussed and written about the topic lately: what constitutes an event of force majeure, whether the outbreak of coronavirus constitutes an event of force majeure, what the consequences of the same are, how one should act in the event of force majeure etc.
One can also observe that the approach of different legal systems to force majeure concept is slightly different: in civil law countries force majeure is often based on an implicit legal rule (as the case is in Finland), whereas in common law jurisdictions the contract will basically need to contain an express force majeure clause in order to be applicable.
In Finland – despite the implicit rule of force majeure – express force majeure clauses are often adopted in contracts. With respect to construction projects, a force majeure clause is included in the General Conditions for Building Contracts (YSE 1998, “YSE”) which are widely referred to in construction contracts. Under the YSE, the contractor is, as a starting point, entitled to a reasonable extension of time in the event of force majeure. Interestingly, the YSE include a force majeure provision applicable in the state of emergency (as defined in the Finnish Emergency Power Act), which prevail in Finland due to the pandemic. The YSE also include a separate clause on the effect of force majeure on the contract price. According to the YSE, the excessive costs incurred as a result of force majeure shall be divided between the contractor and the client.
- Force majeure in construction contracts in Finland
The fundamental principle and premise of the Finnish contract law is that the contracting parties are bound by the contract. However, under certain conditions, a contracting party may be released from its contractual obligations to the extent and for the duration of which fulfilment of the obligations under the contract is prevented by an event of force majeure.
Under Finnish law, force majeure is understood as an unforeseen event or circumstance which (i) occurs after the conclusion of the contract, (ii) is beyond the control of the contracting parties and which (iii) partially or completely prevents the fulfilment of the obligations under the contract. The party encountering force majeure event or circumstance is obliged to endeavor to overcome the force majeure for example by using another supplier, mode of transport or mode of operation, and to fulfil the obligations under the contract as far as possible.
The YSE apply to a construction contract if the client and the contractor have so agreed. After the Finnish Government declared the state of emergency in Finland on 16 March 2020 and implemented restrictive measures in accordance with the Emergency Powers Act due to the coronavirus outbreak, attention in the YSE terms is drawn to the clause which expressly sets forth that a state of emergency may constitute a force majeure circumstance. Under the YSE, a force majeure circumstance prevails if the state of emergency causes the contractor considerable difficulties in engaging employees and procuring construction goods or otherwise prevents the execution of the obligations under the construction contract in the agreed time. A clause specifically referring to a state of emergency seems to be an exception in an international comparison (e.g. the Swedish equivalent to the YSE, the AB 04 General Conditions of Contract for Building and Civil Engineering Works and Building Services do not include such clause. This is also the case with respect to FIDIC).
As of the beginning of May 2020, the Finnish Government has commenced planning and the execution of a hybrid strategy to gradually remove the restrictive measures. The removal of the restrictive measures will likely raise questions and possibly disagreements about – among other things – at which point of time the state of emergency ceases so that it no longer causes force majeure circumstances to the contractor.
It is worth noting that under the YSE, a mere ending of the state of emergency or removal of certain individual restrictive measures do not automatically mean that the force majeure circumstance would cease. Removal of restrictions mean in practice that the society’s functions gradually return to the pre-pandemic state. However, according to the YSE, a force majeure circumstance may also be caused by “other exceptional circumstance beyond the control of the contracting parties that creates significant difficulty in fulfilling the obligations of the contract and which the contracting party could not have taken into account beforehand and the inconvenience from which he could not reasonably be expected to have eliminated.” Such circumstance might in an individual case also prevail e.g. after the removal of certain restrictions.
- Effect of force majeure on contract price under the YSE
The starting point of the YSE is that the contractor shall not bear the financial burden of the force majeure alone. Instead, the client has to reimburse part of the costs to the contractor.
According to the YSE, in case of force majeure the client shall compensate the contractor for (i) the site security expenses, (ii) heating and other energy costs and (iii) the costs of protecting, servicing and maintaining the site as a consequence of the interruption.
Furthermore, the client shall contribute to (iv) other costs incurred by the contractor, the amount of the contribution amounting to 2 per cent of the average daily cost of the construction project per working day for the first 5 working days of the period of interruption, and 1 per cent per working day thereafter, the average daily cost being calculated by dividing the contract price exclusive of value added tax by the number of working days in the construction contract period.
According to the YSE, the calculation of the costs caused by the interruption shall take into account the shifting of the construction contract period to a less favorable or more favorable time of the year. There are no detailed provisions in the YSE setting out how the said shift in the contract period is in practice taken into account in calculation of the costs, but in many cases the said YSE provision may affect the amount of the compensation.
- Procedural provisions
The YSE also includes procedural provisions that the contractor must comply with in order not to lose its right to an extension of time and reimbursement of costs. According to the YSE:
(i) The contractor shall promptly notify the client in writing of any threat of a suspension of work or a delay on the site due to force majeure. In addition, if the work is suspended or other reasons emerge on the basis of which the contractor believes to be entitled to receive an extension of time or compensation for costs, he must notify the client of the said in writing immediately.
(ii) If the obstacle for the fulfillment of the contractual obligations does not appear to be of short duration, the contractor shall propose to the client negotiations or other measures to reduce the amount of the loss, to clarify the grounds for loss and to calculate the amount thereof.
(iii) The contractor has the burden of prove as regards the impacts of the delay on the fulfillment of the contractual obligations.
During the prevailing corona pandemic, contractors’ performance may in many situations be interrupted or delayed due to the pandemic and disagreements between the contractor and the client may arise as to e.g. whether an event of force majeure is at hand or not and when it ends. It is worth noting that in a concrete disagreement, a mere reference to a corona pandemic or the state of emergency is not sufficient for the contractor to be entitled to extension of time and reimbursement of costs. The contractor must be able to demonstrate which circumstances resulted in the suspension or delay in fulfilling the obligations under the specific contract and that those circumstances were caused by force majeure event or circumstance.
Contractors should record the impacts that the corona pandemic and the restrictive measures have had (and possibly continue to have) on the construction project (delays on supplies, quarantines on employees etc.). Otherwise, a contractor may have considerable difficulties in proving the existence of force majeure and its adverse impacts (ultimately in a court of justice or arbitration) with respect to a construction project under dispute.
It remains to be seen to what extent corona related disputes over the extension of time and excessive costs will end up in court or arbitration. In many situations, resolving disputes amicably between the parties without involving a court of justice or arbitration would be the best and most cost-efficient way, but this is obviously for various reasons not always possible.
Mikko Leppä
Partner
+358 40 750 5663
mikko.leppa@hpp.fi
Iiro Lähdevuori
Senior Counsel
+358 50 527 5357
iiro.lahdevuori@hpp.fi
08.05.2020
HPP appoints Emil Degerholm as Senior Counsel in Transactions team
HPP Attorneys is pleased to announce the arrival of Emil Degerholm as Senior Counsel in HPP’s Transactions team effective as of Monday 4 May. Emil Degerholm is a highly-experienced transactional lawyer with over a decade’s experience of advising on the full range of M&A, joint venture and corporate structuring transactions. He has particular experience of assisting private equity clients on sell-side divestments as well as buy-outs and structured auction processes. His wider experience also includes PE fund-related issues and he also has significant experience of advising on Warranty & Indemnity insurance underwriting processes. His transactional work covers a wide range of sectors, including real estate transactions.
Commenting on his move, Degerholm said: “I am really pleased to join HPP at a time of real growth in its transactional practice. HPP’s team has been increasingly noticeable in the M&A and private equity markets in recent years. I was impressed by the range of expertise the team possesses and their ambition for continued growth both in the domestic M&A market and increasingly in cross-border transactional work, something I have been very involved in and will continue to focus on.”
HPP’s Managing Partner, Markku Mäkinen, commenting on Degerholm’s arrival, said: “Emil’s arrival is another reflection of HPP strengthening our ability to handle high-value, complex transactional work, and our focus on attracting and advising a growing roster of private equity clients, both Finnish and international. Attracting talented and experienced lawyers is important to our future growth and we are delighted that Emil has chosen to join HPP to help us continue the positive development of the firm. Emil’s expertise will add significant value to both our firm and, ultimately, our clients.”
Prior to joining HPP, Degerholm spent 12 years in the Transactions team at another leading Finnish law firm.
Emil Degerholm can be contacted as follows:
Emil Degerholm
Senior Counsel
040 566 2128
emil.degerholm@hpp.fi
05.05.2020
Legal pitfalls in out-of-court restructuring in Finland
General
In the current difficult business environment with significant pressure on many companies’ cashflow resulting in reduced liquidity, companies may find themselves in default or on the verge of defaulting under their financing arrangements. This has already led creditors considering appropriate measures to safeguard their position and re-open the toolbox that was previously in more active use in the aftermath of the financial crisis. In a nutshell, debt creditors quite typically want to act before the debtor becomes insolvent to avoid formal insolvency proceedings such as bankruptcy or official restructuring, which are regulated in Finland by the Bankruptcy Act (120/2004, as amended) and the Restructuring of Enterprises Act (47/1993, as amended) respectively. The debtor, on the other hand, is aiming to preserve its financial position with survival in mind in order to get through the current crisis and continue its business operations in the best possible conditions when the times get better again.
Whilst the parties may have conflicting interests they also invariably have at least one common objective: a controlled solution to the distressed situation in which they find themselves. Formal insolvency proceedings are often associated with negative effects such as adverse publicity, length and inflexibility and thus are not always the desirable option for either the debtor or its creditors. Often, a more viable solution is to restructure the debtor’s financial position through a voluntary restructuring process approved by all parties – or as it is commonly known an “out-of-court restructuring” (given that restructuring measures are not always voluntary as such from the debtor’s or junior creditor’s perspective). A significant advantage of out-of-court restructuring is that it is based on freedom of contract and is, as a result, very flexible. Of course, this could also be seen as a drawback since all the relevant parties involved in the restructuring negotiations need to unanimously agree on the solutions to make them effective which means that one dissenting party can prevent a sensible arrangement being achieved.
Based on our previous experience, there are certain risks for creditors involved in out-of-court restructuring processes. A particular risk worth taking into consideration, and which is easily overlooked, is the risk of a potential claim for recovery of assets where the debtor eventually ends up in formal insolvency proceedings in spite of the out-of-court restructuring. Recovery of assets, as regulated by the Act on the Recovery of Assets to Bankruptcy Estates (758/1991, as amended) (the Recovery Act), is applicable to both bankruptcy and official restructuring and provides that a creditor which has inappropriately received a payment or other benefit from a debtor, may be ordered to repay such payment or the relevant transaction or series of transactions may be revoked and unwound. Even if each party involved in an out-of-court restructuring would consider the measures agreed as being sensible and justifiable, these may ultimately be considered to be unfair preferential treatment of creditors given that such out-of-court restructuring arrangements typically involve only major creditors, not all creditors.
Irrespective of the parties’ efforts to keep the debtor’s business alive through an out-of-court restructuring arrangement, the debtor may eventually end up in formal insolvency proceedings, e.g. if the Tax Authority, a pension insurance company or some other creditor, that has not been involved in the out-of-court restructuring process, is dissatisfied with the solution. At this point, careless restructuring measures may give rise to recovery claims and generally result in the relevant creditors being in a worse position than was intended when taking such measures or a potentially worse position than such creditors would have been in had the out-of-court restructuring arrangement not been entered into.
Grounds for Recovery Claims
As a general rule, a transaction which inappropriately favours a creditor or another party at the expense of other creditors by transferring assets of the debtor beyond the reach of other creditors or which increases the debtor’s liabilities in the five year-period prior to a trigger date (the definition of which depends on the type of proceedings) may give rise to a recovery claim. Significant factors are whether (i) the debtor was insolvent (otherwise than temporarily unable to repay its debts as they fall due), (ii) the transaction contributed to the debtor becoming insolvent, (iii) the creditor was aware or should have been aware of the debtor’s insolvency, and (iv) the creditor knew or should have known of the circumstances, based on which the transaction is to be deemed inappropriate. It should be noted that the general rule sets a relatively high bar for the bringing of recovery claims in order to avoid tenuous or frivolous applications being made.
In addition to this general rule, the Recovery Act contains additional stricter provisions relating to other issues including payments and security arrangements.
Payment of debt made later than three months before the trigger date may be recoverable if it is made (i) via an unusual means (other than money), (ii) prematurely (before becoming due and payable), or (iii) in an amount which could be considered as being significant in comparison to the assets of the bankruptcy estate.
Security granted later than three months before the trigger date may be set aside if (i) no such security had been agreed upon when the secured debt was incurred; or (ii) control of the pledged object had not been transferred or other perfection actions required for the creation of the security had not been taken without undue delay after the secured debt was incurred.
It should be noted that the Recovery Act provides certain stricter restrictions on transactions between the debtor and a related party, e.g. a board member or an affiliate. Such restrictions include extensions to the critical times and presumption of the related party having known of the debtor’s insolvency. Although external financing arrangements do not usually meet the criteria of related party transaction, it is possible for a third party creditor to be deemed a related party if it is considered to have significantly influenced or controlled the decision-making of the debtor.
Some Restructuring Measures
We have listed below some of the typical out-of-court restructuring measures seen in Finland and briefly analyse them in the light of potential formal insolvency proceedings.
1) Covenant waiver and reset
A covenant breach under a loan agreement is often the first sign of financial distress of the debtor. In less serious situations where the debtor is only experiencing temporary issues, a waiver of a single covenant testing period might be all that is required. If more extensive restructuring is needed, waiver of current breaches may be supplemented by adjustments in future testing date frequencies and covenant levels.
As such, waiving or resetting of covenants should not raise any recovery risk concerns but it should be noted that breaching of these covenants and subsequent waiver or reset may indicate financial difficulties of the debtor or even its insolvency. This may mean that, when assessing the merits of a recovery claim, a creditor can be considered as having been aware of the debtor’s insolvency or at least obliged to further examine the financial position of the debtor more closely. A classic oversight is to state in the recitals of a restructuring agreement that the debtor is insolvent which makes it easy for an administrator to subsequently claim recovery as it is apparent that the transactions have been effected when the debtor was insolvent and all parties were aware of the insolvency at the time (unless it also is made clear that the parties justifiably considered that the debtor will be solvent as a result of the restructuring measures).
2) Increased reporting
A debtor’s financial difficulties will likely make its creditors more vigilant which may result in a requirement for more frequent reporting. During the restructuring process, the budget and development of the restructuring (e.g. divestment plan and cost cuts) will often be strictly monitored, which enables the creditors to react swiftly to any defaults or changing circumstances.
3) Increased creditor control
Creditors may feel a need to increase their control over a distressed debtor, e.g., by appointing a board supervisor, nominating a board member and/or submitting material decisions to the creditors for approval. In extreme cases, significant control may give rise to a potential recovery claim on the grounds of a related party transaction having been deemed to arise.
A good rule of thumb is that a board supervisor or contractual arrangements should not cause related party problems, but a board member nominated by a creditor may in some circumstances result in the creditor being a related party. It should also be noted that a board member may be personally liable for violation of law or the Articles of Association of the debtor and regardless of a board member being nominated by creditors, such board member should always act in the best interest of the debtor, not the creditors.
4) Debt rescheduling and/or reduction
One of the most common restructuring measures is rescheduling of the debt by (i) extending repayment dates, (ii) accelerating repayment dates, or (iii) a combination of both (i) and (ii). When planning the rescheduling, it is of the utmost importance that payments under the revised repayment schedule will be considered ordinary (i.e. neither delayed nor accelerated) in the light of the Recovery Act.
The crucial question is whether the ordinary nature of the payments is assessed in the light of the original repayment schedule or the revised repayment schedule. In simple terms, the first interpretation would lead all subsequent repayments to be open to potential recovery whereas there would be no recovery risk at all in the second interpretation. A good rule of thumb is that, to mitigate recovery risk, rescheduling (together with other restructuring measures) should enhance the debtor’s financial position instead of simply ensuring repayments to certain group of creditors.
Sometimes, the creditors may consider so-called ‘haircuts’ to their receivables in the form of an agreement reducing the principal amount of the debt. This might make commercial sense at the time of the restructuring but it should be borne in mind that straightforward reductions are permanent by nature meaning that, in any subsequent formal insolvency proceedings concerning the debtor, the creditor can only lodge a claim for the agreed reduced amount of the debt and not for the original, higher, debt amount. Therefore, it is always worth considering alternative structures in which the debtor would receive the benefit of the reduction in some way or another but the creditor would not permanently lose the ability to recover the full amount of its receivable.
5) New equity injection
An effective and straightforward way to enhance the debtor’s financial position is to inject new equity from shareholders and/or group companies. By way of example, this can take place in the form of commitment letters, guarantees and/or cash.
Insolvency is often a contagious condition in that a group company’s insolvency is often followed by the insolvency of other group companies. If a group company that has made an equity injection subsequently becomes insolvent, it is possible that such equity injections (in practice required by the creditors) could be subject to critical review by the administrator in terms of potential recovery. Given this potential recovery risk, the creditors should not feel too comfortable with equity injections being simply additional money in the structure but also pay attention to well-founded documentation and corporate benefit considerations of such transactions.
6) Sale of non-core assets
The debtor may have assets that are not vital to its business which can be sold to improve its working capital position or repay debts. When negotiating an agreement with creditors concerning a divestment plan and the use of proceeds received from the sale of such assets, it should be noted that using the sale proceeds for the benefit of only certain creditor(s) may give rise to allegations that a creditor or group of creditors has been inappropriately favoured at the expense of other creditors. Such payments could also be considered as being not in the ordinary course of business under the Recovery Act.
7) Additional financing
Whilst the aim in restructuring is usually to decrease the amount of debt, the debtor will have some working capital requirements in order to be in a position to continue its business. This is often solved by existing or new creditors granting a temporary bridge loan or rescue facilities to the debtor on a super-senior basis. This means that this additional financing will be the first in ranking order (based on contractual arrangements) if the debtor subsequently ends up insolvent and subject to formal insolvency proceedings.
The practical consideration for other creditors in this scenario is whether the debtor will survive after the restructuring measures or if the additional super-senior facilities simply reduce their share of proceeds from the bankruptcy estate.
8) Perfection of existing securities and/or creation of new securities
In Finland, it is rather common practice that certain securities, such as pledges over bank accounts and receivables, are perfected (made legally effective against bona fide third parties) only when a default occurs under the financing agreements. It is typical for creditors to require these soft pledges to be ultimately perfected in a distressed situation even if this usually means an additional administrative burden for the debtor (e.g. access to the pledged bank accounts will be blocked and receivables are paid through the creditor etc).
It is typical for creditors to conduct a security review at the beginning of restructuring negotiations to evaluate what securities need to be perfected and what additional securities might be available. These security-related measures basically always improve the creditors’ position but it should be noted that these arrangements are particularly vulnerable to recovery risk and are always closely reviewed by any administrator subsequently appointed in formal insolvency proceedings.
9) Interest rate adjustments / fees regarding waivers, standstill etc.
Creditors typically charge certain fees for restructuring, e.g. waiver, standstill or amendment fees. They may also demand higher interest rate in the future.
Although all these measures are justified in principle, it is possible that the increases and additional fees are so excessive that they could lead to claims for usury or result in an allegation of infringement of the duty of loyalty to the contractual counterparty. The bar for this kind of claim to have any merits is undoubtedly high but, at least in theory, it limits the use of such measures to some extent.
Creditors may also decrease interest rates, waive accrued interest, delay interest payment dates or capitalise interest etc. As mentioned above concerning debt haircuts, various deductions might make commercial sense at the time of the restructuring but it is always worth considering structures in which the debtor would receive the relief in a different way and the creditor would not permanently lose its receivable (so that the full amount of the receivable would benefit the creditor in potential formal insolvency proceedings).
10) Debt-to-equity swap
Depending on a creditor’s internal policies, it may be willing to agree on various reliefs for the debtor against the receipt of shares or option rights. For example, some or all of the debt may be converted into equity securities in the debtor. From a creditor’s perspective, whether debt-to-equity swaps are appropriate in the circumstances depends, firstly, on the estimation of the general future prospects of the debtor and, secondly, whether the debtor is more likely to end up in a bankruptcy or official restructuring.
In a bankruptcy scenario, a debt-for-equity swap is basically identical to simple debt reduction given that this kind of transaction is permanent by nature and the debtor’s bankruptcy would result in the equity being lost in its entirety whereas there is at least some prospect of receiving a part of debt capital back from the bankruptcy estate.
In contrast to the bankruptcy scenario, a debt-for-equity swap might be a very appealing option for unsecured creditors if the debtor is more likely to end up in official restructuring (or to survive without any formal insolvency proceedings). This is because haircuts of unsecured debt are possible in official restructuring without the consent of the creditor but the equity of the debtor cannot be reduced without the consent of the equity holder(s) (even if it can be diluted with certain measures).
Mitigating Legal Risk
Out-of-court restructuring is, in essence, making economic decisions as to how to optimize the outcome for both the debtor and its creditors. These decisions are, to a large extent, linked to a commercial analysis as to what may happen in the alternative scenarios of bankruptcy and official restructuring, whether chosen right away at the time of the initial distress or if taking place at a later stage. This requires close interaction between the debtor or the creditor and their legal and/or financial advisers. In our opinion, mitigating legal risk is often, firstly, creating the right context for financial advisers to make an informed assessment of various potential scenarios and, secondly, pointing out pitfalls in potential strategies as well as providing tools for alternative solutions to mitigate identified risks.
It follows that one of the key means of mitigating legal risk is the proper documentation of transactions including the background to those transactions. For example, the risk of potential recovery claims can arguably never be ruled out, but it can be mitigated through the use of thorough well-drafted documentation. Carefully drafted documentation can effectively evidence that the actions taken were justified and appropriate in the prevailing circumstances. For instance, proper recording of the assessment and existence of corporate benefit and solvency considerations in respect of both the restructuring agreements and the relevant corporate resolutions can make all the difference when assessing transactions in hindsight.
Various restructuring measures may seem plausible at first sight but include material practical risks that are ultimately detrimental to the creditors. Optimally, the creditors should be at least aware of such risks when assessing potential solutions so that they can consider if those are worth taking. In the best case, some of these risks may be avoided after being identified.
Authors / Contacts:
Antti Rintakoski
Partner, Banking and Finance
antti.rintakoski@hpp.fi
+358 50 344 5606
Klaus Majamäki
Senior Counsel, Restructuring and Insolvency
klaus.majamäki@hpp.fi
+358 50 3737 283
Valtteri Jalo
Associate, Banking and Finance
valtteri.jalo@hpp.fi
+358 40 043 1319
About HPP’s Banking and Finance:
HPP’s banking and finance team has wide-ranging experience in complex and often high-value financial arrangements. We assist clients on assignments relating to syndicated lending, acquisition finance, project finance, bonds, high yield bonds, unitranche and direct lending, mezzanine finance, sale and leaseback, factoring and other asset finance, real estate finance and financing rounds of growth companies. We also regularly advise our clients in voluntary restructurings, contingency planning and distressed situations.
In addition to debt financing, our banking and finance group advises on financial regulation in general as well as fund establishment and other fund-related arrangements from both the fund management and investor perspective.
Our expertise is based not only on the ability to consider legal issues, but also on practical business experience. A number of the lawyers in our banking and finance team have gained in-house experience in the banking and financial sectors as well as in listed companies, giving us a good understanding of the commercial drivers in finance transactions.
About HPP’s Restructuring and Insolvency
HPP’s expertise covers all areas of insolvency proceedings and related legal issues based on several decades of experience of advising on and managing insolvency processes. We regularly work with all areas of insolvency law, including administration of corporate restructuring processes and bankruptcy estates and representing creditor’s interests in insolvency proceedings. We also provide our clients with input on potential insolvency issues in financing and corporate transactions including transactions involving distressed assets.
Our experts participate actively in the development of insolvency law and practice in Finland and our lawyers hold positions including the Chair of the Advisory Board for Bankruptcy Affairs, the Bankruptcy Law Revision Committee appointed by the Finnish Bar Association as well as many international insolvency organisations. Our team is recognised internationally as a leading team in Finnish insolvency matters.
27.04.2020
HPP Renewable Energy – market update
In this short update, HPP’s Energy team highlight 2 recent developments which may be of interest to clients and contacts developing or operating Finnish wind farms.
List of critical foreign workers updated to include maintenance workers
The Ministry of Economic Affairs and Employment has updated the list of tasks that are essential from the point of view of security of supply or critical of the operations of the sector in question (3: Energy supply and 5: Construction, the list in Finnish). This update means that, while the list is a guideline only and the Border Guard has the final decision-making authority, workers from outside Finland who are required to travel to Finland to undertake essential maintenance tasks for the operation of energy plants have a strong chance of being deemed to be undertaking essential work and to be granted entry accordingly. The Finnish Wind Power Association has prepared a document for its members to help explain the authorities why it is crucial for certain workers to enter Finland during COVID-19 restrictions. The Border Guard also has a similar form but it’s not so detailed. Clients who are arranging maintenance work at Finnish project sites at the current time should consider providing one of these forms to their contracted maintenance provider to give them the best chance of ensuring their maintenance employees are permitted entry to Finland.
Infrasound from wind turbines does not directly cause adverse health effects
A Government-funded study has investigated whether the infrasound of wind turbines in Finland has harmful effects on human health. The study was carried out as a multidisciplinary collaboration by the Technology Research Center VTT Oy, the National Institute of Occupational Health, the University of Helsinki and the National Institute for Health and Welfare.
According to the results of research which were recently released, the infrasound caused by wind turbines was not found to be linked to adverse health effects reported by research subjects. The project consisted of three research sections: (1) long-term measurements; (2) surveys in areas of wind power operation; and (3) listening experiments in a laboratory. The new research provides useful background information for the land use planning process. It reasserts our current understanding of the effects of infrasound and when correct information is shared widely at the early stage of a project, project approval should be easier to obtain.
Long-term measurements were used to find out what kind of noise wind turbines make to nearby residences. Measurements showed the infrasound levels caused by wind turbines in the residences were of the same order of magnitude as the infrasound levels in the urban environment.
The survey focused on areas where some of the residents living close to wind farms were known to associate symptoms with wind farm infrasound. In the group living less than 2.5 km from wind turbines, 85 percent of respondents did not associate possible symptoms with wind turbine infrasound. Throughout the survey area, within a radius of about 20 kilometers from wind turbines, only five percent of respondents associated symptoms with wind turbine infrasound.
In the laboratory tests infrasound samples recorded in wind power areas were played to the participants. Participants of the hearing test were divided into two groups: individuals who reported experiencing symptoms from wind turbine infrasound prior to the study and individuals who did not report experiencing symptoms from wind turbine infrasound. According to the results of the hearing tests, participants were not able to detect infrasound in the sound samples and there was no difference in the answers between the two different respondent groups.
Physiological measurements performed during the hearing tests also showed no difference in stress indicators between different groups or sound samples. Those participants who had reported experiencing symptoms or a feeling of illness from the wind turbines’ infrasound prior to the study were not more sensitive to detecting wind turbine infrasound than others, and they did not perceive the infrasound as being more disturbing than other participants. Nor did their autonomic nervous system respond more strongly than normal to the infrasound. However, more than half experienced adverse symptoms in different sections of the test day, while only a few of those who had not reported symptoms from wind farms reported mild sensations. However, the reported symptom was related to samples that did not include infrasound (nature videos and sound from wind turbines with infrasound removed).
As a conclusion, the level of exposure with no known health effects, the wide range of symptoms, and the fact that the exposure test could not show direct effects from wind farm infrasound suggest that symptoms can be explained by factors other than wind farm infrasound. Similar multifaceted symptoms at very low exposure levels have also been associated with other environmental factors, such as electromagnetic fields, which have no known health effects.
FWPA’s announcement and links to the study in English
The study in Finnish
For more information please contact Laura Leino (laura.leino@hpp.fi), Jesse Viljanen (jesse.viljanen@hpp.fi) or Björn Nykvist (bjorn.nykist@hpp.fi).
About HPP’s Energy team
HPP is widely-recognised as one of the leading Finnish law firms advising on projects and transactions in the energy & infrastructure sector. Consistently-ranked as a Tier 1 firm in the leading global law firm directories, our multi-disciplinary Energy team has decades of experience of advising project developers, investors, specialist funds and financial institutions on the whole range of legal issues involved in the development, planning, construction, financing and operation of Finnish energy and infrastructure projects. For more information go to www.hpp.fi
22.04.2020
HPP appoints Jaakko Klemettilä as Head of Transactional Tax
HPP Attorneys is pleased to announce that leading tax lawyer, Jaakko Klemettilä, has joined the firm with effect from Friday 17 April, as Head of Transactional Tax. Jaakko brings a wealth of experience on transactional tax matters, with a strong focus on cross-border M&A and investment cases. Jaakko’s client base comprises private equity and strategic investors, specialist funds and transaction insurance underwriters to whom he offers the full range of advice on tax issues arising from the planning, structuring and execution of transactions involving Finnish targets, both on sell-side and buy-side mandates. He has significant experience of advising on the tax issues across a wide range of sectors, with a focus on real estate transactions.
Commenting on his move, Klemettilä said: “Joining HPP will allow me to continue to develop my practice in a modern, progressive Finnish law firm which in recent years has developed into one of the leading Finnish firms in the M&A market, particularly in the cross-border M&A segment. In addition, they have market-leading expertise in advising insurers providing transaction insurance supporting Finnish transactions, an area in which I have significant experience. HPP was a logical next step in my career and I am looking forward to working with the firm’s clients and my HPP colleagues”.
Discussing Klemettilä’s arrival, HPP’s Managing Partner, Markku Mäkinen said: “Attracting a tax expert of Jaakko’s calibre is excellent news for HPP and its transactional clients particularly for our international investor base and the international law firms we work with on Finnish transactions. Jaakko’s arrival further strengthens our Transaction Team’s ability to provide high-quality, comprehensive and pragmatic advice to our clients, which is already highly-regarded by clients, peers and the leading global legal directories.”
Prior to joining HPP, Jaakko was Head of Tax at DLA Piper Finland and before that gained experience in both Big 4 and in-house roles.
