i The scheme of New Zealand's arbitration legislation
New Zealand is a common law jurisdiction. Arbitrations in New Zealand are governed by the Arbitration Act 1996 (Act), which came into force on 1 July 1997. It applies to every arbitration agreement made before or after the commencement of the Act and to any arbitration under such an agreement. The Act applies, with variations, to both international and domestic arbitrations.2
The purposes of the Act are to:
- encourage the use of arbitration as an agreed method of resolving commercial and other disputes;
- promote international consistency of arbitral regimes based on the Model Law on International Commercial Arbitration (Model Law) adopted by the United Nations Commission on International Trade Law (UNCITRAL);
- promote consistency between international and domestic arbitral regimes in New Zealand;
- redefine and clarify the limits of judicial review of the arbitral process and of arbitral awards;
- facilitate the recognition and enforcement of arbitration agreements and arbitral awards; and
- give effect to the obligations of the government under various international conventions, including the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958) (New York Convention).3
The Act closely follows the Model Law (as amended in 2006), although with some minor, but significant, changes.
In interpreting the Act, an arbitral tribunal or a court may refer to the Model Law and materials originating from UNCITRAL or its Working Group for the Preparation of the Model Law.4
The Act applies where the place of arbitration is or would be in New Zealand5 and comprises three key parts:
- the principal part of the Act, which is relatively short and contains some general statutory provisions governing both domestic and international arbitrations;
- the First Schedule, which comprises the Model Law (in a slightly modified form); and
- the Second Schedule, which contains optional provisions that do not apply to international arbitrations unless the parties expressly agree to adopt them; these provisions apply to domestic arbitrations unless the parties expressly agree they are not to apply.
Only those provisions of the First Schedule of the Act that are based on Articles 8, 9, 35, and 36 of the Model Law (and deal with the stay of court proceedings, the grant of interim measures, and the recognition and enforcement of awards) apply to arbitrations where the place of arbitration is not in New Zealand.6
A contract containing an arbitration agreement entered into by an individual as a consumer is only enforceable against the consumer if the consumer enters into a further written agreement with the other party after the dispute has arisen confirming the consumer's agreement to be bound by the arbitration agreement. Any separate written agreement must disclose whether any (and, if so, which) of the Second Schedule provisions do not apply to the arbitration agreement.7
ii International Centre for Settlement of Investment Disputes (ICSID) disputes
The Act does not apply to any disputes within the jurisdiction of ICSID established under the Convention on Settlement of Investment Disputes between States and Nationals of Other States, Washington, 1965 (Washington Convention), or any awards in respect of such disputes.8
Rather, by virtue of the Arbitration (International Investments Disputes) Act 1979, the key provisions of the Washington Convention are incorporated into New Zealand domestic legislation.9 Any award made pursuant to the Washington Convention may be enforced by entry as a final judgment of the High Court of New Zealand in terms of the award.10
iii Application of the New York Convention and other conventions
New Zealand is a party to the New York Convention, having acceded to it on 6 January 1983; it entered into force in New Zealand on 6 April 1983. The Act applies the Convention to recognition and enforcement of all awards made in other countries, irrespective of the country in which an award was made and without any requirement of reciprocity.11 Consequently, where the required procedure is observed, the award must be recognised as binding and enforced in New Zealand12 except where one of the specified grounds for refusal of recognition or enforcement13 applies.
New Zealand is also a party to the Protocol on Arbitration Clauses (Geneva, 1923) and the Convention on the Execution of Foreign Arbitral Awards (Geneva, 1927).
iv Structure of the New Zealand courts
New Zealand has a four-tier court system:
- the District Court, in its civil jurisdiction, deals with claims for amounts of up to NZ$350,000;
- the High Court, in its civil jurisdiction, is the primary court for dealing with all other claims. It also deals with certain appeals from the District Court;
- the Court of Appeal hears certain appeals from the High Court. In the case of certain appeals involving the Act, leave of the High Court or the Court of Appeal is required to appeal to the Court of Appeal; and
- the Supreme Court is the final court of appeal for civil matters in New Zealand. Leave of the Supreme Court is required in all cases to appeal to that Court. It may only grant leave where it is satisfied that it is necessary in the interests of justice for the Court to hear and decide the appeal. Such circumstances include where the Court is satisfied the appeal involves a matter of general or public importance or a matter of general commercial significance, or where a substantial miscarriage of justice may have occurred or may occur unless the appeal is heard.
v Local institutions
The Arbitrators and Mediators Institute of New Zealand, Inc (AMINZ) is the major arbitration institution in New Zealand. It commonly acts as an appointing authority for the appointment of arbitrators in New Zealand-based arbitrations. AMINZ is also the appointed body under Article 11 of the First Schedule of the Act for the purposes of making arbitral appointments and implementing appointment procedures where the required parties have failed to do so.
