-Thinking Ahead Since 1899-QUARTERLY Q/1 – 2020 Welcome to MyD&I Name Password Sign in We are creating the best digital processes together with our clients. For further information mydi@dittmar.fi-Thinking Ahead Since 1899- TABLE OF CO N TE N TS P4EDITORIAL Times like these… Jan Ollila Senior Partner P20THINKING AHEAD Do you hear the birds sing? Katja Hollmén Director of Client Relations P6RIGHT NOW Coronavirus and Force Majeure in commercial contracts and disputes P22TRANSACTION POWERHOUSE Finnish Act to be aligned with the EU regulation on the screening of foreign direct investments Anders Carlberg Managing Partner Juha-Pekka Mutanen Partner Jan Ollila Senior Partner Tuomas Rytkönen Senior Attorney Tuomas Tiensuu Senior Associate Heidi Yildiz Senior Attorney Nita Rautakoski Associate Jussi Lehtinen Partner P10EMPLOYMENT Coronavirus, employment relationships and daily working life P26DISPUTE POWERHOUSE Managing disputes after Brexit Heidi Yildiz Senior Attorney Suvi Knaapila Partner Seppo Havia Partner Jukka Lång Partner Petteri Uoti Partner P14TRANSACTION POWERHOUSE MAC & Corona - Could the coronavirus trigger MAC’s in M&A transactions? P32INNOVATION POWERHOUSE A little bed time story about trademarks & the lesson from Her Majesty the Queen Jan Ollila Senior Partner Wilhelm Eklund Partner Anna Haapanen Partner Tuomas Tiensuu Senior Associate P16RIGHT NOW Impact of coronavirus on fi nancing documents and available relief measures P34INNOVATION POWERHOUSE Regtech - A new approach to old challenges? Kristian Karlsson Senior Attorney Juha-Pekka Mutanen Partner Sakari Sedbom Senior Associate Kai Holkeri Partner Vilho Lammi Senior AssociateQUARTERLY Q/1 – 2020 P4 Times like these… EDITORIAL First of all, I hope that you and your loved ones are safe. In times like these, it is so much clearer what is really important in life. In many parts of the world, our generation has never experienced anything like the times we are experiencing now. A pandemic threatening the lives of millions. A black swan appearing from no-where and radically changing people’ lives within just weeks. Something completely unexpected changing our daily routines, our ways of working, our economic environment and temporarily depriving people in our western democracies of some of our very basic rights. The world changes. Change is fast. Change will never be as slow as it is today. We all knew about change. But we had no idea of the sudden and dramatic effect that the Covid-19 outbreak would have on each and every one of us, on our communities and on our businesses. Yet times like these also open opportunities. In times like these our values are being tested. In times like these we have the opportunity to really show what we stand for. The things we experience in times like these can bring us together. In times like these we need our friends and turn to people we trust. In times like these we establish trustful relationships that may last for decades. As trusted advisors, with the ambition of thinking ahead, times like these may show us how well we’ve succeeded. Sustainable legal advice should stand the test of not only time but also changed circumstances. In the drafting of contracts, the challenge is not how it will hold up when all circumstances remain unchanged. It is change that makes things tricky. And as lawyers and advisors, we should be experts in the unexpected. We all should know how the world works. We all should know that we will inevitably face unknown challenges. We can always be certain that we will meet the unknown. And when the world changes, our values, commitments, undertakings and rules are all put to a test. It is in times like these that we can learn about thinking ahead. I do hope that your business is not suffering too badly. And I do hope that you have advisors you trust to help you navigate through these unchartered waters. Right now we all need to be prepared for a number of different scenarios. Right now, we really need to be thinking ahead. Despite all the ugly sides of this crisis, we at D&I have decided that it is also an opportunity. It is an opportunity to strengthen our relationship with our clients. It is an opportunity to get to know them better and to gain a deeper understanding of their businesses. It is an opportunity to invest in important relationships. But it is also an opportunity to show what we stand for. It is an opportunity to really let our values guide us. And it’s an opportunity to learn how important our culture of working together is. How the brightest ideas are born in the interaction between brilliant and ambitious professionals, even when they sit physically isolated from each other. And it is an opportunity to really learn how to make use of all the technologies available to us. This is the second editorial I’ve written for this edition of our D&I Quarterly. I was very excited about the first one I just recently wrote at the office. But Covid-19 changed the world and my first