Enforcement of Judgments 2022

Last Updated August 02, 2022

New Zealand

Law and Practice

Authors



Russell McVeagh is a leading New Zealand law firm known as the go-to team for tackling complex legal problems. The firm employs more than 320 people across the Wellington and Auckland offices, and offers clients a collaborative, one-firm approach. As a full-service firm, its practice groups work seamlessly to support a wide range of clients, drawing on expertise across the full spectrum of corporate advisory, banking and finance, litigation and disputes, real estate and construction, tax, public law and environmental law matters. The firm's litigation team act for a wide client base across a range of industries, and its litigators are first and foremost experienced advocates and acted in some of New Zealand's most high-profile disputes. The firm's courtroom experience is often of great benefit to its clients in providing strategic advice and risk analysis to identify and maximise commercial opportunities.

There are a number of options available in New Zealand to identify another party's asset position. These include:

  • Publicly available information sources:
    1. Toitū Te Whenua Land Information New Zealand – to confirm the ownership of real estate and any registered charges over the property.
    2. The New Zealand Companies Office maintains several online registers, including the following:
      1. Companies Register – annual returns are available alongside details about the directors, shareholders, registered charges and whether the company is subject to insolvency proceedings;
      2. Personal Properties Securities Register; and
      3. Disclose Register – financial products and managed investment schemes.
    3. The New Zealand Insolvency and Trustee Service maintain the following:
      1. Debt Repayment Order Register; and
      2. Insolvency Register. 
    4. Aviation Security Service Aircraft Register.
    5. Waka Kotahi NZ Transport Agency Motor Vehicle Register.
    6. Maritime New Zealand Ship Registration.
    7. Yachting New Zealand Boat Registration.
    8. The Intellectual Property Office of New Zealand – registers trade marks, patents, designs, plant variety rights and geographical indications. 
  • Parties may also instruct a private investigator to carry out a lawful investigation to identify any further assets. 
  • A judgment creditor may serve a judgment debtor a notice to complete a financial statement. A financial statement is a questionnaire stating the party′s ability to pay the judgment. 
  • If the judgment debtor is uncooperative, the judgment creditor may apply to the court for an order for examination. The judgment debtor must present to the court or a person appointed by the court and be examined under oath about their financial position. 

Once the assets in the jurisdiction have been identified, it is possible to obtain freezing, charging, attachment, sale and possession orders in New Zealand. These orders are discussed below. 

There are several different types of judgments available in New Zealand. Generally, judgments will follow the trial of a dispute and will be in the form of:

  • money judgments where the defendant is ordered to pay a debt or sum of money; and
  • judgments where the defendant is ordered to undertake a specific action or stop doing something.

These types of judgments are known as executory judgments. In each case, a court considers the respective rights of the parties and makes a determination ordering the defendant to act in a certain way.

In addition to obtaining a judgment following a full trial of the dispute, it is also possible to obtain:

  • Judgments at an interim stage prior to a full trial. An example would be obtaining an interim injunction to freeze a defendant′s assets to prevent disbursement.
  • Judgment in default of a trial. This is available where the defendant has failed to respond to the proceedings brought against them within the prescribed timeframe. If this judgment is obtained, the defendant may be able to have it set aside and defend the litigation in a full trial.
  • A declaratory judgment whereby the court provides judgment upon the status of a legal state of affairs. The judgment does not order the defendant to act in a certain way; instead, it is an attempt to resolve uncertainty between the parties. If the defendant acts contrary to the declaration, the claimant may be able to bring separate proceedings for damages or seek to enforce their rights on the basis of the determination.

There are a number of ways to enforce domestic judgments. A judgment creditor can apply to the court for civil enforcement action against a debtor when two conditions are met:

  • A person has received a court or tribunal judgment in their favour ordering the defendant person or organisation to pay them a civil debt; and
  • A 48-hour stand-down period has passed since the order was made, and the person or organisation has not paid the debt owed.

Attachment Order

Where the judgment debtor is an individual, the judgment creditor may apply to the court for an attachment order.

An attachment order is designed to secure a creditor′s right to the debtor′s earnings by requiring their employer to pay the creditor directly. The order accomplishes this by creating a charge over the salary or wages of the judgment debtor, which, once in place, requires the debtor′s employer to pay a portion of the debtor′s salary or wages to the party seeking enforcement.