Jaakko Klemettilä can be contacted as follows:
Jaakko Klemettilä
Senior Counsel
+358 40 536 0963
jaakko.klemettila@hpp.fi
16.04.2020
HPP and its lawyers ranked among the leading Finnish lawyers in Legal 500 2020
Once again, HPP has been highly ranked in 7 key categories of the latest edition of the Legal 500. The quality of our leading lawyers has been recognised in this leading global directory and a total of 14 HPP lawyers have been listed as recommended individuals in their fields.
HPP would like to thank all our clients and co-operation partners for giving us such positive feedback.
In summary the rankings provide as follows:
HPP Attorneys has been highly ranked and recommended in the following 7 practice areas:
Banking and finance (Tier 3)
Corporate and M&A (Tier 2)
Dispute resolution (Tier 2)
EU and competition (Tier 2)
Maritime and transport (Tier 1)
Real estate and construction (Tier 1)
TMT (Tier 1)
14 lawyers are recommended in The Legal 500 (listed below). 4 lawyers are listed in “Leading individuals” list in the guide to outstanding lawyers nationwide.
Banking and finance:
Antti Rintakoski
Commercial corporate and M&A:
Andrew Cotton (Leading individual)
Antti Säiläkivi
Dispute resolution:
Marko Wainio
Mikko Leppä
EU and competition
Tuomas Saraste
Jouni Alanen
Maritime and transport:
Nora Gahmberg-Hisinger (Leading individual)
Matti Komonen
Real estate and construction – environment:
Kari Marttinen (Leading individual)
Jari Tuomala
Leif Laitinen
TMT:
Kari-Matti Lehti (Leading individual)
Pekka Raatikainen
25.03.2020
HPP highly ranked in Chambers Europe 2020
HPP has been ranked high again in the latest edition of Chambers Europe 2020. Our key practices and practitioners are recommended and ranked high. We are happy to continue to support our clients to reach their business goals with high value-added legal solutions.
HPP has been recommended in the following key practice areas:
Banking & Finance
A client states that Antti Rintakoski ‘s “availability, enthusiasm, extremely service-oriented personality and knowledge in banking and finance has impressed us.” He is active in a plethora of banking and finance matters, including real estate and project financing, assisting with sale-leaseback arrangements and loan arrangements.
Competition
One client attests: “I am absolutely satisfied with them and I don’t think anyone could do any better.”
Maarika Joutsimo advises on various competition law matters including compliance issues and merger control proceedings of transactions. She also assists clients with cartel cases.
Tuomas Saraste is “very easy to work with, very helpful and knows the competition law well.” He advises on competition law aspects of transactions including merger control and on compliance issues. He also assists clients with court cases relating to abuse of dominance and cartels.
Corporate and M&A
A client describes the team as “business-minded and straightforward.”
Björn Nykvist advises clients on energy-related M&A transactions, with particular expertise in the mining sector. He is also held in high regard by clients for his expertise on wind power matters and is highlighted for being “customer service-minded and available.”
Dispute resolution
The practice receives praise for its “excellent communication and constructive and successful analysis of matters.”
Sources hail Marko Wainio for his wealth of experience, with one interviewee describing him as “exceptionally thorough and clever.” He represents clients in corporate and construction disputes, and also regularly acts as arbitrator.
Energy & Natural resources
The team receives praise for its availability, with one client additionally stressing its “very in-depth knowledge about the field, understanding of business needs, efficiency and flexibility.”
Clients are fond of Kari Marttinen‘s “reliable service,” further highlighting his “fair and equal perspective” on the issues at hand. He has particular expertise obtaining permits for a range of different enterprises including power plants, smelters and mines, and also advises on transactions and regulatory matters in the energy sector.
Björn Nykvist advises clients on energy-related M&A transactions, with particular expertise in the mining sector. He is also held in high regard by clients for his expertise on wind power matters and is highlighted for being “customer service-minded and available.”
Clients highlight Tarja Pirinen‘s “commercial understanding and good knowledge” and further state that she is “easy to approach and effective.” She advises on a range of environmental issues, assisting clients with permitting and exploration matters, as well as administrative proceedings relating to compensation claims.
Real estate
Assists clients with a range of real estate deals, including sale and leaseback transactions. Additional experience in lease negotiations. Also advises on construction and development projects, including planning and zoning issues. Particularly noted for its expertise in environment law issues linked to construction ventures, such as infrastructure projects.
Jari Tuomala is praised by sources for being “flexible and solution-oriented.” He has a broad practice, advising on the acquisition and disposal of single assets, portfolios and development projects.
Restructuring & Insolvency
Clients say the team is “easy to co-operate with” and has “good insolvency knowledge.”
Juho Lenni-Taattola is recognised as a highly experienced practitioner. He frequently acts as supervisor and administrator on restructuring and bankruptcy proceedings. He also represents creditors in insolvency mandates.
Sami Uoti is best recognised for his expertise in insolvency-related disputes. He handles restructuring and bankruptcy mandates, often acting as supervisor or administrator. Clients describe him as “very experienced, easy to deal with and very thorough.”
Shipping
One client comments: “They are a solid firm, very commercial and specialised. We got answers very quickly and they have good knowledge.”
Nora Gahmberg-Hisinger is commended by a client for her knowledge of the industry: “She has an extensive understanding of shipping and legal issues related to shipping.” She is the head of the team and often advises shipyards and shipowners in relation to shipbuilding projects. Another client adds: “She is very approachable and is effective at finding practical solutions; she understands the needs of businesses particularly well.”
Matti Komonen is described by clients as “a true expert” in the shipping space. He often advises clients on contentious insurance and transport matters.
TMT
One client praises the team’s “excellent experience in IT contract negotiations,” further noting their “negotiation skills and good relationship with other lawyers.” Another client describes the practice as “a high-quality team with the ability to deliver.”
Kari-Matti Lehti is held in particularly high esteem for his work in the technology sector, where he regularly advises on large IT projects, contract negotiations and outsourcing matters. He acts for clients from the insurance, professional services and technology sectors.
Pekka Raatikainen rises in the rankings due to his impressive market reputation. He assists clients with digitalisation projects and contract negotiations. One client highlights “his experience, negotiation skills, broad understanding of comparable cases and high energy-level.”
HPP wishes to thank its peers and clients for helping us be consistently recognised as a leading Finnish law firm comprising of leading lawyers.
24.03.2020
The effects of COVID-19 on the obligation to pay rent under Finnish lease agreements
Due to the recent infectious disease, COVID-19, virtually all Governments, communities, companies and private persons have been forced to implement special measures to prevent or at least delay the spread of the disease. The Finnish Government has introduced a number of measures to manage the situation with the coronavirus and has declared a state of emergency, which is starting to have a significant restrictive impact on the functions of Finnish society. In particular, these restrictions are starting to have adverse economic effects on almost every industry and sector and a number of Finnish companies are starting to suffer liquidity issues. In particular, the solvency of companies in the entertainment, restaurant and retail sectors, which rely on sufficient volumes of customers to at least break even, has begun to decline at least temporarily.
With regard to commercial lease agreements, the Government’s recent guidelines have an essential impact on both the landlord’s and the tenant’s positions. Premises have been forced to close temporarily or, alternatively, restrictions regarding the use of premises have been set. Currently, the Government has determined that certain categories of public buildings and facilities for example, libraries, museums and swimming halls, should be temporarily closed as well as restricted public gatherings to a maximum of ten persons. This has left private entrepreneurs in a difficult situation, since the Government has only issued certain recommendations in terms of the opening hours of business premises, but has not yet issued any special prohibitions requiring them to close. As a result, some retailers have kept their stores open whereas others have closed due to concerns over coronavirus or with the intention to cut employee and other operating costs.
Based on the Act on Commercial Leases, restrictions regarding the business of a tenant or a downturn in the volume of customers and the consequent adverse trading conditions do not directly entitle a tenant to a release from the obligation to pay rent or any reduction of the agreed rent. However, if restrictions issued by authorities, would lead to a clause being considered as being unreasonable, Section 5 of the Act on Commercial Leases may give grounds for adjustment of such clause. The current restrictions due to the coronavirus are in force temporarily and it is not entirely clear as to whether they constitute a ground which would entitle the tenant to an adjustment of the rent. It may be noted that under Section 25 of the Act on Commercial Leases a tenant has a right to claim the amount of the rent to be reduced via court proceedings. Nevertheless, this provision has been applied very rarely in courts due to the nature of business-to-business agreements. According to legal practice, business-to-business agreements have been settled and terms of such agreements will be capable of adjustment only in very exceptional circumstances. It is not yet clear whether the Finnish courts would consider the impact of coronavirus as being sufficient grounds for deviating from the principle that business-to-business agreements are legally valid on the agreed terms and that adjustment of any term in such agreements is not generally available.
Further, according to Section 21 of the Act on Commercial Leases, a tenant is not obliged to pay rent, or alternatively the amount of the rent can be reduced, during any period during which the premises cannot be used for purposes set out in the lease agreement. While enacting the Act in question, the intended purpose of this Section was primarily to address a situation in which the use of premises was prevented due to the negligence of a counterparty or a fault in the premises. As regards the current circumstances, whether this Section could be applied to the present situation in which business premises should be closed due to rules and regulations issued by an authority, is open to interpretation. With regard to Section 54 of the Act on Commercial Leases, which provides that a tenancy expires in case an authority prohibits a tenant from using premises, it should be noted that only a permanent prohibition from use of premises, for example in case of the discovery of asbestos in premises, would entitle a tenant to invoke this section. As a result, a temporary event, such as the impact of the coronavirus, would not constitute a situation in which section 54 of the Act on Commercial Leases could be applied.
As regards the obligation to pay rent in the current situation, a party may be able to invoke force majeure clauses if the agreement contains such a provision and the wording is applicable to the case at hand. Generally, Finnish lease agreements do not contain a force majeure clause for this kind of unusual situation. Nevertheless, even if the agreement does not contain a force majeure clause, according to Finnish law, a party can invoke force majeure under the general contract law principle. In general, “Force majeure” means an exceptional overwhelming obstacle, which is beyond the party’s control and to which the party has not been able to prepare fairly, for example, a state of war or the measure of an authority which prevents to fulfil obligations in accordance with the agreement. On the other hand, it should be noted that the scope of force majeure is more restricted than in cases where a specific clause of force majeure has been included in an agreement. As a result, while considering the interpretation and adjustment of the agreement, parties shall firstly examine the terms and conditions of the agreement.
On the one hand, the situation considered a force majeure may be at hand if the authorities set out a prohibition requiring certain premises to close, such as restaurants or shopping centres. In this case, a landlord is not able to offer the premises and the tenant is not able to operate business in accordance with the lease agreement and the prohibition causes an overwhelming obstacle in terms of fulfilment of obligations of the lease agreement by either party. On the other hand, if the landlord decides to close business premises such as a restaurant or a shopping centre on its own initiative and without any prohibition from a public authority, the tenant’s operating in the premises has been prevented. In such circumstances, a temporary suspension of the obligation to pay rent or a reduction in the amount of the rent should be possible as in such case, the landlord is responsible for the actions. Where the tenant itself decides to close its premises due to the adverse operation conditions caused by the coronavirus, a force majeure situation would generally not be at hand. A deterioration of the tenant’s liquidity or business conditions would not constitute force majeure that makes the fulfilment of the obligation by the tenant impossible, i.e. issues regarding a tenant’s cashflow would presumably belong to the business risk of the tenant and not to the scope of force majeure.
It should be noted that invoking force majeure is always subject to case-specific consideration. Additionally, invoking force majeure does not mean the total termination of the obligation to pay rent under the lease agreement but may give rise to other remedies such as, for example, a right to claim more time to pay the outstanding amount of rent as well as a waiver of the usual delay consequences due to the situation. In addition, force majeure does not, as a matter of general contract law, primarily entitle the tenant to terminate the tenancy unless the lease agreement itself includes a right for the parties to terminate the agreement, for example when the duration of a force majeure event exceeds a certain period.
All in all, under these exceptional circumstances, for parties, it would be mostly recommended to request commercial discussions with the counterparty to renegotiate and agree on the challenges regarding the fulfilment of obligations under the lease agreement in the present circumstances. The outcome of these negotiations should focus on enabling continuation of both parties’ business after the coronavirus epidemic.
This article has been published on 24 March 2020. The situation with the coronavirus is continuously changing and hence HPP’s lawyers are happy to discuss any questions over the telephone or via email in order to assess a specific set of facts and circumstances and potential legal implications of such facts and circumstances.
Leif Laitinen
Partner
+358 44 750 5610
leif.laitinen@hpp.fi
Jari Tuomala
Partner
+358 40 553 1010
jari.tuomala@hpp.fi
Johanna Roine
Associate
02.03.2020
Comission fines companies for restricting cross-border sales
During the past year European Commission has ordered penalty fines for several companies operating in EU for restricting traders from selling products cross-border. The amounts of penalty fines are high, as the Commission ordered 12,5 million euro fine for Nike, 6,2 million euro fine for Sanrio and 14,3 million euro fine for NBCUniversal for restricting the sales of licenced merchandise products. Moreover, InBev was ordered approximately 200 million euro fine for abuse of dominant position by restricting the cross-border sales of beer. However, the Commission granted 15-40 % fine reductions to the companies due to cooperation with the Commission during the investigation process. Without reductions the amounts of fines would’ve been significantly higher.
In Nike, Sanrio and NBCUniversal’s case the sales restrictions concerned licensed merchandise products (e.g. mugs, bags, clothes, toys) carrying logos or images protected by intellectual property rights, such as trademarks. Nike had agreed to use names, images and logos of inter alia well-known football teams (e.g. FC Barcelona, Manchester United, Juventus) in its merchandise products sold to consumers, as well as Sanrio had agreed to use e.g. of Hello Kitty -character and NBCUniversal of popular films and film characters (e.g. the Minions, Jurassic World, Trolls).
Nike, Sanrio and NBCUniversal had prohibited the traders from selling products within the scope of the agreement out of a specific territory. Moreover, they took several measures in order to prevent traders from selling cross-border. Nike obliged, inter alia, traders to refer orders for out-of-territory sales to Nike, followed by threatening to terminate the agreement if the trader would intend to sell out of its territory and carrying out audits to ensure compliance with the restrictions. Sanrio, who applied similar clauses in its agreements, additionally restricted the availability of different language options in the products sold to traders. NBCUniversal additionally restricted the traders’ rights to sell beyond allocated customers or customer groups as well as restricting online sales. The Commission concluded in its separate decisions that the anti-competitive clauses and measures of the companies infringed EU competition rules.
A dominant beer brewer InBev had upheld a high level of prices for several years in Belgium by restricting the import of its less expensive beer from Netherlands to Belgium. InBev applied its strategy, inter alia, by using different information on the label of beer it sold in the Netherlands in order to make it more difficult to resell the beer to Belgium, by limiting the volumes of Jupiler beer supplied to a wholesalers in the Netherlands and by pressuring the retailers in Belgium and Netherlands to restrict cross-border sales. Commission found these measures as abuse of dominant market position, prohibiting consumers to benefit from the EU’s Single Market.
The decisions mentioned above show that the Commission has taken more critical view on agreements and measures leading to maintenance of separate national markets inside the EU. According to this approach Commission is attempting to enhance the functioning of the Single Market as well as to improve equal chances for European consumers to have the best possible selection for products for the cheapest price. Taking measures prohibiting or restricting traders from cross-border sales by a company always increases the risk of being ordered a penalty fine.
Companies doing business in EU should review their distribution agreements and practices briefly in order to remove possible anti-competitive clauses and measures in accordance with EU competition rules.
Maarika Joutsimo
Senior Advisor
19.02.2020
Real estate transactions involving foreigners in Finland – changes in legislation
A package of legislation concerning foreign ownership of a real estate entered into force in the beginning of the year, facilitating the state to intervene with such real estate ownership that is considered a threat to national security. As a result of the new legislation, every limited liability company at least 10% of the shares of which are held by an actor outside of the European Union (EU) or the European Economic Area (EEA), for example an owner of the shares from in Great Britain or in the United States, must apply for a permission to purchase a real estate in Finland. The background for the amended legislation is the inadequacy of the previous legislation to meet the needs of the authorities in the changed security situation.
From now on, the Act on Transfers of Real Estate Requiring Special Permission (470/2019), that entered into force in the beginning of 2020, requires that buyers from outside the EU and EEA will need a permission for real estate transactions in Finland. With the adoption of the Act, authorities will acquire a more comprehensive understanding of foreign ownership. The purpose is to ensure that adequate and up-to-date information of the parties involved in a transaction will be received in due time. Buyers that fall within the scope of the Act must apply for a permission either before the real estate transaction is completed or within two months from the complition. The permission authority is the Ministry of Defence of Finland. The Ministry will process permission applications and make decisions on permissions in Finland (except for the Åland Islands). The aim of the permission process is not to slow down or hinder foreign real estate transactions in Finland, but it allows the state to intervene in such real estate acquisition that can be considered a threat to national security.
A permission must be acquired when one of the following parties purchases a real estate:
- A private person who does not have a citizenship of an EU member state or a state belonging to the European Economic Area (EAA).
- A company or other entity domiciled outside the EU and the EAA.
- A company or other entity domiciled in the EU or the EAA but in which a private person or entity referred to in paragraphs 1 or 2 has the minimum of ten percent ownership or equivalent effective power over such entity.
The citizenship or domicile of the seller or other transferor of the real estate does not affect the need for a permission.
The permission requirement applies to real estate transactions to be confirmed on or after 1 January 2020. The acquisition of a real estate refers to a legal act by which the ownership of a real estate or a specific share or parcel of it will be transferred to another party. The permission requirement does not apply to transactions concerning purchases of shares of housing or real estate companies, transfers of rental rights or renting real estate. The permission is real estate-specific, and the application shall indicate i.a. the real estate, the parties to the transaction and the intended use of the real estate. It is also possible to request prior information from the Ministry of Defence on whether a permission is needed.
Granting a permission is subject to the condition that the transaction does not cause any risk to national defence, border control or maintenance of emergency stocks of critical supplies. It is worth noting that a real estate transaction is not automatically cancelled upon the refusal of a permission. The granting or refusal of a permission does not in itself affect the consummation of a real estate transaction or the granting of a title. If a real estate transaction has been confirmed despite a refusal of a permission or before the refusal, the buyer will be obligated to sell or otherwise transfer the real estate. If a permission for an acquisition of a real estate is refused, the state shall reimburse the transferee for the financial and other necessary expenses arising from the transaction as well as necessary expenses related to the administration, management and maintenance of the real estate.
In addition, the Act on the State’s Right to Pre-emption in Certain Areas (469/2019) entered into force in the beginning of 2020, giving the state a pre-emptive right to buy real estate in the immediate vicinity of strategic sites. The act facilitates intervening in a real estate transaction before the registration of title. The act facilitates intervention e.g. in a situation in which the actual ownership of a real estate has been hidden by a false arrangement and thus, the permission requirement does not apply. The state has the pre-emptive right regardless of a citizenship of the buyer. In practice, the act affects a very small proportion of real estate transactions, because for its provisions to be applied, the real estate would have to be located in protected areas that are defined for the specific needs of the Defence Forces or the Border Guard. If the state chooses to exercise its pre-emptive right, it will replace the buyer as the transferee of the property at the previously agreed-upon terms and conditions of real estate sale and purchase agreement. It is possible to request prior information from the Ministry of Defence on whether the state intends to exercise its pre-emptive right.
At the same time as the aforementioned acts promoting national security, the Act on the Right of Redemption of Immovable Property and Special Rights in Order to Protect National Security (468/2019) entered into force. The act facilitates intervening in existing ownerships. The act applies to the right of redemption of immovable property and special rights for the purpose of safeguarding the national defence, territorial integrity, internal security, government administration, border security, border control, maintenance of emergency stock of critical supplies, the continued operation of the infrastructure necessary for the vital functions of society or other equivalent public interest. The full compensation payable for the asset subject to redemption shall be equivalent to the highest fair market price.
Redemption of a real estate would always be the last resort in relation to a refusal of a permission and pre-emptive right, as it intervenes with the civil rights. However, the Redemption Act has the widest scope of application and application grounds, meaning that it may be applied in situations where neither refusing a permission nor exercising the pre-emptive right is possible. The Redemption Act complements the package of legislation described above so that the authorities will have the possibility to effectively intervene in different types of situations.
Due to the renewed legislation, the new obligations must be taken into account in real estate transactions where the buyer is an actor outside of the EU or the EEA regardless of the domicile of the actor. Determining the ownership of the parties, the procedure of obtaining possible prior information and applying for the permission as well as the time needed for these measures must be considered as a part of the transaction process. However, since it is estimated that no more than 500 real estate transactions involving buyers outside the EU or the EAA take place annually, the new obligations only affect a small proportion of all real estate transactions in practice.
Jari Tuomala
Partner
Johanna Roine
Associate
14.02.2020
HPP highly ranked in Chambers Global 2020
HPP has been ranked high again in the latest edition of Chambers Global 2020. Both key practice areas, M&A and Dispute resolution and their lawyers, are recommended and ranked high as leading practices and practitioners. We are happy to continue to support our clients to reach their business goals with high value-added legal solutions.
HPP has been recommended in the following two key practice areas:
Corporate and M&A
What the team is known for
Notable practice advising corporates, investors, private equity houses and industrial clients. Particular focus on transactions in the energy and infrastructure sectors, including deals linked to renewable energy. Offers additional experience with transactions in the life sciences sector, and also provides insurance advice. Regularly advises on both domestic and cross-border mandates.
Andrew Cotton is qualified to practise in Finland and as an English solicitor. He advises clients hailing from the technology and infrastructure sectors on cross-border M&A and financing of projects. He garners praise for his dedication and forethought, with one client stating that he is “always there when needed and always looking three steps ahead.”
Dispute resolution
What the team is known for
Established outfit assisting with a range of disputes. Boasts notable expertise in cases involving environmental, infrastructure and corporate law. Also active in matters related to competition law. Advises on both litigation and arbitration proceedings concerning construction disputes, maritime issues and transportation-related disputes. Further experience in handling tax-related cases.
Sources hail Marko Wainio for his wealth of experience, with one interviewee describing him as “exceptionally thorough and clever.” He represents clients in corporate and construction disputes, and also regularly acts as arbitrator. He is renowned as one of the sharpest and most experienced legal minds in dispute resolution in Finland, regularly representing clients on some of the largest and most complex disputes arising in the Finnish market, covering both court and arbitration proceedings. He is also one of the most sought-after arbitrators in Finland.
Sami Uoti is best recognised for his expertise in insolvency-related disputes.
HPP wishes to thank its peers and clients for helping us be consistently recognised as a leading Finnish law firm comprising of leading lawyers.
10.02.2020
HPP’s environmental and tax experts co-authored the Finland Chapter of the Chambers Global Practice Guide – Mining 2020
Tarja Pirinen from HPP’s environmental team and HPP’s tax expert Marko Koski co-authored the Finland Chapter of the Chambers Global Practice Guide – Mining 2020.
The guide covers the latest regulation of different aspects of the mining sector in Finland. It is a useful read for mining industry professionals, investors as well as lawyers from other jurisdictions assisting clients in matters relating to mining projects in Finland or investments in the Finnish mining sector.
HPP is one of the leading service providers in the Finnish legal market advising on the full range of legal issues relating to mining operations, as reflected by its ranking as a Tier 1 firm in each year in which leading global law firm directory, Chambers, has issued rankings for the ‘Energy & Natural Resources’ category. HPP also provides domestic and international clients across a range of industry sectors with extensive legal assistance on corporate transactions, business operations and taxation.
07.02.2020
The transformation of traffic reaches the construction market – need for charging stations for electrical vehicles rapidly growing
The energy efficiency of buildings is a multi-dimensional and broad concept. Innovation and technology make it possible for buildings to support the overall decarbonization of the economy, including in the transport sector. For example, buildings can be leveraged for the development of the infrastructure necessary for the charging of electric vehicles.
The Finnish Ministry of the Environment has drafted a government bill regarding charging and charging stations for electric vehicles. The proposed act is a part of the implementation the changes of the Energy Efficiency Directive (2018/844) regarding buildings.
The draft government bill includes obligations to design and build recharging stations and charging capabilities for electric vehicles. The legislation would oblige the owner of a building to provide residents with access to an electric car charging station without undue delay in situations where the download capability is already installed. The draft bill proposes minimum requirements for the number of charging stations and capabilities depending on the amount of parking spaces and whether the building is residential or not.
In new residential buildings or those, which are object to larger renovations, that have over four parking spaces, the charging capability should be installed in a way, that makes it possible to later install recharging stations to each parking space. In non-residential buildings having over ten parking spaces, in similar situations should be installed one recharging station and the charging capability, so that it later is possible to install recharging stations to at least half of the parking spaces. In case the non-residential building has over 20 parking spaces, recharging stations should be installed to at least ten percent of the parking spaces, instead of one, and the charging capability should be installed in a way that enables later installation of the recharge station to at least half of the parking spaces. In car park-buildings related to residential buildings, the charging capability should on the other hand be installed in a way making it possible to later install recharging stations to each parking space. These obligations should be taken into consideration in the applications for building permits, that issued after March 2021. The non-residential buildings, that have over 20 parking spaces constitute a derogation to this transition period. In these situations, the installation of the recharging stations to at least ten percent of the parking spaces should be done by 2025.
Who shall bear the costs? The draft bill not giving efficient guidance
One of the key issues relating to the construction of charging stations and capabilities is the issue of cost. Who should pay for the construction of charging stations? One option is that construction costs relating to charging stations would be carried by only those housing company shareholders who require the charging capabilities. Alternatively, it could be implemented so that all housing company shareholders pay the costs in the form of common expenses. The draft bill does not provide any clarity on the division of the costs and the decision-making process in housing companies in which there are multiple shareholders owning apartments.
The Limited Liability Housing Companies Act (1599/2009, in Finnish ‘asunto-osakeyhtiölaki’), as such doesn’t include a provision on what housing services the housing company should provide or allow. Therefore, the question regarding the costs of charging stations and capabilities of electric vehicles will be assessed on the basis of general provisions of the act, such as principle of equality and provisions regarding alteration or renovation work.
Section 31 of Chapter 6 of the Limited Liability Housing Companies Act states that “The General Meeting shall decide on modernisation by a majority vote, if the shareholder’s obligation to pay does not reach an unreasonable level and it is standard practice to make the joint acquisition of a commodity, related to the use of a building or real estate, with financing provided through the charge for common expenses.” The regulation aims to protect shareholders by limiting the possibility of the majority to make decisions regarding projects, that would be funded by all shareholders, in cases that the project can’t be considered as “standard practice”. What can be considered as “standard practice” at any given time is subject to interpretation which can change over time. Even though electric vehicles might not be considered common just yet, the construction of charging stations for electric vehicle will, without doubt, be a common feature in the services to be provided by housing companies in the near future. Drawing a line between what is common and what is unusual is certainly not easy and the draft bill is not clear on this issue.
Apply for state aid for the changes in the infrastructure
Giving state aid for the necessary changes for building the recharge stations is aimed to further advance the use of electrical vehicles. The Housing Finance and Development Centre of Finland (ARA) grants subsidies for the building of the infrastructure necessary for the charging of electrical vehicles. Companies owning residential buildings and the parking buildings owned by them, can apply for subsidies. The condition for granting subsidies is that the charge capability is built for at least five recharge stations. The subsidies cover expenses for needs assessment, planning of the project, changes needed to the electrical switchboard, changing of electrical connection, pipe work and cabling and other related standard construction work. It is also possible to get subsidies for acquiring the recharge stations. As a main rule, the subsidies cover 35% of the realised costs, however with a maximum limit of 90 000€. In addition, from the beginning of year 2020, the subsidy is raised to cover 50 % of the realised costs, if at least half of the recharge stations built with subsidy enable 11 kW charging or more. The application should however be submitted before the new infrastructure is built and approved of.
The draft bill received a lot of opinions
It was possible to comment on the proposal until the beginning of November 2019. Indeed, the proposal received numerous contributions from both individual and industrial parties. Most of the feedback was dismissive and, in many respects negative. Many supported the proposal’s idea of electrifying transport but considered the proposed measures to be excessive and unnecessary. According to the current timetable, the aim is to present the modified proposal to the Parliament during the week 9/2020 and the act, if passed by the Parliament, is scheduled to enter into force on 10th March 2020.
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HPP is constantly following this transformation of the real estate market. HPP aims to provide its clients with the most up-to-date advisory services and highlight the future possibilities for its clients involved in the real estate sector.
This is the third article of HPP’s Smart Building article series, where HPP’s real estate team members share their thoughts regarding the transformation of the market. Read more about admissibility of camera surveillance in a housing company and its premisess in HPP’s Partner Leif Laitinen’s and Associate Johanna Roine’s upcoming post of this series.
Leif Laitinen
Partner
Minna Juhola
Senior Associate
17.12.2019
HPP updates its values and purpose
We are a business law firm that finds inspiration in solving our clients’ problems. We have a unique, straight-forward way of functioning, meaning we avoid over-complicating things both in communication with the client and when interacting with our colleagues.
We understand what is essential when dealing with large entities, focus on them, and come up with high-quality solutions serving our clients’ business. We don’t work alone but build genuine partnerships both with our colleagues and clients. From this partnership stems our aim for equality, which we build from the basis of mutual trust and respect.
It is important for us to take action for a more responsible society and also support our clients in finding responsible solutions. We take responsibility together.
PURPOSE:
Straightforward, high-quality problem solving. We’ll take responsibility together.
VALUES:
TRUST
High quality, professionalism and ethics drive our work. We keep the client’s interests at heart and constantly aim to develop our competence. Our clients can always trust in the quality of our work, transparency in pricing and our ability to meet deadlines.
PARTNERSHIP
We are proud of the open working environment in which ownership and collaboration are highly-valued. Having a different opinion is allowed, and injustices can be brought up. Our clients and us are on the same side.
EQUALITY
We respect one another and our business partners, regardless of different backgrounds, personalities and strengths. Everybody has equal opportunities to progress in their career.
03.12.2019
Henna Kinnunen joins HPP partnership
HPP Attorneys Ltd is pleased to announce that it has invited Henna Kinnunen to join the partnership effective 1 January 2020.
Henna is an experienced professional in the field of employment law. In addition to her long-standing experience with employment law assignments as an attorney, she has led the employment law team in one of the biggest employer companies in Finland.