AMINZ has established an Arbitration Appeals Tribunal. The Appeals Tribunal provides a private forum for the resolution of appeals on questions of law as an alternative to having those appeals heard and determined by the High Court.
Another local institution, the New Zealand Dispute Resolution Centre and its associated New Zealand International Arbitration Centre (NZIAC) offer a variety of arbitration rules, including a set of international arbitration rules, several sets of expedited arbitration rules (which are applicable depending on the amount in dispute) and a set of arb-med rules.
The International Chamber of Commerce (ICC) has a presence in New Zealand through ICC New Zealand, an ICC national committee. There are one New Zealand member and one alternate New Zealand member on the ICC Court of International Arbitration in Paris. There is also a New Zealand member on the Court of the London Court of International Arbitration and a New Zealand representative on its Asia-Pacific Users Council.
II THE YEAR IN REVIEW
i Developments affecting international arbitration
New AMINZ Arbitration Rules
In June 2017, AMINZ published a new set of Arbitration Rules.14 These rules are designed to cater both for domestic and international arbitrations and to align arbitration in New Zealand with current international best practice. In the development of its new Arbitration Rules, AMINZ took account both of recent changes to New Zealand's arbitration legislation and those changes made over recent years to the rules of other major international arbitration institutions.
The AMINZ Arbitration Rules make provision for emergency arbitration, consolidation of arbitral proceedings and the appointment of tribunal secretaries. They also provide for expedited arbitration for low-value or less complex claims.
The default position under the AMINZ Arbitration Rules is that an arbitral tribunal is to have regard to, but will not be bound by, the IBA Guidelines on Party Representation In International Arbitration and on Conflicts of Interest in International Arbitration and the IBA Rules of Evidence.
The powers given to an arbitral tribunal under the AMINZ Arbitration Rules include the power to summarily dismiss claims that are manifestly without legal merit or that fail to disclose any reasonably arguable cause of action or that cannot succeed.
Where, in the case of an international arbitration, the parties have agreed in advance to there being a right of appeal on a question of law (as permitted by New Zealand's arbitration legislation) the new AMINZ Arbitration Rules provide for any appeal to be made to the AMINZ Arbitration Appeals Tribunal in accordance with the Rules of that Tribunal. This procedure preserves the confidentiality of the arbitration proceedings to the extent confidentiality might otherwise be lost if an appeal were made to the High Court.
NZIAC 2018 Arbitration Rules
NZIAC has recently published the latest revision of its Arbitration Rules.15 These Arbitration Rules have been designed to take an innovative and common sense approach to some of the challenging issues that arise in international arbitration with a view to redressing, in a way that is efficient, cost-effective and certain, the concern that delays in obtaining awards and the cost of international arbitration have made many cross-border disputes uneconomic for parties to pursue.
The NZIAC 2018 Arbitration Rules provide for the grant of interim measures, including urgent interim relief before the arbitral tribunal has been constituted. They also provide for joinder and consolidation and, unless the parties otherwise agree, for the Tribunal to have the ability to appoint a tribunal secretary.
These Rules also permit the Arbitral Tribunal to decide one or more issues of fact or law by way of summary procedure. They also permit a party to apply for early dismissal of a claim or a defence, in whole or in part, including on grounds the claim or defence discloses no reasonably arguable cause of action, is frivolous or vexatious or is otherwise an abuse of process, a claim or defence is manifestly outside the jurisdiction of the Tribunal, or an allegation of fact or law material to the outcome of the claim or defence is manifestly without merit.
The NZIAC Arbitration Rules also take a slightly novel approach in several areas.
In relation to document disclosure they provide that, unless otherwise agreed by the parties or the Tribunal considers it necessary to properly determine the dispute, no formal document disclosure or inspection processes are contemplated. They oblige each party to make available to the other parties on an informal basis all relevant documents not protected by legal privilege. This is supplemented by a formal 'notice to produce' process under which a party can seek formal disclosure of a specific document or narrow category of documents that are considered relevant and material to the case.
The NZIAC Arbitration Rules also make express provision for mediation during the course of an arbitration, with the ability for a person acting as arbitrator to also act as mediator (subject to certain safeguards).
The NZIAC Arbitration Rules permit an appeal on a question of law to be referred to the AMINZ Arbitration Appeals Tribunal (rather than the High Court) where, in the case of an international arbitration, the parties have agreed that a question of law may be subject to appeal.
