Arbitration Amendment Bill — Third Reading 
Arbitration Amendment Bill — Third Reading 
[Volume:642;Page:12181] 
Arbitration Amendment Bill 
Third Reading 
Debate resumed from 12 September. 
TE URUROA FLAVELL (Maori Party—Waiariki) 
: 
 Kia ora Mr Speaker. This bill is a milestone bill for the Maori Party. When my colleague the honourable Mr Hone Harawira last spoke on this bill on 8 May this year he said that land issues are so important to Maori that we were considering an amendment to this bill to refer all Maori land disputes to the Maori Land Court. Within 24 hours we had the amendment on the table to put into effect the idea that Hone had initiated. 
That 24-hour period in May 2007 signalled quite an important moment in  
Hansard 
 when the proposal of an MMP party such as the Maori Party was almost seen to have an opportunity to influence the parliamentary debate. I remember that night quite well. The motion was put “That it be an instruction to the Committee of the whole House on the Arbitration Amendment Bill that it have the power to consider and if it thinks fit adopt the amendment in the name of Te Ururoa Flavell relating to the arbitration of disputes concerning Maori land.” It was a pretty straightforward argument I thought that centred around the Maori Land Court. 
As I am sure all members of this Parliament would agree the Maori Land Court is the court charged with the responsibility to judge on matters relating to Maori land. It is under the mantle of that responsibility that where there is dispute such matters are rightly put in its hands. But with the Arbitration Amendment Bill there is the potential for decisions and processes to effectively cut across the jurisdiction of the Maori Land Court. 
Therefore we came to the House with a simple request to have the korero to have the debate. We asked the House to accept that we had the power within this Parliament to consider and if it was thought fit at the time to adopt the amendment relating to the arbitration of disputes concerning Maori land. All we wanted was the opportunity for the debate on the amendment to occur. So a party vote was called for in order to determine whether the debate would be held. The scorecard read: New Zealand National 48 Green Party 6 Maori Party 3 ACT New Zealand 2 in support; and New Zealand Labour 49 New Zealand First 7 United Future 3 Progressive 1 Independent 1 against. So the scorecard came up Noes 61 Ayes 59—amendment lost. 
I recount this history because it seems almost ironic now. Here we had measures to improve the processes of arbitration and disputes resolution and to enhance communication—qualities that this House would support and strive towards—yet the House could not return a majority vote of support for my amendment. The request put to the House was not an all-out “open the envelope” recommendation for the support to ensure all Maori aspirations could be transformed into tangible outcomes. It was not even a request for the utilisation of tikanga Maori as an appropriate and apt foundation for disputes resolution processes. All it was about was just having the korero. What was the harm in that? 
We believe the amendments proposed in this bill are now at least positive. We certainly endorse the process of arbitration as an effective method in resolving disputes particularly in regard to commercial litigation. We appreciate too the significant advances that have taken place to ensure that arbitration is now based on an international model developed by the United Nations Commission on International Trade Law rather than being a simple rehashing of the English arbitration procedures of 1908. 
The Maori Party believes that the process of arbitration as a consensual method of disputes resolution is particularly aligned with kaupapa Maori particularly the attainment of kotahitanga—the oneness of purpose. The demonstration and influence of consensus models are illustrated in the many many hui throughout the country and have been commented on in many reports of that esteemed body the Waitangi Tribunal. That is the same tribunal by the way that is charged with the function of determining whether matters are inconsistent with the Treaty principles and commenting on proposed legislation if and when requested to do so by Parliament. That is the same tribunal whose recommendations are consistently ignored or shelved to gather dust. 
That aside what has the tribunal said about consensus models? The  
Ngai Tahu Sea Fisheries Report 1992 
 put it fairly clearly when it said: “The Maori consensus process requires a high level of community involvement and debate. New ideas must be allowed to lie for a long time and there are inhibitions on all tribal leaders in expressing a view that has not been tribally approved. Under the consultative processes of Maori nothing can be hurried along.” Consensus therefore which underpins the arbitration process may be one area in which the Crown is prepared to learn from Maori as to effective strategies and time-tested experiences can be applied to resolve commercial and other disputes. 