It is important to note that the procedure for seeking an attachment order differs depending on the court in which the judgment was obtained:

In the District Court, the applicant will need to provide:

  • the debtor's employment details (if they are employed); 
  • their date of birth; and/or 
  • details of their benefit, if they have one. 

The applicant can propose the amount or percentage of the payments they believe should be deducted from the debtor’s salary/wage. The Court will assess whether the proposal is reasonable with consideration of the debtor′s personal circumstances. 

In the High Court, no order can be made unless: 

  • a financial statement has been provided; 
  • a financial assessment hearing has occurred; or 
  • the parties have agreed for the payment of money to be enforced in this method. 

After examining the debtor′s personal circumstances, the applicant can apply for an attachment order, and the court will assess the amount/percentage that should be deducted from the debtor's wages.

Charging Order

Charging orders are available in both the District Court and the High Court.  A charging order places a “charge‟ over specific property owned by the judgment debtor (land, securities, or certain other assets) in the amount owing from the judgment sum.   

The order operates as a “stop order‟, preserving or holding the property and preventing it from being disposed of by the judgment debtor. The charging order does not give the holder possession or ownership of the property; instead, it entitles the holder to apply to the court for a sale order to complete execution. It should be noted that, even if a sale order is not obtained, the charge holder is a “secured creditor‟ for the purposes of insolvency proceedings. However, should the judgment debtor declare bankruptcy, the charging order will no longer be enforceable.

The process for obtaining a charging order is relatively straightforward and can be made without notice being given to the other party. The application must:

  • be in the prescribed form;
  • be accompanied by an affidavit in support, also in the prescribed form; and 
  • describe the property for which the charge is sought in sufficient detail so as to identify it.

If the judgment debtor owns the land (or other asset), once a charging order is obtained, the judgment creditor can place a caveat on the land′s title.

Garnishee Order

If a third party owes the judgment debtor money, the judgment creditor can apply to the court for that money to be paid directly to them. A garnishee order can attach to money in a bank account or a solicitor's trust account. 

This order is only available in District Court. In the High Court, a similar outcome can be achieved through a sale order.

Sale Order

Available in relation to judgments obtained from the High Court (or District Court judgments transferred to the High Court), a sale order authorises an enforcing officer to seize personal property and sell it to satisfy the judgment debt. The enforcing officer can seize all the judgment debtor′s property except:

  • necessary tools of the trade to a value not exceeding NZD5,000; and
  • necessary household furniture and effects (including clothing) to a value not exceeding NZD10,000. 

A sale order can also entitle the enforcing officer to sell land. While not required, it is easier to accomplish this if a possession order has been obtained first, as adverse possession tends to disrupt a sale.

Possession Order

Possession orders are available where a judgment orders the debtor to deliver land or chattels to the judgment creditor. A possession order is often made in conjunction with a sale order. 

A possession order authorises an enforcing officer to deliver possession of the specified land or chattels to the judgment creditor. To do this, the enforcing officer has the power to:

  • eject any other person from land; and
  • seize and take possession of chattels.

As mentioned, it is not necessary for a possession order to be obtained to sell land, but it is often beneficial. In relation to chattels, it is necessary to seize them before they can be sold.

Freezing Order

A judgment creditor may apply to the court for an order freezing the judgment debtor′s assets pending enforcement (or, indeed, prior to judgment). This is an interim relief used to prevent the debtor from dissipating their assets, as such, it is only available where the judgment creditor can show there is a real risk of dissipation. 

Insolvency Proceedings

If the judgment debtor is an individual and the judgment debt is over NZD1,000, the judgment creditor can apply for the judgment debtor to be adjudicated bankrupt.

For an application to be made, the judgment debtor must have committed an act of bankruptcy within three months of the application. The judgment debtor commits an act of bankruptcy if:

  • a final judgment is obtained against the judgment debtor;
  • execution of the judgment has not been halted by the court;
  • the judgment debtor is served with a bankruptcy notice; and 
  • the debtor has not complied with the notice or satisfied the court that they have a cross-claim against the creditor within ten working days.

Once the judgment debtor is adjudicated bankrupt, the Official Assignee will take control of the judgment debtor′s income and assets. The job of the Official Assignee is to realise funds for distribution to the creditors.