editorial no longer felt right. This version I’m writing from my quarantine hiding, far away from the office. Once I’m done I’ll go and hang around our virtual coffee machine on-line, to see my colleagues and hear their latest stories and experiences. In times like these, you learn to value also the small and ordinary things in life. Jan Ollila, Senior Partner @JanOllila -Thinking Ahead Since 1899- In times like these we have the opportunity to really show what we stand for. The things we experience in times like these can bring us together. “QUARTERLY Q/1 – 2020 Coronavirus and Force Majeure in commercial contracts and disputes RIGHT NOW The COVID-19 coronavirus has quickly developed into a worldwide pandemic. The question is no longer whether there will be a coronavirus epidemic in Finland but instead what will be the fi nancial, societal and human losses caused by the outbreak. The losses resulting from the pandemic are causing a significant increase in discussions around the possibility to invoke the force majeure doctrine as a consequence of payment default and other contractual breaches as well as a ground for suspension of contractual performance. What is ‘force majeure’? Force majeure refers to impossibility or insurmountable hardship to fulfi l the contract because of an unexpected, unforeseen event which has occurred after the conclusion of the contract and which is beyond the control or infl uence of the parties. The purpose of a force majeure clause in a contract is to limit a contract party’s liability to fulfi l the contract if its fulfi lment has become impossible or unreasonably diffi cult due to a force majeure event. What does the contract say? Force majeure clauses are customarily included in commercial contracts. These clauses are often standard boilerplate provisions, which on many occasions have not been subject to much attention or negotiation. Typically, such clauses contain a specific list of events or circumstances, which constitute force majeure and relieve a party from liability to fulfi l the contract for as long as the force majeure event continues. Sometimes, a force majeure clause allows the other contract party to terminate the contract if the force majeure event continues longer than a certain period of time set out in the contract. Accordingly, a party seeking to suspend its performance of a contract should fi rst examine whether the contract includes a force majeure clause and, if yes, assess whether the clause covers the current epidemic. Since force majeure clauses typically contain only examples of situations which may be considered as force majeure events, unique situations like the coronavirus outbreak or other events caused by it may not be explicitly covered by the wording of many force majeure clauses. Whether the coronavirus outbreak constitutes a force majeure event in the context of a particular contract will be a matter of interpretation. Contractual parties are, however, likely to interpret the force majeure clause differently. They are also likely to differ in their assessments of the effects of the outbreak on their contractual performance. These differing views are accordingly likely to give rise to a significant number of commercial disputes in the future. What does the law say? Sale of goods is governed by the Finnish Sale of Goods Act (27.3.1987/355, in Finnish: “kauppalaki”). The Act is non-mandatory and will be applied unless the parties have agreed otherwise. According to the Act, a party to a sales contract is entitled to suspend performance of the contract if it proves that the delay was due to an impediment which (a) the party could not reasonably be expected to have taken into account at the time of the conclusion of the contract and (b) whose consequences it could not reasonably have avoided or overcome. Impediments recognized in Finnish case law and legal literature as force majeure events include acts of war, upheavals of nature (e.g. an earthquake or fl ood), provisions of law (e.g. import or export restrictions) and general interruption of communications or payment services. Finland is also a party to the United Nations Convention on Contracts for the International Sale of Goods (“CISG”). CISG is applied where a sale of goods contract is concluded between parties whose places of business are in different Contracting States P6-Thinking Ahead Since 1899- This is the opportunity to increase trust between the contract parties, instead of destroying it for good. “ - Jussi Lehtinen, PartnerQUARTERLY Q/1 – 2020 or when the choice of law rules lead to the application of the law of a Contracting State. Article 79 of the CISG contains a provision similar to the one included in the Finnish Sale of Goods Act mentioned above according to which a party may be exempted from its contractual obligations in the event of force majeure for as long as such an event continues. The threshold for invoking force majeure has generally been considered relatively