Commercial Arbitration

New Zealand

Daniel Kalderimis

Chapman Tripp

    Infrastructure

  1. 1.The New York Convention
    Is your state a party to the New York Convention? Are there any noteworthy declarations or reservations?

    Yes. There are no noteworthy declarations or reservations. New Zealand’s only reservation is reciprocity (“(a) This State will apply the Convention only to recognition and enforcement of awards made in the territory of another contracting State”).

  2. 2.Other treaties
    Is your state a party to any other bilateral or multilateral treaties regarding the recognition and enforcement of arbitral awards?

    Yes. New Zealand is a party to the 1923 Protocol on Arbitration Clauses and the 1927 Convention on the Execution of Foreign Arbitral Awards.

  3. 3.National law
    Is there an arbitration act or equivalent and, if so, is it based on the UNCITRAL Model Law? Does it apply to all arbitral proceedings with their seat in your jurisdiction?

    Yes: the Arbitration Act 1996 (the Act), Schedule 1 of which closely follows the UNCITRAL Model Law and applies to all arbitrations (domestic or international) seated in New Zealand.

  4. 4.Arbitration bodies in your jurisdiction
    What arbitration bodies relevant to international arbitration are based within your jurisdiction? Do such bodies also act as appointing authorities?

    None of any note. The New Zealand Dispute Resolution Centre has now been established, but as yet this body has little experience administering truly international arbitrations.

  5. 5.Foreign institutions
    Can foreign arbitral providers operate in your jurisdiction?

    Yes.

  6. 6.Courts
    Is there a specialist arbitration court? Is the judiciary in your jurisdiction generally familiar with the law and practice of international arbitration?

    There is no specialist arbitration court. The New Zealand judiciary are, however, of high calibre and have generally produced sound decisions on arbitration topics. The New Zealand Court of Appeal has, on several occasions, given decisions that reflect international arbitration trends and approaches (see, eg, Gold & Resource Developments (NZ) Ltd v Doug Hood Ltd [2000] 3 NZLR 318, Amaltal Corp Ltd v Maruha (NZ) Corp Ltd [2004] 2 NZLR 614, Methanex Motunui Ltd v Spellman [2004] 3 NZLR 454 and Hi-Gene Ltd v Swisher Hygiene Franchise Corp [2010] NZCA 359) and the Supreme Court has given one, detailed, decision on the Act (see Casata Ltd v General Distributors Ltd [2006] 2 NZLR 721).

    7. Agreement to arbitrate

  7. 7.Formalities
    What, if any, requirements must be met if an arbitration agreement is to be valid and enforceable under the law of your jurisdiction? Can an arbitration agreement cover future disputes?

    An arbitration agreement must “submit to arbitration all or certain disputes which have arisen or which may arise between [the parties] in respect of a defined legal relationship, whether contractual or not” (Act, section 2). In New Zealand, oral arbitration agreements are valid and enforceable (see article 7 of Schedule 1).

  8. 8.Arbitrability
    Are any types of dispute non-arbitrable? If so, which?

    Yes. Arbitration agreements contrary to public policy are not determinable by arbitration (see the Act, section 10). To date, no such disputes have been identified. The High Court confirmed 20 years ago that competition law disputes are arbitrable in New Zealand (Attorney-General v Mobil Oil NZ Ltd [1989] 2 NZLR 649 (HC)).

  9. 9.Third parties
    Can a third party be bound by an arbitration clause and, if so, in what circumstances? Can third parties participate in the arbitration process through joinder or a third-party notice?

    Not readily. In the leading New Zealand case on this issue, Methanex Motunui Ltd v Spellman [2004] 3 NZLR 454, the Court of Appeal held that an arbitration clause between A and B did not extend to C so as to give C standing to appeal the arbitral award, notwithstanding that C had – with agreement – participated in the arbitration on a limited basis. Joinder is, however, possible with party agreement (although the Act is silent on this point). There is no recognised third-party notice procedure for arbitrations in New Zealand.

  10. 10.Consolidation
    Would an arbitral tribunal with its seat in your jurisdiction be able to consolidate separate arbitral proceedings under one or more contracts and, if so, in what circumstances?