Henna’s expertise covers the full spectrum of employment law matters over the entire duration of the employment relationship, from entering into an employment contract to changes in employer’s business and employment relationships as well as termination of employments. Henna has extensive experience in negotiations relating to employments as well as handling disputes and criminal cases related to employment law.
“Specialising, but, on the other hand, offering clients legal services that cover the needs of all aspects of their business is in the heart of HPP’s services. Employment law concerns all companies and its significance in business has constantly grown. We want to offer our clients leading expertise also in this field. Henna has led the development of our employment law practice and our purpose is to ensure that the practice continues to thrive”, comments HPP’s Managing Partner Markku Mäkinen.
13.11.2019
Moving the immovable to a digital landscape
Real property holds a special position in Finnish property law, not least because of the existence of the real estate register and other registers containing a lot of information on each real estate unit. As regulated as the ownership and transfer of real estate is, share ownership in companies that own real estate has not been subject to such strict legislation. This is about to change with the new electronic register for housing company information (in Finnish ‘huoneistotietojärjestelmä’) that will be applied to both residential housing companies and such mutual real estate companies to which the Limited Liability Housing Companies Act (1599/2009, as amended; in Finnish ‘asunto-osakeyhtiölaki’) is applied.
Electronic share register will supersede physical share certificates
Since 1 May 2019, it has been possible for housing companies to transfer the upkeep of their share register to the National Land Survey (in Finnish ‘Maanmittauslaitos’; hereinafter the “NLS”). All housing companies established on or after 1 January 2019 will automatically have an electronic share register and all housing companies established before that are required to apply for the transfer of the upkeep of the share register which must be completed by the end of 2022. As such, housing company share registers will be fully digitised during the next few years. Consequently, physical share certificates held by the shareholders will also be a thing of the past as, after the housing company has transferred the upkeep of its share register, each shareholder can apply for the registration of their ownership and the annulment of their physical share certificates.
A new shareholder in a housing company with an electronic share register is required to apply for the registration of their ownership and the annulment of any physical share certificates within two months of signing the deed of sale or, in the case of new housing, two months after the transfer of ownership. In any case, the shareholder is required to apply for the registration of ownership within 10 years of the transfer of the upkeep of the company’s share register to maintain their right to attend shareholder meetings. If the share certificate(s) matches the information on the electronic share register, the share ownership will be registered directly. Otherwise, the shareholder will be required to provide additional documentation proving their ownership, in practice, by acquiring a document signed by the Board of Directors of the housing company confirming the share ownership. After the registration of the ownership and the annulment of the physical share certificates, in all subsequent transfers of the shares, the new shareholder shall apply for the registration of its ownership. A prerequisite for the registration is the approval by the registered shareholder or some other form of clarification of the transfer.
For the time being, applications for the transfer of the upkeep of the share registers and the registration of the share ownership are handled by the NLS which maintains the new electronic register for housing company information. An electronic service specifically designed for the transfers is in progress and is scheduled to replace the abovementioned registration process sometime during 2020. Due to an anticipated initial flood of applications, it is recommended to wait for the introduction of this electronic service before applying for the transfer.
Electronic mortgage certificates replace physical ones in January
Meanwhile, the digitalisation process for physical real estate mortgage certificates has already advanced to its last stages and physical mortgage certificates will soon be fully replaced by their electronic counterparts. During the past few years, a transition into using electronic mortgages has taken place. This means that after the mortgage and the mortgage holder have been registered in the title and mortgage register, no physical mortgage note is given as a proof of the mortgage, but only a decision by the NLS regarding the confirmation of the mortgage. Electronic mortgages cannot be transferred physically, and all transfers must be done either via an electronic service maintained by the NLS or an application to the NLS. This amended procedure should be taken into account and reflected in real estate transaction documentation and mortgage transfers should be done electronically or mortgage transfer applications should be signed and provided as closing deliverables.
Since 1 June 2017, the NLS has only given mortgage notes in electronic form and starting 1 January 2020, mortgages in paper form will no longer be used as collateral. This applies to both new debt and existing debt. In practice, as there are still a fair amount of mortgage notes in paper form, it is highly likely that the NLS will receive a high volume of conversion applications as 2019 comes to a close, which means that the processing times may be slower than usual.
Taking into account that real estate law is traditionally quite static in nature and legislation is typically revised slowly and incrementally, these new digital systems have been introduced rather quickly. At the same time, electronic systems are very well suited for Finnish real estate law that already has highly-specific, well-maintained and trusted registers and there is certainly still much more room for digitalisation in the field.
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HPP is constantly following this transformation of the real estate market. HPP aims to provide its clients with the most up-to-date advisory services and highlight the future possibilities for its clients involved in the real estate sector.
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This is the second article of HPP’s Smart Building article series, where HPP’s real estate team members share their thoughts regarding the transformation of the market. Read more specifics about the regulation on electric vehicle charging in HPP’s Partner Leif Laitinen’s, Senior Associate Minna Juhola’s and Associate Trainee Johanna Heinonen’s upcoming post of this series.
Leif Laitinen
Partner
Oskari Kemppinen
Associate
10.10.2019
Smart building law
What’s ‘smart building law’ all about?
The real estate market, and the regulatory environment relating to it, has traditionally been considered as being a stable sector – economically even a safe haven – which has been subject to slow structural changes. However, recent megatrends, like the increase of digitalisation in everyday life and the transformation of the services markets are also bringing interesting changes to the real estate market. These changes create new business opportunities for all sector participants including investors, contractors and developers.
While the regulation of real estate, construction and buildings has traditionally been primarily limited to liability issues, land use, security, ownership and usage matters, a new approach to building rules and regulation can already be detected. Smart building law can simply be seen as a developing area of law and regulation aimed at encouraging current and future construction, operation and usage of buildings more intelligently, without forgetting the aspect of sustainability.
Digitalisation and regulation
Digitalisation has already brought changes to our daily life. A good example is electric vehicles (EVs). Currently a Government Bill regarding charging capabilities and stations of EVs is under preparation, which aims to implement the EU Energy Efficiency Directive 2018/844/EU. Apartment owners purchase EVs which need to be charged at home. An apartment building needs to estimate the number of chargers needed, the most effective and safe technical alternatives and the impacts on the energy efficiency of the building.
An interesting question is also the allocation of costs – who is responsible for the expenses of up-grading the building technology? Should the chargers be purchased by the housing company which provides services in respect of the apartment building or by the individual apartment owners themselves? If there are several individual shareholders who are willing to purchase and pay for the chargers, do they need the acceptance from the other apartment owners in the same apartment building as well? The purchaser can also consider applying for a subsidy, since the Housing Finance and Development Centre of Finland (ARA) has granted financial aid for apartment housing companies to build chargers to EVs from 2018. In the recent budget proposal of the Finnish Government for 2020, the amount of subsidy was tripled demonstrating that the development of smart buildings is receiving support from the very highest level.
As another example, since November 2013, it has been possible to apply for a real estate mortgage in the form of a physical mortgage certificate or as an electronic mortgage certificate. Further, the 2016 regulatory reform of the Code of Real Estate (540/1995) provided for the digitalisation of the real estate mortgage certificates, as from 1 June 2017, real estate mortgage certificates were issued in electronic form only.
By the end of 2019, any mortgage certificates that are in paper form should be converted into electronic form, as from the beginning of 2020, an effective mortgage right needs to be established by using an electronic mortgage certificate. In other words, physical mortgage certificates may be used to establish effective mortgage rights only until the end of 2019.
As a part of natural development, the Act on the Residential and Commercial Property Information System (1328/2018), which came into force from the beginning of 2019, requires that new housing companies and mutual real estate companies, to which the Finnish Housing Companies Act (1599/2009) is applied, are founded electronically and the share registers are kept in electronic form maintained by the National Land Survey of Finland. The deadline for existing housing companies to transfer their share registers into the new register is 31 December 2022.
There is also currently an ongoing reform of the Land Use and Building Act (132/1999) (“LBA”). The new Government Programme outlined the main objectives of the reform, one of them being the improvement of digitalisation in building and land use. There is a plan to create a nationwide digital register of the built environment and a data platform on which to make land use and construction decisions.
These are only a few regulatory examples of digitalisation in real estate sector. Obviously, digitalisation is an important driver in future real estate development, and it will bring substantial change to the real estate sector, its day-to-day business and its regulatory environment.
Future use of buildings – SpaaS and LaaS
There are a number of well-known businesses which are based on platform economy business models. By way of example, Airbnb has successfully disrupted the tourism and hotel business, facilitating the use of real estate assets more effectively, as a result creating new service markets around private apartments.
As another example, the shared usage of space is already developing. Space-as-a-service (SpaaS) is a business model enabling us to have a new approach and view on using joint spaces – thanks to technological solutions and the changing ways of living and working. Apart from traditional commercial leasing, SpaaS companies often offer more flexible, short-time options that involve leasing a single desk for two months or a closed office area for five people for a longer period. This has already changed the way commercial landlords and investors think about lease terms, building solutions and adaptable use of facilities. Consequently, the role of commercial landlords is in many cases changing from pure rent collectors to more value-added service providers.
A similar phenomenon to SpaaS is Living-as-a-service (LaaS) where customers are charged a fixed monthly fee for rent, utilities and services. As an upgrade to a traditional apartment lease, the charge can cover for example furniture, utilities and additional services such as cleaning, surveillance and communication. LaaS can mean in practice co-living, where several tenants share a house or a larger apartment together with related services.
SpaaS and LaaS consists of three parties: the owner of the premises, the business operator and the lessee. As we know from the experience with Airbnb, from a legal point of view the new models of doing business can be complicated. The current regulatory environment, such as the Act on Residential Leases (481/1995) or the Act on Commercial Leases (482/1995), can be partly out-dated when addressing the demands of the new business models, for instance, with respect to how liabilities are allocated and what kind of contractual arrangements are most feasible.
Towards sustainable buildings
Buildings are responsible for approximately 40% of energy consumption and 36% of CO2 emissions in the EU, making them the single largest energy consumer in Europe. The energy efficiency and the sustainability of building solutions is therefore obviously an important part of the development of the real estate sector in the future.
The EU has established several directives to boost the energy performance of buildings requiring, amongst other items, that all new buildings must be nearly zero-energy buildings (NZEB) by the end of 2020. NZEBs are buildings of very high energy efficiency and very low-energy needs, the supply of which should be covered to a very large extent by renewable energy.
In Finland, the Ministry of Environment aims to include regulation on carbon footprint in the National Building Code by mid-2020. Therefore, it is no surprise, that as preparation for this change, the deployment of sustainable solutions in the real estate sector is growing substantially.
The production of energy is transforming, and also private households and apartment buildings can become energy producers and an active part of the overall energy system. There is a growing interest towards utilizing solar power and energy storage systems to increase both self-sufficiency and value of buildings and real estate. As a result, several new legal issues in relation to apartment buildings and households in terms of decision-making, permits, energy sales, service offering, and contractual responsibilities must be taken into account in order to ensure this new reality is legally compliant.
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HPP is constantly following this transformation of the real estate market. HPP aims to provide its clients with the most up-to-date advisory services and highlight the future possibilities for its clients involved in the real estate sector.
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This is the first article of HPP’s Smart Building article series, where HPP’s real estate team members share their thoughts regarding the transformation of the market. Read more specifics about the electronic register for housing companies and electronic mortgage certificates in HPP’s Partner Leif Laitinen’s and Associate Oskari Kemppinen’s upcoming post of this series.
Leif Laitinen
Partner
Minna Juhola
Senior Associate
Johanna Heinonen
Associate Trainee
02.10.2019
HPP’s real estate and banking partners endorsed as rising stars – meet them at the EXPO REAL
HPP’s real estate partner Leif Laitinen has been endorsed as a rising star in Euromoney Expert Guide 2019 (Real Estate). Leif has also been shortlisted for the 2019 inaugural Euromoney Legal Media Group Europe Rising Stars Awards in the practice area awards for real estate. The Awards celebrate rising star lawyers across 20 practice areas and for the purposes of these awards, “rising stars” are defined as lawyers under the age of 40 on November 1 2019.
HPP’s banking and finance partner Antti Rintakoski has been endorsed as a rising star in the 2020 Edition of IFLR1000 in the practice area banking. IFLR1000, part of Euromoney Institutional Investor, focuses on ranking law firms and lawyers in over 120 jurisdictions based on financial and corporate transactional work. The rankings are based on a mix of transactional evidence, peer feedback and client feedback.
Leif Laitinen and Antti Rintakoski will be attending the largest international trade fair for real estate and investment in Europe, the EXPO REAL, in Munich between 7 – 8 October 2019.
23.09.2019
IBA Annual Conference Seoul 2019
The International Bar Association (IBA) Annual Conference will be held in Seoul on the 22-27 September 2019. Our attendees are Björn Nykvist, Mikko Leppä and Andrew Cotton.
The Annual Conference is the premier conference for legal professionals worldwide to meet, share knowledge, network, build contacts and develop business. It also serves to advance the development of law and its role in business and society and to learn from the experience of others.
06.09.2019
HPP’s Energy team authored the Finland Chapter in the Chambers Alternative Energy & Power Guide 2019
Three of HPP’s Energy team, Andrew Cotton, Laura Leino and Suvi Kurki-Suonio have co-authored the Finland Chapter of the recently published Chambers Alternative Energy & Power Guide 2019.
The guide covers the latest regulation of different aspects of the energy sector in Finland and will be a useful read for energy industry professionals, investors and lawyers from other jurisdictions assisting clients contemplating undertaking projects or investments in the Finnish energy sector.
HPP’s Energy team is one of the leading energy teams in the Finnish legal market, as reflected by its ranking as a Tier 1 energy firm in each year in which leading global law firm directory, Chambers, has issued rankings for the ‘Energy & Natural Resources’ category.
27.05.2019
The modification of the Bankruptcy Act enter into force on 1 July 2019
The modification of the Bankruptcy Act has finally been accepted and the new Rules. Partner Sami Uoti acted as a member of the working group: “I am grateful that I have been able to influence to this new legislation as a member of the working group. I am also very satisfied of the results of our work”.
22.05.2019
HPP authored the Finland Chapter in the Chambers Mining Guide 2019
Partner Tarja Pirinen from HPP’s environmental team authored the Finland Chapter of the Chambers Global Practice Guide – Mining 2019.
12.03.2019
HPP ranked highly in the 2019 edition of the leading global law firm directory, Chambers and Partners
8 core practice areas and 13 lawyers were ranked as notable individuals in their chosen specialist legal field with Head of Energy & environment Kari Marttinen and Head of TMT Kari-Matti Lehti, both ranked as leading individuals in their practice area, reflecting HPP’s market-leading strength in Energy & natural resources and TMT respectively.
HPP has been recommended in the following 8 practice areas:
Competition
Corporate and M&A
Dispute resolution
Energy and natural resources
Insolvency
Real estate
Shipping
TMT
Clients’ responses to our products and services:
Competition
“comprehensive skills and ability”
Corporate/M&A
“solution-oriented”
“high responsiveness”
Dispute resolution
“very responsive and co-operative”
“ready to go the extra mile”
Energy and natural resources
“one of the best law firms in Finland on the energy and natural resources sector”
Insolvency and restructuring
“They do give value”
“They are very strong in insolvency”
Real estate
“extremely reliable and flexible”
“effectiveness and ability to focus on the major issues”
Shipping
“one of the go-to firms in shipping”
“pays the necessary attention to the matter”
TMT
“very efficient work”
The full list of HPP lawyers ranked is as follows:
Nora Gahmberg-Hisinger, Shipping
“she knows the industry well, and has a practical understanding of the business”
Maarika Joutsimo, Competition/European law
“very skillful in the important matters”
Matti Komonen, Shipping
“a good litigator, and very service-minded”
“very proactive”
Kari-Matti Lehti, TMT
“great technical and commercial knowledge”
“demonstrating leadership in difficult negotiations”
Juho Lenni-Taattola, Restructuring and insolvency
“He is very experienced as an insolvency lawyer”
Kari Marttinen, Energy and natural resources, real estate
“great knowledge of the waste and recycling industry”
Björn Nykvist, Energy and natural resources
Tarja Pirinen, Energy and natural resources
Pekka Raatikainen, TMT
Tuomas Saraste, Competition
“very good business acumen”
“practical and workable solutions”
Jari Tuomala, Real estate
“quick and effective”
“comprehensive understanding of the customer’s needs”
Sami Uoti, Dispute resolution, insolvency and restructuring
“besides his own expertise, he is willing to take into account the client’s input”
“a well-regarded practitioner”
Marko Wainio, Dispute resolution
“a brilliant legal mind”
HPP wishes to thank its lawyers and clients for helping us be consistently recognised as a leading Finnish law firm comprising of leading lawyers.
06.03.2019
HPP strengthens real estate team with Leif Laitinen joining as Partner
HPP is pleased to announce that Leif Laitinen has joined the firm as Partner effective from 18 March 2019. With the addition of Leif to the HPP partnership, the firm further strengthens its expertise in real estate transactions, particularly with a cross-border element.
Leif has significant experience in domestic and, in particular, complex cross-border real estate transactions, including real estate portfolio and real estate fund investments and sale and leaseback arrangements. His other areas of expertise include mergers and acquisitions and private equity transactions. He also provides general corporate, contract and real estate advice. He represents international, Nordic and Finnish real estate funds, major investors and private and public companies. Leif’s working languages are Swedish, Finnish and English.
“We are very pleased to have Leif joining the HPP team to strengthen our growing team of experts focusing on real estate transactions. Leif brings experience, knowledge and expertise which will be very valuable to our clients”, commented HPP’s Managing Partner Markku Mäkinen.
Leif is a graduate of the University of Helsinki and has an LL.M. degree from Georgetown University Law Centre in Washington D.C., the US. Leif is a member of the Finnish Bar Association and is also admitted to the New York State Bar. Mr Laitinen joins HPP from Aleksandra Attorneys, a boutique law firm focusing on real estate transactions which he co-founded in 2016.
26.02.2019
Autonomous Shipping and Liability from a Finnish Perspective
Maritime automation and fleet intelligence in maritime cargo logistics face the same digitalisation challenge as in Smart Mobility (MaaS) in passenger transport.
Recent Developments
Finland is investing in maritime automation and fleet intelligence in many ways. The Finnish legislation was recently amended to enable development of autonomous shipping by allowing shipowners to apply exemptions to watchkeeping and minimum vessel manning requirements. Remote pilotage, i.e. pilotage taking place outside a ship, is allowed in Finnish waters as of 1 February 2019. Finland is also actively participating in an assessment process in the IMO to determine how IMO conventions may apply to autonomous ships with different degrees of autonomy.
Major advances were made in autonomous shipping in December 2018: Finferries and Rolls-Royce demonstrated the world’s first fully autonomous ferry, and Helsinki Region Transport (HSL) and ABB successfully tested to remotely operate a ferry. Autonomous shipping is also reflected in the educational field, Novia University of Applied Sciences has launched a master’s degree programme on autonomous maritime operations. The above mentioned are only a few examples of the emerging sector of maritime automation in Finland.
Allocation of Liabilities
Vessel automation raises many kinds of questions in the field of regulation, one of which is the allocation of liabilities. The Finnish Maritime Code (674/1994, as amended), and more precisely part III of it, includes the provisions regarding liability. The general provision on liability can be found in section 1 of chapter 7, under which the shipowner (FI: laivanisäntä, SV: redare) shall be liable to compensate damage caused by the fault or neglect of the master, crew or others performing services for the ship.
In the light of this provision, what would be the liability of a programmer of an autonomous ship control system or other new parties involved? Could product liability, regulated in the Product Liability Act (694/1990, as amended) in Finland, be applied to damages caused by autonomous vessels or vessel equipment, or some components or software thereof? But how would the different types of liability be integrated? Allocation of liabilities between a shipowner, programmer, shipbuilder, subcontractor and marine insurer, and possible other parties involved, requires new approach and thinking.
When reviewing the allocation of liabilities, remotely controlled vessels and autonomous vessels should be distinguished from each other. In practice, the autonomy level may vary which is likely to make a liability framework multiform. The IMO classifies the different degrees of autonomy as follows:
Degree one: Ship with automated processes and decision support: Seafarers are on board to operate and control shipboard systems and functions. Some operations may be automated and at times be unsupervised but with seafarers on board ready to take control.
Degree two: Remotely controlled ship with seafarers on board: The ship is controlled and operated from another location. Seafarers are available on board to take control and to operate the shipboard systems and functions.
Degree three: Remotely controlled ship without seafarers on board: The ship is controlled and operated from another location. There are no seafarers on board.
Degree four: Fully autonomous ship: The operating system of the ship is able to make decisions and determine actions by itself.
Shipowners of conventional vessels should not be forgotten either, as autonomous and remotely controlled ships will sail side by side with conventional ones. Firstly, this begs the practical question of how ship-to-ship communication between ships is going to be arranged. Secondly, when it comes to a possible collision between a conventional and an autonomous ship or a conventional and a remotely controlled ship, the allocation of liability might demand re-evaluating.
Future Insights
Neither international maritime conventions nor Finnish laws have been prepared with a view to autonomous shipping. Consequently, for example the liability provisions will need to be interpreted in a new way or to be amended. Stakeholders in the maritime industry should prepare themselves for new, and perhaps creative, ways of thinking and interpreting liability questions that will arise. And one thing is sure, they will arise.
Because maritime and land transport, as well as cargo and passenger traffic, face similar challenges and are often also closely integrated, it would be recommendable to apply the same best practices to the whole transport chain. This could mean applying similar principles and regulatory approaches in liability issues to all modes of transport.
Nora Gahmberg-Hisinger
Partner
Alexandra Heikkonen
Associate Trainee
13.02.2019
Antti Rintakoski joins HPP partnership
HPP Attorneys Ltd is pleased to announce that it has invited Antti Rintakoski to join the partnership effective 1 January 2019.
Antti Rintakoski has extensive experience in both domestic and international debt and equity financing arrangements. His areas of expertise include corporate and real estate finance, project and infrastructure finance, bonds, factoring, leasing and voluntary restructuring.
Rintakoski is known for handling many of the most challenging and significant assignments in the Finnish corporate finance market. In addition to his work experience in leading law firms, Rintakoski has developed his expertise during time spent working in both OP Corporate Bank and the European Investment Bank. As a result, he has very good knowledge of the operating environment for financial institutions and their requirements.
“Expertise and understanding of our clients’ businesses are the core of HPP’s services. Antti has shown himself to be a top-class legal expert in relation to the banking and finance sector and capable of bringing real added value to our clients with his experience, knowledge and expertise. Antti is a great example of HPP’s principle of specialising in the essential”, commented HPP’s Managing Partner, Markku Mäkinen.
Antti Rintakoski is a graduate of the University of Helsinki and has worked for HPP since 2018.
28.01.2019
ECJ confirms insurance premium tax is payable in the jurisdiction in which the policyholder is established
EXECUTIVE SUMMARY
On 17 January 2019, the European Court of Justice (“ECJ”) gave its judgment on the question of the right Member State entitled to levy tax on insurance premiums, which was referred to the ECJ by the Supreme Administrative Court of Finland. According to the judgment, when an insurance company established in a Member State offers insurance covering the contractual risks associated with the value of the shares and the fairness of the purchase price paid by the buyer in the acquisition of an undertaking, an insurance contract concluded in that context is subject exclusively to the indirect taxes payable on insurance premiums in the Member State where the policyholder is established. The SAC will give its final ruling on the matter based on the judgment, which is expected within approximately 2 months.
Background
On 4 November 2016, the Central Tax Board (“CTB”) of Finland gave a preliminary ruling (2016/49), in which it assessed the liability to pay the insurance premium tax (“IPT”) at 24% in relation to a buy-side Warranty & Indemnity (“W&I”) insurance. According to the ruling, which was given in respect of a buy-side W&I policy issued in respect of a Finnish target, IPT at 24% should be levied on the premium payable by the insured. According to the CTB, the location of the place of business of the target company was relevant, as the policyholder is a legal person and the insurance policy covers risks caused by the operations of the target company. In that case the state of location of the target company was also the state of location of the risk.
The CTB’s preliminary ruling is not binding as it was appealed to the SAC. The question to be resolved by the SAC was how to interpret the provisions regarding the state in which the risk is located of the Directive 2009/138/EC (Solvency II, recast). The SAC decided to postpone the processing of the case and requested a preliminary ruling from the ECJ, which was given on 17 January 2019.
ECJ Judgment of the ECJ (C-74/18)
According to the ECJ judgment, when an insurance company established in a Member State offers insurance covering the contractual risks associated with the value of the shares and the fairness of the purchase price paid by the buyer in the acquisition of an undertaking, an insurance contract concluded in that context is subject exclusively to the indirect taxes on insurance premiums in the Member State where the policyholder is established. According to the ECJ, it should be primarily considered that the place where the activity is carried out whose risk is covered by a W&I policy, is the place of establishment of the policyholder acting either as the seller or as the buyer, and not the place of establishment of the target company.
Further updates and information
HPP will update clients on the outcome of the SAC process as is becomes available (expected in spring 2019).
The ECJ ruling is contrary to the ruling given by the CTB. Due to the judgment by the ECJ, we expect the Finnish Tax Administration to amend its current guidelines on the tax on insurance premiums after the matter has been further evaluated in the Finnish Tax Administration. For now, the ECJ judgement should be followed by insurers in respect of W&I policies issued in relation to Finnish target.
HPP has a market-leading team advising underwriters looking at underwriting Finnish M&A deals and tax risks and HPP’s experts would be happy to assist on all legal issues in Finland related to insurance and specifically W&I and specific tax insurance.
Contacts:
Andrew Cotton
Partner
+358 45 657 57758
andrew.cotton@hpp.fi
Marko Koski
Senior Advisor / Head of Tax
+358 44 758 2475
marko.koski@hpp.fi
23.01.2019
Who is responsible for the ethics of a self-driving car?
The greatest challenge of autonomous driving will be the replacement of the human power of deduction with artificial intelligence. At the moment, a machine cannot be taught to make purely abstract decisions; instead, all the reaction models are the consequence of pre-programmed solution models.
In problematic situations, the machine is programmed to naturally select the option that causes the least damage, in other words to avoid collisions and bodily injuries, which is called a win-lose situation. The challenge is situations where none of the assumed options create a positive outcome, in other words so-called lose-lose situations. How to programme a machine to solve an ethical problem, and who decides how to solve it?
Let’s imagine a scenario where a child suddenly jumps in front of the car, and the only way of not hitting the child is to drive the car off the road which, in turn, has a high chance of causing the death of the driver and other passengers. How should the car be programmed to react in such a situation? Should it spare the passengers by killing the child or kill the passengers and, thus, save the child? The machine may also face situations where it uses other viewpoints to make the decision: old or young; one person or several people?
Figure: Ethical cars
Source: MIT Technology Review.
Current legislation is not very helpful in terms of ethical choices. The Constitution of Finland stipulates that each person has the right to life and integrity (section 7) and that no one shall be treated differently from other persons on discriminatory grounds (section 6). In light of this, it is impossible to decide who is hit or how the person to be hit is selected.
Numerous discussions find the most ethical solution to be a model where the vehicle should continue on its selected lane, in other words hit the people who would be directly in front of it. This model would not consider the personal characteristics or number of people. This is ethically based on the perspective that the better or at least not quite as bad an option is to let death happen, instead of actively selecting a person who will die.
Which ever solutions are decided upon, they must be predictable and enable consistent compliance. Such decisions cannot be made by individual businesses or programmers; ethical logic must be based on governmental decision-making and legislation. A separate challenge is posed by situations where different countries would apply different ethical perspectives to solve the problem. Should the features of the car change according to the country in which it is used at any time?
In collisions, the most likely option is a solution model where the passengers in the vehicle are protected at the expense of others. Self-driving cars would probably not become a huge commercial success if they were programmed to turn against their owners in emergencies. On the other hand, a setting can be programmed in which the passenger gives their consent to this option as a potential solution. Such consent would be required from each passenger for each individual drive. The question, of course, is: who among us would be prepared to give such consent?
The increase of smart features in cars puts pressure on existing legislation. At the moment, the driver is responsible in each situation, regardless of assistive functions. An example of this is the accident in Florida which was caused by Tesla’s Autopilot function and resulted in the driver’s death. The National Highway Traffic Safety Administration of the U.S. did not find Tesla liable for the fatality that was caused after a truck suddenly turned to oncoming traffic as the driver was not monitoring the traffic as actively as instructed by Tesla but was instead watching a Harry Potter movie with a DVD player, according to witness testimonies. With the Autopilot function, the driver is liable for reassuming control of the vehicle in hazardous situations. In the United Kingdom, legislation specifically states that the driver is liable for any actions performed by the vehicle (the Road Traffic Act, 1998).
In Finland, valid legislation offers some answers to the question of liability. According to the Finnish Product Liability Act, compensation shall be paid for an injury or damage sustained or incurred because the product has not been as safe as could have been expected. According to the same section of the act, in assessing the safety of the product, the time when the product was put in circulation, its foreseeable use, the marketing or the product and instructions for use as well as other circumstances shall be taken into consideration. However, section 2 of the same act excludes liability for damages when the damages have been caused by the vehicle to the vehicle itself.
If the driver’s role in the vehicle becomes similar to the role of a passive passenger, should the driver’s responsibility be adjusted accordingly? Can a person travelling in a self-driving car be compared to a passenger in a taxi? Could the passenger’s responsibility only be actualised in situations where the passenger has, through his or her own actions, caused a disruption that can be considered as impacting the actions of the driver? Can this analogy also be applied to other offences carried out by a vehicle? Tesla’s Autopilot programme can be set to knowingly drive over the speed limit which, under certain conditions, can be a maximum of 10 km/h. This is considered to increase driving safety as the car adjusts to the speed of other traffic when people are generally driving slightly above the speed limit.
It is very likely that external operators will supply the software to be installed in car manufacturers’ vehicles in the future. Will connected cars become computer-like platforms with the software purchased separately? Or will there be one or two large operators in the market whose software will be used by all the car manufacturers, similarly to the phone market (Android, iOS)? Will it be possible to switch the software later? This raises an interesting questions about the liability related to connected cars. What is the responsibility of such a software developer and, on the other hand, the car manufacturer, regarding the functions of the end product?