If so adjudicated, the bankruptcy will generally last for three years. During this period, the bankrupt individual will usually be unable to travel overseas, manage a business, or be employed by relatives without the consent of the Official Assignee.

Liquidation

If the judgment debtor is a company and the judgment debt is over NZD1,000, the judgment creditor can apply for the company to be placed into liquidation.

To initiate liquidation proceedings, the judgment creditor will need to serve a statutory demand on the company. The company will then have ten working days to apply for the statutory demand to be set aside or 15 working days to pay the debt. If the debt is not paid and no application is made to set aside the demand, the judgment creditor can apply for liquidation.

Once in liquidation, the liquidator will take total control of the company. The liquidator represents the creditors of the company and will realise the company's assets to repay the company's debts. Once the company’s funds are distributed and the liquidation is complete, the company is usually removed from the Companies Office Register.

The costs and time to enforce a judgment will depend on the enforcement method chosen and the complexities of the case. Theoretically, applying for an order to enforce a judgment should be straightforward and able to be achieved in a relatively cost-effective manner.

However, even a straightforward application can face increased time and cost if challenged by the defendant. A common example is when a judgment creditor seeks an order of sale once they have obtained a charging order. While a charging order works as a stop order and safeguards the asset in question, to actually sell the asset, the judgment creditor needs to apply for an order of sale. This application will often be disputed, particularly where a major asset like a family home is involved and the judgment debtor has limited equity in the property, or the property is jointly owned.

The commencement of bankruptcy or insolvency proceedings requires a professional person to be appointed. This person will be paid out of the estate of the judgment debtor, reducing the size of the asset pool available for distribution to creditors. Additionally, the assets are distributed in a set order of priority: secured and preferential creditors are paid out first, and then what is left of the asset pool is distributed across all unsecured creditors pari passu (in accordance with the level of debt – pro rata). It is common for unsecured creditors only to receive a small portion of the debt they are owed. Further, there are often challenges to claims of priority, causing delays in enforcement and adding to costs.

The most efficient option for enforcing a judgment will often depend on the size and nature of the judgment debtor′s assets relative to the size of the judgment debt. For example, if the judgment debtor owns significant property, then a charging order may be appropriate. However, if the judgment debt is relatively small, a sale order may be more difficult to obtain. Equally, whether the property already has existing charges registered against it will be of relevance. Attachment orders are commonly sought, but their efficacy may also depend on the size of the debt and the level of repayment. For example, a significant debt may result in only limited recovery over a lengthy period.

In order to maximise a judgment creditor′s prospect of recovery and protect against loss, it may be that several different enforcement options are pursued. What is available will depend on the circumstances of the case.

As discussed above, there are a number of publicly available sources for determining the assets of a judgment debtor. 

In addition, a judgment creditor may serve a judgment debtor a notice to complete a questionnaire that states the party′s ability to pay the judgment, known as a financial statement. 

If the judgment debtor is uncooperative, the judgment creditor may apply to the court for an order for examination.  This requires the judgment debtor to present to the court or a person appointed by the court and be examined under oath about their financial position.

There are two main ways in which enforcement of a judgment can be challenged.

Challenging the Enforceability of the Judgment

A common way the enforceability of the judgment is challenged is by saying the court either did not have jurisdiction to rule on the matter or that the judgment is not final and is still being considered by the court.  Examples of this type of challenge are:

  • The defendant disputing whether proceedings were correctly served on it or whether they should have been dealt with in a different forum (as the court did not have jurisdiction to hear the dispute).
  • The defendant seeks a stay on the execution of the judgment on the grounds that they are challenging the outcome of the judgment, and the court should not allow the judgment to be enforced until the challenge is dealt with. Defendants might challenge the outcome in the following ways:
    1. an appeal of the judgment;
    2. applying to set aside the judgment because the defendant was not in attendance at the hearing where the judgment was obtained; or
    3. applying to set aside a judgment obtained in default.

Challenging the Method of Enforcement

Defendants may also challenge the method of enforcement sought by the judgment creditor. Often these challenges occur because the judgment debtor will be prejudiced if the enforcement is allowed in the manner sought or that there are questions over the ownership of the asset in question. 

Subject to any challenges to enforcement, any judgment obtained in a New Zealand court requiring the defendant to pay an amount of money or act in a particular way can be enforced by the courts of New Zealand.

