Arbitration Amendment Bill

Hon CLAYTON COSGROVE (Associate Minister of Justice) Link to this

I move, That the Arbitration Amendment Bill be now read a third time. Arbitration and mediation are the two main forms of alternative dispute resolution. Alternative dispute resolution is a growing trend in New Zealand, with arbitration becoming increasingly popular for contract-based relationships. Arbitration is a more formal method of dispute resolution than mediation, with the parties still having a significant amount of control over the proceedings. Although the result in arbitration is a binding decision, the parties can agree to structure the arbitration in a manner that suits their individual needs. That flexibility proves to be attractive when a dispute arises, as many parties are involved in ongoing relationships. Arbitration allows for a less adversarial approach to a dispute when compared with litigation, leading to less chance that the relationship between the parties will break down in the future. Due to the increasing popularity of arbitration, it is timely that the Government is improving the Arbitration Act.

This bill makes a number of relatively small changes to the Arbitration Act, to improve its operation and to keep it in line with international best practice. The bill is the result of a review of the Arbitration Act by the Law Commission. The Law Commission concluded that although the Act was working well, a number of minor changes could be made to improve the Act’s operation. I would like to extend my thanks to the Law Commission for its work.

The Arbitration Act of 1996 replaced an outmoded 1908 Act, which had been inherited from England. The 1996 Act, which was based on an earlier Law Commission report, saw a whole new approach to arbitration introduced to New Zealand. The review by the Law Commission was therefore essential to ensure that the Act was working well for all those who were involved in arbitration. It is pleasing to see that the Act has proven to be a well-used and workable framework, with very few tune ups needed.

As I mentioned in my speech during the second reading of this bill, the timing of the bill has also provided an opportune time to ensure that the Act keeps pace with international best practice. One of the purposes of adopting the current Act in 1996 was to create consistency with laws in other jurisdictions. It was for that reason that New Zealand adopted the United Nations model law on international commercial arbitration. Recently, changes were made to the model law to reflect international best practice. Those changes have been incorporated into this bill, and New Zealand will be one of the first countries to update its legislation to reflect the changes. The amendments in the bill that reflect the changes to the model law will give arbitrators more power to ensure that arbitral proceedings are worthwhile. Assets will be able to be preserved, ensuring that a successful party will be able to recover an effective remedy. Evidence will also be able to be preserved, ensuring a fair process for all. Those new powers will help to further enhance the attractiveness of arbitration.

The bill makes some important technical changes to the legislative framework within which arbitration takes place. The fact that only relatively technical amendments were identified by the Law Commission is a reflection on the success of the 1996 Act.

Again, I thank the Law Commission for its expert review of the Act. I also take the opportunity, in a non-partisan way, to thank the Justice and Electoral Committee for its careful and thoughtful deliberation on the bill, and to thank the officials for their advice. I thank the House for the positive and cooperative approach taken to this legislation. I commend the bill to the House.

CHRISTOPHER FINLAYSON (National) Link to this

National supports the third reading of the Arbitration Amendment Bill. I join with the Associate Minister of Justice in thanking the Law Commission for the good work it has done.

The Minister is quite right when he says that the Arbitration Act 1996 has worked pretty well, and that all that is required here are some minor technical amendments. It was very fortuitous that at the time the Justice and Electoral Committee was dealing with this legislation, an opportunity was afforded to make a couple of amendments to deal with the issue of interim measures. What happens is that arbitration, to a large extent, is guided and governed by the United Nations Commission of International Trade Law, which is known as UNCITRAL. It just so happened that the United Nations Commission of International Trade Law, which meets twice a year—once in New York and once in Vienna—had been looking at the issue of interim measures. The New Zealand delegates could report back to the Ministry of Justice that some changes to these provisions were required, and then the changes could be made very quickly.

What the measures do is set out detailed provisions for the making of interim measures, including the appropriate test for the tribunal to use regarding the need for interim measures, and provisions for the making of preliminary orders. As a result of those amendments, which the select committee worked on, New Zealand has probably one of the most up-to-date arbitration laws in the world. Indeed, I think it is possible that New Zealand is the first country in the world to adopt the new chapter on interim measures, and I am very pleased that the select committee was able to do this.

I particularly pay tribute to the three New Zealand delegates who have, on a pro bono basis, provided such a good service to New Zealand over the years at meetings of the United Nations Commission of International Trade Law. I am referring to David Williams of Auckland, who is a very distinguished Queen’s Counsel and arbitrator. I refer also to James Hosking and Jennifer Lake, both of whom are New Zealanders and are now resident in New York. James Hosking was a lawyer in New Zealand, and is now a partner with Clifford Chance in New York. Jennifer Lake is well known to some of us. She was formerly a Crown counsel in the Crown Law Office, and for a time did important work at the Iran - United States Claims Tribunal.