Another key issue on which the Maori Party sought the influence of an independent Maori voice was the concept of consumer protection. The bill improves the level of protection provided to consumers by proposing that an arbitration agreement takes effect only if arbitration has specifically been agreed to by consumer and business enterprise. In addition jurisdiction of disputes tribunals is removed if both parties agree that arbitration is the most appropriate form of disputes resolution. These are important initiatives that may well lead to a decrease in the disputes resolved through the court process as well as protecting the interests of the consumers and the Maori Party supports them. 
I want to take us back to the issue that I introduced tonight the concept that where Maori land is the subject of dispute it should be dealt with by the Maori Land Court. If we are looking to truly respect the concept of consensus and if we are truly looking to pay heed to the interests and priorities of consumers then accordingly we must rely on protocols and procedures that are already in place rather than walking roughshod over Maori—again. The Maori Land Court would be able to deal with disputes regarding Maori land even when one of the parties is not Maori. The Maori Land Court has the capacity to deal with such disputes in an effective and cost-efficient manner because of its awareness of tikanga Maori and how this affects Maori attitudes towards land. 
We know also that there is a precedent for Maori land disputes to be taken from the general courts to their rightful home the Maori Land Court in two other current pieces of legislation. In the Fencing Act jurisdiction Maori land disputes are able to be dealt with in the Maori Land Court under section 26 of Te Ture Whenua Maori Act. Similarly in the property law jurisdiction similar models apply that are relevant to sections 2 to 25 of Te Ture Whenua Maori Act. So if it has been done before it can be done again. 
We continue to support this bill because we do support the promotion of arbitration as a useful tool in solving disputes. We know that the practice of arbitration has not been as extensive as was originally envisaged. In the Ministry of Justice’s 2004 report into alternative disputes resolution it stated that arbitration was used only in the very smallest of cases—some 6 percent of 1274 disputes—so anything that can increase the satisfaction and confidence from lawyers mediators and consumers that arbitration can be effective is worthy of our support. But we cannot leave this debate without expressing our profound disappointment at the inability of Government parties to consider any ideas other than the ones that they put forward. 
Hon DAVID PARKER (Minister of Energy) 
: 
 The Arbitration Amendment Bill is worthy legislation. Of course there has been a bit of a rise in the use of alternative dispute resolution procedures not just in New Zealand but in most Western countries around the world. This has partly been a response to court processes becoming expensive some of the courts being a bit bound up in their own processes and therefore people seeing that there are advantages in using alternative dispute resolution methodologies to resolve their disputes. 
The two main sorts of alternative dispute resolution are mediation and arbitration. The main difference between them of course is that mediation does not lead to an imposed solution; it leads to an agreed solution. That is not always appropriate. There are occasions when parties have disputes that will not be amenable to agreed solutions and when those parties want to have a solution imposed by a fair and impartial decision maker. Of course arbitration can achieve that. 
Arbitration is more formal than mediation because it does lead to a binding decision. But none the less it can still have advantages over traditional court processes. Parties can agree to the structure of the arbitration in a manner that suits their individual needs easily. There is also flexibility that might make it easier for a positive relationship to be maintained between the parties to the dispute which can be particularly important where the dispute is in a commercial context involving ongoing commercial relationships between parties. They might disagree on a particular issue but want to maintain an ongoing working relationship. Arbitration can provide a means by which the parties can resolve their dispute while taking a slightly less adversarial approach perhaps. Arbitration certainly can on occasion result in a less public airing of the issues if parties do not want to air their dirty laundry in public. As a consequence compared with some litigation there is probably less of a chance that the relationship will break down. 
Other advantages can relate to cost though I would note that that is not always the case. The court provides a very cost-effective service most of the time. The cost of services particularly where expert arbitrators are involved can be higher than the cost of traditional courts. Another advantage for arbitration is that the arbitrators can bring specialist skills. The parties to dispute can decide that it would be more fairly determined if the arbitrator was someone with knowledge of the industry concerned or some specialist knowledge of the matters that are in dispute. It is for them to choose who the arbitrator will be if they can agree and often the instruments or the contracts if they have a contractual relationship will set out a process for the appointment of the arbitrator if they cannot agree on an appropriate arbitrator. So arbitration is a very important part of a developed country that is trying to provide cost-effective and practical ways for people to resolve disputes between themselves. 
