International Arbitration 2023 Comparisons

International arbitration as a method of resolving disputes is increasingly prevalent in New Zealand. This is primarily a result of increased numbers of New Zealand entities and their overseas counterparties entering into contracts containing arbitration clauses, rather than domestic parties choosing international arbitration. According to the inaugural Aotearoa New Zealand Arbitration Survey, 15% of all arbitrations conducted by New Zealand-based arbitrators in 2019–20 were international arbitrations.

Historically, domestic parties have preferred litigation as a dispute resolution method but, increasingly, arbitration is being adopted.

Most disputes submitted to arbitration in New Zealand relate to general commercial contracts. Specific sectors in which arbitration is common in New Zealand include construction and property-related disputes, particularly disputes arising out of leases. Valuation and rent review disputes are also commonly arbitrated. Specific to New Zealand, share milking/farming disputes are often arbitrated, as are some disputes within Iwi (Māori tribes). New Zealand has also recently legislated to allow trust disputes to be arbitrated.

Most arbitrations in New Zealand are ad hoc – conducted under the Arbitration Act 1996 (the “Act”), without the assistance of institutional rules.

In 2022 the Arbitrators’ and Mediators’ Institute of New Zealand (“AMINZ”) released its new Arbitration Rules, which include expedited arbitration provisions. The New Zealand International Arbitration Centre also offers a variety of arbitration rules, including rules providing for expedited arbitrations conducted in 60, 90 or 120 working days, depending on the sum claimed or whether declaratory relief only is sought, as well as its standard Arbitration Rules.

Where international institutional rules are adopted, the ICC Rules are most common, followed by the SIAC and UNCITRAL Rules.

No new arbitral institutions were established in New Zealand in 2022–23.

In the limited circumstances in which the Act permits a New Zealand court to intervene in arbitral proceedings, the Act designates the High Court as the supervisory court, with limited rights of appeal to the Court of Appeal.

In certain limited circumstances, recourse may also be had to the District Court: issuance of a witness summons or assistance in obtaining documents (Art 27 of Sch 1); interim measures (Art 9(2)); recognition and enforcement if the sum awarded does not exceed the jurisdiction of the District Court (Art 35(3)(b)); acting in aid of an arbitral tribunal (cl 3(1) of Sch 2); and granting extensions of time to commence arbitral proceedings (cl 7 of Sch 2).

The Act governs arbitration proceedings seated in New Zealand, including international arbitrations. It contains three core parts:

• The general provisions of the Act, which are denoted by “sections” on various matters including: arbitrability (s 10); the power of arbitral tribunals to grant relief (s 12); arbitrator immunity (s 13); and confidentiality and privacy (s 14).
• Schedule 1, which contains “articles” that substantially reproduce the UNCITRAL Model Law.
• Schedule 2, which contains “clauses” with additional rules on, for example: the appointment of arbitrators (cl 1); consolidation (cl 2); and preliminary determinations of, and appeals on, points of law (cls 4 and 5).

The general provisions of the Act and of Schedule 1 to the Act apply to all domestic and international arbitrations. Schedule 2 to the Act applies to a domestic arbitration unless the parties agree that it does not, and to an international arbitration only if the parties agree that it does.

Schedule 1 to the Act substantially reproduces the UNCITRAL Model Law. It was amended in 2007 to reflect the changes made to the Model Law in 2006. There are some notable differences between the Act and the Model Law, including the following:

• Additional requirements for the enforceability of arbitration agreements with consumers (s 11).
• An arbitrator is not liable for negligence in respect of anything done or omitted to be done in their capacity as arbitrator (s 13).
• Express requirements of privacy and confidentiality (ss 14–14I).
• The arbitration agreement may be made orally or in writing (Art 7(1) of Sch 1).
• A stay of court proceedings may be refused if “there is not in fact any dispute between the parties” (Art 8(1) of Sch 1). However, the New Zealand Supreme Court has held that these words were not intended to expand the jurisdiction of the courts beyond that provided for in the Model Law, and therefore a court may only grant summary judgment despite the existence of a valid arbitration agreement if there is no actual dispute (and not merely no arguable defence) (Zurich Australian Insurance Ltd v Cognition Education Ltd [2015] 1 NZLR 383).
• The powers of courts to grant interim measures are assimilated to those of an arbitral tribunal, though the courts are bound by any findings of fact made by the tribunal (Art 9(2)–(3) of Sch 1).
• The ability of a party to request a decision on jurisdiction from the High Court is not limited to situations where the tribunal has positively ruled as a preliminary question that it has jurisdiction (Art 16(3) of Sch 1).
• Security for costs is available as an interim measure (Art 17 of Sch 1, definition of “interim measure”).
• Witnesses and counsel have the same privileges and immunities as witnesses and counsel in a court proceeding (Art 19(3) of Sch 1).
• If a claimant fails to prosecute its claim, the arbitral tribunal may make an award dismissing the claim or give directions for the speedy determination of the claim (Art 25(d) of Sch 1).
• The High Court and District Court are empowered to take various steps to assist the arbitral tribunal in taking evidence (Art 27(2) of Sch 1).
• Unless the arbitration agreement provides otherwise, or the award otherwise directs, any sum awarded shall carry interest from the date of the award at the same rate as a judgment debt (Art 31(5) of Sch 1).
• The death of a party does not terminate the arbitration, unless otherwise agreed by the parties (Art 32(4) of Sch 1).
• Grounds for setting aside, or refusing to recognise or enforce, an arbitral award on the basis that it is contrary to public policy expressly include the award having been induced or affected by fraud or corruption, or a breach of the rules of natural justice (Arts 34(6) and 36(3) of Sch 1).