Investor–State Dispute Settlement and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP, formerly the TPP)
In October 2017, a new centre-left coalition government took office in New Zealand. Shortly afterwards the new Prime Minister, Jacinda Adern, announced the government opposed the inclusion of investor–state dispute settlement (ISDS) provisions in the TPP and the Cabinet had instructed trade negotiation officials to oppose ISDS in any future trade agreement.
The CPTPP was signed by New Zealand and 10 other countries in March 2018. In the course of negotiation of the CPTPP, the New Zealand government made efforts to have the ISDS provisions removed from the CPTPP but was unsuccessful in this endeavour. New Zealand has, however, signed bilateral reciprocal side letters with Australia, Brunei, Malaysia, Peru and Vietnam. These side letters exclude the unqualified right of an investor from either country to use the ISDS process in a dispute against the other country. The side letters with Australia and Peru exclude entirely an investor's right to use the ISDS process.16 In the case of the side letters with the remaining three countries, the ISDS right is replaced with, first, an obligation for the investor to seek to resolve the dispute through consultation and negotiation between the investor and the foreign government (including the use of non-binding third-party processes such as good offices, conciliation and mediation). If the dispute is not successfully resolved within six months by these means, the investor can, with the specific agreement of the foreign government, invoke the ISDS process in the CPTPP.17
ii Arbitration developments in local courts
There have recently been several significant decisions from the New Zealand courts. They reflect the continuing support of the courts for the arbitration process. These decisions have addressed a range of issues, including the extent of reasons required in an award; the interpretation of an arbitration provision in a lease that reserved certain disputes for resolution by the courts; the ability of a party to resist enforcement of an award based upon the conduct of its own counsel, and the ability of a party to access documents from an earlier proceeding on a High Court file for use in an international arbitration seated in South America.
Extent of reasons required in an award
Article 31(2) of Schedule 1 of the Act (which mirrors Article 31 of the Model Law) requires that, except in certain limited circumstances, an award must state the reasons upon which it is based.
The Court of Appeal has recently in Ngāti Hurungaterangi, Ngati Taeotu me Ngati Te Kahu o Ngati Whakaue v. Ngāti Wahiao18 restated the purpose of the requirement for reasons and has articulated what is needed to satisfy that requirement.
Over recent years, the New Zealand government has been endeavouring to negotiate settlements of claims under the Treaty of Waitangi (New Zealand's founding document) by various iwi (tribes) of Maori (New Zealand's indigenous people) in respect of historical grievances by those iwi, particularly claims in respect of confiscation or forced sale of tribal lands. There have been several recent instances where, in the context of either recent or impending settlements by the government with Maori iwi, arbitration has been used to resolve differences among Maori hapu (sub-tribes or clans) regarding their respective beneficial ownership of land, or their respective mana whenua (their authority or jurisdiction over, or guardianship of, the land) where this was relevant to determining their respective entitlements to an allocation of the Treaty settlement proceeds.19
In the present case, Ngati Whakaue and Ngati Wahaio had been unable to agree on which of them was entitled to the lands. They had, consequently, established a joint trust to take title to their lands until their competing claims had been determined. The trust deed provided for the claims to be determined by an arbitration panel if the parties were unable to agree on their respective entitlements. As they were unable to resolve their differences, an arbitral panel was convened. The panel chair was a retired Supreme Court judge who had earlier served as a member of the Waitangi Tribunal for 10 years. The other members of the panel were Maori leaders with impressive credentials.
