Finns pay Estonian subcontractors who are ready to go to court

06.02.2013, 15:14

Seppo Maunula who helps Estonian construction companies to claim debts from Finnish contractors says that his experience shows that it’s a growing problem because not many Estonian subcontractors know the Finnish legal system, writes Finnish Baltic Business Report.

He says there is no precise statistics on the extend of the problem,  but because this is a foreign territory for Estonian enterprises, many companies simply prefer to write down the debts and never pursue them.

“You need to know the Finnish law and the Finnish legal language,” says the expert, adding that one development that has been taking place is that Finns are increasingly taking into account Estonian court rulings. “Not many people know that,” says Maunula, adding that the largest debt that he has been helping Estonian customer to reclaim from Finland is EUR 50,000.

Maunula says that Finnish enterprises are often testing Estonian companies and their readiness to claim debts.

“They often let Estonians to do the work, but don’t pay. The plan is to wait and see what happens. If the other side knows the law and it shows, Finnish company pays the bill. However, when the Estonian company is unlikely to take legal action against the Finnish contractor, the bill remains often unpaid,” says Maunula.

He adds that most Finnish companies don’t want to go to court over unpaid bills and prefer an out-of-court settlement.

“It’s easier to pay the money than to risk getting your image tarnished,” he said.
Maunula says that most claims are settled in first-instance courts in Finland and adds that he knows no instances where the settlements have been appealed.

Maunula adds that because of EU directives, court bailiffs are able to claim debts in any EU member state and that companies could avoid payment only if they move to Russia or to another non-EU country.

The expert recommends to keep an eye on Finnish credit information to obtain more information about one’s business partner.

“Unlike in Estonia, Finnish credit information is a paid service that could become an obstacle for smaller enterprises that often provide subcontracting services in Finland.

Although all sides are urged to sign a contract, even lack of contracts does not avoid payment because a claim can be based on hourly worksheets, delivery and acceptance documents, etc.

“Of course, if no documents exist, it is almost impossible to make a successful claim,” he adds.