There have been no significant changes to the Act in the past year, and there is no pending legislation relating to arbitration of which we are aware.

Section 2(1) of the Act provides that an arbitration agreement is “an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not”.

An arbitration agreement may be made orally or in writing (Art 7(1) of Sch 1) save for arbitration agreements in a contract between a consumer and a trader, which are only enforceable if certain formality requirements are met (s 11).

Section 10(1) of the Act provides that any dispute that the parties agree to submit to arbitration may be determined in that way “unless the arbitration agreement is contrary to public policy or, under any other law, such a dispute is not capable of determination by arbitration”. However, Section 10(2) of the Act clarifies that “[t]he fact that an enactment confers jurisdiction in respect of any matter on the High Court or the District Court but does not refer to the determination of that matter by arbitration does not, of itself, indicate that a dispute about that matter is not capable of determination by arbitration”.

Whether a particular type of dispute is considered arbitrable is therefore a matter for the courts, having regard to either relevant public policy factors in New Zealand, or other laws.

There are two recent decisions of the New Zealand courts on the concept of arbitrability under Section 10 of the Act. One decision has confirmed that matters relating to child guardianship (that is, the care and custody of children) are not arbitrable (Wade v Wade [2022] NZHC 3254). Another decision, which has proved controversial, held that issues of whakapapa (loosely translated as one’s genealogical identity) could not be arbitrated and that to do so would be an abuse of process (Ngawaka v Ngāti Rehua-Ngātiwai Ki Aotea Trust Board (No 1) [2021] NZHC 291).

Section 11 of the Act places further restrictions on the arbitrability of disputes under consumer contracts, unless specific criteria have been fulfilled. This provision is designed to ensure individual consumers (not corporates) are not drawn into arbitration by unnegotiated standard form agreements.

There are no judgments of the New Zealand courts under the Act with respect to determining the law governing the arbitration agreement. The New Zealand courts would, however, likely follow the recent UK Supreme Court decision in Enka v Chubb [2020] UKSC 38. A detailed analysis of the Enka case is beyond the scope of this chapter. In brief, the Supreme Court held where the parties had agreed on the law governing the contract, save for the validation principle, that law would also govern the arbitration agreement. As there was no governing law of the contract, the court still had to determine what was the law governing the arbitration agreement. By majority, the court held that in the absence of any express choice of law, the law applicable to the arbitration agreement was the law of the seat, being the law most closely connected to that agreement.

The New Zealand courts generally take a pro-arbitration stance and strive to enforce arbitration agreements where possible. This pro-arbitration stance was recently affirmed in a case in which an anti-suit injunction was sought, restraining overseas litigation allegedly in breach of a New Zealand law governed arbitration agreement. The High Court noted that in such cases, comity has a diminished role given “the Court’s role in upholding and enforcing the parties’ contractual bargain” (Maritime Mutual Insurance Association (NZ) Ltd v Silica Sandport Inc [2023] NZHC 793). The New Zealand courts therefore generally favour a liberal interpretation of arbitration agreements and do not allow inconsistencies or uncertainties in the wording used by the parties in their arbitration agreement to thwart their intent to arbitrate disputes (see Marnell Corrao Associates Inc v Sensation Yachts (2000) 15 PRNZ 608 at [61]).

This view was, however, somewhat tempered by the judgment of the Supreme Court in Carr v Gallaway Cook Allan [2014] 1 NZLR 792. In that case, a domestic arbitration clause purported to allow the appeal of an award to the High Court on a question of fact. Such appeals are prohibited under New Zealand law. A majority of the Supreme Court did not adopt a narrow interpretation of “arbitration agreement” that would have confined it to the expression of intention to arbitrate. Instead, it set aside the arbitral award because the offending words were “integral” to the agreement to arbitrate and therefore could not be severed, as a result of which the entire arbitration clause was invalid.

An arbitration clause in a contract may be considered valid even if the rest of the contract in which it is contained is invalid. Article 16(1) of Schedule 1 to the Act states that, for the purposes of the arbitral tribunal’s competence to rule on its own jurisdiction, “an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract”, and that “[a] decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure (necessarily) the invalidity of the arbitration clause”.