Following the issue of an award by the panel, there was a challenge to the adequacy of the reasons given in the award. Oral evidence had been heard for 13 days20 from more than 30 witnesses,21 the notes of evidence ran to more than 1,200 pages22 and there had been substantial briefs from expert witnesses.23 The findings made by the arbitration panel and its accompanying reasoning in the award were subsequently described by the High Court as 'undeniably sparse'.24 The panel's reasoning was contained in just five paragraphs of the award.25
The High Court, however, found 'by a fine margin' that the award satisfied the requirements for a reasoned award.26
On appeal the Court of Appeal allowed the appeal and set aside the award.27
The Court noted the introduction of Article 31 of the First Schedule along with the incorporation of the other Model Law provisions into New Zealand arbitration legislation marked an important legislative development and 'recognised the increasing significance of arbitration as a means of formal dispute resolution and aligned more closely the arbitral and judicial functions and our statutory code with international practice'.28
It then restated the purpose of the requirement to give reasons in an award as being to explain how the arbitrator progressed from a particular state of affairs to a particular result.29 The reasons were said to be the articulation of the logical process employed by the person deciding the dispute and were seen to 'expose to the parties the disciplined thought process of the specialist adjudicator, thereby dispelling any suggestion of arbitrariness'.30 The requirement to give reasons was regarded as concentrating the mind with the resulting decision more likely to be soundly based on evidence.31 The Court adopted the English Court of Appeal's observation that the duty to give reasons is a function of due process, and therefore of justice and that the parties, especially the losing party, should be in no doubt why they have won or lost or why their expectations have been disappointed; without reasons, the disappointed party would not know whether the panel had misdirected itself and whether he or she might have a right of appeal available.32 Having noted the English Court of Appeal's comments were made in relation to a determination of a judge at first instance, the Court observed that, while the nature and extent of the reasons required to fulfil this function varies according to the context, this underlying purpose for which reasons are necessary is common to both the judicial and the arbitral process.33
The Court noted the leading authorities recognise the nature and extent of the duty to give reasons for an award necessarily imports a degree of flexibility according to the circumstances, including the subject matter being arbitrated, its significance to the parties and the interests at stake, with the standard required being dictated by the context and the reasons reflecting the importance of the arbitral reference and the panel's conclusion.34
The reasons are not required to meet the judicial standard. They must, however, 'be coherent and display an elementary level of logic of adequate substance to enable the parties to understand how and why the arbitrator moved in the particular circumstances from the beginning to the end points. They must engage with the parties' competing cases and the evidence sufficiently to justify the result. They must be the reasons on which the award is based.'35
The Court accepted that brevity is often acceptable in an arbitral tribunal's assessment of evidence and factual findings, reflecting the principles of arbitral finality and party autonomy underpinning the legislation, provided the circumstances justify it and there is reasonable clarity about the core basis for the conclusion. The reasons, however, cannot be so economical as to deprive a party of having a question of law determined by the High Court if necessary.36
The Court considered the current dispute to fall at the upper end of subject-matter importance. It dealt with grievances of great historical and spiritual significance to the parties. In the Court's view those grievances could only be laid to rest by an adequately reasoned award.37 In this regard, the Court considered the appointment of a retired Supreme Court to chair the panel to be significant and reflecting an expectation the panel's reason would be expressed with the depth and substance appropriate to the occasion.38
The Court perceived an apparently shared expectation by the parties the panel's decision would explain its determination logically by reference to their competing cases, the relevant evidence on which it relied and its factual findings on each particular block of land with its own distinctive history.39 The panel was expected to assess discretely the claims to each block of land.40
The dispute was regarded as being essentially factual and, consequently, the Court held it could only be determined by making reasoned findings on the evidence.41 Although the reasons did not need to be as extensive as for a formal judgment, they had to be sufficiently full for the parties to understand the path taken by the panel to reach its result.42
Although recognising the obvious evidential difficulties the panel faced given the lapse of time and lack of contemporaneous records, the Court held none of these factors could justify an impressionistic approach given the parties' choice of the discipline inherent in the arbitral process for resolving their dispute.43
The parties' respective cases were seen to raise a series of important issues relating to each particular block of land which, had they been addressed logically, would have provided a focused path to the panel's determination.44 Instead, the Court found the panel had failed to engage with the issues emerging from the parties' respective cases and had rather simply identified three largely uncontentious and formalistic issues and this provided an inadequate platform for its reasoning process.45
The Court found the panel had failed to weigh or evaluate the evidence adequately and that the panel's reasons were essentially conclusory in nature and were so inadequate and inconsistent they fell short of discharging the panel's mandate to give a reasoned award and were not reflective of the importance of the subject matter or the panel's conclusion.46
The panel's award was, consequently, set aside.
An application was subsequently made to the Supreme Court for leave to appeal the Court of Appeal's decision to that court.47 The Supreme Court accepted the adequacy of reasons in an arbitral award was a question of public or general importance that would have given it jurisdiction to hear the appeal.48 The Court noted that there was no question adequate reasons are required and observed that the present case simply concerned the application of that requirement in the particular facts of the present case.49 In these circumstances, as it did not see any real prospect it would, on appeal, conclude that adequate reasons were given in the present case, the Supreme Court declined leave to appeal.50
In doing so, it noted there might be room for debate as to whether the Court of Appeal's approach regarding the requirement for the giving of reasons may have been too prescriptive for an award in relation to a dispute such as arose in this case.51 This may suggest the Supreme Court, or at least some members of the Court, regarded the approach taken by the Court of Appeal as having been too prescriptive in the context of this case and the Supreme Court may be prepared to revisit this question and provide additional guidance on the appropriate approach to assessing the adequacy of reasons in a suitable future case.