As mentioned, a judgment for declaratory relief cannot in itself be enforced but may still be effectively enforced if a defendant acts contrary to the declaration. However, in practical terms, this would require new proceedings to be brought on the basis of the court′s declaration and the judgment creditor seeking to enforce the judgment in the new proceedings.

In New Zealand, there is no central register of judgments. The Ministry of Justice maintains an online database of court judgments called “Judicial Decisions Online‟. This database includes:

  • all Supreme Court judgments;
  • Court of Appeal judgments from 2003; and 
  • High Court judgments from 2005.

Alternatively, a sample of District Court judgments, with emphasis on significant decisions or particular interests, can be found on the District Court website. 

The Ministry also maintains an online decisions finder where most of the Special Jurisdictions′ decisions can be assessed. 

The historical decision of the courts and other legal materials are available on a database maintained by the New Zealand Legal Information Institute.

There are four methods of enforcing foreign judgments in New Zealand. The country from which the judgment was obtained, the date of the judgment and the subject matter will determine which regime will apply.

Trans-Tasman Proceedings Act 2010

Judgments obtained in an Australian court may be enforced under the Trans-Tasman Proceedings Act. 

This Act relates to all Australian judgments, except those relating to specifically excluded matters, and allows for streamlined enforcement in New Zealand as if the judgments had been obtained from a New Zealand court. This Act also works in reverse, allowing New Zealand judgments to be enforced in Australian courts.

Senior Courts Act 2016

The Senior Courts Act replaced the Judicature Act 1908 and applies to all judgments obtained in Commonwealth countries. 

Under this Act, only final money judgments can be enforced in New Zealand. This Act provides for money judgments to be registered with the New Zealand High Court and become enforceable as if obtained in the New Zealand courts subject to certain criteria.

Reciprocal Enforcement of Judgments Act 1934

Foreign judgments from non-Commonwealth countries with which New Zealand has a reciprocal agreement may be enforceable under the Reciprocal Enforcement of Judgments Act. The countries to which this Act applies are set out within this Act and subsequent Orders. 

Foreign judgments may be registered in the New Zealand High Court and enforced as if they had been obtained in New Zealand, subject to criteria similar to those applying under the Senior Courts Act 2016.

Enforcement under Common Law

Judgments from countries with which New Zealand has no reciprocal arrangements for enforcement (notably the USA, China and Russia) will need to be enforced in New Zealand under the common law. This requires fresh proceedings to be issued in the New Zealand courts, based on the foreign judgment.

After obtaining a judgment that is enforceable in New Zealand, it is open to a judgment creditor to consider the domestic enforcement options discussed above.

In New Zealand, foreign judgments are treated differently depending on the country in which the judgment was obtained:

  • judgments obtained in an Australian Court are covered by the Trans-Tasman Proceedings Act 2010; 
  • judgments from Commonwealth countries are covered by the Senior Courts Acts 2016;
  • judgments from countries with which New Zealand has a reciprocal agreement are covered by the Reciprocal Enforcement of Judgments Act 1934; and
  • judgments from countries not covered by any of the above statutes may be covered by the common law.

The nature of a foreign judgment will also have a bearing on its enforceability in New Zealand. Some relevant considerations are:

  • whether it is a money claim for the payment of a judgment debt or some other amount;
  • whether a money judgment is in relation to tax or constitutes a penalty;
  • the nature of the dispute in which the judgment was obtained;
  • whether a judgment is a final and conclusive judgment between the parties; and
  • whether the judgment represents interim relief or is declaratory in nature.
  • The foreign court in which the judgment was obtained.

In New Zealand, the only foreign judgments able to be enforced are money judgments requiring payment of a debt or some other definite sum of money. Money awards in relation to taxes, fines, or penalties are generally not enforceable in New Zealand. The Trans-Tasman Proceedings Act provides an exception to Australian judgments imposing civil pecuniary penalties (which have not been excluded by the Governor General by an Order in Council).

Foreign judgments for injunctions or orders prohibiting/requiring the doing of an act are unlikely to be enforced in New Zealand. The only exception is Australian judgments for interim injunctions and interlocutory relief, which the Trans-Tasman Proceedings Act states are registerable judgments.

