A Long Way Alongside Olkiluoto 3
Trust and industry knowledge have carried Ismo Hentula’s journey alongside the eventful stages of Olkiluoto 3.
The light began to increase during the winter day solstice on Olkiluoto 3’s twenty-year voyage. On 21 December, Teollisuuden Voima (TVO) launched the third reactor at the Olkiluoto nuclear power plant, which in full capacity will be able to cover about 14 percent of Finland’s electricity needs.
Ismo Hentula, Chairman of the Board of Procopé & Hornborg, shared the exciting experience as he has travelled alongside Olkiluoto 3 through the entire power plant project. Cooperation began in the early stages when TVO applied for a permit for construction to build the plant from the Government and shareholder financing was agreed on.
The biggest challenge of the journey was reaching an agreement with the power plant supplier Areva-Siemens -consortium. It was one of the largest tort trials in Finland. The demands of both parties were extensive and several foreign law firms were involved. As the capital owner of Areva, the French state also had its own role in the background.
“It is a given to be more personally committed to the success of a project of this kind. For that reason, it is rewarding to see that the plant containing advanced technology is complete and nothing short of excellent,” says Hentula.
An All-rounder in Energy Law
Hentula´s cooperation with TVO goes beyond one power plant project.
“I myself have been working for Teollisuuden Voima for about 30 years and my previous colleague, chief justice Olavi Ylänkö, had already started in the 1970s,” Hentula reminisces.
“As a demanding and knowledgeable lawyer, Ylänkö is a role model that I get to thank for many practical lessons I have received,” says Hentula.
The energy industry has become familiar to Hentula in many other aspects as well. The man has solved legal issues in all forms of energy, from hydro to wind. Among other things, the Electricity Market Act, the Nuclear Energy Act and land use planning issues have become familiar. A stack of Mankala memos and articles of associations and energy supply and financial contracts have also emerged on the desk on Eteläesplanadi.
Over the years, Hentula has developed a diverse knowledge of the field that is hard to come by in Finland.
“What is important to us is that the lawyer knows the history of the company, the documents, and the effects of the Mankala principle. Those Ismo Hentula and the Procopé office have understood commendably,” Ulla-Maija Moisio, Chief Legal Officer of TVO reports.
TVO transmits all electricity it generates to its owners in accordance with the Mankala principle, so the overall advantage and equality of shareholders must be considered more variously than in a normal limited liability company.
Redeeming Trust Strengthens Relationship
Trust is another prerequisite for long cooperation. Like competence, it develops over a long period of time, project at a time. For example, professors Jeanne Brett and Tyree Mitchell wrote in the Harvard Business Review: Trust is the social glue that holds business relationships together. Business partners who trust each other spend less time and energy protecting themselves and both parties get better results.
In law, trust is paramount to the success of the assignment.
“When a client openly deals with all the issues, it is easier for a lawyer to give advice,” says Hentula.
Trust includes more than just preserving a trade secret. In the thinking of Procopé & Hornborg, it also involves the client being able to rely on a lawyer to provide only the necessary service for the relevant situation.
“The customer should be advised to correctly measure the service they want to purchase. A lawyer must not maximize their own sales by taking means that are not genuinely beneficial to the client. Such can be, for example, extensive examination, which, after all, does not have an equivalent use value for the customer,” says Hentula.
To the client trust also means that a lawyer gives, for example, a reliable risk assessment of the outcome of a dispute.
“The client must not be surprised. If a lawyer describes the risk of loss reliably, the client can decide, based on the right information, whether the risk is worth taking,” says Ulla-Maija Moisio.
Trust is also reinforced by the fact that a lawyer takes care of the client even without a request.
“I also appreciate Procopé & Hornborg because they always contact us if we should take into account, say, some change of legislation in our own activities,” says Moisio.
Personal Chemistry Must Work
Competence and trust are critical factors in collaboration. In addition to these strict things, personal chemistry between individuals is also important. No matter how qualified the expertise is, the relationship may fall into a break with the problems of communication between people. The lawyers involved thank TVO for maintaining a good spirit in a challenging project.
With TVO, Hentula has been cooperating for so long that there have been three chief legal officers at the client’s end. The first was Heikki Kolehmainen, TVO’s Director of Governance and Legal Affairs, who was a broadly networked and extremely skilled when it came to social relations.
“Kolehmainen unexpectedly asked me to lunch sometime in the mid-1990s — probably to check the status of my table manners,” reckons Hentula.
A new person can appreciate the fact that the service provider knows the affairs of the customer company more variously than they themselves. Yet again, sometimes a new director may think that an outside lawyer has too strong a position in a new situation.