The parties are “free to determine the number of arbitrators” (Art 10(1) of Sch 1 to the Act). If the parties do not make such a determination, in an international arbitration, the number of arbitrators shall be three; in every other case, the number of arbitrators shall be one (Art 10(2) of Sch 1).

No person shall be precluded from acting as an arbitrator by reason of their nationality, unless the parties agree otherwise (Art 11(1) of Sch 1). The parties are also “free to agree on a procedure of appointing the arbitrator or arbitrators” (Art 11(2) of Sch 1).

If the parties’ chosen machinery for selecting arbitrators fails, then (unless the parties have agreed otherwise) at a party’s request the “appointed body” – currently AMINZ – shall take the necessary measures under that machinery (Art 11(4) of Sch 1 to the Act).

If the parties have not agreed any machinery, then the applicable default procedures are specified in the Act:

• In an arbitration with two parties:
1. If there are to be three arbitrators, then each party shall appoint one arbitrator, and the two arbitrators thus appointed shall appoint the third arbitrator. If a party fails to appoint an arbitrator within 30 days, or if the two arbitrators fail to agree on a third arbitrator within 30 days, the appointment shall be made by AMINZ upon request (Art 11(3)(a) of Sch 1).
2. If there is to be a sole arbitrator, if the parties are unable to agree on the arbitrator, a party may request AMINZ to make the appointment (Art 11(3)(b) of Sch 1).
• If the parties have agreed to an arbitration with two or four or more arbitrators, or there are three arbitrators and more than two parties, then, unless the parties have agreed otherwise, AMINZ may appoint the requisite number of arbitrators upon the request of a party (Art 11(6) of Sch 1).

Schedule 2 to the Act previously provided for a “quick draw” procedure for default appointments. This has since been repealed.

The New Zealand courts may only intervene in the selection of arbitrators in limited circumstances. Decisions by AMINZ, as the body authorised by the legislation to act as a default appointing authority, are not subject to appeal (Art 11(4) of Sch 1 to the Act). The High Court may only intervene upon an application by a party to appoint an arbitrator or arbitrators, in the event that (a) AMINZ is unable or fails to appoint an arbitrator within 30 days, or (b) a dispute arises in respect of the process adopted by AMINZ (Art 11(7) of Sch 1).

Articles 12 and 13 of Schedule 1 to the Act govern the challenge and removal of arbitrators. An arbitrator may be challenged “only if circumstances exist that give rise to justifiable doubts as to that arbitrator’s impartiality or independence, or if that arbitrator does not possess qualifications agreed to by the parties”.

The parties are free to agree the procedure for challenging an arbitrator. Under the default procedure, the challenging party must send a written statement of the reasons for challenge to the arbitral tribunal within 15 days of the constitution of the tribunal or after becoming aware of the circumstances giving rise to the challenge. The arbitral tribunal shall decide on the challenge. However, if the challenge is unsuccessful, the challenging party may request the High Court to decide on the challenge.

The Act has adopted the Model Law requirement that a person who is approached in connection with appointment as an arbitrator must disclose any circumstances likely to give rise to justifiable doubts as to that person’s impartiality or independence. An arbitrator also has an ongoing duty to disclose any such circumstances (Art 12(1) of Sch 1 to the Act). As set out above, an arbitrator may be challenged if circumstances exist that give rise to justifiable doubts as to the arbitrator’s impartiality or independence (Art 12(2) of Sch 1).

The AMINZ Arbitration Rules contain similar requirements. The 2022 edition provides that an arbitrator must complete a statement of impartiality and independence (r 6.4) and is under an ongoing disclosure duty (r 6.10). An arbitrator must also be impartial and independent (r 6.9) and may be removed if circumstances exist that give rise to justifiable doubts as to that arbitrator’s impartiality or independence (r 7.1).

The test for independence or impartiality is objective: whether “a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question the judge is required to decide” (Saxmere Co Ltd v Wool Board Disestablishment Co Ltd [2009] NZSC 72). The “fair-minded lay observer” has an awareness of the circumstances of the case, but is objective and does not stand in the complainant’s shoes (Todd Taranaki Ltd v Energy Infrastructure Ltd HC Wellington CIV-2007-485-2684, 19 December 2007).

The AMINZ Arbitration Rules also state that, unless otherwise agreed, the arbitral tribunal and the parties shall “shall 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” (r 5.2). The “Red”, “Orange” and “Green” lists contained in the ICA Guidelines may therefore be used as a source of guidance. However, the touchstone for independence or impartiality is likely to remain the objective test articulated above.

As set out in 3.2 Arbitrability, Section 10(1) of the Act provides that any dispute that the parties agree to submit to arbitration may be determined in that way “unless the arbitration agreement is contrary to public policy or, under any other law, such a dispute is not capable of determination by arbitration”.

Pursuant to Article 16 of Schedule 1 to the Act, an arbitral tribunal may rule on whether (and, if so, to what extent) it has jurisdiction to determine the particular dispute.

The tribunal may rule on the point as a preliminary question, or in an award on the merits.

