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Arbitration law reform: three takeaways

May 2019 - Litigation & Dispute Resolution. Legal Developments by Bell Gully.

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​​​​​​Last week, Parliament made several technical reforms to New Zealand's arbitration legislation. The changes will be of interest to any party considering an arbitration, or to anyone drafting a dispute resolution provision. In this update, we draw three relevant points to your attention.

Change to default appointment procedures

Parliament has repealed the so-called "quick draw" default appointment procedure.

Under the existing provisions, one party can impose its choice of arbitrator if it gives the other party seven days' notice to remedy a default in the appointment procedure, and the other party fails to do so.

This procedure created the potential for unfairness because it appeared to apply not only where one party was refusing to co-operate, but also where the parties failed to agree or if the third party appointing body failed to act as required. That interpretation had been confirmed by a decision of the High Court holding that the default procedures apply if there is a failure under any of the mechanisms for appointment, including a failure to agree. In those circumstances, the legislation permitted one party to serve an appointment notice that would result in that party's choice of arbitrator being imposed after seven days despite the fact that the other party was not at fault in any ordinary sense.

A High Court judge has previously commented that "within the context of legislation which is designed as best as possible to facilitate agreement between the parties, it is in my view bordering on repugnant that genuine disputes should be resolved by unilateral notices."

The reforms deal with that concern. Such appointment disputes will now be dealt with by applying to a third party, the Arbitrators' and Mediators' Institute of New Zealand.

Timely pursuit of jurisdictional challenges in the courts

The reforms impose a new requirement to pursue a court challenge to an arbitrator's ruling on jurisdiction in a timely manner.

An arbitrator may determine any jurisdictional challenge as a preliminary question in the arbitration. After the arbitrator gives a preliminary ruling​ on jurisdiction, an objecting party has 30 days to apply to the High Court. An arbitrator may also rule on jurisdiction in the substantive award on the merits​.​

The reforms now also require the objecting party to pursue a jurisdictional challenge in the High Court "in a timely manner".​ If not, the objecting party will be treated as having waived its right to object to the arbitrator's ruling on jurisdiction.

Confidentiality provisions left unchanged

We also note that in 2018 the Select Committee chose to remove a reform that would have provided for arbitration-related court proceedings to be held in private, unless otherwise ordered by the court. Parliament concluded, however, that the status quo strikes an adequate balance between the interests of open justice and confidentiality. Under the status quo, there is a presumption that arbitration-related court proceedings (e.g., appeals) will be heard in public but the court retains a discretion to order that the proceeding be heard in private.