    Yes, provided the optional Schedule 2 to the Act applies. Where proceedings all have the same arbitral tribunal, the tribunal may, on the application of at least one party in each proceedings, order those proceedings to be consolidated (Schedule 2, cl 2(1)). Where proceedings are in different tribunals, any of the tribunals may make a provisional order to consolidate proceedings (Schedule 2, cl 2(2)). The order becomes effective once provisional orders have been made on behalf of all the parties. The High Court also makes a consolidated order upon application by a party in any of the proceedings. Schedule 2 applies to all domestic arbitrations seated in New Zealand, unless the parties agree otherwise; and to international arbitrations seated in New Zealand, only if the parties so agree.

  11. 11.Groups of companies
    Is the “group of companies doctrine” (or any other method of piercing the corporate veil) recognised in your jurisdiction?

    No.

  12. 12.Separability
    Are arbitration clauses considered separable from the main contract?

    Yes: see article 7 of Schedule 1, which reflects the equivalent provision of the Model Law.

  13. 13.Competence-competence
    Is the principle of competence-competence recognised in your jurisdiction? Can a party to an arbitration ask the courts to determine an issue relating to the tribunal’s jurisdiction and competence?

    Yes: see article 16 of Schedule 1, which reflects the equivalent provision of the Model Law.

  14. 14.Drafting
    Are there particular issues to note when drafting an arbitration clause where your jurisdiction will be the seat of arbitration or the place where enforcement of an award will be sought?

    Not in particular. It may be noted that the New Zealand arbitration climate remains, in practice, highly conscious of domestic laws when determining procedural or evidentiary matters. It may therefore be particularly sensible to incorporate a set of procedural rules or to record that the arbitration is to be conducted by reference to the IBA Rules on the Taking of Evidence in International Commercial Arbitration, or both.

  15. 15.Institutional arbitration
    Is institutional international arbitration more or less common than ad hoc international arbitration? Are the UNCITRAL Rules commonly used in ad hoc international arbitrations in your jurisdiction?

    Most arbitrations in New Zealand, even where they are international, are conducted without recourse to any set of procedural rules (including the UNCITRAL Rules). New Zealand has one locally-based arbitral institution, the New Zealand Dispute Resolution Centre, which is not yet widely used.

  16. 16.Multi-party agreements
    What, if any, are the particular points to note when drafting a multi-party arbitration agreement with your jurisdiction in mind? In relation to, for example, the appointment of arbitrators.

    New Zealand courts have not yet considered the issue in the Dutco case (BKMI and Siemens v Dutco (1992) 1 Bull CivFrench Cass Civ 1ere, 7 January 1992). Thus there is no precedent which, as yet, would require multi-party agreements to specify mathematical equality for arbitrator appointment.

    17. Commencing the arbitration

  17. 17.Request for arbitration
    How are arbitral proceedings commenced in your jurisdiction? Are there any key provisions under the arbitration laws of your jurisdiction relating to limitation periods of which the parties should be aware?

    New Zealand’s provisions on the commencement of arbitral proceedings derive from the UNCITRAL Model Law (see article 21 of Schedule 1). Unless parties agree otherwise, proceedings commence when a request for that dispute to be referred to arbitration is received by the respondent. In terms of limitation periods, section 39 of the Limitation Act 2010 provides that claims made in New Zealand-seated arbitrations have the same limitation periods as claims made in civil proceedings. The limitation periods are governed by the substantive law: thus, where the substantive law is New Zealand, New Zealand limitation rules will apply. Where the substantive law is foreign, they are subject to that foreign law’s limitation law (section 55). The High Court may override section 55 in the interests of public policy (or hardship), unless the foreign law is Australian (section 56). New Zealand law also specifies a limitation period for the enforcement of an arbitral award under article 36, which is six years from the date on which the award became enforceable in New Zealand (section 36).

    18. Choice of Law

  18. 18.Choice of law
    How is the substantive law of the dispute determined? Where the substantive law is unclear, how will a tribunal determine what it should be?

    New Zealand’s provisions on the choice of substantive law derive from the UNCITRAL Model Law (see article 28 of Schedule 1). Thus, parties are entitled to choose the substantive law. Where the parties do not choose the substantive law, the arbitral tribunal applies the law determined by conflict of laws rules which it considers applicable. (See generally A’s Co Ltd v Dagger (HC Auckland M1482-SD00, 7 March 2003), for the leading New Zealand decision on amiable composition.)

