N:o 420.

The Act
on Compensation for Properties Lost in Severance of Territory.

Issued in Helsinki on August 9, 1940.


In accordance with the resolution of the Diet and in compliance with the statutes of the section 67 in the Parliamentary Procedures Act, the following has been enacted:

Paragraph 1.

General regulations.

Section 1.

This law governs and stipulates the procedure and use of State funds when compensating local authorities, joint municipal boards, church and other religious communities, companies of Finnish origin, cooperatives, associations, institutions, foundations and other corporations and Finnish citizens, for the property they have lost on territories ceded or rented to the Union of Soviet Socialist Republics, as concluded in the Peace Treaty of March 12, 1940, and for other properties which, during the time period starting from October 1, 1939, and ending on September 30, 1940, these dates included, have, because of war risk, war or the aforesaid treaty, suffered destruction or damage or have disappeared on this territory or during transfer from there. A person whose Finnish citizenship by a process of naturalization or through marriage commences only after December 31, 1939, is not entitled to compensations. The Bank of Finland will neither be compensated.
Likewise, a person without Finnish citizenship but having done military service in the Finnish defence forces and who has taken part in the war referred in subsection 1 is entitled to compensation.
The Council of State may at its discretion, when specific reasons occur, consent to compensation to a person lacking citizenship in any country but regularly living in Finland. The maximum compensation to him cannot exceed the amount to which he had been entitled as a Finnish citizen.
The beficiary for compensation according to this act refers to a person who, on the 12th of March, 1940, owned the property referred to in this act.

Section 2.
The funds for compensations referred to in this act are will be collected as stipulated in the Property Conveyance Tax Act, with a surplus of three billion marks from state funds.

Section 3.
The following items are excluded from compensation,
1) property which is covered by insurance or will be otherwise compensated or for which there exists a right for compensation;
2) money, warrants, bonds or other securities;
3) gold, silver or other precious metals, jewels, pearls and objects made of these or other jewelry unless the owner is a merchant of these objects or they otherwise procure his professional income;
4) objects of art, books, professional and scientific literature excluded, collections of art or similar objects, household furniture and other loose property used for beneficiary's or his family's personal use, unless used for professional purposes, for which the aforelisted property exceeds 50,000 marks; and furthermore,
5) clothing and other personal property, not listed above at subsection 4, when its total amount exceeds 8,000 marks for a person over 16 years of age at December 31, 1939, and 1,000 marks for a person then less than 16 years of age.

Section 4.
Local authorities, joint municipal boards, parishes and other religious communities whose domain entirely belonged to the ceded or rented territory, as well as non-profit associations, foundations, educational, charitable and other similar institutions are compensated only if their remaining property does not cover their debts but not considering their own funded assets as debts. The upper limit of compensation, the remaining property included, is restricted to the amount what should otherwise be withheld for debtors in accordance with the stipulations in the subsection 1 of the section 21. If thus calculated amount falls smaller than the rest value of the beneficiary's remaining property, no compensation will be paid. In case of non-profit associations, educational and charitable institutions, the Council of State may, after deliberating and finding it necessary, consent to a compensation not exceeding 50 per cent of the value of the lost property.
The regulations for compensation to the Greek Orthodox church and its parishes and to their monasteries will be specified by separate legislation.
Other local authorities, joint municipal boards, parishes and other religious communities than those referred in subsections 1 and 2 may receive compensations up to 50 percent of their lost property if thus considered by the Council of State.
If a debt owed by local authority in the subsection 1 derives from a labour or public servants contract, legal obligation or decree, or from a local authority pension, running on the 12th of March, 1940, and it will not be entirely compensated by what is defined in this subsection, the State will remunerate the debt or the uncompensated part of it according to specific regulations. However, the maximum compensation to a recipient of a municipal pension cannot exceed what a state civil servant in similar position would have been paid.
Similarly, the rules stated in the subsection 4 above are applied to a person who was entitled to pension as of the 12th of March, 1940, but who cannot collect it because of the insolvency of a local authority or other employer. This pension is to be paid even though he had such other means for subsistence which are referred to in the subsection 1 of the section 5 in the Welfare Act.