With a sufficiently long reference period, all the technical components will stop working, some sooner than others. Instead of a linear or gradual breakdown, software components often function in a binary manner. Either they are fully functional or not functional at all, which makes it quite difficult to check their condition. How to detect the likelihood of breaking and how to monitor the condition of these components? What is the liability of an individual component manufacturer if a defect in one part results in more extensive damage? Can the manufacturer’s liability be transferred to the consumer by, for example, requiring the consumer to maintain the components and replace components or software in specific intervals according to a maintenance programme?
It is obvious that the Road Traffic Act, the Motor Liability Insurance Act and product liability legislation need to be amended to better take into account future changes in both technological development and driving culture. The current legislation contains too many questions with no clear answers and considerable problems in terms of interpretation.
The situation makes both buyers and manufacturers uncertain about the division of liability when problems arise. Excessively strict product liability for the manufacturer, automatically making car manufacturers liable for any collision damages and accidents, would probably hinder the development of self-driving vehicles. The state should assume responsibility for solving ethical questions. The manufacturers could then adjust their technical solutions and software to the resulting parameters.
Kari-Matti Lehti
Partner
Mikko Leppä
Partner
Mikko Kaunisvaara
Legal Trainee
15.01.2019
HPP`s Insolvency team authored the Finland Chapter in the Chambers Insolvency Guide 2019
Partners Sami Uoti and Juho Lenni-Taattola have co-authored the Finland Chapter of the recently published Chambers Insolvency Guide 2019.
The guide covers the latest regulation and recent development in the field of insolvency and restructuring in Finland. It is a useful read for insolvency and restructuring professionals as well as for lawyers from other jurisdictions assisting clients in matters relating to insolvency and restructuring in Finland.
HPP’s Insolvency team is one of the leading teams in the Finnish legal market.
Chambers Insolvency Guide 2019
08.01.2019
HPP`s Environmental team authored the Finland Chapter in the Chambers Environmental Law Guide 2019
Four of HPP’s Environmental team, Kari Marttinen, Tarja Pirinen, Minna Juhola ja Outi Iso-Markku have co-authored the Finland Chapter of the recently published Chambers Environmental Law Guide 2019.
The guide covers the latest regulation of different aspects in the field of environmental law and will be useful read for environmental industry professionals and lawyers from other jurisdictions assisting clients contemplating undertaking projects related to environment in Finland.
HPP’s Environmental team is the leading environmental team in the Finnish legal market, as reflected by its ranking as a Band 1 Natural Resources firm in each year in which leading global law firm directory, Chambers, has issued rankings for the ‘Energy & Natural Resources’ category. HPP has one of the largest dedicated environmental teams in Finland which specialises in all aspects of the environmental sector.
05.12.2018
Self-driving cars are the next step in traffic development
The introduction of self-driving cars in traffic is the single biggest change in the history of automobiles. This still requires developmental efforts in technology, community planning and legislation. The revolution at hand can be divided into two phenomena: connected cars and self-driving cars.
A connected car is a vehicle with built-in features that assist or bypass the person in pre-programmed situations. Cars with the self-driving feature can also be described as connected cars. Self-driving is not the same as autonomous driving where the car drives to the set destination without human participation, even without a passenger. Self-driving refers to a feature where artificial intelligence can temporarily and briefly steer the car without human assistance. The function is switched on separately and usually includes a short time limit.
Tesla has been able to develop its self-driving feature the furthest. In the Tesla model, the car drives independently until it reaches a situation where human intervention is necessary for safety. The purpose of self-driving features is to provide active assistance in situations where driving the vehicle is monotonous, the vehicle ends up in a surprising situation or the driver is temporarily or permanently distracted.
The future objectives of Tesla include making self-driving a standard feature in all its vehicles. Other car manufacturers have also offered similar features in their vehicles, such as Mercedes Benz with its S-Class (W222). Other connected car features in vehicles already on the market include a lane monitor and the automatic emergency braking system of Volvo.
A robotic vehicle or a self-driving car refers to a vehicle which primarily or exclusively uses the self-driving function. Self-driving replaces active human steering either partially or completely or even prevents the vehicle from being driven in the traditional sense. Such self-driving cars have not yet reached the consumer market but their testing among passenger traffic has already started.
Industry has used similar robot automatics successfully for decades. The Port of Rotterdam, for example, is nearly completely automated so that any transport and loading of goods, crane functions and most of the other logistics operations are performed by robots and monitored by artificial intelligence. The cargo port area has so many automatically moving parts that, instead of focusing on the robots, the surveillance in the area guides people to prevent them from disrupting the robot traffic. Human drivers instead of other robotic vehicles are also the greatest challenge in the design of fully automated cars.
The upcoming renewals of smart mobility are not restricted to vehicles but require infrastructural and legislative development. The question is a symbiosis of technology and legislation where the changes must overlap and the development be built gradually.
Self-driving robotic vehicles are the natural and inevitable next step for the evolution of motoring. Transferring the previously human-performed driving function to a computer and artificial intelligence means integrating both the motoric actions of the driver as well as human thinking, power of observation, problem-solving capacity and ethics in the process.
Transforming the routine movements of a human into something a machine can perform is technologically quite simple. Vehicles already contain technology that, in some situations, replaces or bypasses human actions. True challenges come from replacing human power of deduction with artificial intelligence.
Kari-Matti Lehti
Partner
Mikko Leppä
Partner
Mikko Kaunisvaara
Legal Trainee
26.11.2018
HPP’s Partner Harri Hynninen has died in an airplane accident
HPP’s Partner Harri Hynninen has died in an airplane accident, which took place in Zimbabwe on Friday. Hynninen was in Zimbabwe on a private holiday trip.
“Harri was a highly respected and much liked person and professional. On behalf of our law firm I wish to extend my deepest condolences to his family”, says HPP’s Managing Director Markku Mäkinen.
Further information: Partner Björn Nykvist, + 358 40 753 7387.
12.11.2018
HPP´s Energy Team authored the Finland chapter in the Global Legal Insights: Energy 2019
Three of HPP’s Energy Team, Andrew Cotton, Laura Leino and Ella Rinne have contributed the Finland chapter to the recently published Global Legal Insights: Energy 2019. The book is part of the Global Legal Insights series in which the world´s leading lawyers provide essential insights into current legal issues.
The book provides an overview of the worldwide energy market and covers the latest changes in the energy situation and summarises the latest developments in legislation, regulation and case-law affecting the energy sector. It will be a useful read for energy industry professionals, investors and lawyers from other jurisdictions assisting clients contemplating undertaking projects or investments in the Finnish energy sector.
HPP’s Energy team is one of the leading energy teams in the Finnish legal market, as reflected by its ranking as a Tier 1 energy firm in each year in which leading global law firm directory, Chambers, has issued rankings for the ‘Energy & Natural Resources’ category. HPP’s Energy team is constantly involved in significant energy projects and transactions and has broad experience advising specialist energy funds, investors, financial institutions and project companies on the full range of legal issues involved in energy project development and investment.
07.11.2018
How will intelligent transport transform future cities?
The development of intelligent transport is often divided into three phases of innovation: electric cars, self-driving cars and car-sharing. The first phase of innovation has already begun with almost all major car manufacturers bringing their own electric cars to the market. There will be a significant increase in the number of electric cars in service as purchase prices go down, making electric cars more affordable for average consumers while the cars’ properties, such as operating ranges, improve and charging times shorten. In the future, electric cars will replace conventional internal combustion engine vehicles – the only question is when.
In the near future, the need for car transport will not decline by any measures. Helsinki Region Transport (HSL) predicts that car density in Helsinki will increase by a third by 2035. The number of parking spaces in town planning must be proportional to the number of vehicles in service in such a manner that the supply of spaces is double in comparison to the demand. The centre of Helsinki has now approximately 13,000 parking spaces (on-street parking, parking areas and parking facilities) and the whole car fleet of Helsinki needs over 5.5 km² of parking space. Development globally has already gone slightly further.
Even if the number of cars would remain at the current level, people’s need for mobility is increasing. One solution to the problem is increasing the utilisation rate of the cars in service. The current estimate is that privately-owned cars are unused over 95% of the time. If the utilisation rate of a vehicle is only around 5%, theoretically, the car could be used by up to 20 people without a reduction in the owner’s usage. This is obviously only a theoretical estimate because people’s need for transport does not spread evenly, but even a small increase in the utilisation rate would reduce the total amount of traffic.
The change is about more than just practicality and transformation of public transport. A needs assessment based on just the utilisation rate does not give a reliable picture of the need or endowment effects. Even if the car is still seen as a part of wealth status, it is increasingly becoming a commodity. It is used to satisfy a need – getting to work, a supermarket, hobbies or holidays. The smaller the utilisation rate of a car is and the more occasional the usage, the further from home the vehicle can be stored.
One future approach is to renounce private car ownership and transform cars into a part of public transport services. It is projected that in the long run transport will experience a transformation into a comprehensive service (Mobility as a Service). A self-driving car could pick you up from your doorstep and carry you to your destination like a taxi, albeit at a significantly cheaper cost. As the safety and reliability of self-driving cars improves, the supply of transport services utilising the technology will increase. Similarly to communication services, transport is intended to become a service package. Vehicles can be designed so that the manufacturing costs are lower (for example, two-seated cars) because the driver functions can be removed. However, so far the technology is not on a practical level nor safe to use.
Instead of self-driving cars, the next step will be sharing and renting cars. However, these “carpool services” are somewhat challenging. For instance, the utilisation rate of Finnish summer cottages is even lower than that of cars and their upkeep is often very expensive, but still, only a few cottage owners are willing to rent out their summer house to outsiders. So why would they do that with their car? On the other hand, the phenomenon of property sharing is exercised with Airbnb, a service where people rent out their homes for short-term accommodation. In the United States, car rentals of private users have already gained more popularity thanks to Turo and other service providers.[1] The Massachusetts Institute of Technology (2017) estimates that two million people in Los Angeles alone will renounce car ownership in the next 15 years. The change does not arise just from technological development but also because consumer habits are changing.
It is worth keeping in mind that the biggest single factor to promote the success of new technologies is money, and only after that comes practicality. If you could travel by a self-driving car, why would you take a train? And how much more should the car cost in order for you to choose the less practical option? Also growing concern over climate change encourages government action to promote cleaner transport. The new report of the Intergovernmental Panel on Climate Change (IPCC)[2] encourages governments to take more active steps to reduce CO2 emissions. New intelligent transport solutions play a key role in these efforts.
Change in intelligent transport would also have an influence on cities’ economies as public parking is a significant source of income to them. In Helsinki, parking payments bring the city approximately 11 million euros a year, that is, around 3,143 euros for each parking space. When residential and business parking is included, the income exceeds 15 million euros a year. Also individual housing associations can gain significant profits by renting out their parking spaces, especially in city centres.
Growth of intelligent transport will lead to reduction of parking spaces and therefore also changes in both town and building planning. In town planning, parking spaces can be replaced with green areas or wider walkways but the reuse of residential building garages can turn out to be more problematic.
[2] IPCC: Global Warming of 1.5 °C (2018). http://www.ipcc.ch/report/sr15/
Jari Tuomala
Partner
Mikko Kaunisvaara
Associate Trainee
02.11.2018
On Sunday, HPP’s co-operation partner Ari Huusela starts to one of the biggest sailing races in the world
Single-handed sailor and flight captain Ari Huusela starts to one of the biggest, most famous and most followed sailing races in the world on Sunday, 4 November. Huusela is the only Finn participating to this legendary transatlantic race, Route du Rhum, in IMOCA-class. No other sailor from the Nordics have ever achieved to start in this class before.
Route du Rhum is sailed single-handed, non-stop across the Atlantic Ocean from Saint-Malo in France to the island of Guadeloupe in the Caribbean Sea. The length of the course is approximately 6.000 kilometres. The race, sailed every four years, have attracted a record number of entries this year, 123 skippers in six different classes.
31.10.2018
The Act on Transport services must promote the creation of new services
Mobile applications through which various transportation and mobility services can be received in return for payment are currently being marketed to consumers. The integrated mobility services offered through the app can include the use of public transport, taxis, carsharing, car rentals and city bikes. The service application Whim, offered to consumers via mobile phones by MaaS Global Oy, is one example of such service packages.
For companies offering integrated mobility services, being able to reach agreements with reasonable terms with transport services companies is very important. Public transport tickets form a key part of the service. Therefore, it is essential that companies providing integrated mobility services reach an agreement on the brokering of tickets to consumers through the app. Technically, this is achieved by the public transport ticket provider giving the provider of integrated mobility services access to their system through the open sales interface built into their ticket and payment system and selling tickets to be brokered to customers through the app.
Issues related to competition arise in situations where the administrator of the public transport ticket system and the ticket seller hold a monopoly in their area. In these situations, the integrated mobility services provider is dependent on the tickets sold by the company holding the monopoly, and it has no access to alternative ticket products or providers. Companies in monopoly position can choose their ticket brokers and sales method without the pressure of competition and determine the prices and terms and conditions of the tickets to be brokered.
The Act on Transport Services, which entered into force in the beginning of 2018, aims to enable the provision of integrated mobility services to consumers. The Act obligates administrators of public transport ticket systems to offer tickets to providers of integrated mobility services through an open sales interface built into their system. It must be possible to use the interface using generally applied technology and tickets must be sold to the users of the interface on fair, reasonable and non-discriminatory terms. Finnish Transport Safety Agency (Trafi) monitors compliance with the Act on Transport Services.
In September 2018, Trafi gave a decision in which it outlined its own powers and the conditions for meeting the requirements of the open interface.[1] The decision stresses the importance of effective cooperation and that the solutions for opening the interfaces must be technologically independent so that the interfaces can be used for as many purposes as possible. The decision concerned the public transport ticket sales interface of the Helsinki Regional Transport Authority (HSL).
In its assessment, Trafi stated that the interface opened by HSL did not use generally applied technology and did not meet requirements of the Act on Transport Services. Trafi ordered HSL to develop its interface solution so that it would not create unnecessary barriers to offering integrated mobility services. Trafi deemed that HSL must also take into account the views of the interface’s users—such as MaaS Global, who already cooperates with HSL—when developing the solution.
Trafi also outlined its own powers related to the assessment of the interface’s terms and conditions of use. MaaS Global had claimed that HSL’s policy of not paying sales commission for tickets brokered through the interface was unreasonable and discriminatory, as HSL paid sales commission for tickets brokered at physical locations.
Trafi did not investigate the discrimination claim as it deemed that its powers only apply to assessing whether the terms and conditions for different users of the interface were reasonable and non-discriminatory in relation to each other. Assessing whether these terms and conditions were reasonable and non-discriminatory in relation to brokers that do not offer tickets through the interface was not considered to be within Trafi’s jurisdiction. Trafi also judged that assessing the contractual arrangements according to which HSL offered MaaS Global tickets through an interface other than the open interface was outside its jurisdiction.
Trafi’s decision demonstrates that certain kinds of matters related to the provision of integrated mobility services—such as those concerning the technological requirements of the ticket system open interface and the requirement of non-discrimination between the users of the open interface—can be resolved on the basis of the Act on Transport Services. Opening the interfaces can therefore be performed as the Act intended.
However, some legal issues still remain that cannot, according to Trafi’s interpretation, be resolved based on the Act on Transport Services. It appears that the Act on Transport Services does not offer solutions for situations in which a public transport monopoly sells tickets under unreasonable conditions through an interface other than its open interface or in which it treats those brokering tickets through the interface differently from those brokering tickets by other means. General competition legislation would better apply to these matters, and the competent authority in Finland for issues such as these would be the Finnish Competition and Consumer Authority (KKV).
The discriminatory or unreasonable pricing of the public transport ticket sales interface could be investigated under the competition legislation as suspected abuse of market dominance or acting in breach of the competition neutrality regulations. The provider of integrated mobility services would therefore be required to start two different processes to have the discriminatory treatment they have experienced investigated by the authorities. This would delay and complicate the creation for the market for new integrated mobility services and its opening up to competition and would admittedly go against the general aims of the Act on Transport Services.
It would be recommendable that all the authorities would use all the opportunities they have in applying the Act to open interfaces and set reasonable terms and conditions of use. This is because, in rapidly evolving markets, amending the Act on Transport Services or starting processes under competition legislation are a slow way to make the interfaces open in a genuine way. If the Act’s aims of opening interfaces and promoting new services cannot be achieved in practice, Finland will lose its chance of being a pioneer of smart mobility services.
[1] https://www.trafi.fi/trafi/ajankohtaista/6469/liikennedatan_rajapintojen_avaamisessa_yhteistyo_avainasemassa
25.10.2018
Financial Supervisory Authority’s interpretation on the insurability on administrative fines and penalty payments
The Financial Supervisory Authority (FSA) has recently published a statement regarding the insurability of both criminal and regulatory fines and penalties. According to the FSA’s interpretation, the provision of insurance coverage in respect of corporate administrative fines and penalty payments, which are deemed to be punitive payments, is contrary to good insurance practice and is therefore not permitted in Finland.
The FSA’s interpretation on insurability of punitive payments covers all criminal and regulatory fines and penalty payments regardless of the cause of such punitive payment and irrespective of whether they are imposed on the basis of a deliberate act, omission or negligence.
The FSA’s reasoning is that insuring such risks could in some events encourage companies to act without regard to regulatory compliance and weaken a company’s obligation to comply with the applicable legislation and regulations. The FSA also believes that insuring punitive payments and sanctions would not be in line with the socially accepted values.
The FSA’s statement clarifies conclusively that warranty & indemnity insurance policies in respect of Finnish transactions should not be extended to cover any corporate fines or other punitive payments. The question of the insurability of fines has arisen particularly in the context of the EU’s new General Data Protection Regulation (GDPR). W&I insurers should consider the effect on W&I policy wording and discuss the effect of the FSA’s statement with brokers arranging W&I insurance for Finnish targets and transactions. The effect of the FSA’s interpretation on the insurability of different interest and penalty payments imposed by the Tax Administration due to the late payment of taxes, tax adjustment or tax increases will have some further clarification to determine whether such fines and penalties are also covered by the FSA’s statement.
Further updates and information: HPP will update clients on the outcome of the updates on the FSA’s position on insurability of punitive penalties.
HPP’s has a market-leading team advising underwriters looking at underwriting Finnish M&A deals and insuring tax risks and HPP’s experts would be happy to assist on all legal issues in Finland related to insurance and specifically W&I insurance.
Contacts:
Andrew Cotton
Partner
+358 45 657 57758
andrew.cotton@hpp.fi
Anna Lehtomaa
Associate / Tax
+358 50 567 5979
anna.lehtomaa@hpp.fi
24.10.2018
MaaS should be considered in traffic taxation
The digitalisation of traffic will reduce the importance of owning vehicles, and the extensive electrification and automation of vehicles will alter current business models so that physical goods, in other words cars, become part of digital services. This development also means that the taxation of traffic must be comprehensibly reassessed.
The assessment must settle how the tax burden of traffic is distributed between the operator and the user of the service and who will be considered the taxpayer in the future. When digitalisation produces more detailed data on service providers, users and the used services, the accumulated information can be used as grounds for taxation, if desired. In addition to fiscal objectives, taxation may also have an increasing number of more targeted objectives related to environmental, infrastructural and technological policies. The administrative costs of taxation should not, however, increase as a result of various targeted tax solutions; on the contrary, the system should be simultaneously streamlined.
The current tax legislation of Finland supports commuters with a number of tax concessions. The tax legislation, tax authorities’ instructions and statements should already be able to respond to the new needs of digital business models. As of the beginning of 2019, the plan will be to alter the tax treatment of charging electric cars at the workplace by specifying a formulaic taxable value for the charging benefit that will correspond to the computational average value of charging. This prevents situations where the employer would like to offer a charging option at the workplace but has to limit the use of the charging station to those entitled to an unlimited car benefit by the employer.
The tax authorities’ current policies do not altogether encourage commuters to extensively use new mobility services. The provisions of the Finnish Income Tax Act concerning an employer-provided commuter ticket’s exemption from taxes in public transport should be amended to cover commuters’ overall mobility services, regardless of the means of transportation. The data produced by MaaS services can be utilised, as explained above, for targeting tax support at commuter traffic in accordance with the legislators’ intent.
In addition, carsharing offered by an employer does not signify a car benefit referred to in the fringe benefit decision of the Finnish Tax Administration but a so-called other fringe benefit that is always assessed with the current value. At the moment, users of MaaS services are also not equal in this respect relative to the terms of taxation for the users of traditional company cars.
Finland may rise as a spearhead of digital traffic. While gaining a more functional and environmentally friendly traffic system, Finland could also obtain thousands of new jobs with digital traffic. However, MaaS and new digital business models also challenge the taxation system. Some of the challenges will be faced as a consequence of long-term development, but some are already calling for attention. It is particularly important to identify the taxation-related issues and find solutions in cooperation with various operators.
The development of the taxation system requires some amendments to legislation, but some issues can be settled within the framework of current legislation through administrative decisions and current instructions submitted by the tax authorities. The fastest changes to the taxation system should be conducted with the specification of the taxable values of MaaS services. The recommended approach for specifying a taxable value for a MaaS service would be similar to that of telecommunications services: a fixed and reasonably low taxable value that is simple and clear for the users and supports the development of the industry.
16.10.2018
Transport Code promotes smart mobility
Transport Code, formally the Act on Transport Services, is one of the government’s chief initiatives. The main purpose of this ambitious, open-minded and future-oriented legislation project is to create a growth environment for business digitalisation and to promote transport business by deregulation. The Code unifies legislation governing different transport services and reforms the strict regulation of all transport modes, so that at least the regulation itself will not become an obstacle to digitalisation, automation and new innovations and business models.
The essence of the Code is customer-oriented and digitalised transport services. The crucial thinking behind the Transport Code is based on the concept of “mobility as a service” (MaaS) – which, according to the Ministry of Transport and Communications, means: “that through technology, information and innovations, transport services will be made a customer-oriented service, in which the boundaries between transport modes disappear and transport chains will be smooth.”
The Code is tailored to enable and promote the seamless and multimodal travel and transportation chains and other combined added value mobility services by opening up the data on traffic systems to be shared between customers, service providers and authorities as openly as possible to promote additional value. Not surprisingly the data protection issues and the GDPR has a big role in legislation process.
Due to the Code’s enormous scope, to cover all transport modes, its preparation has been divided into three stages.
First stage
The first stage focuses mainly on road transport harmonising the provisions of the Public Transport Act, Taxi Transport Act and the Act on Transport of Goods on the Road. Unlike other transport modes, the transport of passengers and goods by road was heavily regulated by domestic legislation and one of the purposes of the Code is to bring the legislation closer to that of other modes of transport by simplifying the traffic licence system. Issuing traffic licences will be centralised to the Transport Safety Agency, which also acts as a general supervisory authority.
The inflexible and old-fashioned taxi system meets the biggest change, when the new legislation makes it easier to access the taxi sector by removing limits on the number of taxi licences, enabling new business models and increasing competition. Pricing will be become more flexible, but the Transport Safety Agency will be able to step in and specify a maximum price should prices rise unreasonably.
The Code reduces significantly the regulatory burden of the public transport of passengers and transport of goods. Additional domestic regulations have been removed by implementing EU legislation and mandatory transport provider training for entrepreneurs will be abolished. The transport licence weight requirement will be raised from 2,000 kilograms (kg) to 3,500kg, so that service providers carrying goods weighing over 2,000kg but less than 3,500kg on a vehicle (typically a van) must register with the Transport Safety Agency. Professional qualifications for lorry and bus drivers will be lightened and clarified. Combining passenger and freight transport is possible.
Implementation of the objectives of the Transport Code requires that data must be compatible with all service providers. Therefore, the Code has obligated all mobility service providers and also authorities from 1 January 2018 onwards to open Application Programming interface (API) as specified in the Government Decree 643/2017. Depending on the mode of service such essential data may consist of routes, stops, timetables, prices and fares as well as information on the availability and accessibility of services.
This obligation applies to all mobility service providers and includes according the Finnish Transport Agency passenger transport services (including bus and taxi services, air- or waterborne passenger transport), stations, ports and other terminals, transport mode rentals and services for commercial ridesharing services, general commercial parking services, brokering and dispatch services.
The first stage of the Transport Code entered into force on 1 July 2018. However, the provisions relating to the Intelligent Transport Systems (ITS) based on Directive 2010/40/EU entered into force already on 1 October 2017 and the above-mentioned provisions on opening essential data on 1 January 2018.
Second stage
The second stage will unify and deregulate the national legislation of other transport modes (air, sea, rail) and bring them into the Transport Code to be compatible with the provisions on road transport. Different, transport mode-based registers will be consolidated on a one single register which would contain data on service operator permits, transport vehicles and personal licences such as professional qualifications. The second stage of Transport Code will strengthen the role of the Finnish Transport Safety Agency as a licensing and supervisory authority and improve registered persons’ possibilities to use their own data in acquiring mobility services.
The second stage legislation continues to develop digitalisation and data availability of the mobility services further. The aim is to increase and innovate mobility services and to improve the official and service activities of the Finnish Transport Safety Agency. The Finnish Transport Agency would be obligated to open collected data through open interface, anonymously and by taking care of data protection.
To promote customer-oriented development of more and more individualized trip chains and combined services in future there would be a new sort of provision on acting another’s behalf. That would enable all service providers, not only those being in the dominant position to administer data, to act on customer’s behalf to incorporate tickets for all modes of transport and mobility services.
Government proposal of the second stage (having colossal 878 pages) was submitted to Parliament for approval on 19 October 2017 and was approved with some amendments on 21 March 2018. The second stage of the Act entered into force on 1 July 2018 except that the provisions on acting another’s behalf will enter into force on 1 January 2019.
Third stage
Third stage legislation is under preparation and after public consultation scheduled to be submitted to Parliament in December 2018. Third Stage would cover the remaining provisions to be ensured that objectives with regard to the transport system and digital services are comprehensively covered in the Transport Code.
09.10.2018
Digitalisation challenges taxation
The digitalisation of traffic changes existing structures and the way we move from one place to another. Mobility increasingly transforms into a service (Mobility as a Service/MaaS) that allows us to purchase mobility services according to our needs. A MaaS concept may consist of, for example, public transport, car, bicycle and haulage services. In the future, we will be able to buy a monthly mobility package similarly to purchasing phone or data communication services from a telecommunications company.
The digitalisation of traffic will influence the structure and efficient use of vehicle stock. The importance of owning a car will be reduced and mobility will become safer, more environmentally friendly and more fluent. At the same time, new business models will create new businesses and challenge established operators. The global value of the digital traffic services market is estimated at more than EUR 10,000 billion. The functional infrastructure and high level of education in Finland gives us an exceptional opportunity to spearhead this development.
Digitalisation, platform economy and sharing economy also pose a challenge to the tax authorities. Some of the challenges are purely national; however, digital business and its parties are often connected to several countries. MaaS services, too, can be offered without the company being physically located in the country where the services are consumed. In that case, however, the tax authorities must settle which country should tax the operations, whether the operations are taxable, who is liable to pay taxes for the operations and whether the tax is paid on income or consumption.
Digitalisation is becoming a hot topic in the taxation discourse all around the world. Digitalisation has been viewed as a threat that disintegrates the tax base of countries and strongly increases tax disputes. It has been argued that digitalisation is everywhere and that the current international tax system that was developed in the beginning of the previous century is outdated and requires a significant reform.
Large-scale policies on tax legislation are drafted on an international level, which makes the role of national tax legislation and legislator more of an executive one. Key taxation rules for digitalisation must be agreed upon on a scale that is as global as possible at the OECD. National, regional and temporary solutions must be avoided. The European Commission’s proposal for a temporary digital tax has faced justified critique, and passing the proposal as such is unsure.
More than 110 member states of the OECD are committed to strive towards shared taxation policies for the challenges of digitalisation by 2020. To put it plainly, the question is how tax revenue will be distributed between different countries. Will corporation tax be directed to the state where the services are used or to the state where the product development of the services takes place and where the value is created? If a global consensus cannot be reached on common policies, companies are at risk of double taxation. There is a lot at stake.
When developing the tax system, it is advisable to acknowledge that separating digital business from other operations is problematic, which is why the taxation principles concerning digitalisation should be as in line as possible with the taxation principles used in traditional business. On the other hand, necessary tax solutions implemented as a result of digitalisation will have an effect on the current rules of the taxation of traditional business.
The principle of destination or consumption countries is applicable to indirect tax, such as value-added tax, traffic-related taxes and excise tax as the precise purpose of these forms of consumption tax is to tax the use of goods and services. However, digitalisation, artificial intelligence and automated traffic will also change the compensation paid for goods or services. Does the platform operator act e.g. as a seller or only as an intermediary. Digitalisation blurs the concept of a service or goods, which may make the application of indirect tax legislation challenging. As a result, legislative decisions may also vary.
The tax authorities are very interested in gaining access to the data accumulated in digital platforms for the delivery of taxation. However, the need to simplify taxation so that every operator has the chance to be correctly taxed with minimal administrative costs has received less attention.
The tax system must adapt to the quick reformation by not hindering development but, instead, enabling the quick and flexible implementation of new business models. This requires changes in the legislation, but some of the issues can be settled by updating the instructions and statements of the tax authorities.
The EU is expanding its special scheme for electronic services and simplifying the value-added taxation of e-commerce. The purpose of the changes is to simplify the declaration and payment of value-added tax when the consumer buys goods and services online. This development has positive implications, and the new regulations should enter into force gradually as of 2019.
For long, it has been argued that states competing with the lowest corporation tax will soon lower it to zero. Digitalisation challenges corporation tax in a new way. The focus of legislative work regarding taxation will be on corporation tax in the coming years. However, simultaneously, the significance of consumption taxes to states’ tax revenue will increase. As a result, digitalisation will challenge corporation tax more than indirect taxation.
02.10.2018
Data management makes or breaks smart mobility
We are about to face the revolution of smart mobility. The development of self-driving vehicles, electric motors and various digital transport services, for example, will revolutionize the mobility of people and goods. The long-term financial, social and legal impacts of the revolution come with a number of questions yet to be answered.