The same is true in relation to declaratory judgments. Under the Trans-Tasman Proceedings Act, an Australian judgment that is final and conclusive and given in a civil proceeding by an Australian court is a “registrable Australian judgment″. The Act sets out what types of judgments or orders are excluded, and as declarations are not excluded, it is presumed that they can and will be enforced where applicable in New Zealand.

There are a number of Australian judgments that are not able to be enforced. These are judgments relating to an “excluded matter‟, defined in the Trans-Tasman Proceedings Act as:

  • the dissolution of a marriage;
  • the enforcement of an obligation under Australian law to maintain a spouse or a de facto partner, or an obligation under New Zealand law to maintain a spouse, civil union partner or de facto partner;
  • the enforcement of a child support obligation; and
  • an arrangement or matter declared by order be an excluded arrangement or matter.

Trans-Tasman Proceedings Act 2010

Australian judgments may be enforceable under the Trans-Tasman Proceedings Act. A person who has received a judgment in their favour from an Australian court may register it under the Trans-Tasman Proceedings Act. Once registered, the judgment can be enforced by the New Zealand courts as if obtained in a New Zealand court.

In order to be registered, a judgment must be:

  • given in a civil proceeding by an Australian court or tribunal;
  • given in a civil proceeding and require a defendant to pay a sum of money;
  • for the payment of expenses incurred by a witness complying with an Australian subpoena served on the witness in New Zealand or incurred by a person in connection with the taking of remote evidence; or
  • registered in an Australian court under the Foreign Judgments Act 1991 (Aust).

An application for registration must be in the prescribed form and accompanied by a copy of the Australian judgment. The application can be filed at any court with jurisdiction to give the relief ordered in the Australian judgment.

Once registered, notice will be given to the liable party within 15 working days. The judgment becomes effective as if it was a New Zealand judgment from the date of registration or, if no notice is given, 45 working days after registration.

Senior Courts Act 2016

Under the Senior Courts Act, any judgment, decree, rule, or order obtained in any court of a Commonwealth country for the payment of money can be enforced in New Zealand.

To enforce such a judgment, a person may file in the High Court a memorial containing the specified particulars of the foreign judgment, authenticated by the seal of the court in which it was obtained. Once filed, the memorial becomes a record of the judgment, and execution may issue upon it.

The memorial must be signed by the party in whose favour the judgment was obtained and contain the following particulars:

  • the names and additions of the parties;
  • the form or nature of the action or other proceeding;
  • when commenced, the date of the signing or entering-up of the judgment, the passing of the decree, or the making of the rule or order;
  • the amount recovered, or the decree pronounced, or the rule or order made; and
  • if there was a trial, the date of the trial and amount of the verdict given.

Reciprocal Enforcement of Judgments Act 1934

Foreign judgments may also be enforced under the Reciprocal Enforcement of Judgments Act. This is only available where judgments are given by a country with which New Zealand has a reciprocal agreement. 

Under the Act, parties may register judgments in New Zealand. Once registered, the judgment can be enforced as if it had been given by the New Zealand High Court.

To be registered, the judgment must come from a country listed in the Act or subsequent Reciprocal Enforcement of Judgments Orders. As a general rule, the Act only applies to judgments obtained in superior courts. 

A party seeking to register a judgment must apply to the High Court of New Zealand and provide evidence of:

  • a copy (and translation if not in English) of the foreign judgment;
  • the relevant exchange rates and interest;
  • the right to registration, including:
    1. the entitlement of the application to enforce the judgment;
    2. the extent, if any, to which the judgment has been satisfied; and 
    3. the balance remaining payable;
  • the enforceability of the judgment in the country of the original court;
  • confirmation that registration is not liable to be set aside under the Act; and
  • details of the judgment creditor and the judgment debtor. 

Importantly, if a judgment is registerable, the Act is the only method available for enforcement of the foreign judgment.

Enforcement under Common Law

Foreign judgments from countries that are not Commonwealth countries and are not covered by the Reciprocal Enforcement of Judgments Act may be enforced at common law by an action or counterclaim. The simplest action is an application for summary judgment.

For a foreign judgment to be enforceable, it must:

  • Be final and conclusive. A judgment will be regarded as such, even if it is subject to an appeal or an appeal is actually pending in the country the order was given. However, it will not be regarded as final and conclusive if the foreign court retains the power to review or vary its own order in the future.
  • The judgment must be for a debt or some other sum of money. If it orders the defendant to do anything else (ie, perform a contract), it is not enforceable at common law. 
  • The foreign court′s jurisdiction must be recognised under New Zealand law.