This bill makes a number of small changes to the existing Arbitration Act. The Act itself was a consequence of the review of the law in this area made by the Law Commission and this amendment bill which came to the attention of the House some 10 or 11 years after the original 1996 Arbitration Act was passed is probably a timely look at whether some minor changes are needed to the Act. The changes are relatively minor and that is testament to the fact that the Law Commission and Parliament at that time generally got it right. The changes that are brought about by this bill do not suggest any fundamental failure with the existing Act. Indeed it is pleasing to see that the existing Act has proven to be a well used and workable framework. None the less a few tune-ups are needed. Some of these come as a consequence of changes made to the international models for arbitration. In the Arbitration Act 1996 New Zealand adopted the model law on international commercial arbitration and recently changes have been made to that international model law. Accordingly this bill incorporates those changes into the New Zealand law and makes New Zealand one of the first countries to update its legislation to reflect those changes. 
So what are some of those changes? First the changes give the arbitrators more power to ensure that the arbitration proceedings are worthwhile. They enable arbitrators to have the power to make orders that preserve property so that a successful party will be able to enforce its arbitration award and there will be something there to enforce it against. Another change is that there will be more powers given to arbitrators to make orders preserving evidence so that the evidence will be preserved for a fair trial. Again these new powers will help to enhance the attractiveness of arbitration as an option. Although these are mainly technical changes to the existing Arbitration Act they are none the less good changes and I recommend them to the House. 
CHRIS AUCHINVOLE (National) 
: 
 I rise to speak in support of the Arbitration Amendment Bill during its third reading. The bill was introduced to the House on 10 October 2006. In the introduction the Minister responsible for the bill the Hon Clayton Cosgrove explained that the bill is the result of a review by the Law Commission of the Arbitration Act 1996 in conjunction with two other bills under review the Wills Bill and the Succession (Homicide) Bill both of which have been keeping pace with the passage of this bill. The Minister described the alternative dispute resolution as a growing trend in New Zealand and as receiving in general support throughout the country. Of particular note is the use of arbitration in disputes in regard to commercial contracts property and contractual situations. It is an observation one could make that the surprise is not that arbitration is having such general acceptance but that it has taken quite so long for such a sensible way of resolving disputes to come about. 
The system of arbitration in New Zealand largely inherited from the UK was in 1996 overhauled and updated. The resulting 1996 Arbitration Act reflected the model of law on international arbitration adopted by the United Nations Commission on International Trade Law in 1985. The Act is a complete code applying to both domestic and international arbitrations. Since then the Law Commission in 2003 reported on the 1996 Act and proposed amendments to it. If I might make an observation again I remember when we spoke with officials of the Law Commission at the Justice and Electoral Committee the sense of frustration that was expressed by them on the lack of Government attention to matters the commission brings to the Government’s attention for review. It is comforting to think that since then we have at least these three pieces of legislation going through as a consequence of the commission’s report. 
Dr Wayne Mapp 
: If it is the Government it is not comforting. 
CHRIS AUCHINVOLE 
: Well that is right. Is it comforting if the Government is doing it? I say to Dr Mapp that I will be speaking a little later about that. 
National supported the first reading of the bill and supported it to the select committee. We concentrated particularly on issues arising from clause 6 which deals with the important issue of confidentiality. Arbitration is a consensual method of dispute resolution. It enables parties to identify parameters to determine the rules that they wish to apply to the resolution of the dispute to adjudicate then make a binding decision. This is quite a delicate and sensitive way of dispute resolution and involves a considerable amount of trust by all parties in reaching a point of resolution. It is not a simple matter any more than is negotiation. Looking at the way the present Government negotiates we see that it seems to expect a particular standpoint to be adopted by all parties before it will begin. That is a great mistake. In my own experience of dispute resolution—and indeed in negotiation—I have never entered a negotiation where all the parties are in agreement initially. If that were the case there would be no negotiation required. Similarly with arbitration there will obviously be considerable differences between the views of the parties that have to be resolved initially so that the rules are plainly clear to everybody. 