There are three circumstances in which the High Court might address the question of jurisdiction and competence of an arbitral tribunal:

• When a question of jurisdiction is referred to it after a tribunal has already ruled on the point as a preliminary question. There is no appeal from such a decision of the High Court.
• When the jurisdictional ruling is given in an award on the merits. If Schedule 2 to the Act applies (Schedule 2 applies automatically to domestic arbitrations, but not to international arbitrations unless the parties specifically agree), an appeal might lie on a question of law under clause 5 of Schedule 2. Alternatively, the issue of jurisdiction may be considered by the Court in connection with setting-aside or enforcement proceedings (Arts 24(2)(1)(i), (iii) and 36(1)(a)(i), (iii) of Sch 1).
• When deciding whether to stay court proceedings to allow an arbitration to proceed.

If the arbitral tribunal rules on jurisdiction in a preliminary ruling, the parties have 30 days from notice of that decision to apply to the High Court to decide the question.

If the arbitral tribunal rules on jurisdiction in an award on the merits, the parties have three months from the date on which the award is received (or a request made for a correction, interpretation or additional award is disposed of) within which to exercise any right of appeal on a question of law (see cl 5 of Sch 2 and Art 34 of Sch 1 to the Act).

The court can review jurisdiction on a de novo basis (see Downer Construction (New Zealand) Ltd v Silverfield Developments Ltd HC Auckland CIV-2004-404-4488, 26 October 2004).

If a party commences court proceedings in breach of an arbitration agreement, it is for the opposing party to apply to have the court proceeding stayed while arbitration is in train. Any application for stay must be made before the applicant submits its first statement on the substance of the dispute.

Article 8(1) of Schedule 1 to the Act provides that the High Court must stay the proceeding and refer the parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed, or there is not in fact any dispute between the parties with regard to the matters agreed to be referred. In Ursem v Chung [2014] NZHC 436, the High Court held that the correct approach is to stay court proceedings if the court is satisfied of the prima facie validity of an arbitration agreement.

The court also retains a residual discretion, by virtue of its inherent jurisdiction, to grant a stay of proceedings in circumstances where Article 8(1) is not engaged. For example, in Danone Asia Pacific Holdings Pte Ltd v Fonterra Co-operative Group Ltd [2014] NZCA 536, the Court of Appeal upheld a temporary ‘case management’ stay of court proceedings on the basis that the court proceedings between Danone and Fonterra were duplicative of arbitral proceedings involving Danone and wholly-owned subsidiaries of Fonterra.

In Methanex Motunui Ltd v Spellman [2004] 3 NZLR 454, the Court of Appeal held that, before the tribunal could assume jurisdiction over an entity, “there [must] be a dispute in respect of a defined legal relationship and it is only the parties between whom that dispute has arisen or may arise who can submit the dispute to arbitration”. The Court added that “a person is a party to an arbitration agreement only if that person is one of the persons who has submitted the dispute to arbitration and the arbitration is in respect of a defined legal relationship which involves that person”. To hold otherwise would undermine the consensual nature of an arbitration agreement.

Some questions might remain with regard to third-party non-signatories, implied consent, groups of companies and principals/agents. A New Zealand court would likely also follow the approach taken by the House of Lords in Fiona Trust & Holding Corporation v Privalov [2007] 4 All ER 951, such that an arbitration agreement contained in one of a number of related contracts would bind a party to those contracts even if they have not signed the arbitration agreement, on the basis that “rational businessmen” are likely to have intended that disputes arising out of their relationship be decided by the same tribunal. But, generally speaking, the New Zealand courts would regard the compulsion of arbitration with non-signatory parties as being at odds with the basic principle that arbitration must be consensual.

A specific exception to this principle is the arbitration of trust disputes. The Trusts Act 2019 provides for the arbitration of trust disputes, even if the trustees or beneficiaries of the relevant trust are not party to an arbitration agreement.

The powers of an arbitral tribunal to grant interim relief in New Zealand are based on the Model Law, as amended in 2006 (see Arts 17–17M of Sch 1 to the Act). Such relief is binding and not merely recommended. As set out in 6.3 Security for Costs, such relief may include an order to give security for costs.

The courts have “the same powers as an arbitral tribunal to grant an interim measure under article 17A for the purposes of proceedings before that court, and that article and article 17B apply accordingly subject to all necessary modifications” (Art 9 of Sch 1 to the Act).

It was initially considered unclear whether the courts retained powers (in addition to those available to an arbitral tribunal) to grant, eg, ex parte interim orders (arbitral tribunals may only grant ex parte preliminary orders) and interim measures relating to a third party. The High Court has confirmed that it retains inherent jurisdiction to grant such interim measures in support of an arbitration, where doing so is consistent with the scheme of the Act (see Discovery Geo Corporation v STP Energy Pte Ltd [2012] NZHC 3549; Worldwide Holidays Ltd v Liu [2018] NZHC 3443).