Interpretation of an arbitration provision reserving certain matters for determination by the courts
Precinct Property Holdings Limited v. OMV New Zealand Limited52 involved an application by OMV (the lessee) for a stay under Article 8 (1) of the First Schedule of the Act53 of summary judgment proceedings brought by Precinct Property Holdings (the landlord) for unpaid rent under a lease between them.
Following a significant earthquake that affected Wellington and other parts of New Zealand on 14 November 2016, the building within which the leased premises were located was closed until further notice and the lessee was unable to access the leased premises. On 2 February 2017, the lessee gave notice under a provision in the lease terminating the lease on the basis the premises had become untenantable in terms of the lease (although there was no damage to the premises themselves). On 10 February 2017 the landlord learned the premises could be reoccupied and on 13 February it notified the lessee it could resume occupation of the premises from 13 March. By 10 February the lessee had, however, leased alternative space.
The landlord disputed the lessee's ability to terminate the lease on the ground the premises had become untenantable and sought summary judgment to recover rental for the period from 13 March 2017. The lessee maintained it had validly terminated the lease and also alleged misrepresentations on the part of the landlord regarding the earthquake rating of the building. It therefore sought a stay of the summary judgment proceedings to enable its 'untenantable' claim and the validity of its termination of the lease to be determined by arbitration under a provision in the lease.
The arbitration provision in the lease provided as follows:
44.1. UNLESS any dispute or difference is resolved by mediation or other agreement, the same shall be submitted to arbitration of one arbitrator who shall conduct the arbitral proceedings in accordance with the Arbitration Act 1996 and any amendment thereof or any other statutory provision relating to arbitration.
44.3. THE procedures prescribed in this clause shall not prevent the Landlord from taking proceedings for the recovery of rent or other monies payable hereunder which remains unpaid or from exercising the rights and remedies in the event of such default prescribed in clauses 28 and 29 hereof.
The lessee's position was that whether the premises were untenantable under the lease and whether the lease had been validly terminated were matters which must be referred to arbitration under Clause 44.1. If the lease had been validly terminated, no liability for rent could accrue after the date of termination and there was no action by the lessor for recovery of rent to which Clause 44.3 could apply. It therefore claimed the arbitration proceedings should be heard first ahead of the summary judgment proceedings and, consequently, a stay was warranted in accordance with the Supreme Court's decision in Zurich Australia Insurance Limited v. Cognition Education Limited.54
The landlord claimed that its claim had always been a claim for rent to which, by virtue of Clause 44.3, Clause 44.1 did not apply.
The Court accepted the purpose of Clause 44.3 was to reflect the 'pay now, argue later' intention to protect the landlord's cashflow while a disputed issue was being arbitrated or litigated.55 It also held Clause 44.3 must apply, although the landlord's claim was being disputed by the lessee.56 It regarded Clause 44.3 as identifying the types of claim a landlord might bring in court proceedings notwithstanding the arbitration clause in Clause 44.1. It was not intended to address whether the amounts were in fact payable and whether the lessee might have a defence to the lessor's claim; the provision was intended to apply in circumstances where there was a known dispute. Requiring the landlord's claim to be referred to arbitration would defeat the purpose of Clause 44.3.57
Consequently, the Court held that as long as the landlord was pursuing recovery of rent or other monies identified in the lease as being payable by the lessee, a claim could be brought by the landlord in court.58 Accordingly, the Court declined the stay sought by the lessee and allowed the summary judgment proceedings to continue.59
The lessee subsequently sought leave to appeal the High Court's judgment on the basis of several alleged errors of law in the award. The High Court has granted leave to appeal60 as the form of lease is in common use in New Zealand and there is considerable practical importance to the commercial community to have guidance from the Court of Appeal as to the circumstances in which a landlord may proceed under Clause 44.3 in the face of an argument from the lessee that the lease is no longer in existence and there is no rent payable under the lease in terms of Clause 44.3.61 It is expected this appeal will be heard later in 2018.
Opposition to enforcement of award on natural justice grounds arising from failures of party's own counsel
In Ratzapper Australasia Limited v. Noe62 Mr Noe opposed enforcement of an award against him on the basis that to grant enforcement would be contrary to the public policy of New Zealand (under Article 36(1)(b)(ii) of the First Schedule of the Act) and, in particular, it would amount to a breach of natural justice.63
Mr Noe had been disbarred by the arbitrator from defending the arbitration proceedings on the ground of persistent and deliberate failures to provide adequate document disclosure. Mr Noe claimed such failures resulted from substantial failures by his counsel (and possibly his solicitors) in making available to the other party materials Mr Noe had previously made available to his counsel and solicitors. He also claimed his counsel had failed to bring to his attention various of the orders made against him and to advise him of the potential consequences of non-compliance. He claimed there had been such substantial failures on the part of his counsel in relation to disclosure of documents and communications by his counsel both with him and the arbitrator, that he was, in substance, not heard or, alternatively, the arbitrator proceeded on a mistaken view of the facts.