Confidentiality as my colleague Mr Finlayson said in the first reading is a key issue. The Law Commission report stated that the key issues were firstly whether section 14 of the Act dealt adequately with the issues of confidentiality and if not how the Act should be amended to deal adequately with that issue. The second issue was when it is necessary for parties in arbitration to have recourse to the courts of general jurisdiction—in other words if the arbitration simply does not work in spite of the best intentions of all parties then they have to have recourse to the courts of general jurisdiction—should the otherwise confidential nature of this arbitral process yield to principles of open justice which of course apply in the courts of general jurisdiction. That was a fairly key question of the whole amendment process for the bill. The bill seeks to deal with this issue in clauses 14F to 14I. The general principle is that if one moves to the court system from arbitration the general principle of open justice will apply unless one can come within the exceptions set out in these clauses. National considered this to be the right balance. 
Other speakers in the first reading applauded other aspects of the bill. We have heard this evening from my parliamentary colleague Te Ururoa Flavell on the views of the Act held by the Maori Party and its support of arbitration in the resolution of disputes. 
The second reading seemed to take an inordinate amount of time to come back to the House and I am not quite sure why that was. Certainly the Justice and Electoral Committee moved with some determination and considerable progress on the select committee part of the bill but it seemed to take a long time to come back for the second reading. Aspects of the debate during that reading included technical discussion and the inclusion of amendments to clause 8. It was noted that the Justice and Electoral Committee worked well together in a constructive manner to build and strengthen the legislation. This is where I revert to the point of Dr Mapp’s very useful interjection in terms of the usefulness of the approach of the current Government. The Justice and Electoral Committee is the same select committee that is currently at risk of being riven over the way the Electoral Finance Bill is being processed. 
Dr Wayne Mapp 
: At risk? It has been riven already. 
CHRIS AUCHINVOLE 
: Well we are a pretty determined lot on that select committee and I think it would be fair to say that so far there is a body of opinion that we on this side of the House are winning the intellectual arguments in most cases that are brought up. 
Christopher Finlayson 
: It’s not hard. 
CHRIS AUCHINVOLE 
: It is not hard. I think we have them intellectually surrounded. The sad thing is the lack of reason in the approach being used by the select committee. This is the same select committee that has demonstrated that we can all work together— 
Dr Wayne Mapp 
: You were deluded. 
CHRIS AUCHINVOLE 
: Well I do not think we were deluded because I think the willingness is there on our part. But as I said before before one can negotiate before one can arbitrate and before one can work together one has to have a fair basis for discussion. We will no doubt be saying more about that as we get closer to the time. 
The arbitration system has significant advantages. I will be echoing the comments that have been made by previous speakers this evening when I talk about the advantages to dispute resolution. One could say that arbitration is a fight without blows. Through an arbitration system nobody should really get hurt. Arbitration should not necessarily be an adversarial type of resolution. It is enforceable; the results of it can be enforced on all parties. It matches the international models and is in harmony with them. It provides remedies. The bill is principally a series of technical amendments to the existing system to bring it right in to the new model. Indeed as has already been mentioned New Zealand has become one of the first countries to adopt the new international model of arbitration systems. The bill provides powers to preserve evidence enhance arbitration and protect property. I am pleased to support this bill. 
RUSSELL FAIRBROTHER (Labour) 
: 
 I am pleased to have the opportunity to speak on the third reading of the Arbitration Amendment Bill. I move to clause 8; a clause that no one appears to have mentioned in this debate. It inserts new article 35 of schedule 1 which relates to recognition and enforcement of arbitral awards. First of all it makes clear that awards no matter in which country they are given can be recognised in New Zealand and are binding in New Zealand. It also provides what the material is that a party relying on an award must supply to the enforcement court. But what this bill does significantly is that it takes the jurisdiction for enforcement out of the sole court as it was previously—namely the High Court. Of course as many awards are for less than $250000 it is sensible that this bill amends the Arbitration Act to give the District Court jurisdiction in cases where the amount of money—the subject of the arbitration—does not exceed the jurisdiction of the District Court. So the availability of the District Court to parties to an arbitration—should there be a need to enforce that agreement—is hopefully a quicker resolution source. Certainly it is usually a less expensive avenue to enforce the judgment. 