    19. Appointing the tribunal

  19. 19.Choice of arbitrators
    Does the law of your jurisdiction place any limitations in respect of a party’s choice of arbitrator?

    No, other that the usual rules, derived from the UNCITRAL Model Law, on independence and impartiality (see article 12 of Schedule 1).

  20. 20.Foreign arbitrators
    Can non-nationals act as arbitrators where the seat is in your jurisdiction or hearings are held there? Is this subject to any immigration or other requirements?

    Yes, see Schedule 1, article 11. It may be necessary for an arbitrator to apply for a work visa to attend hearings in New Zealand, depending on the nationality of the arbitrator and New Zealand’s visa arrangements with that country.

  21. 21.Default appointment of arbitrators
    How are arbitrators appointed where no nomination is made by a party or parties or the selection mechanism fails for any reason? Do the courts have any role to play?

    New Zealand has adopted the default procedure from the UNCITRAL Model Law (see article 11 of Schedule 1), by which an application can be made to the High Court in the case of non-appointment. However, in arbitrations to which Schedule 2 applies, a “quick-fire” procedure is provided instead by which one party can identify the default of appointment and require the appointment of a nominated arbitrator within seven days (see cl 1). If such appointment is not made by agreement within that time, it is made by operation of law. It has been confirmed that this procedure, where it applies, entirely replaces article 11 of Schedule 1, thus ousting court jurisdiction (see Hitex Plastering Ltd v Santa Barbara Homes Ltd [2002] 3 NZLR 695 (HC)).

  22. 22.Immunity
    Are arbitrators afforded immunity from suit under the law of your jurisdiction and, if so, in what terms?

    Yes, section 13 of the Act provides that arbitrators are not liable for negligence in respect of anything done or omitted to be done in the capacity of arbitrator.

  23. 23.Securing payment of fees
    Can arbitrators secure payment of their fees in your jurisdiction? Are there fundholding services provided by relevant institutions?

    There is no statutory mechanism for securing payment of fees. Any such arrangements would need to be agreed with the parties.

    24. Challenges to arbitrators

  24. 24.Grounds of challenge
    On what grounds may a party challenge an arbitrator? How are challenges dealt with in the courts or (as applicable) the main arbitration institutions in your jurisdiction? Will the IBA Guidelines on Conflicts of Interest in International Arbitration generally be taken into account?

    See the answer to question 19 above. The grounds on and procedure by which a party may challenge an arbitrator are specified in articles 12 and 13 of Schedule 1. There is no New Zealand institution that has widely considered arbitrator challenges. There is, as yet, no New Zealand case where the courts have applied the IBA Guidelines on Conflicts of Interest in International Arbitration in considering a challenge.

    25. Interim relief

  25. 25.Types of relief
    What main types of interim relief are available in respect of international arbitration and from whom (the tribunal or the courts)? Are anti-suit injunctions available where proceedings are brought elsewhere in breach of an arbitration agreement?

    New Zealand has followed the UNCITRAL Model Law, both in providing for court-ordered interim measures in support of an arbitration (article 9 of Schedule 1) and for a tribunal-ordered interim measures regime (articles 17 to 17M of Schedule 1). It would now appear that New Zealand courts have only the same power to order interim measures as do tribunals (article 9(2) of Schedule 1). This raises questions about the courts’ power to exercise inherent jurisdiction on an interim measures application. The Act does not provide for anti-suit injunctions in support of an arbitration agreement, and no New Zealand court has yet ordered one. However, by parity of reasoning to a New Zealand court decision which granted an anti-arbitration injunction (Carter Holt Harvey Ltd v Genesis Power Ltd [2006] 3 NZLR 794 (HC)), it would appear that New Zealand courts have jurisdiction to grant anti-suit injunctions.

  26. 26.Security for costs
    Does the law of your jurisdiction allow a court or tribunal to order a party to provide security for costs?

    Yes. This is specifically permitted by cl 3(1)(d) of Schedule 2. Where Schedule 2 does not apply, security for costs orders may be permitted under article 19 of Schedule 1, but this is unclear.

    27. Procedure

  27. 27.Procedural rules
    Are there any mandatory rules in your jurisdiction that govern the conduct of the arbitration (e.g. general duties of the tribunal and/or the parties)?