Chapter 2.
The amount of compensation.

Section 5.

Compensable property not exceeding 320,000 mark will be fully compensated.
Compensable property exceeding 320,000 mark will be compensated according to the following table:

Percentage of compensation

Fixed amount
at lower limit
the lower limit
40,960,000 or more

If the full sum of all compensations paid according to this table is less than total funds intended in the section 2 for this, the excess should be allotted to recipients short of full compensations in proportions set by the Council of State.

Section 6.
A shareholder or member of a condominium, apartment consortium and semimunicipal housing company, as well as of a company with a purpose of possessing a real estate in accordance with the section 25 of the Apartment Housing Shareholders' Act, will be remunerated for each apartment as if it had been his private property.

Section 7.
The upper limit of compensation to each individual or an undivided estate of a deceased person is 2,000,000 marks and to other beneficiaries 2,000,000 marks per each shareholder or member, however, not exceeding 10,000,000 marks in total.

Section 8.
The value of compensable and saved property will be assessed according to the stipulations of the Income and Property Act of the 5th of December, 1924, however, with the following adjustments,
1) a valid price for farming land and buildings is set by calculating the branch average prices in the years 1934-1938, and
2) the value of loose properties, stores, machines and domestic animals excluded, can be set for 4,000 marks at the maximum per a farm with cultivated soil equal or less than five hectares and, at the highest, not more than 600 marks per each excess hectares.

Chapter 3.
Assessing of compensations.

Section 9.

For assessing of compensations the Ministry of Finance will set one or several Boards of Assessors for each local authority whose territory is fully or partly ceded or rented to the Union of Socialist Soviet Republics. The Ministry of Finance is also authorized to set joint Boards of Assessors for many local authorities. For special cases, as defined in the subsection 2 of the section 13, compensations are set by separate procedures.

Section 10.
When the compensation recipient possesses compensable properties in addition to his domiciliary local authority also elsewhere in the domains of other local authorities, the amount for compensation will be set by the Board of Assessors for his domiciliary local authority. If the recipient only has compensable properties outside the domain of his domiciliary local authority, the amount of compensation will be set by the Board of Assessors in such a local authority where the bulk of his property resides. In these cases the competent Bord is obliged to acquire the opinions of respective authorities elsewhere. The compensation seeker should submit separate applications to each local authority.

Section 11.
A Board of Assessors consists of the chairman and two members. The Council of State may, if it considers it to be motivated, increase the number of members in the Board. The chairman and other members of the Board, one of them holding a mandate for State Ombudsman, and their deputies are appointed by the Ministry of Finance after consulting the corresponding provincial administration. The chairman and the members, with the exception of one person, cannot be beneficiaries of this act. The same applies to their deputies. Before the compensation is confirmed the Board has to ask the opinion of the chairman or a member of the taxation board of the said local authority.
The chairman of the Board of Assessors and its members act under judicial responsibility. Similarly, the rules of exception to a judge are applicaple to them. However, the right to acquire compensation according to this act should not exclude an assessor otherwise than in his own case.

Section 12.
The quorum is reached when the chairman, State Ombudsman and one of the members, or when there are more than three members, half of them are present.
In case of dispute, the opinion which is seconded by the majority, or in case of a tie, the one which is seconded by the chairman, will be the Board's decision.
The meetings shall be recorded in the protocoll.
A Bord of Assessors has the right to call in experts and it can institute other inquiries.

Section 13.
The Board shall, according to stipulations in the section 8, evaluate the lost and remaining property and settle the compensation, which each of the applicants should be allotted. Compensations to those local authorities, joint municipal boards, parishes and other religious communities mentioned in the subsections 1 and 3 of the section 4 are, however, decided by the Council of State after receiving the opinion of the respective Board about the value of lost and remaining property.