high. Accordingly, we recommend assessing whether suspension or delay of performance is directly caused by the coronavirus outbreak, such as travel restrictions imposed by public authorities, bans to attend large events and conferences, or compulsory quarantines, or whether it results from the indirect consequences of the outbreak, such as disruption of supply chains or compulsory or voluntary quarantines. Depending on the circumstances, suspension or delay of the contractual performance could be interpreted as force majeure or as a measure taken for precaution. What if application of Sale of Goods Act and CISG have been excluded? In the event that the application of the Sale of Goods Act and the CISG have been specifi cally excluded, it may nevertheless be possible to invoke the force majeure doctrine as a legal principle generally applicable to commercial contracts. In such a circumstance, it may be possible to argue that the principles concerning force majeure contained in the Sale of Goods Act and the CISG refl ect general rules of law, which should apply even if the Sale of Goods Act and the CISG are excluded. The coronavirus outbreak has become a global phenomenon and the situation is developing rapidly. If both contracting parties are expected to experience diffi culties in performing their respective contractual obligations, it may make sense to initiate negotiations for the purpose of reaching a mutual agreement to suspend performance until the outbreak has been contained and the situation is clarifi ed. Documenting the force majeure event We recommend carefully documenting all effects of the outbreak on business’ contractual performance. Gathering evidence of the causal link between the outbreak and the hindrance on contractual performance or the losses suffered as a result, will be important in a potential future dispute to establish that the outbreak constitutes a force majeure event that has negatively affected the contractual performance. Some parties may also regrettably seek to benefi t from the outbreak and, thus, attempt to rely on force majeure clauses on less genuine grounds. Therefore, gathering evidence of the causal link between the outbreak and the delay or suspension of contractual performance may also be necessary to guard the business against the other contractual party’s potential claims or even termination of the contract. Depending on the strength of the evidence and the particular circumstances, a business may be able to shield itself against such less genuine or groundless actions, for example, by applying for interim measures in the Finnish courts. How to avoid and prepare for future commercial disputes arising in the Force Majeure and the coronavirus context Due to the immediate and thorough impact of the coronavirus outbreak to businesses in Finland and the society at large, and the resulting risk of all forms of commercial disputes, we recommend businesses to:-Thinking Ahead Since 1899- • review the force majeure clauses in their critical contracts and identify which partners and/or supply chains may be subject to interruptions or fi nancial distress due to the outbreak; • collect and retain documentary evidence as to how the coronavirus will potentially affect or has affected contractual performance, for example, by causing critical delays under a contract and/or necessitating suspension of performance; • consider what options are available to perform their contractual obligations and mitigate the effects of the outbreak; • formulate written plans to mitigate the effect of the coronavirus and carefully document all steps taken under such plans; • if necessary, initiate negotiations to agree on suspension or delay of performance; • if applicable, notify the other contracting party of a force majeure event; • if applicable, notify the other contracting party of a breach of contract without undue delay; • ensure that the contractual notice provisions are complied with when notifying of a force majeure event and/or a breach of contract, whichever if applicable. Future contracts Because force majeure requires that the event or occurrence is not foreseeable, businesses negotiating new contracts should not rely on traditional force majeure clauses but should include in their contracts delivery timetables which take into account the challenges brought about by the new situation. In addition to a usual force majeure clause, it is recommended to include in new contracts specific provisions allowing suspension of performance due to unexpected future developments of the coronavirus situation. Further information D&I’s experts are happy to discuss any questions or concerns that you may have concerning the legal implications of the coronavirus outbreak. Anders Carlberg, Managing Partner @AndersCarlberg_ Juha-Pekka Mutanen, Partner @MutanenJuha Tuomas Tiensuu, Senior Associate @TiensuuTuomas Heidi Yildiz, Senior Attorney @heidi_yildiz Jussi Lehtinen, Partner @jussi_lehtinenNext >