    Yes. Articles 18 (equality of treatment), 24(2) (advanced notice of meetings and hearings) and 24(3) (right to be notified) of Schedule 1. See generally Methanex Motunui Ltd v Spellman [2004] 3 NZLR 454 (CA).

  28. 28.Refusal to participate
    What is the applicable law (and prevailing practice) where a respondent fails to participate in an arbitration?

    Article 25 of Schedule 1 provides that if a respondent fails to participate in the arbitration, the tribunal will continue the proceedings without treating the respondent’s non-participation as an admission of the claimant’s allegations.

  29. 29.Admissible evidence
    What types of evidence are usually admitted, and how is evidence usually taken? Will the IBA Rules on the Taking of Evidence in International Commercial Arbitration generally be taken into account?

    See the answer to question 14 above. Strictly speaking, the New Zealand Evidence Act 2006 does not apply to arbitrations in New Zealand; however, it is common for its provisions to be applied by analogy. The IBA Rules on the Taking of Evidence in International Commercial Arbitration will not generally be taken into account unless the parties so agree.

  30. 30.Court assistance
    Will the courts in your jurisdiction play any role in the obtaining of evidence?

    Yes, see article 27 of Schedule 1, which provides that the tribunal may request the court’s assistance in taking evidence.

  31. 31.Document production
    What is the relevant law and prevailing practice relating to document production in international arbitration in your jurisdiction?

    See the answers to questions 14 and 29 above. Strictly speaking, the New Zealand court procedural rules do not apply to arbitrations in New Zealand; however, it is common for such rules (including as to document production) to be applied by analogy. The IBA Rules on the Taking of Evidence in International Commercial Arbitration will not generally be taken into account unless the parties so agree.

  32. 32.Hearings
    Is it mandatory to have a final hearing on the merits?

    No.

  33. 33.Seat or place of arbitration
    If your jurisdiction is selected as the seat of arbitration, may hearings and procedural meetings be conducted elsewhere?

    Yes.

    34. Award

  34. 34.Majority decisions
    Can the tribunal decide by majority?

    Yes: see article 29 of Schedule 1, which provides that where there is more than one arbitrator, the decision shall be made by a majority, unless otherwise agreed.

  35. 35.Limitations to awards and relief
    Are there any particular types of remedies or relief that an arbitral tribunal may not grant?

    No. An arbitral tribunal may award any remedy or relief that the High Court could have awarded if the dispute had been the subject of civil proceedings (Act, section 12(1)(a).

  36. 36.Dissenting arbitrators
    Are dissenting opinions permitted under the law of your jurisdiction? If so, are they common in practice?

    Yes, they are permitted (in that they are not prohibited). No, they are not common in practice.

  37. 37.Formalities
    What, if any, are the legal and formal requirements for a valid and enforceable award?

    See article 31 of Schedule 1, which provides that the award must be in writing and signed by the arbitrator(s), it must provide the reasons on which it is based, and it must provide the date and place of arbitration. A signed copy of the award must be delivered to each party.

  38. 38.Time frames
    What time limits, if any, should parties be aware of in respect of an award? In particular, do any time limits govern the interpretation and correction of an award?

    There are no particular time limits for the rendering of an award. With respect to interpretation and correction, see article 33 of Schedule 1, which provides that parties must request corrections and interpretations within 30 days of receipt of the award, unless parties agree on another time limit. Note that this provision was considered in detail in Shell (Petroleum Mining) Company Ltd v Todd Petroleum Mining Company Ltd (HC Wellington CIV-2009-485-2024, 5 March 2010).

    39. Costs and interest

  39. 39.Costs
    Are parties able to recover fees paid and costs incurred? Does the “loser pays” rule generally apply in your jurisdiction?

    Where Schedule 2 applies to the arbitration, costs are to be fixed in the award (see cl 6), and arbitrators are required to so fix costs, even if no party claims costs: see Casata Ltd v General Distributors Ltd [2006] 2 NZLR 721 (SC). By analogy with domestic court practice, costs will usually follow the event. However, there is no certainty that a winning party will recover all fees paid and costs incurred (as opposed to a reasonable proportion thereof).

  40. 40.Interest on the award
    Can interest be included on the principal claim and costs? Is there any mandatory or customary rate?