Generally, a foreign court is regarded as having jurisdiction to give a judgment capable of enforcement in New Zealand in the following situations:

  • If the judgment debtor was a resident in a foreign country when the proceedings were initiated. In the instance of a company, it is whether it had a place of business in a foreign country.
  • If the judgment debtor was the plaintiff or had counterclaimed in the proceedings in the foreign country.
  • If the judgment debtor, as a defendant in the foreign court, submitted to the jurisdiction of that court by voluntarily appearing in the original proceedings.
  • If the judgment debtor had before the commencement of the proceedings agreed, in respect of the subject matter of the proceedings, to submit to the jurisdiction of that court or the courts of that country.

Timing

It is difficult to estimate the time it will take to enforce a foreign judgment. Timing depends on the High Court Registry in which the application has been made. As some courts are busier than others and some may have limited staffing due to the areas they service, timeframes will vary depending on when and where the application is filed.

Costs

An application under the Reciprocal Enforcement of Judgments Act is an originating application. The filing fee is NZD540.

The filing fee for an application to register a registrable Australian judgment is NZD100.

The filing fee for an application to either set aside the registration of an Australian judgment or stay the enforcement of a registered Australian judgment is NZD250.

At common law, the action to enforce a foreign judgment is commenced by filing a statement of claim. The filing fee for a statement of claim in the High Court is currently NZD1,350.

The legal fees involved will vary depending on the nature of the application. 

The process for challenging a foreign judgment will depend on the regime which applies to the particular judgment. 

Trans-Tasman Proceedings Act 2010

Under the Trans-Tasman Proceedings Act, a defendant can apply to set aside registration of an Australian judgment if:

  • the judgment was registered in contravention of the Trans-Tasman Proceedings Act; 
  • enforcement of the judgment would be contrary to public policy in New Zealand; or
  • the judgment was given in a proceeding the subject matter of which was immovable property, or in a proceeding in rem the subject matter of which was moveable property, and that property was, at the time of the proceeding in the original court or tribunal, not situated in Australia.

Senior Courts Act 2016

Under the Senior Courts Act, once a memorial has been filed, the defendant can challenge the foreign judgment.  The onus is on the defendant to show an adequate reason why the foreign judgment should not be executed against them.

Importantly, the New Zealand court is not to examine or pass judgment on the merits of the foreign judgment.

Reciprocal Enforcement of Judgments Act 1934

Under the Reciprocal Enforcement of Judgments Act, a defendant may apply to set aside the registration of a foreign judgment for any of the following reasons:

  • The judgment is not properly registrable in New Zealand.
  • A lack of jurisdiction in the original court.
  • Failure to give sufficient notice of the proceeding in the original court to enable the judgment debtor to defend the claim.
  • The judgment was obtained by fraud.
  • The registration is contrary to public policy in New Zealand.
  • The rights under the judgment are not vested in the applicant.

Enforcement under Common Law

A defendant can oppose the enforcement of a foreign judgment in common law on any of the grounds below.  Importantly, the defendant cannot raise, by way of a defence, any matter which could have been raised in a foreign court. The relevant grounds of opposition are:

  • Fraud by the party who received the judgment in their favour or fraud on the part of the court who gave the judgment.
  • Lack of jurisdiction (in the view of the New Zealand court) by the foreign court in which the judgment was obtained.
  • Enforcement or recognition of the judgment would be contrary to New Zealand public policy.
  • Breach of natural justice in the foreign proceeding in which the judgment was obtained.

The recognition and enforcement of arbitral awards in New Zealand are governed by the Arbitration Act 1996. An arbitral award is binding irrespective of the country in which it is made and, by application to the court, can be entered as a judgment in terms of the award or by action, subject to the grounds of refusal set out in Article 36 of schedule 1 of the Arbitration Act. Enforcement attracts the full range of civil mechanisms available to the court to ensure the award debtor carries out the award. 

International Conventions

As stated in the purpose section of the Arbitration Act, the Act gives effect to New Zealand's obligations under the following: 

  • Protocol on Arbitration Clauses 1923;
  • Convention on the Execution of Foreign Arbitral Awards 1927; and 
  • Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (the “New York Convention‟).