The New Zealand courts will also generally enforce interim measures granted by an arbitral tribunal, including a foreign arbitral tribunal (see Sensation Yachts Ltd v Darby Maritime Ltd HC Auckland M1146-SW02, 1 November 2002 and Discovery Geo Corporation v STP Energy Pte Ltd [2012] NZHC 3549).

In 2016, the Act was amended to include emergency arbitrators within the definition of an arbitral tribunal under the Act. Awards by emergency arbitrators are therefore binding and can be recognised and enforced under the Act.

In addition to the interim measures specified in the Model Law, interim measures under Article 17 of Schedule 1 to the Act include an order to “give security for costs”.

The Act governs the procedure of arbitration in New Zealand. Schedule 1 to the Act, “Rules applying to arbitration generally”, includes rules of procedure and expressly covers the following matters of procedure:

• the date of commencement of arbitral proceedings (Art 21);
• the language to be used in the proceeding (Art 22);
• the form and timing of statements of claim and defence and the circumstances in which they may be amended or supplemented (Art 23);
• the receipt and consideration of evidence and argument by the tribunal (Art 24);
• the power of the tribunal to make or authorise a request for court assistance in taking evidence (Art 27);
• the conferring on witnesses giving evidence and counsel, experts or other persons appearing before an arbitral tribunal, of the same privileges and immunities as witness and counsel in proceedings before a court (Art 19(3));
• the powers of the tribunal in the event of default of a party (Art 25); and
• the power of the tribunal to appoint an expert or experts (Art 26).

The parties are generally free to agree on the procedure to be followed by the arbitral tribunal (Art 19(1) of Sch 1 to the Act). Failing agreement, the arbitral tribunal is authorised to conduct the arbitration in such manner as it considers appropriate (Art 19(2) of Sch 1).

Any procedure adopted by the arbitral tribunal must not conflict with: (a) the requirements of equality of treatment and full opportunity to present each party’s case imposed by Article 18 of Schedule 1; or (b) any other provision of Schedule 1 from which the parties may not derogate or the relevant public policy, which would have the effect of rendering an award susceptible to being set aside or being refused recognition or enforcement.

The Act provides for a range of powers for arbitrators, including: procedural powers; the power to award any remedy or relief that could have been ordered by the High Court in civil proceedings (s 12); and, unless the parties have agreed otherwise, the power to grant interim measures (Art 17A of Sch 1).

Further, unless the parties have agreed otherwise, clause 3(1) of Schedule 2 to the Act provides for an arbitral tribunal to have certain powers in those arbitrations to which Schedule 2 applies (again, Schedule 2 applies automatically to domestic arbitrations unless the parties ‘opt out’, but applies to international arbitrations only if the parties expressly ‘opt in’). Those powers include drawing on its own knowledge and expertise and ordering any party to do such things to enable an award to be made properly and efficiently.

As for duties, many of the mandatory rules in Schedule 1 operate as duties on the arbitral tribunal in practice. For example, an arbitral tribunal must: ensure the equal treatment of the parties and provide the parties with an opportunity to be heard (Art 18 of Sch 1); decide the dispute in accordance with the rules of law chosen by the parties (Art 28 of Sch 1); and issue an award in writing, signed and with reasons (Art 31 of Sch 1). More generally, it has been suggested that arbitrators have duties stemming from their quasi-judicial status, namely to take care, proceed diligently, disclose potential conflicts, act impartially, apply the law and not to delegate their duties.

There are no requirements or restrictions on persons able to represent a party in an arbitration under New Zealand law. Foreign counsel may appear in New Zealand-seated arbitrations.

As set out in 7.2 Procedural Steps, in the absence of an agreement between the parties to the contrary, the arbitral tribunal has the power to conduct the arbitration in the manner it considers appropriate. In exercising that power, the general approach followed by arbitral tribunals in practice is as follows:

• In relation to discovery/disclosure, arbitral tribunals routinely make orders for the production of documents. In domestic arbitration, it is common for document production orders to reflect the discovery regime that applies to litigation under the New Zealand High Court Rules. In contrast, in arbitrations conducted under the AMINZ Rules, the arbitral tribunal is expressly given the power to “order the production of documents and other material which it considers to be relevant and material to the dispute at a time, and in a manner and form in which the Arbitral Tribunal may reasonably determine”, and the arbitral tribunal may have non-binding regard to the IBA Rules on the Taking of Evidence in International Arbitration.
• Evidence may be given informally or under oath. Witnesses may provide written witness statements prior to the hearing. If they do, such evidence may be taken as read during the hearing or read out, depending on the preference of the arbitral tribunal.
• Cross-examination and re-examination would typically follow. Following cross-examination, arbitrators in New Zealand will commonly ask questions of the witness.