The High Court noted previous Court of Appeal authority64 determining article 36 of the First Schedule was to be construed narrowly and the words 'public policy' required that some fundamental principle of law and justice be engaged, that there be some element of illegality, or enforcement of the award must involve clear injury to the public or abuse of the integrity of the Court's processes and powers.
The Court then considered cases in the context of judicial review, particularly refugee and asylum cases, where there had been some relaxation of the 'surrogacy principle' and the courts had not entirely attributed to clients faults on the part of their counsel. It was noted the justification for doing so was the concept of 'irretrievable and incompensable loss'.65 The Court concluded that concept does not typically arise in a private law context and certainly did not arise in this case, which was simply a contractual claim for damages for breach of an agreement.66 To the extent Mr Noe could establish fault on the part of his solicitors or counsel, a civil remedy would be available to him against them and his remedy, if any, lay against them.67
In the course of his judgment the judge observed:
Moreover the present case arises in the arbitration context where there is a high premium on finality and certainty and where failure to uphold the surrogacy principle would significantly impact on that objective by potentially exposing awards to minute examination of counsel performance. At least in cases such as the present, involving a monetary claim and where there is no suggestion of incompensable loss, it is not in my view contrary to the requirements of justice for the Court to recognise an arbitral award under art 35 despite arguable counsel error or breach in the process by which that award was reached68.
The Court accordingly made orders enforcing the award as a judgment of the High Court.
Access to documents on a High Court file for purposes of an international arbitration
In Greymouth Petroleum Holdings Limited v. Empresa Nacional Del Petróleo69 the Court of Appeal overturned a prior High Court decision allowing Empresa Nacional Del Petróleo (ENDP) access to documents on a High Court file in relation to proceedings heard in New Zealand several years earlier.
ENDP had initiated an ICC arbitration seated in Chile against PetroMagallennes Operaciones Ltda (PMO), a company controlled by Greymouth Petroleum Holdings Limited (Greymouth). ENDP and PMO were parties to a joint operating agreement for oil and gas exploration in Chile with PMO being the operator of the exploration block under the joint operating agreement. Greymouth had been named in addition to PMO as a party to the arbitration. As it was not a party to the joint operating agreement to which ENDP and PMO had been party, Greymouth had objected to its joinder to the arbitration.
ENDP was seeking to lift the corporate veil and establish liability against Greymouth for breaches of the joint operating agreement. Greymouth's relationship with PMO was therefore a key issue in the arbitration.
ENDP had not been a party to the earlier High Court litigation. That litigation had related to a dispute among the three major shareholders of Greymouth.
Documents to which access was sought by ENDP had in large part previously been sought by way of document disclosure in the arbitration proceedings. The arbitral tribunal had declined to order disclosure of the documents concerned because it was not persuaded as to the relevance and materiality of the requested documents and they related to information which was commercially or technically confidential.70
In its decision the Court of Appeal recognised that seeking documents for a parallel proceeding, whether it be a court or arbitral proceeding, is a reasonable and legitimate purpose to seek access to court documents.71 It also observed that the courts no longer exercise a general supervisory jurisdiction over arbitrations in New Zealand and referred to the purposes of the Arbitration Act 1996 as being to encourage the use of arbitration for resolution of disputes, with the courts giving deference to the decisions of arbitral tribunals and only departing from them in exceptional circumstances.72
It then proceeded to weigh several factors in deciding to overturn the previous decision to allow access to the documents on the court file. A significant factor in the court's decision was the situation of comity that exists between a New Zealand court and an international arbitration tribunal and the fact that ENDP, having invoked arbitration as the way of resolving its dispute, was trying to step outside the arbitration process and circumvent the consequence of the arbitral tribunal's ruling refusing disclosure of the documents.73
iii Investor–state disputes
New Zealand currently has ISDS processes provided for in 14 bilateral investment treaties. To date, no ISDS claims have been filed against the New Zealand government under any of those agreements.74
III OUTLOOK AND CONCLUSIONS
i The Arbitration Amendment Bill (Bill)75
This Bill was introduced to Parliament in March 2017. It is currently going through the usual legislative process. As a Member's Bill and with a change of government since the Bill was introduced, it does not necessarily reflect government policy. The Bill would introduce several changes to the Act that are generally perceived by the arbitration community to be beneficial to arbitration in New Zealand:
- It would enhance the use of arbitration in trust disputes by providing for an arbitration clause contained in a trust deed to be binding on all trustees, guardians and beneficiaries as if it were an arbitration agreement.