    Yes. It is customary for pre-award interest to be added to the principal claim. Unless the parties agree otherwise, a sum directed to be paid by an award shall carry post-award interest from the date of the award and at the same rate as a judgment debt (see Schedule 1, article 31(5)).

    41. Challenging awards

  41. 41.Grounds for appeal
    Are there any grounds on which an award may be appealed before the courts of your jurisdiction?

    Yes, on a question of law; but only: (a) if cl 5 of Schedule 2 applies; and (b) with agreement of the parties or leave of the High Court.

  42. 42.Other grounds for challenge
    Are there any other bases on which an award may be challenged, and if so what?

    Yes, there is a mandatory set-aside mechanism in article 34 of Schedule 1, which is based on the equivalent provision of the UNCITRAL Model Law.

  43. 43.Modifying an award
    Is it open to the parties to exclude by agreement any right of appeal or other recourse that the law of your jurisdiction may provide?

    Parties may exclude by agreement the right to appeal on a question of law, but not the article 34 set-aside mechanism.

    44. Enforcement in your jurisdiction

  44. 44.Enforcement of set-aside awards
    Will an award that has been set aside by the courts in the seat of arbitration be enforced in your jurisdiction?

    This point has not yet been tested in New Zealand. However, the wording of article 36 of Schedule 1 (based on the equivalent provision of the UNCITRAL Model Law) does not require that set-aside in the seat of arbitration will necessarily preclude enforcement in New Zealand, however, it is a possible ground for non-enforcement. The existence of foreign set-aside proceedings would more usually result in the adjournment, rather than the dismissal, of the New Zealand enforcement proceedings: see article 36(2)).

  45. 45.Trends
    What trends, if any, are suggested by recent enforcement decisions? What is the prevailing approach of the courts in this regard?

    New Zealand courts have been generally pro-enforcement, as can be seen from recent cases such as Hi-Gene Ltd v Swisher Hygiene Franchise Corp [2010] NZCA 359. It should be noted that New Zealand has modified article 36 so that a possible ground for non-enforcement is a breach of the rules natural justice, which is deemed by article 36(3)(b) to be a conflict with the public policy of New Zealand. It remains to be seen whether this provision will lead to a divergent jurisprudence in New Zealand. So far, there are no signs of this, and New Zealand courts are following international arbitration orthodoxy.

  46. 46.State immunity
    To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?

    New Zealand recognises the doctrine of restrictive sovereign immunity at common law, which generally reflects the approach taken in codifications such as the UK Sovereign Immunity Act 1978. Thus, a defence of sovereign immunity can be raised at an enforcement stage and, in accordance with conventional principles, immunity to execution will not be deemed waived by a previous submission to arbitration.

    47. Further considerations

  47. 47.Confidentiality
    To what extent are arbitral proceedings in your jurisdiction confidential?

    Very. New Zealand is the only country in the world with a specific and detailed confidentiality code for arbitrations, which has been in place since 2007. This provides that the tribunal must conduct proceedings in private, and that every arbitration agreement carries an implied term that parties and the tribunal will not disclose confidential information (section 14-14I).

  48. 48.Evidence and pleadings
    What is the position relating to evidence produced and pleadings filed in the arbitration? Are these confidential? Is there any way that they might be relied on in other proceedings (whether arbitral or court proceedings)?

    Evidence produced and pleadings filed in the arbitration are deemed to be confidential information pursuant to the confidentiality code (see section 14B). However, parties can disclose confidential information if disclosure is necessary to establish rights in relation to a third party, and if the disclosure is no more than what is reasonably required to serve that purpose (section 14C(b)(i)(B)). This provision, which is presently untested, suggests that evidence and pleadings could be relied on in other proceedings where necessary. However, it is difficult to know how widely New Zealand courts will interpret it.

  49. 49.Ethical codes
    What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your jurisdiction?

    No arbitration-specific standards apply. New Zealand practitioners consider themselves bound by the relevant New Zealand professional standards when conducting arbitral proceedings.

  50. 50.Procedural expectations
    Are there any particular procedural expectations or assumptions of which counsel or arbitrators participating in an international arbitration with its seat in your jurisdiction should be aware?

    Only that international influences are making their way relatively slowly into New Zealand arbitrations. Thus, if a truly international arbitration procedure is desired, it is sensible to specify this by agreement before any dispute arises.

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