Section 14.
The Board of Assessors is obliged to make a list of compensation applicants. An extract of it should, after the Board has finished its work for the whole region of a local authority or a specified part of it, be placed for public inspection at a suitable site in the locality where Provisional Administrative Board of the respective ceded or rented territory is situated, or in case no such authority is created, to a place where the offices of the former municipal council, city or town government resides. An announcement of the exhibition should be made public in a suitable way in the locality and, furthermore, at least in one of the daily newspapers of the capital city [Helsinki].
The said extract should include the applicant's name and other data, the property they have lost and remaining value of the property and the approved sum for compensation to each.

Section 15.
If the applicant or the State Ombudsman is not satisfied with the decision of the Board of Assessors, he can lodge an appeal against it at the National Assessing Inspection Board. The same right can be used by a debtor in cases mentions in the subsection 2 of the section 25.
The appeal should be handed over to the chairman of the respective Board within thirty days from the day when the extract was presented for public exhibition, the first day of exhibition excluded. At sender's risk the appeal may be sent to the chairman in a letter with postage paid. The chairman is obliged to register in the document at what time it was handed over to him or otherwise received. When the appellant is the State, the compensation recipient should be allowed to give his written statement, and after this, with no delay, the complaint should be sent to the Inspection Board along with the statement and the documents on basis of which the compensation was originally allotted and including an extract of the Board protocol and of the exhibition list - concerning the complaining person - unless the documents are already included in the appeal.

Section 16.
The National Assessing Inspection Board is appointed by the Council of State. The Board has the chairman and at least nine members with one appointed to act as a State Ombudsman, and a suitable number of substitute members. The chairman and at least one third of the members should be competent judges with court experience.
The Inspection Board may subdivide itself into departments. A department chaired by a person having the competence of a judge will attain the quorum when at least three of its members are present and they are unanimously approve the decision. In case of opinion differences the matter will be submitted to the whole Board.
The stipulations of the subsection 3 of the section 11 and of the section 12 concerning the Boards of assessors and their members will similarly apply to the National Inspection Board.

Section 17.
The Boards of Assessors and the Inpection Boards have the right to require, if specific reasons occur, that an applicant should confirm by oath in a court of justice that facts he has presented are correct.

Section 18.
If the decision of the Inpection Board is not unanimous, an appeal against it can be lodged at the Supreme Administrative Court within thirty days, the party concerned from the day he received the decision, the delivery day excluded, and the State Ombudsman from the day of the decision.
The appeal and the decision appealed against should be handed over or sent, at sender's risk, in a letter with postage paid, to the chairman of the Inspection Board within the defined time and it must include a document, when the appellant is not the State Ombudsman, of the receiving date of the appealed decision.
The chairman is obliged to register in the document at what time it was handed over to him or otherwise received, and in case the appellant is the State, allow the compensation recipient to give his statement, and after this to send to the Supreme Administrative Court the appeal with the statement and all the documents of this case and the extracts of the Inspection Board protocol and its compensation list, unless these are included in the appeal.
The appeals should be treated as urgent in the Supreme Administrative Court.

Section 19
After the legal time for handing in appeals concerning decisions of the Boards of Assessors has expired, the Board will deliver decisions to those applicants for whom the decisions have thus taken legal effects. After the decisions on the appeals have been made, the Inspection Board will as soon as possible deliver its decisions.
The chairmen of the Assessor Boards and the Inspection Board shall send to the State Treasury an abridged copy of the compensation recipient list with markings concerning outstanding appeals.
When an appeal is made to the Supreme Administrative Court, its decision should be sent, in addition to the Inspection Board, also to the State Treasury.

Chapter 4.
The payment of compensation.