- Currently there is a presumption that court proceedings under the Act should be conducted in public, with a court only making an order requiring proceedings to be held in private if it is satisfied the public interest in having the proceedings conducted in public is outweighed by the interests of any party in having the whole or any part of the proceedings conducted in private. Under the Bill, if enacted, this presumption would be replaced by a requirement for a court, on the application of any party in proceedings under the Act, to make a direction as to what, if any, information relating to the proceedings may be published. This would remove the presumptive loss of confidentiality on commencement of proceedings under the Act and allow a more balanced assessment to be made regarding the extent of confidentiality that should properly be accorded to particular proceedings under the Act.
- Thirdly, it would amend the Act so that if a party receives a ruling from a tribunal on the question of jurisdiction and fails to seek a decision from the High Court on the jurisdictional question within the 30-day time period provided for in the Act, that failure would operate as a waiver of any right to subsequently challenge or call into question (including in any set aside or enforcement proceedings) the tribunal's ruling as to its jurisdiction.
- Finally, the Bill76 would, if enacted, address perceived concerns arising from the 2014 Supreme Court decision in Carr v. Gallaway Cook Allan77 in two ways. First, where there is clear agreement by parties to submit a dispute to arbitration, the Bill, if enacted, would limit a court's ability to set aside, or decline to recognise or enforce an award due to procedural provisions in the arbitration agreement being in conflict with the Act (as, for example, where the arbitration agreement contains an impermissible right of appeal on a question of fact). Secondly, the Bill would modify the provisions of Articles 34(2)(a)(iv) and 36(1)(a)(iv) of the First Schedule of the Act so a court could not set aside, or decline to enforce, an award where a procedural aspect of the arbitration was not in accordance with the agreement of the parties, but that agreement of the parties was in conflict with any provision of the Act from which the parties cannot derogate.
The Parliamentary Justice Select Committee considering the Bill has recently received a report from the Ministry of Justice regarding the changes proposed in the Bill. The Ministry was, for various reasons, entirely unsupportive of the various changes proposed in the Bill. In light of this report, the Select Committee has signalled its intention to allow time for further feedback from submitters on the Bill.
ii International Council for Commercial Arbitration (ICCA) Conference 2018
AMINZ was appointed together with the Australian Centre for International Commercial Arbitration as the joint host of ICCA 2018. A highly successful conference event was held in Queenstown, New Zealand on 20 April 2018 immediately following completion of the associated conference events in Sydney, Australia.
New Zealand's arbitration legislation is closely modelled on the Model Law. Changes made to the Act in 2016 have updated the Act in line with changes made to arbitration legislation in other leading jurisdictions.
The courts have regard in their decision making to New Zealand's international obligations under the New York Convention, and they respect and give effect to the express purposes of the Act of encouraging the use of arbitration as an agreed method of resolving commercial and other disputes, recognising the importance of party autonomy and limiting court intervention in the arbitral process.
New Zealand consequently remains a jurisdiction where the courts are highly supportive of arbitration and that is an attractive venue for arbitration.
1 Derek Johnston is a commercial barrister and arbitrator at Thorndon Chambers.
2 An 'international arbitration' is defined in the Act in the same terms as it is defined in the Model Law.
3 Arbitration Act 1996, Section 5.
4 Arbitration Act 1996, Section 3.
5 Arbitration Act 1996, Section 6.
6 Arbitration Act 1996, Section 7.
7 Arbitration Act 1996, Section 11.
8 Arbitration (International Investments Disputes Act) 1979, Section 9.
9 Arbitration (International Investments Disputes Act) 1979, Section 3A.
10 Arbitration (International Investments Disputes Act) 1979, Section 4.
11 Arbitration Act 1996, Article 35, First Schedule; see DAR Williams and A Kawharu, Williams & Kawharu on Arbitration (2d ed,LexisNexis, Wellington, 2017), Paragraph 19.3.
12 Arbitration Act 1996, Article 35, First Schedule.
13 Arbitration Act 1996, Article 36, First Schedule.
14 The AMINZ Arbitration Rules are available at: https://12216-console.memberconnex.com/Folder?Action=View%20File&Folder_id=68&File=AMINZ%20Arbitration%20Rules%20-%20as%20printed.pdf.
15 The NZIAC Arbitration Rules (and the various sets of NZIAC Expedited International Arbitration Rules) are available at: https://www.nziac.com/arbitration/arbitration-rules/.