As stated above, the Arbitration Act governs the enforcement of arbitral awards in New Zealand irrespective of the country in which they are made and their obligations under any international conventions to which New Zealand may or may not be a signatory. 

As New Zealand is a signatory of the New York Convention, arbitral awards made in New Zealand may be recognised and enforced internationally in accordance with the Convention, subject to any local procedural requirements and grounds for refusal.

Arbitral awards generally can be enforced by recognition or by recognition and enforcement. An “award” is a decision on the substance of a dispute, including an interim, interlocutory, or partial award. For enforcement, an “award” also includes an award that is varied on appeal. 

Recognition

Recognition alone is most often sought as a defence to claims raised in fresh proceedings already settled by arbitration. When an award only partially covers the grounds of a new dispute, recognition can be used to restrict the scope of the fresh claim. 

Beyond defensive purposes, recognition can be useful in certain jurisdictions to avoid the operation of a limitation period for award confirmation. It may also be necessary to seek recognition in preparation for seeking enforcement later. 

Recognition and Enforcement

If a party will not comply with an award voluntarily, it is necessary to seek enforcement through the court. Court enforcement is a two-pronged request of both recognition and enforcement. The starting point for recognition and enforcement of an arbitral award in New Zealand is Article 35(1) of schedule 1 of the Arbitration Act. 

There is little variation in New Zealand′s approach to enforcement of different types of awards. The grounds for setting aside and refusing recognition or enforcement of a domestic award are substantially similar to those for an international award. 

For a domestic arbitral award, the court is asked to consider its supervisory power and the maintenance of minimum standards of procedural fairness for arbitrations in New Zealand. 

For an international arbitral award, the court instead considers:

  • international comity;
  • respect for the capacities of international tribunals;
  • dissuasion of tribunal shopping; and
  • the need for predictability in commercial disputes, together with the general presumption in favour of the enforcement of international awards.

An award may be defective to the extent that it is unenforceable in New Zealand. An example of this is when relief is uncertain or incomplete.   

There is no power for the court to remit awards that are the subject of enforcement proceedings for a defect to be remedied under Articles 35 or 36 of the Arbitration Act. The only way to do this is through an appeal on a question of law (under clause 5 of schedule 5 of the Arbitration Act), where the court could vary the award or return it to the tribunal for consideration.

Alternatively, a party may be able to rely on Article 33 for interpretation and correction of awards and additional awards, subject to relevant time limits and consent requirements. A tribunal may make corrections of their own initiative, but it must be done within 30 days of the award. 

Arbitral awards may be enforced by agreement or application to the District Court or High Court. The process outlined below is set out in Article 35 of schedule 1 of the Arbitration Act and part 20 of the District Court Rules, and part 26 of the High Court Rules. 

Entry of Judgment by Agreement

No affidavit or more formal application is required if the Registrar is “satisfied that all parties have agreed‟ in accordance with the applicable court rules. The letter confirming this agreement must be accompanied by:

  • the original award or a certified copy;
  • if in writing, the original arbitration agreement or a certified copy; and 
  • if the award is not in English, the application must be accompanied by a certified translation into English. 

Once the documents are compiled, the Registrar will enter the award as a judgment as soon as practicable.

Enforcement without Agreement

When one party does not consent to the arbitral award being enforced, the other party may apply to the court for entry of the award as a judgment or for the court to enforce the award by action. 

Entry of the Award as a Judgment

Applications for enforcement of an award may be brought before the District Court or the High Court, depending on the sum of the award sought to be enforced. Applications must be:

  • made in writing by way of:
    1. originating application; and 
    2. affidavit in support. 
  • supported by the authenticated original award or a certified copy of the award; and 
  • if recorded in writing, the original arbitration agreement or a certified copy of the agreement (together with an English translation if necessary). 

Enforcement by Action

The right to enforce an arbitral award by action recognises the fundamental term of an arbitration agreement that parties will perform the terms of any award. A proceeding by action will have the full range of remedies available before the court, including specific performance and injunction. In most cases, the action will, however, be for the creation of a simple debt by the terms of the award. 

An application for enforcement by action must be made by an originating application. To enforce the award by action, it is necessary to file and serve:

  • a notice of proceeding; and
  • a statement of claim. 

The provisions of part 5 of the High Court Rules then apply to the commencement of proceedings, filing of documents and service.