Section 20.
When the amount of compensation is finally settled, the State Treasury will pay it immediately in cash, in accordance with the stipulations of the section 21, if it does not exceed 10,000 marks but otherwise at least 10,000 marks in cash and the rest as bonds issued by the Finnish State on named holders.
Bonds will possess an annual interest of 4 per cent and will reach their maturities within a time period of five years from the dates of issue. The exact procedure for their redemption will be later determined by the Finance Ministry. The total amount of the bonds, together with the handed cash as stipulated in the subsection 1, shall correspond to the amount of money collected according to the section 2 of the Property Conveyance Tax Act, and they should primarily be used to pay the full compensations according to the rules determined by the Council of State. In addition to this, bonds for named holders and issued by the state with an interest of 2 1/2 percent will be provided to compensate the claims of debtors and for paying of other larger compensations. Detailed amortization plans for the latter bonds, not exceeding twenty-five years from the dates of issue, will be determined after the bonds of four percent have been redeemed.
However, the Council of State is authorized to decide that the maturity period of the 4 percent bonds, defined in the subsection 2, may be extended but not for more than two years.
In the case when an appeal against a decision of a Board of Assessors or the National Assessing Inspection Board have been lodged only by the State Ombudsman, the compensation can be delivered to the recipient irrespective of this if he can put up an approved collateral for the paid amount.

Section 21.
When the payment is ready to be remitted, the amount corresponding to liabilities and their interests as of 12th of March, 1940, adjusted by the stipulations of the section 29, will be deducted and paid to the debtors by the State Treasury. The rest, if 320,000 marks or less will be paid to the recipient deducted with a sum corresponding to property conveyance tax, if he was obliged to pay this if he had owned a property of the same size. If the compensation exceeds 820,000 marks but the uncompensated part of the property is smaller than the payable property conveyance tax for a property of similar size, the difference between the uncompensated property and the said tax should be deducted from the compensation.
However, no deduction for the property conveyance tax shall be made for the part of the compensation based on property defined in the lines 4 or 5 of the section 3 of this Act, if the compensation does not exceed 30,000 marks.
The liability deductions will be made even though their due dates have not been reached. The cash payment of the section 20 should primarily be paid to the compensation recipient. If he has died, only his widow, offsprings and adopted child and his parents and siblings in legal succession have the right to receive his due compensation as defined in the subsection 1.
If there are several persons entitled to a compensation, it will be paid to them only after they have made a mutual agreement on the apportionment or after each one's individual share is otherwise fixed.
If it will be found that the compensation, because of a defective or faulty application or otherwise erroneous information or document, or for some other reason than the assessment procedure itself, is determined as too high, the State Treasury should rectify this, and when the payment is already made, it should start the procedure for recovery of the excess amount if found to be in the interest of the State.
A measure taken by the State Treasury can be appealed to the Supreme Administrative Court within thirty days after the day he received information about the measure, without counting that day.

Chapter 5.
Specific regulations.

Section 22
A debtor of the compensation recipient, with a claim originated before 12th of March, 1940, as well as anyone who in a compulsory purchase has conveyed land to the compensation recipient, shall be obliged to accept, at their nominal value, as a payment of his claim or as that of a real estate purchase price the bonds defined in the section 20. The said bonds can be used for payments of buildings and timber expropriated according to the Act for Swift Settlement of Evacuated Population as well as for payments of goods and material purchased compulsatorily. The conveyor of a piece of land has the right to use the bonds to pay his mortgages. Likewise, anyone can use the 4 percent bonds to pay the property conveyance tax. Furthermore, anyone who has, in accordance with this act, received the 2 1/2 percent bonds as a compensation for a lost property or as a payment for his claim, may use them for paying the property conveyance tax.

Section 23.
The bonds as of the section 20 can only be transferred to a specified holder, and for obtaining a legal validity, the transfer should receive the acceptance of the State Treasury, unless the bonds are used to pay the property conveyance tax or for purchasing a real estate. In the latter case, the payment recipient is obliged without delay to inform the State Teasury of becoming the holder of the bonds.