In relation to privilege, the Evidence Act 2006, which codifies the rules of privilege in New Zealand, applies only to court proceedings, not arbitrations. Nevertheless, it is arguable that the rules of privilege in New Zealand as codified in the Evidence Act 2006 might, as a matter of substantive law, be regarded as applicable if New Zealand law governed the arbitration. Moreover, Article 19(3) of Schedule 1 to the Act confirms that every witness giving evidence in an arbitration has the same privileges and immunities as witnesses in court proceedings.

In the absence of an agreement between the parties to the contrary, the arbitral tribunal has the power to conduct the arbitration in the manner it considers appropriate, including to determine the admissibility, relevance, materiality and weight of any evidence (Art 19(2) of Sch 1 to the Act).

Subject to the requirements of equal treatment and a full opportunity to be heard (Art 18 of Sch 1), there are no rules of evidence that apply to arbitral proceedings in New Zealand. The rules of evidence prevailing in New Zealand (eg, those contained in the High Court Rules and the Evidence Act 2006) therefore do not apply to an arbitration, unless the parties expressly choose to adopt them. However, in practice, arbitrators are often guided by such rules.

If the optional Schedule 2 to the Act applies, clause 3 states expressly that the parties shall be taken as having agreed that the arbitral tribunal has the power to “order the discovery and production of documents or materials within the possession or power of a party”, “order the answering of interrogatories”, “order that any evidence be given orally or by affidavit or otherwise”, and “order than any evidence be given on oath or affirmation”.

Arbitral tribunals do not have the power to compel a witness to appear before them.

Sections 14A–14I of the Act contain a code on confidentiality that applies to every arbitration for which the place of arbitration is or would be New Zealand.

• Arbitral proceedings must be conducted in private.
• Arbitration agreements are deemed to provide that the parties and the arbitral tribunal must not disclose confidential information. There are, however, limits on that prohibition.
• Disclosure may be made to a professional or other adviser of any party, or if the disclosure is necessary to ensure each party has a full opportunity to present its case, for the establishment or protection of legal rights in relation to a third party or for making and prosecution of any application to a court, provided disclosure is no more than what is reasonably required to serve the purposes for which it is necessary.
• Disclosure is also allowed if required under a subpoena issued by a court.
• Another circumstance is where disclosure is authorised or required by a competent regulatory body (eg, a stock exchange) and written details of the disclosure are provided to the opposing party. The arbitral tribunal and High Court also have discretion, in certain circumstances, to order disclosure.

Court challenges are generally heard in public. However, in limited circumstances, the High Court may make an order allowing the whole or any part of the proceeding to be conducted in private. Such an order can only be made if the Court is satisfied that the public interest in having the proceedings conducted in public is outweighed by the interests of any party to the proceeding in having the whole or any part of the proceedings conducted in private.

Confidential information from an arbitral proceeding may be disclosed in a subsequent proceeding if the parties agree or if permission is given, either by the arbitral tribunal or by the High Court (eg, in response to a subpoena).

The formal requirements for a valid arbitral award are contained in Article 31 of Schedule 1 to the Act, which follows the Model Law. The award must be in writing, signed by (a majority of) the tribunal, state reasons and include the date and place of the arbitration. The signed award must be delivered to each party after it has been made. There is no requirement that the arbitrators sign each page of the award.

Such formal requirements apply to substantive awards as well as corrections/interpretations of an award, and to any additional award made by the tribunal. They also apply to any costs award.

In Ngāti Hurungaterangi v Ngāti Wahiao [2017] NZCA 429, the Court of Appeal held that there is no qualitative measure of adequacy of reasons. Flexibility was instead required as to the nature and extent of the duty to give reasons, depending on the subject matter being arbitrated, its significance to the parties and the interests at stake.

The Act does not contain any time limits on the delivery of an award.

Section 12(1)(a) of the Act provides that, unless otherwise agreed by the parties, “an arbitral tribunal may award any remedy or relief that could have been ordered by the High Court if the dispute had been the subject of civil proceedings in that court”.

Parties are generally entitled to recover interest and legal costs.

In relation to interest, Article 31(5) of Schedule 1 to the Act states that “[u]nless the arbitration agreement otherwise provides, or the award otherwise directs, a sum directed to be paid by an award shall carry interest as from the date of the award and at the same rate as a judgment debt”. Section 12(1)(b) also provides arbitral tribunals with a broad power to award interest.

The rate of interest is a matter for the tribunal. The Interest on Money Claims Act 2016 does not bind an arbitral tribunal (s 6(1)(a)) but parties can refer to this statute as a guide for assessing the appropriate interest to be ordered in any particular case. The Ministry of Justice maintains an online Civil Debt Interest Calculator for such purposes.

In relation to costs, tribunals have the power to award costs under the broad power given to arbitral tribunals under Section 12(1) of the Act to award any relief that could have been ordered by the High Court in the dispute (see General Distributors Ltd v Casata Ltd [2006] 2 NZSC 8).