Smart mobility heavily relies on the efficient digital collection and sharing of information, such as geographic data and traffic behaviour. Therefore, smart mobility also entails the question of how various personal data related to mobility is processed and utilised.
For privacy protection, information related to the mobility of individuals is sensitive. Hardly anyone would want information related to their movements used without express permission, appropriate reason and supervision.
All the information collected in mobility is managed somehow. Data management can be centralised, decentralised or something in between.
Centralised data management could mean that an authority-driven, centralised system used to collect mobility-related personal data would be created in Finland. This approach is used for health care in the Kanta.fi service, for example. A centralised system might entail some benefits, for example from a data protection perspective, but in other respects, it is poorly suited for ecosystem-based, quickly developing business operations.
An opposite extreme would be based on deregulation, meaning that the model would allow the market to manage the processing and utilisation of data. However, it seems that completely excluding the collection and utilisation of data from authoritative direction is quite difficult, as seen when, for example, the United States Congress heard Mark Zuckerberg, founder of Facebook.
Finland has chosen a data sharing model based on the distribution of information and open interfaces. Operators joining the ecosystem of smart traffic must open their data for the use of others so that the data is machine readable and generally available, based on existing technology.
This operating model also comes with its issues that must be settled in the near future.
One key conflict has to do with the ownership of data. Is information related to mobility the sole property of an operator or does the shared use of information based on legislation considerably narrow the traditional concept of ownership where the owner is entitled to use their property as they see fit?
Some comments start by stating that shared information is not owned by anyone. On the other hand, companies that use money and resources to collect, manage and utilise data are not too excited about a model that turns shared data into public assets.
The ownership of data is closely connected to its pricing. If the market is allowed to control the exchange of information, a certain price is formed for cooperation between businesses and for opening one’s own interface. In that case, we face the risk that the smart mobility operators with a strong position in the market and especially monopolies overprice their cooperation and knowingly hinder the arrival of new businesses in the market. This has also occurred in other sectors.
In fact, other industries have observed that there has been reasons to take action against the pricing of companies with a strong market position. This has taken place for instance in the telecommunications sector.
As the ecosystem of smart mobility will have an extremely large number of operators and contractual relationships, the policies related to contracts should be updated to a new level. It is not efficient to create a modern ecosystem for smart traffic by relying on traditional document or meta keyword-based contract management systems. It would be more advisable to use data-based -even standardised – contracts that can automate processes related to data management and payment.
Smart mobility is a great opportunity for Finland. However, utilising it in practice requires us to reconsider and settle a number of issues, in a new, innovative way.
Published in Finnish in Kauppalehti 2018
Pekka Raatikainen
Partner
HPP Attorneys Ltd
Vesa Silaskivi
Executive Advisor
HPP Attorneys Ltd
14.08.2018
HPP’s Energy team authored the Finland Chapter in the Chambers Alternative Energy & Power Guide 2019
Three of HPP’s Energy team, Andrew Cotton, Laura Leino and Ella Rinne have co-authored the Finland Chapter of the recently published Chambers Alternative Energy & Power Guide 2019.
The guide covers the latest regulation of different aspects of the energy sector in Finland and will be a useful read for energy industry professionals, investors and lawyers from other jurisdictions assisting clients contemplating undertaking projects or investments in the Finnish energy sector.
HPP’s Energy team is one of the leading energy teams in the Finnish legal market, as reflected by its ranking as a Tier 1 energy firm in each year in which leading global law firm directory, Chambers, has issued rankings for the ‘Energy & Natural Resources’ category.
17.07.2018
Young tennis talent, supported by HPP, won the Wimbledon Boys’ Doubles trophy
The young tennis talent Otto Virtanen (pictured left), supported by HPP, has won the boy’s doubles championship in Wimbledon.
Congratulations Otto.
photo by Anthony Upton
05.06.2018
HPP’s Aleksei Hanninen defended his doctoral thesis on the transfer pricing of business restructurings
HPP’s Senior Associate Aleksei Hanninen defended his doctoral thesis entitled “Transfer pricing of business restructurings from the perspective of Russian, Finnish and U.S. tax law” on 20 April 2018. Hanninen examines in his dissertation to what extent business restructurings may become objects of transfer pricing under the national transfer pricing regulations in Russia, Finland and the USA. The second research question is how the arm’s length transfer prices should be determined for transfers of such assets/something of value that are deemed to be in the scope of the national transfer pricing rules. In particular, the current Russian transfer pricing rules have not been examined broadly in international tax law research.
The research reveals that business restructurings fall more extensively within the scope of application of the national transfer pricing rules and the arm’s length principle in Finland and the USA in comparison with the existing situation in Russia. In Russia, only transfers of tangible property and intellectual properties seem to fall within the scope of the Russian transfer pricing rules in the business restructuring context, while in Finland and the USA the assets/items-of-value that are typically transferred in business restructurings seem to fall well within the scope of the national transfer pricing rules. This means that intangible assets transferred between related parties are also generally objects of transfer pricing had unrelated parties compensated transfers of such assets in corresponding situations. Moreover, related parties are required to examine on a case-by-case basis whether premature terminations or renegotiations of existing agreements should potentially be compensated and whether the restructuring should be regarded as a transfer of a going concern and thus examined as a whole.
Several uncertainty factors also may relate to the transfer pricing treatment of business restructurings. It is not entirely clear in all cases, inter alia, to what extent transfers of something of value (especially intangibles) fall within the scope of application of the national transfer pricing regulations and what the most appropriate transfer pricing method in a given case is. The best solution to address the uncertainties that relate to the transfer pricing of business restructurings is the conclusion of multilateral or bilateral advance pricing agreements (APAs) with tax authorities. In addition to APAs, the maintenance of a thorough transfer pricing documentation as well as the compliance with the transfer pricing reporting requirements may lead to potential transfer pricing disputes with tax authorities being avoided.
24.05.2018
New support scheme for renewable energy
Wind power produced about 5.6 % of all consumed Finnish electricity in 2017. By the spring 2018, new wind power projects were published for nearly 15 500 megawatts (MW), of which offshore projects are approximately 2 000 MW. In total, projects in different stages of project development will lead to a total investment of over 23 billion in Finland. However, lately the development has decelerated due to the anticipation of the new support scheme.
Wind power operators have been waiting for a new support scheme for renewable energy and its details for a long time. The Finnish Parliament has on 23 May 2018 approved the Government Bill 175/2017 vp by enacting an amendment to the Feed in Tariff Act (Act on Subsidies for Electricity Produced from Renewable Energy Sources 1396/2010). According to the new Act, provisions on a premium system based technology-neutral tender process are added to the Feed in Tariff Act. The new Act must be approved by the European Commission before entering into force.
According to the Energy and Climate strategy for 2030 adopted by the Finnish government on 24 November 2016, the aggregate annual electricity production to be tendered under the new support scheme will be 2 TWh. The Government has, however, subsequently, stated that it will in the autumn 2018 make a proposal to the Parliament to ban the use of coal, which, if approved, will most likely to reduce the aggregate annual electricity production covered by the scheme from 2 TWh to 1.4 TWh. If said reduction is effected, it is expected that only one auction round will be arranged. The timing of the round has not yet been determined, but it is however expected that it will be arranged in December 2018.
Hydro power excluded from the support scheme
According to the new Act, the new subsidy scheme will apply to wind power, solar power, wave power, biogas and wood fuel power. Therefore, hydro power is explicitly excluded from the support scheme. The tenders with the lowest premium and with an annual electricity production not exceeding the annual production subject to tender would win the process. The premium offered would have to fall under the threshold price of the process, which in the beginning would be EUR 53.5/MWh, i.e. the same as under the current feed-in tariff system. The subsidy may be received for maximum of 12 years.
The project must fulfill the preconditions for the auction process
To be eligible for an auction process, the project should be genuinely feasible, which means that the project is as ready as possible for the construction. Therefore, the electricity producer would have to meet certain physical conditions of participation in order to be able to participate in the tender process. The Energy Authority verifies the fulfillment of the conditions as part of the process of selecting the electricity producers approved for the premium system. A participation fee (currently estimated to be EUR 2 500 per bid) is payable in connection with the submission of the bid in the auction process. Furthermore, as the aim is also to ensure the viability of the projects, a participation security and a construction guarantee must be issued during the process. To participate in the tender process, electricity producer would have to post a participation security amounting to the annual production of electricity being tendered multiplied by EUR 2/MWh. Respectively, the amount of the construction security is the offered annual production amount multiplied by EUR 16/MWh.
Obligation to produce electricity
The electricity producer is obliged to produce electricity produced from renewable energy sources according to the accepted tender. Whether the electricity producer would fail to comply with its obligation, an underproduction compensation shall be paid to the state. However, the electricity producer would not be obliged to pay the underproduction compensation insofar as the shortage is attributable to the grid operator and for the time when the market price of electricity in the power plant’s location has been negative. The Energy Authority may also in certain situations exempt the electricity producer to pay the underproduction compensation.
HPP is one of the leading legal experts in the wind power sector. We are actively following the development and implementation of the new premium scheme and assisting customers in support scheme related issues.
Minna Juhola
Associate
Minna Juhola specializes in environmental law and advises clients on issues relating to renewable energy projects. Minna has extensive experience in energy, environmental and land use issues related to the wind power sector both in project development and in operational projects.
Björn Nykvist
Partner
Björn Nykvist specializes in banking and finance, M&A and real estate transactions and advises clients on investment and structuring issues arising from renewable and wind energy projects for overseas investors on regular basis. Björn has long-term experience in various transactions and financing arrangements in the wind power and energy sector in general. He is widely respected by both project developers and investors.
12.04.2018
A digital tax would slow down the development of technology and business
The so-called digital tax being planned by the European Commission has been the topic of recent discussions. The idea behind this tax is that the digital platform of a company could form a basis for taxation and a virtual permanent establishment of a sort. This tax would mean that companies providing digital services and exceeding pre-defined revenue or user-based threshold values would be taxed for offering digital services.
In the global distribution of work, Finland’s role will continue to be based on high competence and technology. The production of basic goods will increase in China, India and other growing markets near customers. Labour-based production is searching for new competitive areas— for example, in Africa.
From Finland’s perspective, any regulation hampering or even punishing business that is based on high technology and competence is a bad thing. This is the case regardless of the future distribution of tax revenue between various countries after the implementation of the new tax and whether Finland loses tax revenue or not.
This issue can be analysed further, for example, from the perspective of smart mobility.
There are various types of operators in the area of smart mobility, such as multinational corporations (e.g. Google), national operators (OP, LähiTapiola) and companies providing new types of services (MaaS Global). All operators are collecting enormous amounts of data that they want to use in the development of new services. The roles of the operators vary greatly: all generate data, some own it while others commercialise it, and data processing is being provided as a service in various parts of the world— for example, by using the SaaS model.
Data related to the movement of people is sensitive and can be compared, for example, to health or credit data. For this reason, it is commonly accepted that the use of such personal data is monitored in order to protect the privacy of persons. The legislation applicable to the monitoring of personal data use has more or less kept up with the changes brought about by digitalisation, which is reflected in the GDPR that will take effect in May.
Topics related to the protection of individuals continue to be of importance in smart mobility, and they may also require national solutions to ensure that Finland can maintain its position at the leading edge of development.
Furthermore, the key factor in the development of smart mobility is data on persons, vehicles, circumstances and behaviour. The major investments of operators in this field are related to system development and interface specification, which enables maximising the collection and utilisation of data. This data exchange is necessary for the development of new services and should not be seen as an object for punitive taxation.
There is no similar commonly acceptable justification for digital tax as there is for regulation related to areas such as personal data and polluting production. On the contrary, digitalisation increases efficiency in the use of raw materials and protects the environment.
In addition, as far as the equality and fairness of taxation is concerned, forms of taxation that are unilaterally adopted internationally, various threshold values and problems related to the determining of the tax base are naturally issues that create problems that will misdirect the operations of companies. The appropriate forum for handling global taxation problems is not a state but an international community such as the OECD. As it is, even the current tax competition is a problem and things should not be made worse by introducing new taxes.
Frankly, digital tax— in the form that is currently being discussed— feels like a measure that the old world would use to intervene in the inevitable economic and service development in a manner that reveals common sense having been replaced with greedy taxation and an attack against multi-national “bad guys”. In all this, the major victims are the companies leading digitalisation and having the desire to develop. A digital tax is not a good idea.
Markku Mäkinen
Managing Partner
+358 (0)40 761 9177
HPP Attorneys Ltd
Vesa Silaskivi
Executive Advisor, LL.D, Lic.Sc. (BA)
+358 (0)50 329 9900
HPP Attorneys Ltd
05.04.2018
Antti Rintakoski strengthens HPP’s finance team
HPP is pleased to announce that Antti Rintakoski has joined as Specialist Counsel to strengthen HPP’s finance team.
Antti Rintakoski has extensive experience in domestic and cross-border finance and debt capital markets transactions, including leveraged and acquisition finance, corporate and investment grade lending, real estate finance, project and infrastructure finance, investment grade and high yield bond financing, asset finance and restructuring.
Antti is a respected finance lawyer in the Finnish legal market through his involvement on some of the most complex and significant finance cases in the market to date. In addition to his decade-long career in a reputable Finnish law firm, he has gained expertise at OP Corporate Bank and European Investment Bank, giving him an excellent insight into the commercial and practical requirements for financial institutions.
“HPP aims to offer its clients both a wide range of legal expertise and a deep understanding of their businesses and sector-specific issues. With his experience, expertise and skill in serving clients in the finance sector, Antti Rintakoski helps us do both. We warmly welcome him to our growing finance team and look forward to continuing to develop a market-leading team”, Björn Nykvist, Head of HPP’s Banking & Finance group, says.
05.03.2018
Smart mobility is a major opportunity for Finland
Daily there seems to be news about the world being on the verge of a transport revolution. Electric cars will soon replace combustion engines, self-driving vehicles will be a part of everyday life, and new types of digital services will enable the flexible combination of various forms of transport.
These technologies that are about to change the way we use transport are called smart transport or smart mobility. Some technologies used in smart mobility are related to vehicles themselves, such as the development of electric motors and self-driving cars. The other aspect of the phenomenon is digital services, which will change the way vehicles are used. A well-known example of this is Uber.
The major revolution in transport will take place when the various transport methods and digital services are seamlessly combined. Only imagination sets the limits to the possible solutions that will be created already in the next few years and that will transform transport into a service. For example, by combining the use of shared self-driving electric cars and public transport, the need to have your own car standing in front of your house will be rendered unnecessary and simply a thing of the past.
Smart mobility will inevitably change the economy as well. According to the estimate of the market research company ABI Research, the value of service business related to smart mobility alone will amount to as much as one trillion (1,000 billion) dollars by 2030. It is no wonder that all companies with transport-related operations are currently reviewing their business strategies, with large car manufacturers leading the pack.
For Finland, smarter mobility is the opportunity of a lifetime. This is because the future change will combine several strengths that Finland and Finnish companies and society already have: a functioning transport infrastructure, strong energy sector, digital competence and flexible cooperation between authorities and the business sector. In addition, the new Transport Code is amongst the most advanced transport-related legislation in the world.
Concrete business opportunities are already emerging at a constant rate. Terrafame is planning to start the production of nickel and cobalt chemicals used in the manufacture of batteries. New consumer services are combining the benefits of various transport modes into one monthly ticket. Robot cars are being tested on the roads in Helsinki. Vaasa is aspiring to be the location for the electric car manufacturer Tesla’s gigafactory and the related competence cluster.
OP and LähiTapiola will start providing mobility services. International corporate giants, such as Toyota, Volkswagen and Denso will invest in innovations related to this field in Finland.
We have the opportunity to make Finland the pioneer in smart mobility while utilising the same development to significantly increase employment and economic growth. However, this cannot be done without increasing the flexibility related to the possibilities of experimenting with new technologies and services. For example, favoring the traditional monopolies at the cost of new transport services will not promote the possibilities to create genuinely new innovations.
Finland should now take action in order to ensure that we can develop into a forerunner country in smart mobility. In the next few years already, the changes in transport will generate not only questions related to technology but also challenges related to community and town planning, responsibilities, the opening of markets and intellectual property rights. These changes should be taken into account already in the Transport Code that is being prepared.
It should be kept in mind that smart mobility is also about societal changes. New services can improve the quality of life in congested big cities and in remote districts in which public transport is no longer available. Efficient use of resources and reducing emissions will also play a key role in the fight against climate change.
For this reason, Finland should invest in cooperation that extends beyond the boundaries of companies, industries and public and private sectors by enabling even bold experiments. This would facilitate the emergence of new transport innovations in Finland instead of only adopting solutions that are created in international markets and utilised by others. If our focus is short-sighted and about protecting what exists now— often monopoly type public transport operations at the national or town level— we will miss the opportunity to create new services.
Finland is a country with a high level of trust and technological leadership. Compared to countries in which citizens and companies do not trust each other or the authorities, Finland is a place where it is easier to implement services such as those related to the sharing economy. This trust and desire to experiment are now the keys to the once-in-a-lifetime opportunity to utilise Finnish work, improve the everyday life of citizens and reduce the environmental burden.
Published in Finnish in Talouselämä 8/2018
Markku Mäkinen
Managing Partner
+358 (0)40 761 9177
HPP Attorneys Ltd
Vesa Silaskivi
Executive Advisor, LL.D, Lic.Sc. (BA)
+358 (0)50 329 9900
HPP Attorneys Ltd
14.11.2017
HPP Energy lawyers write the Finland Chapter of Global Legal Insights to: Energy 2018
Three of HPP’s Energy team have contributed the Finland chapter to leading global law guide Global Legal Insights to: Energy 2018.
In the chapter, HPP lawyers Andrew Cotton, Laura Leino and Björn Nykvist give their insights on topical issues in the Finnish energy sector including, amongst other topics, the development of different energy sources market share in the recent past, attempts to improve security of supply and the new proposal for a renewable energy support scheme as well as other future trends in both energy policy and regulations.
The chapter is available online. HPP’s Energy team is one of the leading teams advising clients in the energy sector in Finland which is reflected by our Tier 1 ranking in the Energy category of leading global law firm directories.
31.05.2017
Uber-complex: regulating ride-hail services
Ride-hail services such as Uber and Lyft generally offer a cheaper and more convenient alternative to standard taxi services, but have disrupted the transport market and generated a myriad of complex issues in terms of regulation. The problem is that a taxi licence is required for driving Uber rides as required for driving a taxi.
Due to the undefined nature of Uber, implications in relation to social security and employment matters have not yet been considered. The insurance industry is also considering issues relating specifically to Uber cars and ride-hail services, as well as to shared cars generally.
Uber began operating in Helsinki in November 2014. However, the police soon began investigations against Uber drivers and now an important precedent is pending before the Supreme Court. That outcome will determine whether and how Uber can continue to operate in Finland. At present, the police are also investigating Uber Finland Oy as a company.
Partner Matti Komonen from HPP Attorneys Ltd has written an update on this matter. The update titled “Uber-complex: regulating ride-hail services” has been published in the International Law Office’s Newsletter.
19.05.2017
Ballast Water Management Convention to enter into force – Impacts on the environment, shipowners and the cleantech industry
The International Convention for the Control and Management of Ships’ Ballast Water and Sediments, adopted by the IMO (International Maritime Organization) in 2004, will enter into force on 8 September 2017. The Convention specifies standards for ballast water and sediments management to follow. It applies, in principle, to all ships in international traffic. The Convention does not apply to vessels which only operate in waters under the jurisdiction of a state,[i] e.g. to Finnish flagged vessels which only sail in waters under Finnish jurisdiction.
Impacts on the environment
The purpose of the Ballast Water Management Convention is to prevent and reduce transferring invasive species through ballast water and sediments from one water area to another, as invasive species cause damage to the environment, biological biodiversity and even to human health. To maintain stability and maneuverability, vessels load ballast water at a cargo discharging port and discharge it at a cargo loading port. Consequently, invasive species are transferred through ballast water from a port to another. Ballast water is also operated during cargo handling to control trim, list and stresses of the vessel.
Impacts on shipowners
Each vessel which the Convention applies to shall be surveyed and carry a certificate onboard which indicates that requirements of the Convention are fulfilled. A type-approved BWTS (Ballast Water Treatment System) shall be installed onboard existing tonnage at the first IOPP (International Oil Pollution Prevention) renewal survey after 8 September 2017, i.e. the latest day to install a BWTS varies among vessels. However, to enable more flexible implementation of the Convention, Trafi (the Finnish Transport Safety Agency) allows for de-coupling the IOPP certificate from the Harmonized System of Survey and Certification with an exceptional permission.[ii]
Each vessel shall have a Ballast Water Management Plan, the minimum content of which is defined in Regulation B-1. Onboard a Finnish flagged vessel, the Plan shall be approved by Trafi or an authorized classification society. Furthermore, a record shall be kept of each ballast water operation as specified in Appendix II of the Convention, for which each vessel shall carry a Ballast Water Record Book onboard.
The Convention requires vessels to either exchange ballast water in accordance with Regulations B-4 and D-1, or treat ballast water before discharging it in accordance with the Ballast Water Performance Standard laid down in Regulation D-2. However, ballast water exchange is only a temporary option until all ships have a BWTS onboard.[iii]
In the Baltic Sea area, ballast water is not possible to exchange as required,[iv] due to the fact that there are no such areas where the minimum required distance from the nearest land and depth are met.[v] This means that when a vessel is operating in the Baltic Sea area, ballast water shall be treated with a BWTS once the vessel has installed one onboard. The low temperature, turbidity and brackish water of the Baltic Sea may also pose challenges to operate a BWTS in the Baltic Sea area.[vi]
Required investments from shipowners – Possibilities for the industry
Investment costs of a ballast water treatment system vary among vessel types and sizes. Trafi has evaluated the amount of investment to be between 120,000 and 1,100,100 euros per BWTS when the treatment capacity of a BWTS is between 300 and 5,000 cubic meters of ballast water per one hour.[vii] In addition, a BWTS causes i.e. maintenance and annual operating costs to shipowners.
On the other hand, the Convention will have and has had positive impacts on the marine technology industry; such as on companies involved in manufacturing ballast water treatment systems, shipyards involved in installing the systems and ship design offices.[viii] Wärtsilä Water Systems Ltd, Panasonic Environmental Systems & Engineering Co., Ltd. and Samsung Heavy Industries Co., Ltd., to name a few, provide type-approved ballast water treatment systems for vessels.[ix] We are of course glad to see that also Finnish companies are represented among the names.
Exceptions and exemptions
Nevertheless, the Convention provides that vessel safety shall be given priority. Ballast water exchange is not required as regulated if the master of the vessel decides that exchange would threaten the safety or stability of the ship, crew or passengers.[x] It is also worth noting that a vessel shall not be required to deviate from its intended voyage or delay the voyage, in order to exchange ballast water as regulated.[xi]
Furthermore, the states party to the Convention are allowed to grant exemption from ballast water management to a vessel on voyages between specified ports or locations, or to a vessel which operates exclusively between specified ports or locations.[xii] To facilitate administrations and shipowners to identify routes that may qualify for exemptions in the Baltic Sea and North-East Atlantic regions, OSPAR and HELCOM have released an online risk assessment tool, which is available here.
Inspection of vessels
To verify compliance with the requirements of the Convention, a vessel may be inspected by the Port State Control Authorities. Trafi is responsible for Port State Control inspections in Finland, while the ELY Centre (Centre for Economic Development, Transport and the Environment) has responsibility for supervision of sediment reception facilities in Finnish ports.
The Port State Control inspection is primarily carried out as a documentary check by Trafi, but the Port State Control may also include a sampling of the ship’s ballast water.[xiii] It is recommended that shipowners and their crew familiarize themselves with the IMO guidelines for Port State Control under the BWM convention (MEPC.252(67)), which provide detailed procedures for inspections. The guidelines are available here.
After all, ballast water management is not a new phenomenon. National rules restricting ballast water exchange locally have been applicable previously[xiv] and are still to be applied in some states, while this is the first international ballast water management convention. However, the USA has not ratified the Convention and has its own regulations on ballast water management to be taken into consideration when a vessel is operating in waters within the jurisdiction of the USA. This is likely to cause confusion amongst shipowners and operators.[xv]
Partner Nora Gahmberg-Hisinger
Trainee Alexandra Kauppi
[i] See Article 3 of the Convention.
[ii] Decoupling ships’ IOPP certificates from the Harmonized System of Survey and Certification, News of Trafi, published on 2 February 2017.
[iii] Government proposal 122/2015, p. 39. Available here (in Finnish) or here (in Swedish).
[iv] See paragraphs 1–2 of Regulation B-4 of the Convention.
[v] Government proposal 122/2015, p. 6.
[vi] Statement of the Environment Committee 1/2016, p. 3, available here (in Finnish) or here (in Swedish) and e-Newsletter of Trafi, published on 4 January 2017, available here (in Finnish).
[vii] Evaluating the costs arising from new maritime environmental regulations, Trafi Publications 24/2013, p. 33. Available here.
[viii] Government Proposal 122/2015, p. 13.
[ix] Lists of Ballast Water Management Systems, which received type-approval certification (updated in November 2016). Available here.
[x] See paragraph 4 of Regulation B-4 of the Convention.
[xi] See paragraph 3 of Regulation B-4 of the Convention.
[xii] See Regulation A-4 of the Convention.
[xiii] Literature Review for the Indicative Ballast Water Analysis Methods, Trafi Publications 10/2017, Summary. Available here.
[xiv] Dandu Pughiuc: Invasive species: ballast water battles, Seaways 11/2010, p. 5. Available here.
[xv] Eva Grey: IMO vs USCG: navigating the differences in ballast water regulation, published on 7 April 2016. Available here.
27.04.2017
HPP ranked highly in the 2017 edition of the leading global law firm directory, Chambers and Partners
8 practice areas and 15 lawyers were ranked as notable individuals in their chosen specialist legal field with Shipping specialist Henrik Gahmberg rated as a ‘Senior Statesman’ and Head of Head of Energy & Environment, Kari Marttinen and Head of TMT Kari-Matti Lehti, both ranked as Leading Individuals in their practice area.
HPP has been recommended in the following 8 practice areas:
Competition
Corporate and M&A
Dispute resolution
Energy and natural resources
Insolvency
Real estate
Shipping
TMT
Clients’ responses to our products and services:
Competition
”Very skilled and flexible team.”
“Lovely to work with.”
“Communicative, available and very skilled.”
Dispute resolution
“It’s a very good service. The practice has good insight into the latest practices and developments in litigation. They have very good contacts and a good selection of arbitrators, as well as very developed tactical insight.”
Energy and Infrastructure
“Range of in-house expertise is reassuringly comprehensive, their variety of languages complements their international service, and their ability to think out of the box is very refreshing.”
Real estate
“Good level of understanding and experience.”
“Provides simple solutions but is also very creative.”
Restructuring/Insolvency
“Interactive and communicates at a good level.”
“Flexible.”
“Able to work across borders.”
“In-depth knowledge of Finnish law.”
Shipping
“Excellent legal skills. They are flexible and quick and understand the customer’s needs. They carry out the duties assigned flawlessly.”
“Approach, availability, the speed in which they deliver the documents and the quality of the documentation.”
TMT
“Versatile expertise.”
The full list of HPP lawyers ranked is as follows:
Tuomas Saraste, Competition/European law
”Good commercial awareness and client service.”
Maarika Joutsimo, Competition/European law
“Good commercial awareness, practical approach to legal problems and excellent training skills.”
Marko Wainio, Dispute resolution
”Really brilliant”
“His legal skills and knowledge are outstanding. He’s quick to understand things and obviously highly intelligent.”
Jörgen Hammarström, Dispute resolution
Mikko Leppä, Dispute resolution
Kari Marttinen, Energy and Natural resources, Real estate
”Leading environmental law specialist.”
“Vast knowledge.”
”Easy-going, understands client needs and is always available.”
Tarja Pirinen, Energy and Natural resources
“Good knowledge, especially in environmental and mining law.”
Björn Nykvist, Energy and Natural Resources
“Commanding grasp of commercial concepts.”
Jari Tuomala, Real Estate
”Very good at making complicated matters simple.”
Juho Lenni-Taattola, Restructuring/Insolvency
“He’s pragmatic.”
“Tries to find solutions.”
“Excellent in all areas.”
Henrik Gahmberg, Shipping
Nora Gahmberg-Hisinger, Shipping
”An excellent lawyer, a skilful negotiator, extremely effective and flexible.”
Matti Komonen, Shipping
“Very hard-working lawyer.”
Kari-Matti Lehti, TMT
”One of the best in that market.”
“Long experience in the market.”
Pekka Raatikainen, TMT
”Very good negotiation abilities.”
12.04.2017
Supreme Administrative Court on reduced fairway dues when carrying empty containers
According to Section 1 of the Fairway Dues Act, “Fairway dues are payable to the government for ships engaged in merchant shipping in Finnish territorial waters”. The amount of fairway dues will be reduced if a ship is not fully loaded comparing to the particular loading capacity utilisation rate. According to the legislature, reducing fairway dues as a result of reduced loading capacity are based on established practice. However, the established practice has been subject to considerable interpretation.
It has been unclear whether a ship is carrying cargo in the meaning of merchant shipping and entitled to reduced fairway dues when carrying empty containers for free. On March 23 2017 the Supreme Administrative Court rendered a decision stating that a ship carrying a shipping company’s empty containers is entitled to the loading capacity reduction, while, on the other hand, a ship carrying empty containers that are not owned by the shipping company is regarded as carrying cargo.
In this case Customs charged fairway dues without granting any reduction. The decision was against the application instructions issued by the Board of Customs in 2006. According to the instructions carrying empty containers and similar platforms free of charge is not regarded as merchant shipping and hence not to be subject to fairway dues.
The Supreme Administrative Court accepted the Helsinki Administrative Court decision, where the customs decision was overruled by referring to Section 6 of the Administrative Procedure Act (434/2003), which states that the acts of the authority will protect legitimate expectations according to law. It means justified expectations towards the acts of the authority.
Partner Matti Komonen from HPP Attorneys Ltd has written an update on the amount of fairway dues and the Supreme Administrative decision. The update titled “Supreme Administrative Court on reduced fairway dues when carrying empty containers” has been published in the International Law Office`s Newsletter.