16 For example, the side letter between New Zealand and Australia. The text of the side letters is available here: https://www.mfat.govt.nz/assets/CPTPP/New-Zealand-Australia-ISDS-Trade-Remedies-and-
17 For example, the side letter between New Zealand and Vietnam. The text of the side letter is available here: https://www.mfat.govt.nz/assets/CPTPP/New-Zealand-Viet-Nam-ISDS.pdf. Text of other side letters can be found here: https://www.mfat.govt.nz/en/trade/free-trade-agreements/free-trade-agreements-concluded-but-not-in-force/cptpp/comprehensive-and-progressive-agreement-for-trans-pacific-partnership-text/.
18  NZLR 770 (CA).
19 For example, Bidois v. Leaf  3 NZLR 474 (CA); Leef v. Bidois  NZSC 128 (SC); Leef v. Bidois  NZHC 36; Ngati Hurungaterangi, Ngati Taeotu me Ngati Te Kahu o Ngati Whakaue v. Ngati Wahaio  NZCA 592 (CA); Ngati Hurungaterangi v. Ngati Wahaio  3 NZLR 378 (HC).
20 Ngāti Hurungaterangi v. Ngāti Wahiao  3 NZLR 378 (HC), Paragraph 120.
21 Ibid., Paragraph 112.
23 Ibid., Paragraph 113.
24 Ibid., Paragraph 120.
26 Ibid., Paragraphs 135 to 136. The High Court decision is discussed in greater detail in The International Arbitration Review (Law Business Research Ltd, London), Eighth Edition (2017), at pp. 332–333.
27 Ngāti Hurungaterangi, Ngati Taeotu me Ngati Te Kahu o Ngati Whakaue v. Ngāti Wahiao  NZLR (CA), Paragraph 112.
28 Ibid., Paragraph 60.
29 Ibid., Paragraph 61.
32 Ibid., Paragraph 62 citing Flannery v. Halifax Estate Agencies Ltd  1 WLR 377.
33 Ibid., Paragraph 62.
34 Ibid., Paragraph 63.
36 Ibid., Paragraph 69.
37 Ibid., Paragraph 70.
38 Ibid., Paragraph 71.
39 Ibid., Paragraph 72.
41 Ibid., Paragraph 75.
43 Ibid., Paragraph 76.
44 Ibid., Paragraph 78.
45 Ibid., Paragraph 79.
46 Ibid., Paragraphs 82, 83, 86, 87, 94, 95, 98, 100, 101–102, 103 and 104.
47 Ngati Wahaio v. Ngati Hurungaterangi, Ngati Taeotu Me Ngati Te Kahu O Ngati Whakaue  NZSC 200 (SC).
48 Ibid., Paragraph 7.
50 Ibid., Paragraphs 7–8.
51 Ibid., Paragraph 7.
52  NZHC 2926 (HC).
53 Article 8 of the First Schedule of the Act largely reflects Article 8 of the Model Law but with the added ability for the High Court to issue a stay of any existing court proceedings.
54  1 NZLR 383, discussed in The International Arbitration Review (Law Business Research Ltd London) Seventh Edition (2016) at p. 392.
55  NZHC 2926, Paragraph 34.
56 Ibid., Paragraph 35.
57 Ibid., Paragraphs 39 – 40.
58 Ibid., Paragraph 45.
59 Ibid. Paragraphs 47 – 48.
60 Precinct Property Holdings Limited v. OMV New Zealand Limited  NZHC 3230 (HC).
61 Ibid. at Paragraphs  – .
62  NZHC 2931 (HC).
63 Article 36 of the First Schedule of the Act mirrors article 36 of the Model Law except an additional sub-clause in the article 36 of the First Schedule of the Act (article 36(3)) deems an award to be contrary to the public policy of New Zealand if the making of the award was induced or affected by fraud or corruption or if a breach of the rules of natural justice occurred during the arbitral proceedings or in connection with the making of the award.
64 In Amaltal Corp Ltd v. Maruha (NZ) Corp  2 NZLR 614.
65  NZHC 2931 (HC) at Paragraph 45.
66 Ibid., at Paragraph 46.
67 Ibid., Paragraphs 46, 53.
68 Ibid., Paragraph 51.
69  NZAR 1617 (CA).
70 Ibid., Paragraph 32.
71 Ibid., Paragraph 36.
72 Ibid., Paragraph 37.
73 Ibid., Paragraphs 41 – 42, 47, 70.
75 A detailed discussion of the content of this Bill and the rationale for the changes proposed in the Bill were contained in The International Arbitration Review (Law Business Research Ltd, London), Eighth Edition (2017), at pp. 335 – 337.
76 Clause 6.
77  NZLR 792; this decision is discussed in The International Arbitration Review (Law Business Research Ltd London) Seventh Edition (2016) at pp. 389-91.