Foster-Bell PaulARBITRATION AMENDMENT BILLFirst ReadingPAUL FOSTER-BELL (National): I move That the Arbitration Amendment Bill be now read a first time. I nominate the Justice and Electoral Committee to consider this bill. I hope that this bill is something that will meet somewhat less controversy in this House than some of the other matters that have been discussed here today. It is in my view a very very good bill. This might be an unusual thing for the sponsoring member to say but in doing so I want to give full credit to the people who drove the formulation of this bill.I would like to first begin by thanking Deborah Hart the executive director of the Arbitrators and Mediators Institute of New Zealand and that institute's president John Walton who have produced a memorandum which I hope has been circulated around this House in support of this measure. Many of the ideas and concepts in this bill did originate from that venerable institution.I also want to single out Jeremy Johnson of Wynn Williams who is the youngest fellow in the history of the Arbitrators and Mediators Institute of New Zealand who helped with the drafting; the team in the office of the Minister of Justice the Hon Amy Adams; Rosemary Colson our researcher; and a colleague and dear friend of mine who ensured this bill was in the biscuit tin and who is currently recuperating in Ward 5 North in Wellington Hospital. I want to pay tribute to the team of medical professionals there who are assisting with his recovery. Without his assistance the bill would not have been drawn from the institution that is the biscuit tin.This bill in terms of what it actually does—it does a couple of quite technical things which I will try to explain in terms that the lay person such as myself can understand and appreciate. This bill does bring greater certainty to our arbitration regime in New Zealand. What is important is that we are seen to be in line with international standards to make New Zealand an attractive destination for arbitration but to provide that greater clarity and certainty. In particular areas around confidentiality it introduces a rebuttable presumption of confidentiality should an arbitration decision be appealed to a court.Why is this important? Well two parties who freely enter into a contract which may contain a dispute resolution mechanism of arbitration—and it should be acknowledged that no party is obliged to undertake arbitration; it is a voluntary measure that parties enter into when they sign usually a commercial contract. Part of the appeal of the arbitration process is the privacy and confidentiality that it affords. This might be for the more obvious things that suggest themselves so that companies do not have trade secrets—their market intelligence that they would prefer to keep private—exposed publicly but actually for a wider reason. In some cases it is the very fact that there is a dispute between two firms that can be injurious and have a detrimental effect on the confidence in the company and perhaps even share prices—their ability to conduct their business. Sometimes the effect of that exposure is highly disproportionate to the substance of the matter that is actually being resolved in a dispute.The particular case that I want to refer to in that regard is the 2014 High Court case of Danone v Fonterra where the High Court very sensibly sent Danone back into arbitration in Singapore with Fonterra to deal with the dispute. But in my view it is problematic when the parties to arbitration who have freely contracted to use that dispute resolution means use the threat of the publicity that can happen if a case is then appealed to a court as a weapon in their negotiations.This is intended to be a rebuttable presumption of confidentiality meaning that if there is an overriding public interest in the matter that is being dealt with the court can of course decide that they should be matters of public record and publicised as such. But in general there is a presumption that the confidentiality of the arbitration will continue on into the courts should the case end up in the courts.Secondly this bill intends to make arbitrations more enforceable in the courts in New Zealand. We have had a couple of recent instances and in particular I refer to the case of Carr v Gallaway Cook Allan. It is also a 2014 case although that one was in the Supreme Court. It is Ewan Robert Carr and Brookside Farm Trust Limited v Gallaway Cook Allan [2014] NZSC 75 for members who might want to look up several hundred pages of deliberations mainly highly technical in nature. But the key question here concerned the validity of an arbitration agreement with a clause allowing appeal on questions of law and fact. The Supreme Court found there that there is actually no legislative grounds allowing appeals on questions of fact. As a result it ruled that the parties could not lawfully provide a contract allowing this. So this did introduce an element of uncertainty as to the enforceability of an arbitration agreement. This bill does seek to remedy that issue by introducing several changes to the 1996 Act which I believe will be positive. Tribunals undertaking arbitrations are currently able to rule on their own jurisdiction and this bill will require that objections on jurisdictional issues are raised in a timely fashion not after the case has already been decided if one party does not like the particular result. It also provides that when there are minor or procedural issues that these are dealt with I think in a more sensible fashion.Finally in terms of the provisions there are some very technical changes but these are there around disputes between trusts where the trust deed a contract will effectively provide arbitration provisions. Around the world this is happening more frequently. So this is when disputes are not between necessarily companies or limited liability companies but perhaps between a trust and an NGO or a trust and a company. So when there is an arbitration clause within a trust deed that will be treated in the same way as an arbitration clause in a commercial contract.Why is arbitration useful? Why do companies opt for that path of I think sensible mature cost effective and speedy dispute resolution? It is for those reasons because it is occasionally more cost effective although not always; sometimes it is actually more expensive to go through an arbitration process. But there are huge positives not only for those who opt into them but actually for us as taxpayers in New Zealand. It keeps cases out of the courts that do not frankly need to be there. It is better that parties to a dispute can resolve their differences in a responsible adult fashion without clogging up our already very busy court system and preventing other cases getting in there.Secondly there is a public benefit in New Zealand for arbitration cases that come to this country. The Arbitrators and Mediators Institute of New Zealand estimates the value of each arbitration to be around a million dollars. This is not just spend on expensive lawyers' fees although I know the lawyers in the House probably will be wringing their hands in glee—The ASSISTANT SPEAKER (Hon Trevor Mallard): Sorry I'm a bit late. I was intrigued.PAUL FOSTER-BELL: Thank you Mr Assistant Speaker. The lawyers in the House will be excited to learn that arbitrators and the legal counsel involved in those cases are often very well remunerated. But actually there will be spend in a wide range of services in the New Zealand economy from conference venues through to hotels and accommodation taxis food and secretarial support. So a wide range of people stand to benefit from New Zealand bringing itself into line with jurisdictions such as Hong Kong Singapore even Australia our near neighbours and the UK—those systems that are closest to ours but also those systems that are known to be international centres of arbitration.Arbitration is also very useful for New Zealand companies and we are a trading nation. So you can imagine a New Zealand company trading in a third country that may not have the strong rule of law may not have the justice system and the lack of corruption that this country thankfully enjoys. If they are trading in a country where the courts cannot be relied upon to be fair it is very useful for New Zealand companies to be able to contract to go to arbitration should they end up in dispute. I think actually it is positive for this country. It does trade on our reputation as being fair-minded having a strong rule of law and being a just country with a low level of corruption.I think this is a bill without drawbacks. I think there are obviously positives for the companies the trusts and the other organisations that want a contract for arbitration. There are also benefits for the taxpayers and savings in the court system and for our economy should we become an international destination of arbitration. I commend this bill to the House and hope it will receive widespread support.