Over the past few years New Zealand has had good service from these people. Indeed, they advised the Ministry of Economic Development and the Ministry of Justice that they would be willing to continue to represent New Zealand on a completely pro bono basis, so it is very disappointing to learn today that the request was refused on the basis that not only are there no funds to cover their expenses, but also there is no time to undertake the pre - working-group meeting briefings and post-meeting reporting. The ministry says it has greater priorities for its time and resources elsewhere. If ever there was a situation where the ministry was looking a gift horse in the mouth, it is this situation. These people have been providing excellent service to New Zealand, as a result of which our arbitration law is state of the art and right up to date, especially on the important question of interim measures. What we have from the Ministry of Justice is an unbelievably stupid response, telling them that it does not have any need for their resources—even on a pro bono basis. I think that, as a result, it is entirely possible that our arbitration law will slip out of date again.

My thanks to those people for what they have done. I certainly hope the Minister will look at this issue, because it is an important one. But, that having been said, National will support the third reading of this legislation.

Hon GEORGINA TE HEUHEU (National) Link to this

I am pleased to rise to make a contribution to the third reading of the Arbitration Amendment Bill. It implements the principal recommendations of the New Zealand Law Commission contained in a report in 2003, which proposed changes to improve the Arbitration Act 1996.

As my colleague Chris Finlayson said, the Act—which has been in operation now since 1996—has worked reasonably well, but some changes will be needed in the future and some are needed now. The changes in the bill are designed to make it more desirable and easier for parties to disputes to resolve those disputes privately by the use of arbitration. That is a worthy objective. National supports the third reading of the bill and congratulates the Government on bringing these amendments forward; they are timely. As I say, the amendments have been proposed since 2003.

Arbitration is only one way of resolving disputes. Other methods, in an ordered civil society like ours, include conciliation, mediation, and, finally, resolution in the courts. Although mediation has shades of arbitration—a neutral intervener facilitates the resolution—the end result is not necessarily a final binding outcome. Conciliation also has limitations that arbitration does not have. Of course, we could say a whole lot of things about the court process, but in this day and age our court processes are not working as well as they should, and, of course, they have not improved under the current Labour Government at all.

The beauty of arbitration is that it is consensual. Parties come to it freely, of their own accord. They can determine the rules under which they wish to have the dispute resolved, and can appoint a neutral arbitrator to adjudicate the dispute—there is agreement on that—and, importantly for the parties, they can accept the ruling of the arbitrator as binding. The process is somewhat regulated by the legal system, in that there are limited rights of appeal to the court, and interlocutory orders can be made during the process, but its strength is that it is a method of resolution outside the normal legal system.

It is not surprising, then, that more and more parties are referring their disputes to arbitration, rather than to court proceedings. As I said earlier, our court system is not working at optimum levels. In fact, in some parts of the system it is clogged up; it is absolutely clogged up. It does not serve our community well at all, and there is a perception—wrong, I might say—that in court proceedings only the lawyers win. That is an increasingly popular view, and it does not enhance the use of court proceedings. Resolution through the courts is becoming, in a way, the last resort. Mr Deputy Speaker, you know that very well, having been involved as a Minister in the justice sector as well.

Colleagues have detailed the main changes promoted by the bill. I refer to only one in concluding my contribution, on the issue of confidentiality. The underlying principle of our court system—that proceedings are conducted in public—flows from the maxim that not only must justice be done, it must be seen to be done. For that reason, court proceedings, with only limited exceptions, are held in open court. Increasingly, however, there has been a growing recognition that a range of disputes, particularly in the business and commercial sector, are more appropriately dealt with in the private domain. It is a strength of the arbitration system, as well, that the process, quite properly, allows for that. Indeed, the changes in this bill ensure that total confidentiality of arbitral proceedings, with a few well-defined exceptions, is confirmed. The openness of justice principle is preserved as well; if the parties have recourse to the ordinary court system, then open justice applies unless there is good reason that persuades the judge otherwise, or unless there is agreement by the parties.

All in all, I commend the Minister in charge, whoever it is; with all the changes that go on on the Government benches we are left wondering sometimes—

PETER BROWN (Deputy Leader—NZ First) Link to this

New Zealand First will support this bill.

TE URUROA FLAVELL (Māori Party—Waiariki) Link to this

I have spent a considerable amount of time this evening on preparing my speech, knowing full well that the Arbitration Amendment Bill is an important issue for this Parliament. Given the very short period of time left, and the work I have put into this speech, I seek leave from the House to suspend the commencement of my speech for just a little bit longer, to allow us to really benefit from my words—if that is appropriate.