Section 24.
The funds collected by the one-time property conveyance tax will be transferred to the State Treasury and it will be obliged to redeem the 4 percent bonds mentioned in the section 20 at their nominal value.

Section 25.
The compensation beneficiary should, according to the separately specified rules, make an application for a compensation to the Finance Ministry within three months after this act came into force. A debtor of a compensation recipient should make to the Finance Ministry a written announcement of his claim within the same period of time.
If no application for compensation is made by the recipient, a debtor will be given the same rights as he had had if the compensation beneficiary hade made the application.

Section 26.
If the compensation beneficiary or his debtor is proven to have been obstructed from applying for a compensation and announcing a claim because of being in the military service or for being legally submitted to activities in the national defense or because of a compulsory labour service, or because of other legal impediment in due time, the Board of Assessors has the authority to decide that the application or announcement should be taken into consideration even though it is submitted after the expiration date. The same applies to the National Assessing Inspection Board, if the applicant for a proven reason is obstructed from appealing the decision of the Board of Assessors, and to the Supreme Administrative Court in case of an appeal for a decision of the National Assessing Inspection Board.

Section 27.
The applicant has the right to obtain an extract concerning his own application from the protocols of the Board of Assessors and the National Assessing Inspection Board and from the compensation list.
The State Ombudsman should at his request be given an extract from the protocols of the Board of Assessors and the National Assessing Inspection Board, the compensation list and from other documents.
No levy or stamp should be imposed on extracts, legal or other documents given in connection of this act.
Authorities, offices and institutions are obliged, without fee or stamp, to give copies or extracts from documents possessed by them for needs of compensation applicants for being able to prove their rights to compensations defined in this act.

Section 28.
The Ministry of Finance decides about remuneration of the chairmen and other members of the Boards of Assessors and National Assessing Inspection Board and about the fees of experts mentioned in section 11 and in the subsection 4 of the section 12 and about the funds needed by the Boards.

Section 29.
If someone has outstanding claims on a compensation recipient and the latter does not receive a full compensation for a property of the subsection 1 of the section 1, the claim should be reduced with a sum which equals to the proportion of the noncompensated part to the sum of the whole damage and the net value of possible property the recipient still has. The amount thus reduced is considered as being paid on the 12th of March, 1940, not including the situation where claim is for a property situated in the present territory of Finland.
A bond loan is not credited by means said in the subsection 1 above.
If the claim is disputed or the compensation beneficiary and his claimant have not reached an agreement whether the object of the claim is situated in the present territory of Finland or not and to what extent, the payment of the compensation will be suspended on this part until the parties will have a court decision on this.
The court of law having the jurisdiction over matters in the subsection 3 is the City Court of Helsinki. If the matter can be decided outside a court of justice, a competent other authority will decide on it.

Section 30.
If the value of the compensable property or the compensation fixed by this act exceeds an even hundred marks, the excess is rounded up to the nearest even hundred marks.

Section 31.
The damages and losses caused by the war between the Republic of Finland and the Union of Soviet Republics, from the 30th of November, 1939, to the 12th of March, 1940, on territories ceded or rented to the latter, are exempted from the regulations stipulated in the War Damage Act of December 14, 1939, the War Damage Act for Loose property of 12 March, 1940, Sections 1 and 2 of the Section 23 of the State of War Act of Septermber 26, 1930, as amended in the Act of September 29, 1939, and from the Act of Grounds for Compensations of Semptember 26, 1939, which in certain cases should be paid from state funds as stated in the State of War Act of Septermber 26, 1930, and from other regulations that are contradictory to this Act.

Section 32.
Detailed instructions for enactment and practical procedures for executing this act will be given by administrative decrees.

In Helsinki, on the 9th of August, 1940.

President of the Republic


Minister J. Erl. Pilppula.

A draft translation by Pauli Kruhse. The legal terms or wordings are not verified. All comments are most welcome.

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