2016 amendments to the Arbitration Act 1996

The amendments introduced bythe Arbitration Amendment Act 2016 effect two relatively modest changes to the Arbitration Act 1996.Further and more decisive reforms remain under consideration.The amendments come into force on 1 March 2017.

Introduction of emergency arbitrator

  • the arbitration agreement that the parties have entered into; or
  • the arbitration rules of any organisation or institution that the parties have adopted.

This amendment should improve New Zealand’s attractiveness as a choice of seat given that many institutional rules now contain emergency arbitrator provisions.It is important that international parties who choose New Zealand as their seat know that their choice of institutional rules can be given full effect under New Zealand law.It is also a welcome development for sophisticated parties who may wish to appoint an emergency arbitrator under their arbitration agreement.This will be especially useful in the construction sector where arbitration is often the default dispute resolution mechanism and time is of the essence.

However, emergency arbitrators have not yet been widely used in New Zealand, if at all.This is partly due to the fact that (a) many New Zealand arbitrations are ad hoc, and hence not conducted pursuant to institutional rules providing for emergency arbitrator appointment and powers; and (b) New Zealand courts have provided fast and effective interim relief, if necessary on an ex parte basis.

Even with this new amendment, it will often be most practical to apply directly to a New Zealand court if urgent interim relief is required at or before the commencement of arbitration proceedings.InSafe Kids v McNeill [2012] 1 NZLR 714, the High Court held that a New Zealand court’s power to order interim measures in support of an arbitration was (due to section 9 of the Arbitration Act 1996) co-extensive to that of an arbitrator (that is, confined to the powers in articles 17 to 17B of the Arbitration Act’s First Schedule).New Zealand courts have also confirmed their power to make ex parte interim orders in support of arbitration agreements: seeDiscovery Geo v STP Energy Pte Ltd [2013] 2 NZLR 122.

New default appointing body to be introduced in place of High Court

Under section 6A of the Arbitration Amendment Act 2016, the Minister of Justice is required to appoint a ‘suitably qualified body’ in place of the High Court to resolve issues relating to arbitrator appointments under article 11, paragraphs (3) to (6), of Schedule 1 to the Arbitration Act 1996.

The rationale for moving the default appointment function from the High Court to a specialist arbitration body is to enable disputes relating to appointmentto be resolved more quickly, and arguably more appropriately, given the heavy caseload handled by the New Zealand High Court and the specialist knowledge relating to arbitrators held by the private sector.

It is hoped that the change will reduce the administrative burden on the parties because they will not need to make an application to the High Court in the following situations:

  • where one party is refusing to appoint an arbitrator or has failed to do so within 30 days;
  • where the parties cannot agree on the sole arbitrator or chairman of the tribunal;
  • where the parties have agreed on the number of arbitrators but cannot agree on the appointment procedure.

The Minister has yet to appoint the relevant body.However, it seems that the most suitably qualified body would be the Arbitrators’ and Mediators’ Institute of New Zealand (AMINZ), which has expressed its interest in the appointment.AMINZ is the leading body for the promotion of alternative dispute resolution in New Zealand and is hosting the AMINZ-ICCA International Arbitration Day in Queenstown on 19–20 April 2018.

Future amendments possible

It is possible that the momentum gained from the 2016 amendments will lead to a more substantive reform of the Arbitration Act 1996.AMINZ has been advocating, and the New Zealand Ministry of Justice has been considering, other possible changes, including extending the presumption of confidentiality in arbitration to the conduct of related court proceedings (such as set-aside applications and appeals on questions of law).To date, the New Zealand Law Commission has not been persuaded of the need for change, but New Zealand’s otherwise commendable ‘confidentiality code’ (sections 14 to 14I of the Arbitration Act 1996) is arguably out of step with jurisdictions such as Singapore, Hong Kong, and even England, which provide greater assurance of arbitral confidentiality in the context of satellite litigation.No decision has yet been reached, but it is understood that the issue is presently under active consideration.

Theprocess of appeals on questions of law under the Arbitration Act 1996 may also warrant review.Presently, the processcan be somewhat lengthy, including due to the possibility of overlapping applications (both to the High Court and Court of Appeal) for leave to appeal after being refused leave to appeal on a question of law.There is also some debate at present concerning whether an arbitral tribunal’s decisions on contract interpretation can properly be characterised as legal conclusions, open to appeal.