For domestic arbitrations, New Zealand law provides (controversially) that a tribunal must consider costs, even where costs have not been claimed by either party. Schedule 2 to the Act, which applies to domestic arbitration (unless otherwise agreed) and is optional for international arbitration, contains specific provisions on costs. Clause 6 of Schedule 2 states that: (a) the costs and expenses of the arbitration (including legal costs) shall be fixed and allocated by the tribunal; (b) the default position on costs in the absence of an award is that the parties bear their own legal costs and share equally the costs of the arbitration; and (c) the tribunal may have regard to settlement offers that are without prejudice save as to costs (ie, Calderbank offers).

The practice as to costs in New Zealand is generally that costs follow the event. AMINZ has produced a Costs Protocol which is often cited by parties and arbitrators in their awards. The Protocol sets out the principles to be applied to costs in an arbitration; essentially, that the successful party is entitled to recover its reasonable costs. High Court costs scales do not apply to arbitration.

There is no right to appeal (whether by consent or otherwise) on a question of fact arising from an arbitral award (Carr v Gallaway Cook Allan [2014] 1 NZLR 792 (SC)).

However, under Schedule 2 to the Act (which, again, applies automatically to domestic arbitrations unless the parties ‘opt out’, but applies to international arbitrations only if the parties expressly ‘opt in’), there is a limited right to appeal against a question of law arising from an arbitral award. Clause 5(10) of Schedule 2 to the Act provides that a question of law “(a) includes an error of law that involves an incorrect interpretation of the applicable law (whether or not the error appears on the record of the decision); but (b) does not include any question as to whether – (i) the award or any part of the award was supported by any evidence or any sufficient or substantial evidence; and (ii) the arbitral tribunal drew the correct factual inferences from the relevant primary facts”.

Even if Schedule 2 applies, the right to appeal is not automatic and requires either the agreement of the parties (the mechanics of which differ depending on the timing of the agreement) or leave of the High Court. Any appeal must be made within three months of the date of the award (cl 5(8) of Sch 2). In most cases, leave to appeal is denied (leave is granted in about one-third of cases). (See further Anna Kirk and Lauren Lindsay, “Arbitration” [2020] NZ L Rev 639.)

Both an application to appeal and an application for leave to appeal are commenced by an originating application filed by the appealing party in the appropriate registry of the High Court (see High Court Rules, 26.3(2)(a), 26.15(1)–(2)(a) and Form Arb 1). Leave applications must also be supported by an affidavit.

If an appeal on a question of law is successful, the court may choose to vary the award, set it aside or remit the award back to the tribunal.

The parties cannot agree to expand the scope of appeal against an arbitral award. For example, as set out above, the parties cannot agree that there is a right to appeal an arbitral award on a question of fact (as opposed to a question of law).

The standard of review on appeal is de novo, not deferential, in relation to the question of law that is appealed.

New Zealand has signed and ratified the New York Convention without reservation. Section 5(f) of the Act confirms that a purpose of the Act is to give effect to the New York Convention, which is attached as Schedule 3 to the Act.

The recognition and enforcement of awards – both those made in New Zealand and those made overseas – is governed by Articles 35 and 36 of Schedule 1 to the Act, which reflect the Model Law and basic New York Convention requirements. The sole exception is for awards made under the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the “ICSID Convention”): the enforcement of such awards is governed by the Arbitration (International Investment Disputes) Act 1979.

Article 35 of Schedule 1 provides that awards must be recognised as binding and, on application, enforced by entry as a judgment or by action.

Under the New Zealand High Court Rules, such an application:

• must be made by way of originating application;
• must be accompanied by an affidavit containing the award and arbitration agreement (if recorded in writing), or duly certified copies thereof;
• must be accompanied by a duly certified English translation (if the award or the arbitration agreement is not in English); and
• must generally be made on notice, but in exceptional circumstances an application may be made without notice. In such circumstances, however, the court may direct that the award not be enforced until after the defendant has been served and a particular period of time has expired.

If the award has been set aside by the courts in the seat of arbitration, the New Zealand courts have discretion to refuse enforcement of that award (Art 36(1)(a)(v) of Sch 1). While the point has not yet been tested in the New Zealand courts, it seems likely – given the general respect for the law of the seat that is well established in New Zealand – that awards set aside by the courts of the seat will not be enforced in New Zealand, unless the set-aside decision was procured by judicial corruption.

If an award is subject to ongoing set-aside proceedings, the New Zealand courts have discretion to adjourn their decision on enforcement (and may require the payment of security) (Art 36(2) of Sch 1). But if the court considered that the application lacked merit, the court may refuse an adjournment request and enforce the award.

In relation to sovereign immunity, the common law doctrine continues to apply in New Zealand. Sovereign immunity in New Zealand applies only to the State’s sovereign or public acts as opposed to its commercial activity.

New Zealand has not seen any cases regarding enforcement of an arbitral award against State assets. However, in the recent case of Sodexo Pass International SAS v Hungary [2021] NZHC 371, the High Court held that the clear and unambiguous intention of the ICSID Convention was to waive sovereign immunity in relation to recognition proceedings for an award made under that Convention, but that the immunity was preserved for execution. As Sodexo Pass was seeking recognition of an ICSID award, the Court held that Hungary was not entitled to object to jurisdiction in the recognition proceedings on the basis of sovereign immunity.