“There is a similar benefit from having a long relationship with a family doctor. A bigger medical center does a big pile of studies, but the family doctor can say, well you have had this family history, so let us see this thing first,” compares Hentula.
Through the journey, Hentula has also became familiar with many knowledgeable colleagues, from whom Mr Hentula raises Anette Kavaleff. She works on the front line of the project and leads the legal office that bears her name.
Kavaleff has been active in the Olkiluoto 3 project almost from the beginning as a legal consultant for TVO.
“Energy projects always take time, because they have so many dimensions from electricity supply to safety and long payback periods. It has been a privilege to be involved in a project like this,” says Kavaleff.
TVO’s Ulla-Maija Moisio also expresses her gratitude for the contribution of Kavaleff, who played a key role, among other things, in the conclusion of a over twenty binder long contract.
‘Someone once pondered whether there should be someone completely outsider in the handling of a dispute, so that the lawyer involved in the drafting of the contract would not be repressed to defend the conditions that are dear to him or her. But yes, we benefited from the fact that Anette knew the terms she wrote well and knew how to answer questions objectively on how the terms should be interpreted in the situations of disagreement.”
Europe’s Finest Power Station
Olkiluoto 3 starts after many stages, at a time, when the importance of energy has become known to everyone. Tackling climate change requires the reduction of CO2 emissions. As a whole Europe is increasingly interested in ensuring energy independence. Nuclear power has emerged as a key factor in the journey towards a low-carbon society.
“That’s why it’s right now particularly great to be witnessing the completion of this finest facility in Europe,” says Hentula.
At 12:01am on Saturday 12 March 2022, the plant unit was connected to the state’s power grid at 103 MW of power. The final point for the episode is written when the facility is brought to full capacity and TVO sees it has received what it has ordered. Then the management of the plant passes from supplier to the company and the construction project ends.
Avoid Disputes by Anticipating Disagreements
In any cooperative situation, it is paramount to identify disagreements in time to prevent their escalation into a dispute.
“Parties must have a common goal to move forward, even in divisive situations. Concord usually costs less than disputing, both in money and management time calculated. In addition, it is the best way to maintain trust and continue a long-term relationship,” says Anette Kavaleff, a project and contract law professional with varied experience in dispute resolution as well.
In this, TVO and its legal partners were remarkably successful in a dispute in which the parties demanded billions in compensation from each other. The arbitration court reached a settlement favored towards TVO.
“The key thing for the company, however, is not disputing and winning, but the progress of the project. Throughout the journey, both parties have had a goal to have a good and safe facility,” says Ulla-Maija Moisio.
Mediation Included in Contracts
Therefore, in large international projects a resolution panel, whose task is to solve disagreements, is currently being set up at the very early stages. For example, the World Bank will only fund a project if such a ruling panel is set. In many countries, mediation is a prerequisite for even being able to bring a dispute to a sub-court. However, in Finland solution panels are still rare.
“Hopefully, they will become more common in Finland too. Cooperation agreements should have alternative procedures in disagreement so that it would not be necessary to go to sub-court or arbitration immediately. In addition, the signs of danger should be identified quickly in order to reach solutions before a dispute arises,” says Kavaleff.
If the disagreement escalates into a dispute, it is important to narrow the dispute to a minimum.
“It’s always worth considering how an agreement can be reached to narrow the dispute to a minimum,” ponders Kavaleff.
Kavaleff also encourages to request external risk analysis in disputes. Companies tend to judge disagreements subjectively so that their own position seems stronger than it objectively is.
A Court Without the First Case
TVO’s Ulla-Maija Moisio has served two years as a judge at the European Nuclear Energy Tribunal. Moisio is the first Finnish member in the position and also the first representative of a nuclear energy company.
The Nuclear Energy Tribunal is a special court that resolves disputes between states in nuclear accident situations. Thus, the court is needed if there is a nuclear power plant accident, and the states cannot agree on compensation. Consequently, the Nuclear Energy Tribunal meets in an extremely demanding situation.
So far, however, the court has not yet had a single case.
“I hope there won’t be any,” says Moisio.
Olkiluoto in brief
- TVO was founded in 1969
- Majority owner is Pohjolan Voima
- After the completion of OL3 Olkiluoto will produce almost a third of Finland’s electricity
- Generates electricity through owners to 151 municipalities
- OL3 capacity 1600 MW
- Generates electricity 12 TWh
- The electricity generated by OL3 is sufficient for heating 5.2 million apartments
Ismo Hentula in brief
- Chairman of the Board of Procopé & Hornborg Attorneys
- Diverse experience in corporate law, contract law, M&A law and private equity law
- Member of the Ethics Committee of the Finnish Bar Association
- Hobbies: history, sailing and heritage construction
- Family: A spouse, three children and a dog