I turn to the issue of confidentiality which has already been discussed considerably in this debate. I think it is worth mentioning again that this bill is a determined departure as is the original Act it amends from the basic principle that justice must be seen to be done. Of course it is a fundamental principle that everyone is entitled to know what is going on in our courts and that is why obtaining suppression orders in the civil court is very difficult indeed and is usually possible only if some statute authorises it. However in this case decisions of arbitration remain determinedly confidential. One may think that that is to abrogate the principle of open justice but on further reflection one can see that the real principle of arbitration is not for a dispute to be resolved in the conventional concept of our justice system but to be resolved in the parameters of keeping a relationship going. So the parties to arbitration are first of all recognising that they are in an existing and often ongoing relationship and recourse to arbitration occurs when they want to resolve disputes without destroying that relationship. If one gets to an adversarial system of justice as happens in the civil proceedings then parties can be driven even further apart than when they started as the dispute materialised. 
The principle for open justice can be easily set aside if one looks at the purpose of the Arbitration Act and this Arbitration Amendment Bill. The purpose simply is to ensure that disputes between parties can be resolved speedily and with a degree of informality by leaving every avenue available for the parties to keep their relationship as harmonious as is possible given the disputes they face. This offer of confidentiality is very important in many many cases—in particular commercial cases—and that adds a further inducement to speed the process along and to ensure that errors of dispute are minimised. So the risk that arbitration will not come about because one party is taking a dogmatic approach on a point which is not the main point of dispute is overcome because the risk of going to the court is to leave open for public examination the contractual affairs between parties which normally would remain private to those parties. The principle of open justice can safely be set aside in the Arbitration Amendment Bill because the principle at work here is to allow parties to resolve disputes with a degree of informality and with confidentiality. 
The confidentiality provisions are extensive. The parties cannot disclose any of the material between themselves except as defined in the clauses of this bill without the leave of the arbitrator. Of course once the arbitration process is complete then that arbitrator is functus officio. If there is any issue as to what can be disclosed subsequently then new section 14E inserted by clause 5 provides for that by way of application to the High Court. The court has a wide discretion after considering all the matters as to how much the disclosure and confidentiality should be lifted. The provision is very wide and is underscored again by new section 14E(2)(b) which provides: “the disclosure is no more than what is reasonably required to serve the other considerations referred to in paragraph (a).” The High Court is given wide powers but subsection (2) is a strong reminder that those powers are not to be a springboard to the concept of open justice. 
We find the definition of “confidential information” in the interpretation clause. It inserts two definitions which are the key to this amending legislation. The first is “confidential information” in relation to arbitral proceedings and the second is “disclose”. The definition of “confidential information” is worth canvassing in this debate. It means “information that relates to the arbitral proceedings or to an award made in those proceedings”. It includes such things as pleadings submissions and evidence—and that often is what is most important to retain some degree of privacy about. It includes any notes made by the tribunal any transcript any rulings of the tribunal on the way to the final resolution and of course the award of the tribunal so that one party cannot then run off and publicly proclaim that that party has scored a significant win over the other side. It would even be improper as many litigants tend to do in these procedures to say: “I can’t disclose what the award was but I’ve got to say that we’re very happy with the outcome.” When I have read those comments in newspapers I have often thought that is a party that is pushing the contempt proceedings to the absolute limit. So we find that the definition of “confidential information” is as extensive as the prohibition on publication is penetrating. 
The definition “disclose” in relation to confidential information is inclusive of all aspects such as publishing communicating or otherwise supplying the confidential information. One cannot pass on to another party in a stated relationship of confidence information that was obtained during the arbitration proceedings. This definition of “disclose” is inclusive and exhaustive and it does not leave and should not leave any way for a party to exploit the vulnerability of the other side in arbitral proceedings when the party in fact discloses information in the course of having an arbitration become effective and a party cannot then by swearing a third party to secrecy pass information on. This bill clearly defines the term “disclose” and puts absolute parameters on what can be done. 
This is an important bill. It is a bill that reflects the thoughts of the Law Commission 4 years ago and it certainly carries through into statute what is a desirable practice in the civil litigation community. 