07.04.2017
New Motor Liability Insurance Act enters into force
The new Motor Liability Insurance Act entered into Force on January 1 2017, renewing the previous act from 1959. The reform process began in 2004 and the end result is a clear and easily understandable act which responds to existing and future needs.
Motor liability insurance safeguards the innocent party’s legal protection and compensation. The protection given by motor liability insurance in the act remains as broad as before. The obligation to insure remains but the consequences of failing to insure are now more severe. The basic compensation principles have not changed but the claims process has now been more accurately specified. The insurer has right of recourse against a third party and as a new aspect the right of recourse is also against a person that is liable under the Product Liability Act.
Partner Matti Komonen from HPP Attorneys Ltd has written an update on this matter. The update titled “New Motor Liability Insurance Act enters into force” has been published in the International Law Office´s newsletter.
20.12.2016
Validity of legal expenses insurance
The purpose of legal expenses insurance is to cover the legal fees charged by a lawyer representing the insured in an insurance event. The right to coverage arises when there is a dispute, such as a claim or charge that has been disputed.
Legal expenses insurance indemnifies only insurance events occurring during the validity of the insurance. However, there is usually a precondition that the insurance policy must have been also valid for at least two years at the time of the insurance event and that the particular matter which the dispute is based on must have been happened during the validity of that insurance. This can be especially problematic when ending business activities.
In a recent decision the Vaasa Appeal Court stated, that such insurance condition was not unreasonable. In the case a pharmacist sued the insurer after the insurer rejected the pharmacist’s claim, which was related to a former employee’s workers’ compensation claim presented after the pharmacist had retired and ended his business activities and terminated legal expenses insurance at the same time. The Court stated that, inter alia, when the insurance contract was concluded the pharmacist had been provided with the insurance conditions, which were not exceptional.
Partner Matti Komonen from HPP Attorneys Ltd has written an update on Finnish legal expenses insurances and the Vaasa Appeal Court decision. The update titled “Validity of legal expenses insurance” has been published in the International Law Office’s newsletter.
01.12.2016
HPP presented an award to F-Secure in Slush
HPP sponsored the competition the Best Mobile Service in Finland 2016 organized by Technology Industries of Finland and Teleforum in one of the most significant start-up events in the world – Slush.
HPP took part in choosing the best mobile service in the category of MyData. The judges decided that among all of the candidates the winning product worked best in securing the privacy of mobile users in mobile devices.
The winner was Freedome VPN by F-Secure.
Minister Anne Berner of the Ministry of Transport and Communications (in the photo on the left) and Terho Nevasalo, a partner in the technology team of HPP Attorneys (in the photo on the right) presented the award in the Slush Arena.
16.11.2016
Ship carrying no cargo entitled to loading capacity reduction of fairway dues
According to Section 11 of the Fairway Dues Act, the amount of fairway dues will be reduced if a ship is not fully loaded according to the particular loading capacity utilisation rate, which is calculated by comparing the combined total of cargo imported into and exported out of Finland.
Section 11 has been subject to considerable interpretation. It has been unclear, inter alia, whether Section 11 applies if there is no cargo onboard at all. On October 25 2016 the Supreme Administrative Court rendered the precedent (KHO:2016:159) that a ship with no cargo onboard is entitled to the loading capacity reduction. The court referred to the wording of Section 11, which states that the fairway dues for a cargo ship are reduced by 75% if the ship’s loading capacity utilisation rate is 15% or less. As reasonably argued by the shipowner, it would be absurd if only partially loaded ships were entitled to a reduction, not ships carrying no cargo at all.
Partner Matti Komonen from HPP Attorneys Ltd has written an update on the reduction of fairway dues and the Supreme Administrative court decision. The update titled “Ship carrying no cargo entitled to loading capacity reduction of fairway dues” has been published in the International Law Office’s newsletter.
14.10.2016
Harri Hynninen and Marko Wainio join HPP as partners
Harri Hynninen and Marko Wainio have joined HPP Attorneys Ltd as partners with effect from 3 October 2016. They join HPP from an international law firm located in Helsinki. Both are qualified attorneys and members of the Finnish Bar Association.
Harri Hynninen (pictured left) has broad experience of M&A, corporate transactions and general corporate law issues. Harri’s clients include investment banks, private equity investors and listed companies. Harri also advises clients on dispute resolution both in the local courts and in arbitration proceedings.
Marko Wainio (pictured right) specialises in dispute resolution. He has significant experience of resolving large and complex disputes both as an attorney and as an arbitrator. Marko’s clients include listed companies and leading private companies across a variety of sectors.
Both Hynninen and Wainio are featured in the global legal directories as leading experts in their respective practice areas in Finland.
According to Markku Mäkinen, HPP’s managing partner, ”Harri Hynninen and Marko Wainio are among the leading Finnish legal professionals in M&A and dispute resolution. Their experience and skills would make a significant addition to any Finnish law firm’s strengths and we are delighted that they have chosen to continue their careers here at HPP, one of Finland’s fastest growing corporate law firms.”
23.08.2016
Insurer’s right to terminate cancer insurance
When research and development of a new type of insurance fails or insurance products priced low at the time of marketing become unprofitable thereafter, insurers are inclined to amend conditions repeatedly, raise premiums or close down the insurance portfolio by referring to extensive and unspecified insurance conditions. However, these remedies are not necessarily available under the Insurance Contracts Act.
Unprofitability has been an issue with cancer insurance products introduced in Finland in the late 2000s. Amendments to cancer insurance conditions and premiums and the insurers’ terminations of the insurances resulted in multiple recommended decisions of the Insurance Complaints Board in 2014. The board’s recommendations serve as a reminder that insurers cannot amend insurance contracts or terminate unprofitable contracts if they do not draft the conditions carefully at the outset and fulfil their duty to inform when marketing their products.
Partner Matti Komonen from HPP Attorneys Ltd has written an update on the cancer insurance policy amendments and terminations and the Insurance Complaints Board recommendations. The update titled “Insurer’s right to terminate cancer issue” has been published in the International Law Office’s newsletter.
06.07.2016
Parliament approves controversial bill abandoning national road cabotage regulations
Following pressure from the European Commission to fully implement European cabotage rules as laid down in EU Regulation 1072/2009, Parliament has approved a controversial bill amending the Act on Commercial Transport of Goods on the Road on June 22 2016.
On June 16 2016 the commission decided to refer Finland to the European Court of Justice for failing to properly apply the cabotage rules. However, the commission noted that if Finland changes its legislation and decides to follow the EU regulation, it will reconsider its decision to sue Finland.
Partner Matti Komonen from HPP Attorneys Ltd, has written an article on this matter, titled “Parliament approves controversial bill abandoning national road cabotage regulations”, which has been published in the International Law Office´s newsletter.
27.05.2016
Bankruptcy estate’s liability for maintenance charges
The Supreme Court recently set a precedent (KKO 2015:103) regarding the liabilities of a bankruptcy estate in a case that concerned maintenance charge receivables (incurred after the beginning of bankruptcy proceedings) of a limited liability golf company in connection with the golf company’s shares (i.e., were they considered administrative expenses, and as such, were they payable on becoming due and before the disbursements towards other creditors’ claims in bankruptcy).
The questions before the court were, whether the maintenance charges were administrative expenses for which the bankruptcy estate was liable and if so, could the bankruptcy estate be discharged from its liability by abandoning the shares for the benefit of the golf company.
The Supreme Court found that the bankruptcy estate was not liable for the maintenance charges as administrative expenses in a precedent that seemed to tie the coverage of the administrative expenses more rigidly to the letter of law. The precedent may also be seen to support the legal objectives of bankruptcy proceedings in general. Further, the precedent could be applied to the maintenance charges connected to other types of shares as well.
13.05.2016
HPP has again been ranked highly in the latest edition of the leading global law firm directory, Chambers & Partners
8 practice areas and 15 lawyers were ranked as notable individuals in their chosen specialist legal field with Shipping specialist Henrik Gahmberg rated as a ‘Eminent Practitioner’ and Head of Competition, Tuomas Saraste as well as Head of Energy & Environment, Kari Marttinen and Head of TMT Kari-Matti Lehti, all ranked as Leading Individuals in their practice area. The full list of HPP lawyers ranked is as follows:
Tuomas Saraste, Competition/European Law
Maarika Joutsimo, Competition/European Law
Kari Marttinen, Energy and Natural Resources, Real Estate, Dispute Resolution
Tarja Pirinen, Energy and Natural Resources
Kari-Matti Lehti, TMT
Pekka Raatikainen, TMT
Pekka Puhakka, Dispute Resolution
Jörgen Hammarström, Dispute Resolution
Mikko Leppä, Dispute Resolution
Björn Nykvist, Corporate/M&A, Energy and Natural Resources
Jari Tuomala, Real Estate
Juho Lenni-Taattola, Restructuring/Insolvency
Henrik Gahmberg, Shipping, Dispute Resolution
Nora Gahmberg-Hisinger, Shipping
Matti Komonen, Shipping
In addition HPP has been recommended in the following 8 practice areas:
Competition
Corporate and M&A
Dispute resolution
Energy and natural resources
Insolvency
Real estate
Shipping
TMT
Clients’ responses to our products and services:
Competition
“The team’s strengths are in having top people, a good teamwork dynamic and being able to connect abilities and skills into one focus. ”
M&A
“We’ve been very pleased. The lawyers are very knowledgeable, professional, always easy to reach and quick to react.”
“The lawyers are very friendly, prompt to answer and offer good advice that you can trust.”
Dispute resolution
“The way the lawyers make an effort to explain things to us understandably and to satisfy our client needs is admirable.”
“The team’s work is really thorough; you can see that the lawyers enjoy what they do, and this brings results.”
Energy
”Its lawyers respond fast and are always available for meetings at short notice. ”
“One of the best environmental legal teams there is.”
Real estate
“The lawyers are very experienced and thus able to concentrate on essential issues in agreements, saving huge amounts of time and energy.”
“These are commercially oriented lawyers. They have the competence to look after the clients’ best interest but also know about market practices, so when there are things that may cause problems down the road, they notice that.”
Restructuring
“The lawyers have a willingness to openly discuss different scenarios and don’t sell us something that looks good but isn’t safe enough. Their honesty really shows through.”
Shipping
“The team delivers on time, giving even more than we expect on different risks and mitigation issues. I’m very happy with its performance and thorough work. No matter the issues, the quality of work is very high. ”
TMT
“The team has a high level of expertise and timely delivery.”
25.04.2016
HPP and its lawyers ranked among the leading Finnish lawyers in Legal 500 2016
Once again, HPP has been highly ranked in 8 key categories of the latest edition of the Legal 500. The quality of our leading lawyers has been recognised in this leading global directory and a total of 14 HPP lawyers have been listed as leading individuals in their fields, with 4 achieving ‘Elite’ status. HPP would like to thank all our clients and co-operation partners for giving us such positive feedback.
In summary the rankings provide as follows:
Hammarström Puhakka Partners has been recommended in the following 8 practice areas:
FINLAND
Banking and finance
Corporate and M&A
Dispute resolution
EU and competition
Intellectual property
Maritime and transport
Real estate and construction
TMT
4 lawyers are listed in elite “Leading lawyers” list. The Legal 500 Europe, Middle East & Africa 2016’s guide to outstanding lawyers nationwide.
Maritime and transport:
Henrik Gahmberg
Real estate and construction – environment:
Kari Marttinen
Technology, Media and Telecom:
Kari-Matti Lehti
Klaus Nyblin
14 lawyers are recommended in The Legal 500 Europe (listed below)
Banking and finance:
Björn Nykvist
Corporate and M&A:
Vesa Silaskivi
Antti Säiläkivi
Dispute resolution:
Pekka Raatikainen
EU and competition:
Tuomas Saraste
Intellectual property:
Markku Mäkinen
Klaus Nyblin
Maritime and transport:
Henrik Gahmberg (Elite)
Matti Komonen
Nora Gahmberg-Hisinger
Real Estate and construction:
Kari Marttinen (Elite)
Antti Rikala
Jari Tuomala
Technology, Media and Telecom:
Kari-Matti Lehti (Elite)
Klaus Nyblin (Elite)
Pekka Raatikainen
16.03.2016
New Workers’ Compensation Act enters into force
The new Workers’ Compensation Act has entered into force. The act’s purpose is to update legislation to meet the requirements of today’s working environment. The act has codified the prevailing court and compensation practice and it is clearer and more accurate than the previous act, which dated back to 1948. Inter alia, the act defines the term ‘accident’ and specifies which workers are insured and under which circumstances the accidents are covered.
Partner Matti Komonen from HPP Attorneys Ltd, has written an update on this matter. The update titled “New Workers’ Compensation Act enters into force” has been published in the International Law Office’s newsletter.
10.02.2016
Icebreaking services agreement with Russia comes into force
Since the traffic to the Russian ports on the Baltic Sea has increased greatly over the last few years, Russia’s icebreaking capability can no longer meet demand in severe winter conditions. Russia and Finland have thus entered into an agreement focus of which is to promote cooperation in icebreaking assistance in the Baltic Sea by letting Finnish icebreakers provide assistance in Russian territorial waters, and vice versa. The assistance is provided under a commercial agreement, which defines, inter alia, a compensation system and individual conditions of assistance.
Partner Matti Komonen from Hammarström Puhakka Partners, Attorneys Ltd, has written an article on the agreement. The update titled “Icebreaking services agreement with Russia comes into force” has been published in the International Law Office’s newsletter.
25.12.2015
Liquidated pension fund had no right to collect extra premiums
In a recent case the Insurance Court found that the debiting of extra premiums, performed by a pension fund after it went into liquidation, was not in line with the Insurance Fund Act. The court confirmed that, in principle, the liquidated pension fund was entitled to collect the premiums in order to meet the solvency requirements, but it set out some requirements for the collection, e.g. that the transfer of the insurance portfolio first required the realisation of the fund’s assets.
Partner Matti Komonen from HPP Attorneys Ltd, has written an article on this matter. The update titled “Liquidated pension fund had no right to collect extra premiums” has been published in the International Law Office’s newsletter.
09.12.2015
Kari-Matti Lehti listed as the most influential IT lawyer
HPP TMT partner Kari-Matti Lehti has been ranked as the most influential IT lawyer in Finland.
Tivi, the leading business newspaper for the information and communication technolgy industry, placed him on their annual list of the most influential experts in the industry.
Kari-Matti is the only lawyer ever to appear on the top 100 list.
24.11.2015
HPP proud to sponsor Jarkko Nieminen’s Final Night event
Finland’s best and most successful tennis player, Jarkko Nieminen, played his last game of professional tennis against the greatest tennis player of the modern era, Roger Federer. In addition, Finnish ice hockey legend Teemu Selanne and Swedish ice hockey legend Peter Forsberg made up a doubles match which entertained the large crowd at the Hartwall Arena in Helsinki.
The Final Night event was a big success and the money generated through ticket sales will be donated for the benefit of the young Finnish tennis players attending the Jarkko Nieminen tennis academy.
12.11.2015
HPP organised a seminar on the new procurement legislation for tendering companies
What does the new national procuerement legislation mean specifically to the tending companies? In the seminar HPP’s public procurement professionals explained, what will change in practice as the new procurement legislation will come into force. The seminar also dealt with the newest case-law of the Market Court and the Supreme Administrative Court. The seminar was opened by Jouni Alanen, Partner at HPP, who was soon followed by the Senior Administrative Secretary of Ministry of Economic Affairs and Employment, Markus Ukkola. Ukkola talked about the background of the reform, the key changes, and the next steps of the legislative process.
Attorney Klaus Majamäki gave a presentation on the scope of the procurement legislation and on the obligation to invite tenders. Partner Jouni Alanen continued along the same lines about the new in house provisions. Senior Associate Perttu Koivula held a presentation on the main changes in the procurement procedures and on the selection of the best tenders. With procurement agreements as his subject, Partner Kari-Matti Lehti talked about the optimisation of tenders and about securing a position in agreement negotiations. The seminar was concluded by a discussion.
10.11.2015
Responsibilities of company management stirred up debate in a seminar organised by HPP
HPP organized a seminar on responsibilities of company management and on legal process. Other topics discussed during the seminar were financial crime process, labour law breaches, bribes, and breaches in business secrecy.
Klaus Nyblin, partner at HPP, opened the seminar with a presentation about why legal process often comes as a surprise. Senior Advisor Jyrki Siivola continued the seminar by presenting corporate criminal processes, concentrating on the labour law breaches. Senior Advisor Mikko Erkkilä gave a presentation on offering and accepting bribes.
Partner Klaus Nyblin then moved on to talk about breaches of business secrecy. The next speaker, nonfiction writer Petteri Järvinen shared personal experiences of being the subject of a financial crime process over the course of 10 years. The last topic discussed during the seminar was crime and public judgement. Communications manager Teuvo Arolainen gave an overview of publicity.
19.10.2015
Pharmaceutical injury insurance and time-bar clauses
In a recent case the Insurance Complaints Board stated that pharmaceutical injury insurance is not in the public domain. The board’s understanding was that an insured usually becomes aware of such insurance from a doctor after injury has occurred, and hence awareness must be judged on a case-by-case basis. The board found that the insurer was not entitled to rely on its insurance conditions and the claim was not time barred.
Partner Matti Komonen from Hammarström Puhakka Partners, Attorneys Ltd, has written an update on this matter. The update titled “Pharmaceutical injury insurance and time-bar clauses” has been published in the International Law Office’s newsletter.
07.10.2015
Labour Court overrules stevedores’ effort to take over container bar lashing
For several years, the Transport Workers’ Union (AKT) has claimed that the lashing and unlashing of bars on container ships in Finnish ports should be performed by its own stevedores, even though usually a vessel’s own crew performs the lashing and unlashing. After several disputes with the Finnish Port Operators Association and the consequent convictions, AKT started boycotting directly selected shipping companies. The case came before the Labour Court, which dismissed AKT’s claim and held that AKT had violated the industrial peace by putting pressure on shipping companies so that they would order bar lashing work from port operators.
Partner Matti Komonen from HPP Attorneys Ltd, has written an article on this matter. The update titled “Labour Court overrules stevedores’ effort to take over container bar lashing” has been published in the International Law Office’s newsletter.
17.09.2015
HPP and Pöyry together organised a seminar on the requirements of a functional environmental permit
HPP and Pöyry together arranged a seminar dealing with the new changes in environmental legislation and the requirements of a fluent environmental permit process.
Kari Marttinen, Partner at HPP, and Jaana Tyynismaa from Pöyry opened the seminar. Kari Marttinen introduced the newchanges brought by the new government platform and the three steps of the reform of the Environmental Protection Act. Mikko Kantokari from Uusimaa Centre for Economic Development, Transport and the Environment spoke about the validity of environmental permits in the light of the new legislation.
Pirkko Seitsalo and Maarit Korhonen from Pöyry presented particular issues of the directive facilities, such as accounting for BAT conclusions in the permit application.
Senior Advisor Suvi Marttinen provided an insight on the environmental permit procedure from an attorney’s point of view. She presented the latest changes in authority practice, such as the significance of of coercive measures and water protection programmes in the permit consideration. Lastly, Kirsi Koivunen from Pöyry presented practical viewpoints concernin a good environmental permit application and e.g. provided examples of problematic parts of drafting an environmental permit application.
03.09.2015
A seminar on the significance of procurement legislation and on the recent practice of the Finnish Market Court
A seminar organized by HPP went through the significance of new national procurement legislation from the viewpoint of waste facilities. Recent case law of the Finnish Market Court was also discussed.
The new national procurement legislation stands for multiple new provisions but what are the changes in practice? In the seminar organized by HPP the changes in national procurement law were discussed with an emphasis on waste facilities. The topics of the seminar were, among other things, the in-house provision of the EU procurement directive and the Finnish draft law, a recent decision by the Market Court concerning the in-house position of waste facilities, essential changes of tender procedures, ruling out the unfit tenderers from the tender process and the selection of the best tender.
The speakers of the seminar were Partner Jouni Alanen, Senior Associate Perttu Koivula, Attorney Klaus Majamäki and Attorney Julia Pekkala.
01.09.2015
HPP and Finnish Software Entrepreneurs Association organised a seminar on the most essential terms and principles of agreements concerning software supply, development and upkeep
Hammarström Puhakka Partners Attorneys Ltd together with Finnish Software Entrepreneurs Association organised a seminar concerning the most essential terms and principles of agreements concerning software supply, development and upkeep. The seminar went through e.g. the differences between the terms concerning software supply and maintenance when installing software for the client and when supplying the software as a service. The presentations also included examples of topics generally most subject to disputes during negotiations concerning the supply and maintenane agreements and attention was also paid to accounting for client requirements in SaaS service agreements. Issues concerning the delivery contracts also discussed during the seminar. What are the most common matters causing disagreements during and after supply? The seminar went practically through the challenges in software supply agreements without forgetting the international viewpoint.
The speakers of the seminar were Terho Nevasalo and Markku Mäkinen, partners at HPP, Keijo Karjalainen, CEO of Sympa, and Kaija Erkkilä, CEO of Midaxo. The seminar initiated by the CEO of SYmpa. His presentation concerned the journey towards internationality and challenges brought by it. He was followed by Terho Nevasalo,who talked about agile development as a supply model and more generally about the supply agreement negotiations. CEO of Midaxo, on the other hand, spoke about Midaxo’s experiences on how Midaxo’s international growth was accomplished and about the experience gained along the way. Markku Mäkinen, the managing parther at Hammarström Puhakka Partners, held a presentation on development and maintenance agreements.
29.05.2015
Markku Mäkinen appointed as the managing partner of Hammarström Puhakka Partners
Partner Markku Mäkinen has been appointed as the managing partner of HPP effective from 1 June 2015.
Mäkinen joined HPP in 2012. Prior to joining HPP, Mäkinen worked at Nokia for 12 years and held various senior positions including as head of both Nokia China and Nokia North America legal teams.
“Markku Mäkinen’s experience and personal qualities provide an excellent basis on which to further develop HPP’s business and continued solution-oriented growth strategy. Furthermore, Markku’s background strengthens HPP’s ability to respond to the increasingly international and diverse nature of legal work and the rapid pace of change in the domestic, Nordic and global economy, which require law firms to develop and adopt new and more effective operating models”, says HPP’s Chairman of the Board Tuomas Saraste.
Mäkinen will continue his client work as an experienced specialist in mergers and acquisitions and technology related matters.
”I’m very excited about the new challenge of leading the HPP organisation. I believe my experience will add particular value to overseeing the development of HPP’s business and the core capabilities supporting the business. Client work and interaction with clients, which are at the core of HPP’s business, have always been close to my heart and I believe that through my new role I will be able to strengthen this vital part of HPP’s business by building on an excellent foundation of highly-experienced and qualified people and their expertise”, says Markku Mäkinen.
27.05.2015
Seminar on damages related to competition law
HPP held a breakfast seminar at the Akseli Gallen-Kallela hall at Hotel Kämp on 27 May 2016. The seminar concerned damages related to competition law. Partners Vesa Silaskivi and Jörgen Hammarström along with Attorney Julia Pekkala were the speakers of the seminar.
The presentation by partners Jörgen Hammarström and Vesa Silaskivi focused on the challenges and special characteristics of damages related to competition law. The presentation went through practical experience from the case involving the biggest damages related to competition law in Finland – the concrete cartel (betonikartelli).
As the second speaker of the seminar, Julia Pekkala’s presentation concerned EU’s new damages directive and its most notable changes to the legal situation. The presentation concentrated on damage presumption, reversed burden of proof and on other notable changes brought by the directive.
06.05.2015
HPP ranked highly by Chambers & Partners
HPP has again been ranked highly in the latest edition of the leading guide to law firms, Chambers & Partners.
13 HPP lawyers were ranked as notable individuals in their chosen legal specialist field with Shipping Partner, Henrik Gahmberg rated as a ‘Eminent Practitioner’ and Head of Competition, Tuomas Saraste and Head of Energy & Environment, Kari Marttinen, both ranked as Leading Individuals in their practice area.
Tuomas Saraste, Competition/European Law
Maarika Joutsimo, Competition/European Law
Kari Marttinen, Energy and Natural Resources, Real Estate, Dispute Resolution
Tarja Pirinen, Energy and Natural Resources
Pekka Puhakka, Dispute Resolution
Jörgen Hammarström, Dispute Resolution
Mikko Leppä, Dispute Resolution
Björn Nykvist, Corporate/M&A, Energy and Natural Resources
Jari Tuomala, Real Estate
Juho Lenni-Taattola, Restructuring/Insolvency
Henrik Gahmberg, Shipping, Dispute Resolution
Nora Gahmberg-Hisinger, Shipping
Matti Komonen, Shipping
In addition, our Shipping and Energy & Natural Resources teams were ranked as top tier departments with stand-out performances over the past year.
HPP is grateful to its clients and peers for their positive feedback and to our committed and talented lawyers and support staff who are continuing to build a high-quality independent Finnish law firm capable of handling the biggest and most complex domestic and cross—border assignments in all sectors in the Finnish market today.
30.03.2015
HPP’s seminar on transfer of environmental and competition law based liabilities in transactions seminar will be arranged again later this year
On 11 March 2015 HPP hosted a topical seminar on “Transfer ofenvironmental and competition law based liabilities in transactions”.
The seminar gathered more than 70 visitors together to listen to HPP’s experts and to discuss environmental and competition law related questions in transactions and bankruptcy.
The head of HPP’s environmental team, Partner Kari Marttinen described the transfer of environmental liabilities in transactions and bankruptcy while the team’s Senior Advisor Mikko Erkkilä focused on environmental liabilities in legal due diligence and M&A agreements. The head of HPP’s competition law team, Partner Tuomas Saraste discussed the transfer of competition law based liabilities in different transactions and Senior Associate Anu Aaltonen focused on state aid risks relating to transactions. The seminar was chaired and presentations commented by Partner Vesa Silaskivi from HPP’s Transactions and Investments team.
HPP’s speakers are happy to provide further information on the seminar and the topics discussed. Due to the high interest in the topic HPP will arrange another seminar on the subject later this year.
05.03.2015
HPP’s seminar on special issues of complementary construction gathered real estate professionals together
HPP hosted a topical seminar concerning special issues of complementary construction on 5 February 2015. Due to shortage of building land, especially in the metropolitan area there is a high pressure for complementary construction and conversion of purpose of use. The seminar gathered a significant number of corporate real estate professionals together to listen to HPP’s experts and to discuss legal issues regarding complementary construction.
Senior Advisor Mikko Erkkilä reviewed preconditions and official procedures necessary for conversion of purpose of use defined in a detailed plan. Erkkilä discussed the subjects especially in the light of recent legal praxis.
Senior Advisor Suvi Marttinen’s presentation concentrated on protection of buildings, which often needs to be considered in complementary construction projects. Marttinen focused on project developer’s possibilities to take part in building protection procedures and options to influence the content of building protection orders.
Partner Jari Tuomala described legislation and regulations regarding soil and structure contamination and project developer’s decontamination liabilities.
Senior Associate Antti Rikala and Associate Pauliina Lievonen reviewed horizontal and vertical division of possession between real property owners.
HPP’s real estate team is happy to provide further information on the seminar and the topics discussed.
22.01.2015
Finnish wind power attracts foreign investors
Successful foreign investments into the Finnish wind sector has alerted other fund investors to the opportunities present in Finland, observes Björn Nykvist, partner at HPP, in an inverview published in the January issue of American Lawyer / Focus Europe.
As a corporate finance partner at HPP Nykvist has advised a number of foreign investors with their wind power related projects.
– HPP has acted for five different foreign private equity funds looking at acquiring assets in the Finnish wind sector in the past 12 months, which is a significant number given the size of the market.
According to Mr Nykvist, one of the main drivers behind wind power investments into Finland is the competitive feed-in-tariff available for electricity producers (83,50 euros per MW/h).
– The current Nord Pool spot price is around 30 euros per MW/h, so the feed-in-tariff guarantees a very healthy return on investment.
The full article is available in the digital edition of Focus Europe.
03.12.2014
Nora Gahmberg-Hisinger appointed as Finland’s representative for WISTA Nordic collaboration
Denmark, Norway, Sweden and Finland have launched a Nordic collaboration of the respective national associations of the Women’s International Shipping and Trading Association (WISTA). Finland’s representative for Nordic cooperation is HPP’s partner Nora Gahmberg-Hisinger, who is also the WISTA Finland board member responsible for international affairs.
WISTA is a networking organization for women at management level in the maritime industry. The organization supports its members by arranging networking possibilities and events with focus on education and mentoring, amongst other things. WISTA has over 2,000 members in 32 countries worldwide.
WISTA Nordic collaboration will enable drawing up a more focused programme for the Nordic member nations, which are known as forerunners in structuring financial and other services, innovating ship type and design, and in environmental aspects related to shipdesign.
28.11.2014
Insurer’s right to amend premiums and conditions of cancer insurance
The Insurance Complaints Board recently issued three recommended decisions about insurers’ rights to amend the premiums and conditions of cancer insurance. The recommendations serve as a reminder that insurers cannot amend an insurance contract on the whatever grounds and should draft the conditions carefully from the beginning.
Partners Matti Komonen and Herman Ljungberg from Hammarström Puhakka Partners, Attorneys Ltd, have written an update on this matter. The update titled “Insurer’s right to amend premiums and conditions of cancer insurance” has been published in the International Law Office’s newsletter.
14.11.2014
“Trends in Nordic M&A “ seminar was a success
HPP was pleased to co-host a breakfast seminar on “Trends in Nordic M&A: Developing solutions and trends for protecting value in Nordic transactions” along with AIG and UK Trade & Investment on Wednesday 5 November at the British Embassy in Helsinki.
Speakers including Rowan Bamford, AIG’s Head of Underwriting, Jan Mattlin, Partner at Capman Buyout, Henrik Rydén, CEO of JLT Risk Solutions and HPP Partner Antti Säiläkivi, addressed the audience on topics concerning trends in Nordic transactions market, the use of M&A insurance on both the buy and sell-side to protect parties to a transaction, and how M&A insurance is affecting deal and auction processes in the Nordic transaction market.