The approach of the New Zealand courts to the recognition and enforcement of arbitral awards is generally consistent with the purpose of encouraging arbitration as a method of dispute resolution and facilitating the recognition and enforcement of arbitral awards (ss 5(a) and (e) of the Act; see also Gallaway Cook Allan v Carr [2013] NZCA 11 (CA) at [66]; Carr v Gallaway Cook Allan [2014] 1 NZLR 792 (SC) at [30]–[32]).

Article 36(1)(b) of Schedule 1 to the Act provides that recognition or enforcement may be refused if it would be “contrary to the public policy of New Zealand”. The Act confirms that an award is contrary to the public policy of New Zealand if (a) the making of the award was induced or affected by fraud or corruption, or (b) a breach of the rules of natural justice occurred during the arbitral proceedings or in connection with the making of the award.

However, the bar for establishing such a conflict with public policy is very high.

In Amaltal Corporation Ltd v Maruha (NZ) Corporation Ltd [2004] 2 NZLR 614, the Court of Appeal concluded that a fundamental principle of law and justice must be at issue to establish a conflict with public policy, and that the alleged conflict should be obvious. Similarly, in Hi-Gene Ltd v Swisher Hygiene Franchise Corporation [2010] NZCA 359, it was held that “a narrow reading is to be given to the public policy ground”. In relation to the circumstances in which a breach of natural justice will amount to a conflict with public policy, the Court held that such a breach would need to be something that violates a State’s “most basic notices of morality and justice”, constitutes an abuse of process, or “shocks the conscience of the court”.

While Article 36(1)(b) of Schedule 1 expressly refers to the public policy “of New Zealand”, it is less clear whether there is a difference between New Zealand public policy as applied to domestic and to foreign arbitral awards. However, in both Amaltal and Swisher Hygiene, the Court of Appeal cited overseas judgments involving the enforcement of foreign awards, which suggests that the distinction between domestic and foreign may have limited practical relevance under Article 36(1)(b).

The Act does not provide for class action or group arbitration.

New Zealand has a “fused” profession whereby most lawyers are “barristers and solicitors”. Lawyers can opt to be a barrister sole. Lawyers are regulated by the Law Society and must comply with the Lawyers Conduct and Client Care Rules 2008 (issued pursuant to the Lawyers and Conveyancers Act 2006). New Zealand lawyers with a New Zealand practising certificate are bound by these rules whether the arbitration is seated in New Zealand or elsewhere. The Lawyers and Conveyancers Act 2006 is drafted to regulate lawyers who hold a current practising certificate in New Zealand.

Therefore, counsel from countries other than New Zealand would not automatically be bound by the Lawyers Conduct and Client Care Rules 2008 simply by virtue of an arbitration being seated in New Zealand. Those lawyers would, however, continue to be governed by the laws of their own home jurisdiction.

Many New Zealand-based arbitrators and arbitration counsel are members of AMINZ, which has a Code of Ethics. All members are expected to comply with the Code, which states that if a member is alleged to be in breach of the Code, they may be subject to the provisions of the AMINZ Rules dealing with professional misconduct and disciplinary matters.

There are no specific laws regulating third-party funding of arbitration in New Zealand. In Waterhouse v Contractors Bonding Ltd [2013] NZSC 89, the Supreme Court sanctioned a limited form of judicial oversight of third-party funding arrangements in litigation. The Court said it would assess the fairness of such arrangements, but that it would adjudicate any application regarding third-party funding that was brought by a party.

On 22 June 2022, the New Zealand Law Commission published a final report on class actions and litigation funding in New Zealand. Among other matters, it recommended enhanced court oversight of litigation funding. The Government has indicated its support for the Law Commission’s recommendations and intends to advance them in 2023.

Schedule 2 to the Act provides for the consolidation of separation arbitral proceedings by agreement (cl 2(9)) or, absent agreement:

• Where the proceedings have the same arbitral tribunal, consolidation may be ordered by the tribunal on terms the tribunal thinks just, failing which by the High Court (cl 2(1)).
• Where the proceedings do not all have the same arbitral tribunal, consolidation may provisionally be ordered by a tribunal on terms the tribunal thinks just (cl 2(2)). Consolidation ceases to be provisional when consistent consolidation orders are made for all the arbitral proceedings, failing which the High Court may make such orders.

As set out in 5.7 Jurisdiction Over Third Parties, non-signatories may sometimes be regarded as parties to and therefore bound by an arbitration agreement and award. Third parties cannot otherwise be bound by an arbitration agreement or award.

The New Zealand courts do have the ability to bind third parties in circumstances in which an arbitral tribunal cannot, eg, in making interim orders, or making an order of subpoena or issuing a witness summons, compelling the attendance of a witness before the tribunal to give evidence or produce documents.