LYNNE PILLAY (Labour—Waitakere) 
: 
 It is a pleasure to rise and take a call on the third reading of the Arbitration Amendment Bill. I would very much like to thank the Justice and Electoral Committee for its hard work and indeed acknowledge the work of the staff and advisers who gave us really good advice and support during our consideration of and deliberation on this important bill. I have been reflecting that this bill amends the Arbitration Act 1996 which is not that long ago. Before that the Arbitration Act replaced the outmoded Act of 1908 which we inherited from England. We can see with this bill the culmination of the progressive approach to alternative dispute resolution in our country. If I reflect on the background that I come from—working in the union movement—I recall that mediation and arbitration was the preferred way of resolving disputes. I see now that arbitration has become a growing trend in New Zealand and I am pleased to say it is a trend that this Government supports. 
Maryan Street 
: It works. 
LYNNE PILLAY 
: My friend Maryan Street says that is because it works and she is right. Arbitration encourages the parties to sit down and talk through those disputes in a less adversarial way than they would do by going through the court process. The advantage of that is a speedier resolution and that is a very good thing. It is a very effective form of dispute resolution but there is also the cost to consider. When we are looking at contractual law and at the associated costs borne by the parties arbitration provides benefits when compared with the more traditional adversarial approach. 
This is a very good bill and it represents an enhanced way of dealing with disputes in this country. Once again I acknowledge the Law Commission because this bill is based on the 2003 Law Commission report on the Arbitration Act. Although it was acknowledged that the Arbitration Act was working well some very common-sense recommendations were made as to how the Act could work better and really that is what this bill is about. It is technical and there is nothing particularly controversial about it but it goes a long way towards making things work better. 
Part 1 amends the Arbitration Act. Part 2 amends the Disputes Tribunals Act. Many of the features of the bill are relatively small and are intended to clarify the legislation. The most significant change is the insertion of new sections 14 to 14I into the Arbitration Act by clause 6 of the bill which will ensure total confidentiality in the proceedings with a very few well-defined exceptions. Confidentiality is a really important aspect of arbitration and mediation because it gives a chance for the parties to talk things through in a generally positive way that should lead to a resolution. If those matters were not kept confidential then there would not be open dialogue and the outcome would not be as positive. I am pleased that that is one of the key features of the bill. Also as a general rule if court action takes place after arbitration it is conducted publicly. 
I am pleased to say that the changes the Justice and Electoral Committee recommended were all agreed to in the Committee stage so at this third reading the bill has been reported without amendment. The first recommendation was that the current practice in relation to getting approval from the tribunal be maintained. That was not in the original bill but after careful consideration we believed that the bill would be enhanced if we retained the requirement to get approval from the tribunal. The second recommendation was to recognise the changes to the model law on universal commercial arbitration adopted by the United Nations Commission of International Trade Law. Those recent changes are included so the Arbitration Amendment Bill before us is very much up to date internationally. There was another recommendation that clause 9(2) be deleted because it would be contrary to the bill’s intent to reduce judicial involvement in the arbitration process. 
As I said before it is excellent that those amendments were agreed to and that there was no argy-bargy about them. The result is that in arbitration now a binding decision can be reached. Although the parties can agree to structure and go through the negotiation and discussion around reaching resolution—and that is a good thing—the decision in the end is binding on all parties. That really enhances the process. As I said before it is a less adversarial approach and although cost is not the only issue in a dispute it is a key issue. 
My view which I am sure would be shared by a number of my colleagues is that arbitration gives more access to justice because the cost is not so great. With a focus on wanting to resolve the dispute and with the parties accepting that it can be binding— 
Christopher Finlayson 
: Absolute drivel. 
LYNNE PILLAY 
: I see that Mr Finlayson does not agree but we do from time to time not agree. I have to say that from time to time we do not agree and that perhaps I have more of a grassroots experience. He tends to focus more on the experience of his background within the law profession and perhaps has just a little less life experience should I say of dealing with people. Certainly it would be fair to say that his experience would not be of the same mediation and communication skills that many at the grassroots level enjoy. 
I really cannot think of much more to add except to thank the committee again and to also say that it is good to see this legislation go through and make the progress that it has made in this House. We know soon that it will be in place and offering an enhanced process for arbitration which has become a much more popular process with the people who use it. I think that is very good for relationships especially contractual relationships and for ongoing relationships in the future. It is with great pleasure that I commend this bill to the House. 
Bill read a third time.