The audience was made up primarily of General Counsel of leading Finnish corporates and private equity and corporate finance professionals. The conclusion of a very interesting panel discussion was that M&A insurance was a developing solution which was set to increase in use as a means of resolving potentially contentious issues during negotiation, for ‘sweetening’ bids in auction processes and avoiding the need for escrow arrangements allowing sellers to realize and protect value at an earlier stage than previously.
Further information on insurances in connection with transactions can be obtained from partner Antti Säiläkivi, antti.sailakivi@hpplaw.fi.
31.10.2014
HPP’s seminar on dispute resolution gathered the representatives of municipal waste management companies together
On 18 September 2014, HPP organized a seminar on dispute resolution directed to waste management companies. In their presentations HPP’s experts concentrated on subjects concerning the waste management business, i.a. public procurement and dispute resolution. Interest towards a seminar focusing on waste management disputes was substantial and the topics evoked a lot of discussion among the participants and speakers.
Jouni Alanen, Partner at HPP, introduced the new public procurement directives and their national implementation and the competence of courts and supervising authorities in the disputes relating to waste management. In addition, Mr. Alanen described the assignment of waste management tasks to waste facilities and presented recent legal praxis relating to waste management business.
Senior Associate Perttu Koivula reviewed the activities of the Market Court and the processing of appeals in the Market Court, especially concerning public procurement.
Competition law specialist, Senior Associate Maarika Joutsimo described recent legal praxis in Finland and in the EU focusing particularly on waste management and recycling and sorting systems. Ms. Joutsimo also covered the current report and measures of the Finnish Competition and Consumer Authority concerning the waste management business.
Senior Associate Johan Pråhl’s presentation concentrated on waste management disputes in general and especially on disputes regarding avoidance of waste related payments. Mr. Pråhl went through the reasons, consequences and damages relating to the avoidance of waste related payments and the special features of criminal and civil procedures in such cases.
Partner Pekka Puhakka described the disputes in the waste management business in connection with arbitration. In addition, in his presentation Mr. Puhakka concentrated on the differences between arbitration and court proceedings.
The topic of Partner Kari Marttinen’s presentation was the reform of the Environmental Protection Act from the perspective of waste management facilities’ operations. The presentation focused on the changes brought by the new Environmental Protection Act especially for the companies acting in the waste management business.
HPP’s dispute resolution, public procurement and environmental law teams are happy to provide further information on the seminar and the topics discussed.
20.10.2014
Kari Marttinen nominated as Lawyer of the Year 2015 in three categories
Best Lawyers, a US publication, lists best lawyers within various jurisdictions that have been nominated by their peers. Within each field of law the acknowledgement is granted to a person who is respected by other professionals and known as outstandingly professional and gifted within his own field. HPP’s partner Kari Marttinen has been nominated as the best within his field by awarding him the distinction Lawyer of the Year 2015 in three different categories; real estate and construction, environment and natural resources.
Best Lawyers recommends also the following specialists working for our firm: Henrik Gahmberg, Jörgen Hammarström, Mikko Erkkilä, Matti Komonen, Juho Lenni-Taattola, Herman Ljungberg, Suvi Marttinen, Klaus Nyblin, Björn Nykvist, Pekka Puhakka, Tuomas Saraste, Jari Tuomala and Vesa Silaskivi.
Best Lawyers listed Finnish lawyers for the sixth time. Altogether it lists top business lawyers in 70 countries in different parts of the world.
17.10.2014
Seminar on e-money was very well received
On 8 October HPP co-hosted a seminar “Electric money in payment service business” together with Teleforum ry. The audience was made up of people working for telephone operators, mobile service businesses and payment system providers. During the event HPP’s partner Terho Nevasalo and Juha Eerikäinen, Senior Financial Supervisor with the Finnish Financial Supervisory Authority, discussed the concept of electric money and which payment services are subject to regulation, whereas Paytrail Oyj and Enterpay Oy discussed their observation of the regulation of payment services and the challenges that it has entailed.
The seminar was the first event organized by Teleforum ry’s working group on electric payment since the establishment of the group in the summer 2014. The working group comprises of 11 member companies and its chairman is Terho Nevasalo.
The seminar was very well received by the audience. HPP and Teleforum ry will continue their collaboration during the course of the year 2015.
14.10.2014
HPP’s and Pöyry’s breakfast seminar regarding the new Environmental law
HPP and Pöyry organized a breakfast seminar about the key changes of the new Environmental law which entered into force on the first of September 2014. The seminar was organized on Tuesday 30.9.2014 in a nearly full Rake Sali Ball Room.
Kari Marttinen from HPP and Jaana Tyynismaa from Pöyry opened the seminar by describing the close cooperation between HPP and Pöyry regarding projects within Environmental law.
The speakers at the seminar were Suvi Marttinen and Tuulia Strandén from HPP, Teemu Lehikoinen from the Regional State Administrative Agency of Southern Finland and Maarit Korhonen from Pöyry.
Suvi Marttinen gave an extensive presentation relating to the key changes of the new Environmental law. Tuulia Strandén spoke about the changes relating to the BAT-regulations and Teemu Lehikoinen continued the topic from an authority’s perspective. The seminar was concluded with the practical presentation of Maarit Korhonen regarding the hands-on experience of the baseline report.
17.09.2014
Supreme Court rules which party is liable for oil-spill fee
A vessel was suspected of leaking oil and the Border Guard imposed an oil discharge fee on the vessel owner. The owner appealed on the grounds that the fee was imposed on the wrong party, since the vessel was operated by the operator at that time. However, the owner had not raised this argument when the fee had been imposed and the Supreme Court dismissed the appeal.
Partners Matti Komonen and Herman Ljungberg from Hammarström Puhakka Partners, Attorneys Ltd, have written an update on this matter. The update titled “Supreme Court rules which party is liable for oil-spill fee” has been published in the International Law Office’s newsletter.
02.09.2014
Helsinki Appeal Court on insurer’s duty to inform in group pension insurance
The Helsinki Appeal Court recently ruled on whether an insurer had given two insured employees incorrect or misleading information about their pension insurance cover. The judgment demonstrates that insurers must be careful when providing information and insureds must use common sense and read annual pension information clearly.
Partners Matti Komonen and Herman Ljungberg from Hammarström Puhakka Partners, Attorneys Ltd, have written an update on this matter. The update titled “Helsinki Appeal Court on insurer’s duty to inform in group pension insurance” has been published in the International Law Office’s newsletter.
27.08.2014
HPP is proud to be co-hosting the next International Project Finance Association seminar in Helsinki on 2 September
HPP is proud to be co-hosting the next International Project Finance Association seminar in Helsinki on 2 September entitled: “Wind in Finland – The Ever-Accelerating Deal-flow”. The event will feature speakers from HPP, KPMG, Pohjola Bank, as well as leading Finnish wind developers, international investors and financial institutions.
To register for this event please go to: http://www.ipfa.org/events/8026/ipfa-nordic-region-helsinki-wind-in-finland-the-ever-accelerating-deal-flow
29.04.2014
HPP ranked highly by Chambers & Partners
HPP has again been ranked highly in the latest edition of the leading global guide to law firms, Chambers & Partners.
13 of our 18 partners were ranked as notable individuals in their chosen legal specialist field with Shipping Partner, Henrik Gahmberg rated as a ‘Star Individual’ and Head of Competition, Tuomas Saraste and Head of Energy & Environment, Kari Marttinen, both ranked as Leading Individuals in their practice area.
In addition, our Shipping and Energy & Natural Resources teams were ranked as top tier departments with stand-out performances over the past year.
HPP is grateful to its clients and peers for their positive feedback and to our committed and talented lawyers and support staff who are continuing to build a high-quality independent Finnish law firm capable of of handling the biggest and most complex domestic and cross—border assignments in all sectors in the Finnish market today.
22.04.2014
Right to indemnities when policyholder fails to notify of increased risk?
A recent Supreme Court judgment has emphasised how important it is to define the scope of insurance in the policy and to keep the policy updated regarding changes in a business environment. The case arose after twenty-seven vehicles were damaged in a flood at a port warehouse. The warehouse was not indicated in the insurance contract as a place of storage and the insurer did not know that the cars were stored there.
Partners Matti Komonen and Herman Ljungberg from Hammarström Puhakka Partners, Attorneys Ltd, have written an update on this matter. The update titled “Right to indemnities when policyholder fails to notify of increased risk?” has been published in the International Law Office’s newsletter.
14.04.2014
HPP and its lawyers ranked highly in Legal 500 2014
HPP has once again been ranked highly in 8 key categories of the latest edition of the Legal 500. We are also delighted that the quality of our leading lawyers has been recognised in this authoritative global publication and a total of 17 HPP lawyers (one in three of all HPP lawyers) have been listed as leading individuals in their fields, with 4 achieving ‘elite’ status. HPP would like to thank all our clients and co-operation partners for giving us such positive feedback.
The full rankings and commentary for HPP can be found here, but in summary the rankings provide as follows:
Hammarström Puhakka Partners, Attorneys Ltd has been recommended in the following 8 practice areas:
FINLAND
Banking and finance
Corporate and M&A
Dispute resolution
EU and competition
Intellectual property
Maritime and transport
Real estate and construction
TMT
4 lawyers are listed in elite “Leading lawyers” list. The Legal 500 Europe, Middle East & Africa 2014’s guide to outstanding lawyers nationwide.
Maritime and transport:
Henrik Gahmberg
Herman Ljungberg
Real estate and construction – environment:
Kari Marttinen
TMT:
Klaus Nyblin
17 lawyers are recommended in The Legal 500 Europe (listed below)
Banking and finance:
Björn Nykvist
Corporate and M&A:
Markku Mäkinen
Björn Nykvist
Vesa Silaskivi
Antti Säiläkivi
Dispute resolution:
Jörgen Hammarström
Mikko Leppä
Pekka Puhakka
EU and competition:
Tuomas Saraste
Intellectual property:
Andrew Cotton
Markku Mäkinen
Klaus Nyblin
Maritime and transport:
Henrik Gahmberg (Elite)
Nora Gahmberg-Hisinger
Matti Komonen
Herman Ljungberg (Elite)
Real Estate and construction:
Kari Marttinen (Elite)
Antti Rikala
Jari Tuomala
TMT:
Markku Mäkinen
Klaus Nyblin (Elite)
11.04.2014
Guarantee issues generated discussion in the HPP Shipbuilding Seminar
The Ship Building Seminar organized by the maritime and transport practice group of HPP attracted an international audience to the Rake hall on 10th April 2014. Speakers at the seminar included senior associate Max Lemanski of the London office of Stephenson Harwood, Knut Morten Finckenhagen of the P&I Insurer Gard, partners Nora Gahmberg-Hisinger, Henrik Gahmberg and Herman Ljungberg as well as senior associate Markus Hamro-Drotz of HPP.
Markus Hamro-Drotz covered in his presentation a buyer’s possibilities for securing his financial interests in newbuild contracts by means of registering a ship under construction or demanding a guarantee from the builder. Max Lemanski further elaborated on refund guarantees through a case study. Herman Ljungberg’s presentation offered a look into the concept of appurtenances in connection with ship mortgages.
Nora Gahmberg-Hisinger spoke on liquidated damages clauses in ship building contracts highlighting interesting practical viewpoints arising from negotiations. Knut Morten Finckenhagen presented Builders’ risks insurances from an insurer’s point of view. Henrik Gahmberg concluded the seminar with a presentation on certain choice of law issues which surfaced in a recent case revolving around asset transfers of active vessels.
The HPP maritime and transport practice group are happy to provide further information on the seminar as well as on any questions pertaining to ship building and maritime choice of law.
09.04.2014
The SaaS and Licence Agreement Seminar attracted a large crowd to the Rake hall
Terho Nevasalo, a partner at HPP, held a seminar at the event organised by the Finnish Software Entrepreneurs Association. Nevasalo spoke on the essential conditions of SaaS service agreements from a business perspective as well as how to avoid risks.
The seminar was part of the series ‘Growth Enterprises’ Business Contracts’. Highlighting the diverse experiences of all parties, the seminar approached the subject from the perspective of service providers, buyers and users. A corresponding seminar will be held at the ICTExpo at Messukeskus Helsinki on 8 May 2014.
29.03.2014
Partner Klaus Nyblin was awarded for the third time
Klaus Nyblin was awarded again in the Client Choice Awards 2014 as the Winner in Healthcare & Life Sciences, Finland.
Partner at Hammarström Puhakka Partners Attorneys Ltd, attorney-at-law Klaus Nyblin was awarded for the third time with International Law Office’s (ILO) award, Client Choice Awards 2014, as the winner of the category Healthcare & Life Sciences in Finland. Klaus Nyblin has market-leading experience and understanding of the pharmaceuticals and life sciences industry; he regularly advises several companies in the pharmaceutical and health care industry.
What clients commented to ILO:
“I know that most of the pharmaceutical giants use Klaus because he is the best.”
“He shows excellent professionalism and knowledge on healthcare and life sciences.”
“His status as one of the leading healthcare law experts is not in doubt. However, it is his understanding of the business of the pharmaceuticals industry that really sets him apart.”
“He is well connected and a key player in the market.”
28.03.2014
Mirka Kuisma at HPP wins the race for Best Commission Representative in the European Law Moot Court
Trainee at HPP, Mirka Kuisma, has won the award of the Best Commission Representative in the 2013-2014 European Law Moot Court competition (ELMC) in the individual competition of Commission Representatives. The prestigious ELMC competition comprises three categories in which mainly European and American law students compete in the field of EU law. The best team prize was awarded to Maastricht University and the prize of the best Advocate General to College of Europe. Kuisma competed as a member of the team of University of Turku.
The All-European Finals of the ELMC were held at the Court of Justice of the European Union in Luxembourg on 28th March 2014 and were preceded by written and oral qualification rounds in four Regional Finals. In the All-European Finals the performance of the students was judged by acting judges and advocates general of the Court of Justice.
More information on the competition can be found on the ELMC webpage.
25.02.2014
Supreme Court rules insured not bound by jurisdiction clause
An insurer and a major Finnish public limited company had agreed in a directors’ and officers’ liability policy that a Finnish court had jurisdiction to settle any disputes arising from the insurance contract. The Supreme Court held that the provisions which derogate from the jurisdictional rules in insurance matters must be interpreted strictly. It stated that the insured’s position was protected by mandatory jurisdiction rules.
Partners Matti Komonen and Herman Ljungberg from Hammarström Puhakka Partners, Attorneys Ltd, have written an update on this matter. The update titled “Supreme Court rules insured not bound by jurisdiction clause” has been published in the International Law Office’s newsletter.
05.02.2014
Suspected abuse of dominant market position in harbour towage services
The Finnish Competition and Consumer Authority recently investigated suspected abuse of the dominant market position of major harbour towage service operators. Based on a competitor’s complaint the authority investigated the suspected abuse in harbour towage services in the port of HaminaKotka and other parts of the Finnish coast. The authority found no form of abuse of dominant position in the operators’ activities.
Senior associate Maarika Joutsimo and partner Herman Ljungberg from Hammarström Puhakka Partners, Attorneys Ltd, have written an update on this matter. The update titled “Suspected abuse of dominant market position in harbour towage services” has been published in the International Law Office’s newsletter.
01.01.2014
Terho Nevasalo invited to join partnership
Hammarström Puhakka Partners has invited Terho Nevasalo to join the partnership effective from 1 January 2014.
Mr. Nevasalo specialises in legal issues in the field of technology as well as intellectual property rights, data security and privacy protection. He works as part of the firm’s technology group with responsibility for ICT assignments. He has 15 years of experience in this area.
Terho counsels clients in data system procurement and other assignments related to the development of electronic business operations. He has extensive experience in different data system procurement and maintenance agreements, licensing agreements and other ICT-sector agreements from the point of view of the buyer as well as that of the supplier. In addition, he has experience in extensive data security and privacy protection legislation-related projects and litigation concerning the ICT sector. He has previously worked as a lawyer at the consulting company KPMG performing similar duties.
Terho completed his postgraduate studies at Stockholm University. He started work at HPP in 2006.
19.12.2013
Solvency II system of governance requirements to enter into effect ahead of schedule
Adoption of the Solvency II Directive has been delayed until 2016. The European Insurance and Occupational Pensions Authority (EIOPA) has released guidelines on preparing for Solvency II, but the Finnish legislator has found the guidelines to be inadequate for patching up any deficiencies until Solvency II is implemented. For these reasons the Finnish insurance company-related legislation will be amended. The reform is expected to come into effect on January 1, 2014.
Partners Matti Komonen and Herman Ljungberg at Hammarström Puhakka Partners, Attorneys Ltd, have written an update on this matter. The update titled “Solvency II system of governance requirements to enter into effect ahead of schedule” has been published in the International Law Office’s newsletter.
15.11.2013
Lawyer of the Year 2014 prize to Mikko Erkkilä and Henrik Gahmberg
Best Lawyers, a U.S. publication, has listed Finland’s best lawyers for the fifth time. The survey involved requesting various business law specialists to nominate their candidate for the award for the best lawyer in their respective categories of business law. The survey also leads to the nomination as the lawyer of the year to individuals who have gained particularly high repute among their peers.
Best Lawyers have awarded the Lawyer of the Year 2014 prize to Mikko Erkkilä and Henrik Gahmberg in their particular areas of expertise. Mikko Erkkilä was chosen as Finland’s leading environmental lawyer and Henrik Gahmberg as Finland’s leading transportation lawyer.
The following members of the HPP team were listed among Best Lawyers in Finland 2014:
Mikko Erkkilä Environmental Law
Henrik Gahmberg Maritime Law; Transportation Law
Jörgen Hammarström Litigation
Matti Komonen Maritime Law; Transportation Law
Herman Ljungberg Maritime Law; Transportation Law
Kari Marttinen Environmental Law; Natural Resources Law
Suvi Marttinen Environmental Law
Klaus Nyblin Intellectual Property Law; Technology Law
Björn Nykvist Project Finance and Development Practice
Pekka Puhakka Arbitration and Mediation; Litigation; Mergers and Acquisitions Law
Tuomas Saraste Competition Law
Vesa Silaskivi Competition Law; Energy Law
Jari Tuomala Environmental Law
12.11.2013
HPP moves on to a new phase in its growth strategy
In recent years, Hammarström Puhakka Partners has been Finland’s fastest growing law firm. The company’s turnover was 6.9 million euros in 2009, and in 2013 it is estimated to reach ca. 14 million euros. In just 4 years, the firm has doubled in size and become one of the most significant corporate law firms in Finland. HPP’s growth strategy was formulated and implemented in 2010 and, due to the success of the initial phase, the associated development programme is progressing to a new phase. The cooperative project commenced with Markus Einiö, the managing director, that was launched with a strategic focus in 2010 is coming to an end as planned and the company will move on to a new management model on 18 November 2013.
The new management model will see the introduction of an executive committee chaired by Mikko Leppä. Kari Marttinen will continue as the Chairman of the Board of directors. Contrary to the normal Finnish legal sector practise, no new managing director or managing partner will be appointed.
“A company’s life cycle requires different management strategies and skills at different phases. Significant changes in HPP’s business have been implemented in recent years and their growth will now continue under a different model. The new model is ground-breaking in the Finnish legal industry. We strongly believe that the model will support the company’s future success and development in the best way possible”, says Markus Einiö, the first non-lawyer in Finland to have acted as managing director of a law firm.
“Recent years have treated the company very well. We are grateful to Markus for the successful cooperation over the past years. After some significant hires we have assembled an excellent team that will build the next steps for HPP’s future. We will continue to invest strongly in our complex dispute resolution and transactions practices where our goal is to have one of the most significant and best teams in the Finnish legal market. In the area of our selected niche practices – environment and infrastructure projects, competition law and public procurement, maritime and transport, technology, and insolvency – we intend to be the country’s leading law firm”, says Kari Marttinen, the Chairman of the Board of Directors.
Markus Einiö believes in HPP’s continued success: “I am convinced that HPP will be one of the legal sector’s biggest achievers in Finland.”
01.11.2013
Duty of bankruptcy administrator to report offences
A recent amendment to the Bankruptcy Act regulates the duty of the bankruptcy administrator to report offences committed by the bankruptcy debtor. Pursuant to Chapter 14, Section 5 (4), if there is a reason to suspect that the bankruptcy debtor has committed an offence against the creditors, an accounting offence or another business offence, and if such an offence may have more than a minor effect on the claims in bankruptcy or the scrutiny of a bankruptcy estate, the bankruptcy administrator must report the suspected offence to the police if deemed necessary. When filing a report on a debtor’s suspected offence, the administrator must assess the effect that the suspected offence has on claims in bankruptcy and on the scrutiny of the bankruptcy estate. The provision sets out an active and independent duty to the bankruptcy administrator to react to if there is a reason to suspect an offence by the debtor, and the administrator is not bound to creditors’ statements. Typical offences committed against creditors include dishonesty by a debtor, fraud by a debtor, favouring a creditor, accounting offence, money laundering and offences under the Companies Act.
Partner, attorney-at-law Juho Lenni Taattola and associate Lasse Luoma at Hammarström Puhakka Partners, Attorneys Ltd, have written an update on this matter. The update titled “Duty of bankruptcy administrator to report offences” has been published in the International Law Office’s newsletter.
23.10.2013
Ports and port operations in revision
Amendments to the Municipal Act and other reforms are set to change the ownership structures of ports, with the aim of enhancing competition within and between ports. Under the new regime, a municipality must establish a corporation for all of its activities when it acts in competitive markets. Meanwhile, the much-debated fairway dues are also subject to possible revision.
Partners Matti Komonen and Herman Ljungberg at Hammarström Puhakka Partners, Attorneys Ltd, have written an update on this matter. The update titled “Ports and port operations in revision” has been published in the International Law Office’s newsletter.
04.10.2013
Students voted HPP the employer of the year
The Association of Finnish Lawyers has awarded Hammarström Puhakka Partners the title of the law student employer of the year 2013. The association conducted a survey in the spring of 2013 with over 400 law students participating. The recipient of the biennial award was announced during the professional lawyers’ fair at the Finlandia Hall on Friday 4 October 2013.
In its findings the awarding jury stated the following: “The employees’ happiness with the workplace and colleagues was reflected throughout in the responses we received concerning the winner. The responses were particularly appreciative of the close-knit and encouraging collegial atmosphere in the office. The students considered their tasks versatile and interesting. The management and other staff were thought to be approachable. The students felt like they were genuinely a solid part of the work community.”
The criteria by which the winner was selected included salaries, compliance with employment legislation, students’ opportunities to combine work and study, students’ orientation and training, students’ opportunity to seize challenges according to one’s level of study as well as a good and open work atmosphere.
03.10.2013
Management liability in international cartels
HPP’s EU and Competition Law Group organized a seminar regarding management liability in the Mirror Room of Hotel Kämp on the 3rd of October, 2013. The speakers of the seminar were Keith Packer, former Commercial General Manager of British Airways World Cargo, Rudolfs Engelis, partner and the head of the Competition & Regulatory Team in the Latvian office of the law firm SORAINEN and Tuomas Saraste, partner and the head of HPP’s EU and Competition Law Group.
Keith Packer spoke about his personal experiences with regard to the flight cargo cartel, one of the biggest cartels in the world, and about the eight months’ imprisonment he served in the United States due to being a top executive in British Airways, a party involved in the cartel. Packer’s presentation was a concrete example of the management’s personal liability. Rudolfs Engelis told about management liability in the Baltic countries and reminded the participants about the potential personal criminal liability in for example Estonia, even though there is little case law at the moment. Tuomas Saraste summarized the theme of the day and described the circumstances in which a Finnish company director or an employee may be personally liable as a result of cartel either in Finland or abroad.
HPP’s EU and Competition Law Group will provide further information on the seminar and management liability with regard to international and domestic cartels.
03.10.2013
Does transport of printed advertisements constitute carriage of goods by road?
In a matter held before the Helsinki Appeal Court, a mail courier company distributed printed advertisements for a retailer based on an assessment of the number of households in different post codes. The retailer claimed that this assessment was incorrect, leading to a shortfall of advertisements in some areas and a surplus in others. The Helsinki Appeal Court held that the advertisements constituted goods and their delivery constituted transport; the advertisements could not be regarded as mail.
Partners Matti Komonen and Herman Ljungberg at Hammarström Puhakka Partners, Attorneys Ltd, have written an update on this matter. The update titled “Does transport of printed advertisements constitute carriage of goods by road?” has been published in the International Law Office’s newsletter.
25.09.2013
Commercial seal equivalent to official seal in unperformed cargo safety checks
In a recent case held before the appeal court a driver was accused of neglecting to control the cargo security of a trailer sealed with the transport company’s seal as he had controlled the trailer from the outside but failed to control the inside. The dispute concerned whether the commercial seal overruled the duty to carry out a cargo safety check. The district court found that as a ‘seal’ is not defined in the Road Traffic Act or its preparatory work, the definition also covers commercial seals.
Partners Matti Komonen and Herman Ljungberg at Hammarström Puhakka Partners, Attorneys Ltd, have written an update on this matter. The update titled “Supreme Court sets precedent on CMR carrier’s liability for loading” has been published in the International Law Office’s newsletter.
21.08.2013
Supreme Court sets precedent on CMR carrier’s liability for loading
The Supreme Court recently confirmed that a Convention on Contracts for the International Carriage of Goods by Road (CMR) carrier has a right to release itself from liability for the loading, stowage and securing of goods, and that the sender has no right to take direct action against the CMR sub-carrier. The decision is a reminder that it is important to have a clear and detailed agreement on such matters.
Partners Matti Komonen and Herman Ljungberg at Hammarström Puhakka Partners, Attorneys Ltd, have written an update on this matter. The update titled “Supreme Court sets precedent on CMR carrier’s liability for loading” has been published in the International Law Office’s newsletter.
28.06.2013
New dominance rule for the Finnish grocery trade will enter into force year 2014
The Finnish Parliament passed a bill on 28 May 2013 proposing a new section to the Competition Act according to which a Finnish grocery trade operator is automatically considered to be in a dominant market position in a nationwide market if its market share exceeds 30 per cent. This means that the two major operators of grocery trade, S and K Groups, must take into consideration the provision prohibiting the abuse of dominant position in their future activities. The amendment will enter into force 1 January 2014.
The amendment will not affect the structure of the Finnish grocery trade market, prevent grocery trade operators from growing or competing and will not impact the activities of local merchants in any other ways. Due to the amendment, the grocery trade operators whose market share exceeds 30 per cent should re-assess their pricing policies and other trading conditions.
Two major grocery trade operators have criticized the amendment in public for leading to higher retail prices and difficulties to buy local products. Most statements given on the proposal of the amendment however supported the amendment because it was held to increase competition in the grocery trade and decrease traditionally high retail prices of grocery goods in Finland.
Should you be interested in hearing more about the amendment, please contact Senior Associate, attorney-at-law Maarika Joutsimo on +358 50 338 8495 or maarika.joutsimo@hpplaw.fi.
27.06.2013
The proposal for intervening in the actions of public entities on competitive market
The Finnish Competition and Consumer Authority (the FCCA) has had difficulties to supervise and intervene in competition law restrictions in connection with economic activities by the state or municipal authorities. The amendment of the Competition Act concerns the supply of goods and services by the public authorities or other public institutions when they act on competitive market.
The FCCA will be given the authority to ban restrictive activities or impose obligations that will ensure competition neutrality in the relevant market, if practices of public entities distort or prevent competition in the Finnish market – and no results are achieved by negotiations.
The proposal does not cover public procurement, EU state aid or official activities of the authorities or competition restrictions based directly on legislation.
The proposal is currently handled in the Parliament by the relevant committees.
Should you be interested in hearing more about the proposed amendment, please contact Senior Associate, attorney-at-law Maarika Joutsimo on +358 50 338 8495 or maarika.joutsimo@hpplaw.fi.
25.06.2013
Application of EU Brussels 1 Regulation in recourse claim between insurers
Finnish courts have recently had to consider the application of the EU Brussels 1 Regulation to a recourse claim between a Finnish and a German insurer which arose from a traffic accident in Germany. The district court ruled that the German courts had jurisdiction; however, referring to principles set out by European Court of Justice in its case law, the Turku Appeal Court reversed the decision.
Partners Matti Komonen and Herman Ljungberg at Hammarström Puhakka Partners, Attorneys Ltd, have written an update on this matter. The update titled “Application of EU Brussels 1 Regulation in recourse claim between insurers” has been published in the International Law Office’s newsletter.
19.06.2013
Does stevedore work for vessel or cargo?
It is sometimes unclear whether a stevedore works for the vessel or the cargo. A longshoreman was injured while working onboard and the case was remitted to a competent maritime court. The court found that since the vessel had not ordered the stevedore’s work, the injured longshoreman was not acting in the interest of the vessel.
Partners Matti Komonen and Herman Ljungberg at Hammarström Puhakka Partners, Attorneys Ltd, have written an update on this matter. The update titled “Does stevedore work for vessel or cargo?” has been published in the International Law Office’s newsletter.
14.06.2013
Should minimum distances between housing and wind turbines be required by law?
The neighbours view the use of “sufficient distance” parameters defined in meters as an easy way to monitor and secure their right to a safe and healthy living environment whereas project developers, on the other hand, wish to have certainty as to which areas may be designated for wind farm development.
Associate Jenny-Li Holmström at Hammarström Puhakka Partners, Attorneys Ltd, has written an article which aims to address from a legal perspective the reasons why it is recommendable to refrain from establishing definite distance requirements or recommendations. The article was published in the Finnish Wind Power Association’s paper Tuulienergiaa, including an abstract in English.
31.05.2013
Creditor’s lodgement of claim in bankruptcy
In order to be entitled to a disbursement, a creditor must lodge a claim by sending a written statement to the estate administrator. Both the Finnish Bankruptcy Act as well as the Council Regulation (EC) on insolvency proceedings comprises provisions in respect of fulfilling the creditor’s obligation to carry out the lodgement of a claim and the content of the letter of lodgement. The provisions are not entirely equivalent which has become apparent in recent case law.
Partner Juho Lenni-Taattola and associate Matias Leskinen from Hammarström Puhakka Partners, Attorneys Ltd, have written an update on this matter. The update titled “Creditor’s lodgement of claim in bankruptcy” has been published in the International Law Office’s newsletter.