Without Notice

In exceptional circumstances, judgment may be entered without notice. The procedure is the same as set out above, with the addition of an affidavit in support setting out the “exceptional circumstances‟ that justify the without notice application. 

Unopposed

If, after ten days of the application for entry of an award as a judgment being served, the defendant has taken no steps, the applicant may apply to the court by a letter to the Registrar for the award to be entered as a judgment unopposed. The Registrar may require an additional affidavit to prove service. 

Enforcement of an Award in Part

An award can be enforced in part as long as the part to be enforced is clear, and judgment can be given on the same terms as set out in the award. 

Time

Making an application to the court for leave to enforce an award is relatively straightforward. Time will depend on whether the enforcement is disputed, as set out above, and the caseload of the court. 

Costs

The costs of enforcement will involve the applicable fee (at the time of writing, the fee for an originating application is NZD1,350 in the High Court and NZD200 in the District Court) as well as legal costs incurred. Additional court fees may be payable. Legal costs will depend on the amount of work required, its complexity and whether the enforcement is disputed. 

Opposition to Entry of Award as a Judgment

The defendant may oppose the entry of an award as a judgment by filing within the applicable time limit:

  • an originating application for an order for refusal of recognition and enforcement of the award; and
  • a supporting affidavit specifying the ground/s relied on in terms of Article 36(1) of schedule 1 of the Arbitration Act.

When the defendant opposes enforcement, the application of the plaintiff is stayed, and the court then considers both applications at the same time. 

Set Aside

Article 34 of schedule 1 of the Arbitration Act will generally have the effect of setting the award aside globally. In comparison, an order for refusal of recognition and enforcement of the award only is binding in New Zealand. 

Opposition to Enforcement by Action

When a party seeks to enforce by action, a range of defences is available. They include:

  • defects in the appointment of arbitrator;
  • excess of jurisdiction by the arbitral panel; and
  • any of the matters set out in Article 36 of schedule 1 of the Arbitration Act.

Limitation Periods

The six-year limitation period for money claims under the Limitation Act 2010 applies to applications for entry of an award as a judgment and the commencement of an action to enforce an award. The limitation does not apply once an award has been entered as a judgment. 

Adjournment of Enforcement Proceedings and Security

If a party applies to set aside or suspend the award, the court may “if it considers it proper‟, adjourn its decision on recognition or enforcement until the other proceeding has been determined. Under the same article, on the application of the party claiming recognition or enforcement, the court can order the other party to provide appropriate security. 

Court′s Discretion not to Refuse Recognition or Enforcement

The court has a residual discretion to recognise or enforce an award, even though the grounds may not be made out. 

Rights of Appeal

The Arbitration Act does not exclude the right of appeal against a decision of the District Court or High Court and does not impose any requirement for leave.   

Domestic arbitrations

Domestic arbitral awards can be appealed on questions of law.  An appeal under clause 5 of schedule 2 is considered an application for setting aside the award, and an award remitted to the original tribunal or a new one is treated as an award suspended.

International arbitrations

In international arbitrations, the provisions of schedule 2, including the rights of appeal, are deemed to be excluded unless they have been expressly included. This means that, unless it has been expressly included in the arbitration agreement, there is no right of appeal under clause 5 for an award made in international arbitration. 

Russell McVeagh

Level 24, 157 Lambton Quay
PO Box 10-214
Wellington 6143

Level 30, Vero Centre
48 Shortland Street
PO Box 8
Auckland 1140
New Zealand

+64 9 367 8000

+64 9 367 8163

contactus@russellmcveagh.com russellmcveagh.com
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Law and Practice

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Russell McVeagh is a leading New Zealand law firm known as the go-to team for tackling complex legal problems. The firm employs more than 320 people across the Wellington and Auckland offices, and offers clients a collaborative, one-firm approach. As a full-service firm, its practice groups work seamlessly to support a wide range of clients, drawing on expertise across the full spectrum of corporate advisory, banking and finance, litigation and disputes, real estate and construction, tax, public law and environmental law matters. The firm's litigation team act for a wide client base across a range of industries, and its litigators are first and foremost experienced advocates and acted in some of New Zealand's most high-profile disputes. The firm's courtroom experience is often of great benefit to its clients in providing strategic advice and risk analysis to identify and maximise commercial opportunities.

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