17.05.2013
AIJA May Conference sponsored by HPP – turnout breaks out all the records
HPP is one of the main sponsors in the International Association of Young Lawyers (AIJA) 2013 May Conference which is going to be held in Helsinki on 22–25 May. Almost 260 lawyers from over 30 countries are going to attend the conference.
The conference consists of seminars on international arbitration and employment law. In addition to the seminars, the participants are offered a chance to take part in various social events, such as home hospitality dinners held by local lawyers, and a midnight sauna.
On Wednesday, before the opening of the conference, the AIJA Nordic Meeting is held at the Helsinki University. The event will feature a presentation by HPP partners Andrew Cotton and Pekka Puhakka on common law concepts in Nordic agreements.
10.04.2013
Seminar on waste as a new critical resource filled the Rake-Sali Ball Room
A breakfast seminar organized by the Finnish Business & Society ry (FiBS) and HPP brought people from waste sector together at Rake-Sali Ball Room in Helsinki.
The new Finnish Waste Act which entered into force in 2012 and the numerous decrees that are going to be renewed as a consequence thereof will radically adapt the operational preconditions in the waste sector. One illustration of these changes is the prohibition against dumping organic waste in landfill sites from the year 2016 on. Waste recycling and intensification thereof, significance of the new waste regulation, new business opportunities in the waste sector and development possibilities in environmental business were covered during the seminar.
The speakers represented companies which have created new business opportunities in the waste sector and the introductory speeches emphasized the new operations models in the sector, such as producing traffic fuels out of waste and producing recycled oil out of waste oil.
02.04.2013
HPP’s seminar acquainted Finnish companies with London’s capital markets
On Wednesday 20th March, HPP co-hosted a breakfast seminar titled ‘Accessing international capital in London’ at the British Embassy in Helsinki. The event, co-sponsored by PwC, the London Stock Exchange, Jones Day and UK Trade & Investment, discussed the opportunity for Finnish companies in all sectors and of all sizes to raise capital through London’s capital markets, particularly the AiM Market.
The event was opened by the British Ambassador, Matthew Lodge and the Minister for Europe, The Rt Hon David Lidington MP and the audience were taken through the reasons for listing in London, the listing process and requirements for Finnish companies for being admitted to the AiM Market.
Should your company be interested in hearing more about the reasons for listing in London or the process for doing so, please contact HPP Partner Andrew Cotton on +358 45 657 5758 or andrew.cotton@hpplaw.fi.
27.03.2013
Stevedores convicted repeatedly for illegal actions
The Finnish Port Operators Association has repeatedly turned down the Transport Workers Federation’s (AKT) demand that the lashing and unlashing of containers – traditionally undertaken by the vessel’s own crew – be carried out by stevedores. In a recent decision the Labour Court found the AKT’s threat that stevedores would take over the lashing work from February 4 2013 to be an illegal industrial action. The Labour Court fined the AKT again when the threat was spurred on by instigating strikes in the ports of Helsinki, Kotka and Tornio. Negotiations to settle the dispute are ongoing.
Partners Matti Komonen and Herman Ljungberg at Hammarström Puhakka Partners, Attorneys Ltd, have written an update on this matter. The update titled “Stevedores convicted repeatedly for illegal industrial actions” has been published in the International Law Office’s newsletter.
20.03.2013
Seminar on agile software development well attended
The joint breakfast seminars of Hammarström Puhakka Partners, Attorneys Ltd and Ohjelmistoyrittäjät ry (The Finnish Software Entrepreneurs Association) continued at the end of February at Tapahtumatalo Bank. This time the seminar dealt with contractual practices of agile software development.
During the well-attended seminar the participants got to familiarise themselves with the realisation processes of agile software development and the basics of two universally used development methods, and heard views on using agile software development in software delivery.
HPP was represented at the seminar by Senior Associate Terho Nevasalo, who discussed the most common disagreements over software deliveries and ways of avoiding them.
A corresponding seminar is going to be held during the ICTexpo event at the Helsinki Exhibition & Convention Centre 21 March 2013.
14.03.2013
Associate Jenny-Li Holmström elected to the Finnish Wind Power Association’s board
HPP’s associate Jenny-Li Holmström has been elected as member of the Finnish Wind Power Association’s (FWPA) board. The head of HPP’s wind power practice, partner Björn Nykvist has been elected as Holmström’s deputy for the year-long board membership period.
The members of the association who voted for the composition of the board considered Holmström’s and Nykvist’s legal knowledge as a valuable addition to the board’s work. Jari Suominen, the CEO of Tuuliwatti Oy and the Energy Director of ST1, will continue as FWPA’s chairman.
The Finnish Wind Power Association was founded in 1988 and its main objective is increasing wind power awareness and its use in Finland.
09.03.2013
Green economy calls for green legal expertise
As Finland’s leading law firm in all aspects of environmental law HPP is now focusing on developing a new approach to the legal services that green economy calls for. Key to HPP’s Green Economy Law concept is the idea that legal services related to green economy are integral to each other and complimentary, rather than separate areas of legal practice as they have been perceived traditionally.
HPP aims to bring its entire palette of legal services closer to the needs of the companies already active in the green economy or aiming to make products and services based on green economy their future core activities.
Various companies have a lot to gain from partnering with a law firm like HPP with both local and international experience of questions pertaining to, inter alia, environmental law, immaterial property rights and financing.
Thanks to the Green Economy Law concept, HPP has been selected to be profiled in this year’s edition of HighTech Finland’s listing of the latest and best in Finnish technology. See HighTech Finland’s 2012-2013 presentation of HPP’s Green Economy Law concept at the company’s website.
11.02.2013
The growth continues – HPP appoints four new partners
Hammarström Puhakka Partners, Attorneys Ltd has promoted four of the firm’s lawyers to partners as the demand for the firm’s legal services continues to grow. The turnover of the firm has nearly doubled during the past three years as a result of the growing demand for the firm’s services. At the same time the number of lawyers in the firm has increased to fifty.
“In accordance with our strategy we have been determined to expand our field of expertise and recruited lawyers from different areas of law and have now appointed four new partners who will be serving our clients in the areas of their speciality”, states Kari Marttinen, the chairman of the board.
Mikko Leppä, attorney-at-law and trained on the bench, specialises in dispute resolution and has extensive experience handling a wide array of commercial litigation cases as well as both domestic and international arbitrations. Mikko joined HPP from Attorneys at law Borenius Ltd.
Markku Mäkinen, trained on the bench and former Director, Legal of Nokia Corporation, specialises in technology, media and telecommunications. He is in charge of the firm’s technology, media and telecommunications practice. Before joining HPP Markku was Director, Legal of Nokia Corporation’s operations in the USA and China.
Tarja Pirinen, attorney-at-law and trained on the bench, specialises in advising clients on mineral exploration and mining projects as well as on IT and technology agreements. She leads the firm’s mining practice. Prior to joining HPP Tarja worked as a partner at Kalliolaw.
Antti Säiläkivi, attorney-at–law, has more than ten years of experience in advising clients on mergers and acquisitions, finance, company law and corporate governance issues. Antti joined HPP from Attorneys at law Borenius Ltd.
The Finnish Bar Association approved the appointments on 1 February 2013.
01.02.2013
Finnish branch offices and bankruptcy
Branch offices are a common model used by many international companies to expand into Finnish markets due to their relative simplicity and cost efficiency. It follows that questions relating to the role of branch offices in potential insolvency situations – whether local or global – are significant issues for the creditors of such companies.
As confirmed by a recent ruling by the Helsinki Court of Appeal, however, a branch office is not a legal person, but rather a part of another foreign legal person. This could be problematic for the creditor, especially if a debtor’s assets in Finland would make local bankruptcy a practical and attractive solution. In these instances, a creditor may find potentially available territorial proceedings (such as secondary insolvency proceeding under EU Insolvency Regulation) directly against the debtor more convenient than the main proceedings in debtor’s country of domicile due to, among other things, the limited scope of the proceedings and relative ease of lodgement in brankruptcy claims.
The update written by partner, attorney-at-law Juho Lenni-Taattola and associate Lasse Luoma at Hammarström Puhakka Partners, Attorneys Ltd has been published in the International Law Office’s newsletter on February 2013.
31.01.2013
Appeal court overrules charges against officers of missile ship
A Finnish appeal court recently dismissed criminal charges against the master and first mate of a vessel who had been fined for failing to ensure that their ship was seaworthy prior to a voyage from Germany. While the vessel’s cargo of explosives had not been transported in accordance with the applicable regulations, the appeal court found that this had caused no risk to life and thus did not constitute a criminal offence.
Partners Matti Komonen and Herman Ljungberg at Hammarström Puhakka Partners, Attorneys Ltd, have written an update on this matter. The update titled “Appeal court overrules charges against officers of missile ship” has been published in the International Law Office’s newsletter.
21.01.2013
Doing business in the Nordic region
In its latest issue Acquisition International, an international magazine specialized in corporate finance, published an interview with HPP’s Partner Andrew Cotton. In the interview Mr Cotton discussed the current outlook for M&A and investments in Finland.
According to Mr Cotton, the Finnish wind sector along with mobile and technology including biotechnology are among the greatest opportunities for investors at the moment. “The Finnish wind sector is currently booming as a result of a competitive regulatory environment, an attractive feed-in-tariff and a lack of local finance to build out the large number of projects currently under development,” he added.
Mr Cotton concluded with his predictions for the Nordic Region’s economy in 2013: “It is very difficult to make solid predictions in the current market but we expect further project-based investment into Finland in specific sectors. M&A will continue to remain relatively flat during the first half of 2013 but with more distressed transactions and consolidation. It is likely that there will be some private equity deals given the age of some of their portfolio investments.”
14.12.2012
Environmental Crimes and Compensation for Environmental Damages
Attorney-at-law Kari Marttinen acted as chairman of the “Environmental Crimes and Compensation for Environmental Damages” seminar organized by The Association of Finnish Lawyers. The seminar took place on 21st November 2012 at Katajanokan Kasino in Helsinki.
The themes of the seminar ranged from special characteristics of environmental crime law and supervision of environmentalmatters to compensation of environmental damages and the legal basis for liability.
Speakers at the seminar were attorney-at-law, LL.L Kari Marttinen of Hammarström Puhakka Partners Attorneys Ltd on compensation of environmental damages, lawyer Satu Lyytikäinen from the Centre for Economic Development, Transport and the Environment for Uusimaa on supervision of environmental matters, attorney-at-law Mikko Erkkilä of Hammarström Puhakka Partners Attorneys Ltd on forfeiture of profit gained by crime in the light of recent case law on environmental crimes, Professor Elina Pirjatanniemi from Åbo Akademi on special characteristics of environmental crime law, and District Prosecutor Heidi Nummela from Prosecutor’s Office of Eastern Finland on prosecutor’s point of view on environmental crime.
13.12.2012
Wind Power Project Planning – Maximizing Profitability seminar gathered together 60 specialists
Aalto Capital Partners Oy, Hammarström Puhakka Partners Attorneys Ltd, Sito Oy and Triventus Oy organized a seminar with the topic Wind Power Project Planning – Maximizing Profitability. The seminar was organized on 11th December 2012 at Rake hall in Helsinki as a co-operation between the four parties.
Speakers at the seminar were Justin Jeffs from Triventus Consulting Ab, who held a presentation on “Maximising returns, minimising risks”, Aleksi Lumijärvi from Aalto Capital Partners Oy, who held a presentation on “Non-recourse lending in wind power projects”, Sakari Grönlund and Petri Kokko from Sito Oy, who presented a 3D virtual model of a wind power plant and the benefits and possibilities of the technology and Kari Marttinen from Hammarström Puhakka Partners Attorneys Ltd, who held a presentation about current and upcoming legislation and regulations regarding the planning stages of wind power.
The seminar gathered together approximately 60 participants.
27.11.2012
Flood damages compensation set to switch to insurers
As part of broader reforms to improve adaptation to climate change, the slow and complex state compensation system for flood damages will be abolished. State funding will come to an end in regard to damages caused to buildings and movables, and will be replaced by flood insurance offered by insurance companies.
Partners Matti Komonen and Herman Ljungberg at Hammarström Puhakka Partners, Attorneys Ltd, have written an update on this matter. The update titled “Flood damages compensation set to switch to insurers” has been published in the International Law Office’s newsletter on 27 November 2012.
07.11.2012
Hammarström Puhakka Partners the Best Maritime & Shipping Firm
Hammarström Puhakka Partners, Attorneys Ltd has been chosen as the Best Maritime & Shipping Firm in Finland in the World Finance Awards. The winners are chosen by the readers of the World Finance magazine and the vote is supervised by a judging panel consisting of experienced financial journalists. World Finance is a financial magazine published by the London-based World News Media.
HPP’s experience in maritime and shipping covers matters concerning maritime, transport, insurance and tort law as well as forwarding and logistics. HPP’s specialists in maritime and transport are partners Henrik Gahmberg, Nora Gahmberg, Matti Komonen and Herman Ljungberg.
29.10.2012
Klaus Nyblin’s book about dispute resolution has been published
Klaus Nyblin’s work “Dispute Resolution – Handbook for a Company” (Talentum, 326 pp.) has been published. The book is targeted at in-house lawyers and corporate management – for assisting with the strategic choices in dispute resolution. The work is the first of its kind in Finland, which is specifically intended to serve a company which is involved in a conflict as a party. The book covers the whole field of dispute resolution: the actual disputes in general courts or in arbitration as well as criminal and administrative law proceedings.
“Klaus’ book highlights the client’s point of view, the fact that is the most crucial in an attorney’s work”, says Pekka Puhakka, the leader of HPP’s dispute resolution group.
The author, Klaus Nyblin specializes in dispute resolution as well as pharmaceuticals law, protection of trade secrets, electronic communications and privacy law.
02.10.2012
Insurance Court decides on amount of parental allowance following recent ECJ ruling
The Insurance Court recently ruled that in order to fulfil the requirements of equal treatment imposed under EU Regulation 1408/71, parental allowance must be calculated by taking into account the income of an individual who is similarly employed in Finland and with comparable experience and qualifications.
Partners Matti Komonen and Herman Ljungberg at Hammarström Puhakka Partners, Attorneys Ltd, have written an update on this matter. The update titled “Insurance Court decides on amount of parental allowance following recent ECJ ruling” has been published in the International Law Office’s newsletter on 2 October 2012.
26.09.2012
Breakfast seminar on Wind Power Financing
Hammarström Puhakka Partners and Suomen Tuulivoimayhdistys (Finnish Wind Power Association) organized a breakfast seminar concerning wind power financing on September 26th.
The seminar guests were members of Suomen Tuulivoimayhdistys. The topical seminar subject aroused interest and even up to 70 wind power professionals joined the event. The presentations aroused lively and diverse conversation between the seminar participants.
Seminar’s program consisted of three interesting presentations which introduced different perspectives to wind power financing. Partner Björn Nykvist of HPP talked about financing of a wind power project, financial director Jarkko Nikkanen of OP-Pohjola described sources of financing whereas chairman of the board Immo Sundholm of Voimavapriikki Oy told about his concrete experiences of financing in wind power projects.
26.09.2012
Will boycotts against foreign vessels end at last?
The Finnish Seaman’s Union (FSU) has long subjected foreign flagged vessels to harassment. If a foreign vessel that applies a collective bargaining agreement which the FSU dislikes calls at a Finnish port, the FSU tends to claim the right to negotiate a new collective bargaining agreement for the vessel. The FSU has almost never sought a mandate from the crew, but claims that it has a right to negotiate.
Partners Matti Komonen and Herman Ljungberg at Hammarström Puhakka Partners, Attorneys Ltd, have written an update on this matter. The update titled “Will boycotts against foreign vessels end at last?” has been published in the International Law Office’s newsletter on 26 September 2012.
18.09.2012
Shipping law seminar
Hammarström Puhakka Partners arranged a shipping law seminar on ship arrest and use of injunctions in shipping and transport related matters. Invited were representatives from different areas of the shipping, insurance and transport industry. More than 30 guests participated in the event that was hosted at Ravintola Sipuli on Katajanokka.
Victor Fenwick from Ince & Co held an introduction to ship arrest under English law, followed by an introduction to ship arrest in Finland by Herman Ljungberg, partner. We were very pleased that the former district bailiff, Antero Seppä of the Kymenlaakso execution office held an interesting lecture about ship arrests from the bailiff’s view and Johan Lång, Claims Manager, Oy Gard (Baltic) Ab from the insurer’s view. Henrik Gahmberg, partner lectured about the use of injunctions in shipping and transport related matters in Finland, and finally Victor Fenwick ended the program with injunctions from an English law point of view.
15.09.2012
Great number of participants assembled to discuss current issues in the field of environmental law
Hammarström Puhakka Partners participated in organizing the annual environment law seminar held by the Finnish Society for Environment Law (SYS ry.) on September 13th.
HPP hosted an afternoon seminar in the Rake hall in the center of Helsinki. HPP’s senior advisor Mikko Erkkilä gave the opening lecture on the use of confiscation in connection to environmental crimes. The environmental crime theme continued with Professor Erkki J. Hollo’s lecture on the challenges of the EU directive on the protection of the environment through criminal law. Researchers at the University of Eastern Finland also introduced topical issues from the frame of reference of their research themes. Niko Soininen spoke of the challenges and possibilities related to reconciliation of different interests in accordance with the Finnish Water Act, with an emphasis on juridical decision making. Kimmo Huttunen spoke of forest planning from an environment law perspective. As chairman of the event acted Mr. Kari Marttinen, partner at HPP and in charge of HPP’s environment law practice. After the seminar, discussions were continued over cocktails and snacks at HPP.
12.09.2012
Seminar on contracting in the software industry
On September 12th 2012, Hammarström Puhakka Partners and Ohjelmistoyrittäjät ry (the Software Entrepreneurs Association) organized a breakfast seminar concerning contracting in the software industry.
Members of the Software Entrepreneurs Association were invited to this successful event, with the participants filling up the whole Rake hall at Hotel Klaus K in the center of Helsinki.
The seminar focused on SaaS, partnership, cooperation and subcontracting agreements, policies, terms and conditions, as well as the use of common law concepts in Finnish agreements. The seminar also discussed the use of such agreements, as well as highlighted the most common risks in particular those arising when doing international business.
Lawyers at HPP who gave presentations included Senior Associate Terho Nevasalo, Senior Advisor Markku Mäkinen and Partner Andrew Cotton.
27.06.2012
Rail freight reform: first new operating licence ends state monopoly
Despite efforts to encourage competition, Finland has remained one of the few EU countries where the goods transport network was operated by a single railway company. However, the first safety certificates were issued to private companies in 2011 and the Ministry of Transport and Communications recently issued a licence to Ratarahti, making it the first new official operator since the sector was opened to competition.
Partners Matti Komonen and Herman Ljungberg at Hammarström Puhakka Partners, Attorneys Ltd, have written an update on this matter. The update titled “Rail freight reform: first new operating licence ends state monopoly” has been published in the International Law Office’s newsletter on 27 June 2012.
12.06.2012
Poor credit history as an obstacle to obtaining insurance
The rate of payment defaults has increased in the last few years. The Insurance Contract Act was amended in 2010 in order to prevent insurance applications from being rejected solely on the basis of the applicant’s public credit records, which are available from the public data registry. Such a rejection is acceptable only if the insurer can objectively assess that the applicant is likely to default on its payments in future.
Partners Matti Komonen and Herman Ljungberg at Hammarström Puhakka Partners, Attorneys Ltd, have written an update on this matter. The update titled “Poor credit history as an obstacle to obtaining insurance” has been published in the International Law Office’s newsletter on 12 June 2012.
02.05.2012
Amendments to Tonnage Tax Act
A shipping company which is subject to tax in Finland can choose between ordinary corporate income tax or tax under the Tonnage Tax Act. However, the shipping industry found the tonnage tax scheme unattractive and inflexible. Therefore, the government recently amended the act. It remains to be seen whether shipping companies will opt for tonnage tax in the future.
Partners Matti Komonen and Herman Ljungberg at Hammarström Puhakka Partners, Attorneys Ltd, have written an update on this matter. The update titled “Amendments to Tonnage Tax Act” has been published in the International Law Office’s newsletter on 2 May 2012.
04.04.2012
Henrik Gahmberg Lawyer of the Year in maritime
Partner, attorney-at-law Henrik Gahmberg at Hammarström Puhakka Partners, Attorneys Ltd has been chosen as the Lawyer of the Year in Finnish maritime law. Lawyers of the Year are chosen by the Best Lawyers publication. The accolade is particularly significant, since only one lawyer in each practice area and designated geographical area is honored with it.
Mr. Gahmberg specializes in maritime and transport law, insurance law and dispute resolution. He handles assignments for domestic and international insurance companies, shipping companies and operators, forwarding agencies, traffic contractors and national maritime authorities.
Lawyers of the Year are selected based on peer-review assessments conducted with thousands of leading lawyers. The nomination implies that a lawyer commands great respect among other leading lawyers for his or her abilities, professionalism and integrity.
03.04.2012
Insurance Complaints Board: good insurance practice
The insurance industry must comply with good insurance practice. Usually, disputes are decided directly under the law and applicable insurance conditions. However, in some cases which are open to interpretation, good insurance practice may be the decisive factor. The Insurance Complaints Board’s practice demonstrates that good insurance practice can sometimes be worth money to the claimants.
Partners Matti Komonen and Herman Ljungberg at Hammarström Puhakka Partners, Attorneys Ltd, have written an update on this matter. The update titled “Insurance Complaints Board: good insurance practice” has been published in the International Law Office’s newsletter on 3 April 2012.
28.03.2012
Klaus Nyblin was awarded for the second time in a row
Klaus Nyblin was awarded for the second time in a row in the Client Choice Awards 2012 as the Winner in Healthcare & Life Sciences, Finland.
Partner at Hammarström Puhakka Partners Attorneys Ltd, attorney-at-law Klaus Nyblin was awarded for the second time in a row with International Law Office’s (ILO) award, Client Choice Awards 2012, as the winner of the category Healthcare & Life Sciences in Finland. Klaus Nyblin has market-leading experience and understanding of the pharmaceuticals and life sciences industry; he regularly advises several companies in the pharmaceutical and health care industry.
What clients have said according to clients’ comments to ILO:
”Klaus Nyblin is one of the leading experts in pharmaceutical law in Finland and has market-leading experience in the life science industry.”
“His outstanding expertise in the law and long experience within the industry make him a great legal partner for a multi-divisional company.”
“Klaus Nyblin is dedicated to providing excellent client service. He is always available with fast and focused responses and high-quality input.”
02.03.2012
Recovery of gratuitous transactions in a corporate group
The need for recovery of assets to a bankruptcy estate can arise for instance when a company declared bankrupt is a group company. The connection between group companies has significance when assessing the remunerativeness of a transaction.
Related recovery situations are reflected upon in the update titled “Recovery of assets: gratuitous transactions in a corporate group”. The update written by partner, attorney-at-law Juho Lenni-Taattola and associate Lasse Luoma at Hammarström Puhakka Partners, Attorneys Ltd. has been published in the International Law Office’s newsletter on 2 March 2012.
15.02.2012
Former director legal of Nokia to head the TMT group
Hammarström Puhakka Partners has appointed Markku Mäkinen as a Specialist Counsel and head of the firm’s technology, media and telecommunications group effective from February 13, 2012. Prior to joining HPP, Mäkinen was in-house counsel at Nokia for 12 years, ultimately as head of legal for Nokia’s global marketing function.
Mäkinen has significant experience of large-scale technology implementation and delivery projects and technology development in an international environment. He has lead several legal teams including the Nokia China and Nokia North America legal teams as well as been responsible for the legal support to Nokia Research Center and Nokia Ventures Organization and head of legal for Nokia’s global marketing, retail, online sales, logistics and care functions. Prior to his career in Nokia he was a partner of a Helsinki based law firm.
“I am really excited about this opportunity. The last 12 years at Nokia in different roles in Europe, China and the US give an excellent basis to add value for the clients of Hammarström Puhakka Partners. Customer focus and providing solutions to our clients’ needs will be at the core of the expanding activities of HPP’s TMT group”, says Mäkinen.
According to HPP’s Managing Director, Markus Einiö, Mäkinen’s long international career in one of the world’s leading technology companies will further strengthen HPP’s TMT practice and offer a valuable commercial and legal perspective on taking Finnish clients into the international market as well as attracting further multinational technology and telecoms companies with Finnish business activities and legal needs.
07.02.2012
The UK Bribery Act seminar well received
HPP held a well-attended and well-received seminar entitled ‘The UK Bribery Act and its effect on Finnish companies’ at the British Ambassador’s Residence in Helsinki on 1 February. HPP partner and English solicitor, Andrew Cotton, examined the new legislation, discussed how Finnish companies might be held liable of the corporate offence of ‘failure to prevent bribery’ and gave some practical tips on how to implement measures to reduce the risk of committing an offence under the Act. The audience was made up of HPP’s clients and contacts and included some of Finland’s largest multinationals. The seminar aroused lively discussion on issues concerning compliance with the Act making it a valuable exercise for all who attended.
For more information on how the UK Bribery Act can affect your business, please contact Andrew Cotton on +358 456 575758 or andrew.cotton@hpplaw.com
01.01.2012
Nora Gahmberg invited to join partnership
Hammarström Puhakka Partners has invited Nora Gahmberg to join the partnership effective from 1 January 2012.
Gahmberg joins from her role as in-house counsel at the Norwegian company Teekay Petrojarl Productions AS, a subsidiary to Canadian Teekay Corporation, the global leader in oil and gas shipping, and offshore oil production, storage and transport. Teekay Petrojarl Productions AS is the largest operator of floating, production, storage and offloading (FPSO) vessels in the North Sea, giving her significant oil and gas industry experience. During her time at Teekay she advised on a range of corporate and commercial matters relating to the oil and gas industry and will complement HPP’s market-leading maritime, transport, energy and natural resources teams.
”HPP is rightly regarded as the leading firm in Finland in transport and energy and with my background in those areas it was a natural choice for me to develop a client base throughout the key jurisdictions in those industries. I look forward to continuing to work with those Nordic and European law firms I got to know during my time in-house and to continuing to grow HPP’s excellent reputation in these sectors”, Gahmberg commented.
HPP’s Managing Director Markus Einiö explained that the hire reflects the increasing focus of the firm on leveraging its core sector strengths internationally: “Nora brings a wealth of specific sector experience gained in an international environment and her international network and relationships will be invaluable as HPP continues to develop its international offering for clients, law firm partners and the firm’s lawyers”.
22.11.2011
Dual-qualified Andrew Cotton invited to join partnership
Hammarström Puhakka Partners, Attorneys Ltd has invited dual-qualified English solicitor and Finnish attorney, Andrew Cotton, to join the partnership effective from 1 November 2011. Cotton is a corporate and commercial lawyer, specializing in both inbound and outbound cross-border transactions in a range of sectors including mobile and telecoms, technology, pharmaceutical and retail.
Commenting on his move into the partnership Cotton said: ”HPP is an excellent firm with a very strong client base and the firm counts some of Finland’s leading lawyers in amongst its partnership and senior lawyers. I am pleased to be given the chance to be part of the process of continuing to spread the word internationally about HPP’s skills and expertise and to continue working with leading international companies and law firms on their Finnish legal issues. This is a very exciting time to be joining such a well-performing firm”
Markus Einiö, HPP’s Managing Director commented: “In a time of increasing change in the Finnish legal market, HPP has grown through hard work and a focus on continuing to serve our Finnish clients to the highest standard and increasing our brand recognition internationally. Andrew’s partnership reflects not only the high quality of his work for HPP’s clients but also our increased focus on developing our international client and law firm relationships.”
21.10.2011
The fastest growing business law firm in Finland
Hammarström Puhakka Partners, is Finland’s fastest-growing law firm. HPP was recently announced by Talouselämä as the firm with the biggest percentage growth in both turnover and profit in 2010 (turnover up by 33%, profit up by 110%). HPP counts among the top 10 of Finnish law firms.
Markus Einiö, HPP’s Managing Director commented: “In a time of increasing instability in the Finnish legal market, HPP has grown through hard work and a focus on continuing to serve our clients to the highest standard and increasing our brand recognition domestically and internationally”.
HPP is a full service commercial law firm serving domestic and international clients from one office in Helsinki, Finland. With over 40 lawyers HPP provide the full range of legal advice to commercial clients, government organisations and industry bodies with particular expertise in the energy, transport and infrastructure, financial, technology and pharmaceutical sectors. HPP services clients in Finnish, Swedish, English, German, French and Mandarin Chinese and cooperates with other leading law firms around the globe.
20.10.2011
New managing director to join the company from the advertising industry
For the first time in the history of Finnish practice of law a law firm will be managed by a person who is not a lawyer. Markus Einiö (M.B.A.) has been called to the office of Managing Director for the law firm Hammarström Puhakka Partners as of 1 January 2011.
Markus Einiö has a long experience and a successful career in the management of companies and business operations. Among other duties, he has worked as a strategy consultant for PwC Oy, a consultancy company, and in his latest office he was Managing Director for and a partner in Family Inc. Oy, a company in the line of marketing and communications.
01.10.2009
Law firms Hammarström Puhakka Partners and Gahmberg & Co merge
The result of this merger will be the leading Finnish provider of legal services related to logistics. The proficiency of Gahmberg & Co is evidenced by its international ranking as leader in this field in Finland and this move will increase the range of areas of specialist expertise offered by Hammarström Puhakka Partners. Gahmberg & Co specializes in transport, maritime and insurance law, and litigation. The current partners of Gahmberg & Co will continue as partners of Hammarström Puhakka Partners.
Managing Partner Vesa Silaskivi says the specialities of Gahmberg & Co both complement and support the services provided by Hammarström Puhakka Partners. He states as follows:
“In an increasingly complex world, clients require deep specialization by their expert organizations. It is our vision to offer our clients the highest quality legal expertise available in the country in all our selected areas, and this arrangement follows that line of thinking; all leading publications and catalogues in the field (Chambers Global, Chambers Europe, Legal500, Best Lawyers) agree that Gahmberg & Co is the leading Finnish specialist in its areas of expertise: maritime and transport law and related dispute resolution.”
The resulting overall logistics services will allow us to assist our clients in relation to legal matters involving both passenger and goods transportation and telecommunications.
