Bayly AndrewARBITRATION AMENDMENT BILLThird ReadingANDREW BAYLY (National—Hunua): I move That the Arbitration Amendment Bill be now read a third time.It's an absolute delight and I've got to say with a certain amount of relief to be talking on this third reading of the Arbitration Amendment Bill. It has certainly been a long road to get to this stage.Before starting on the bill I want to first acknowledge certain people. This bill was originally lodged in the name of Paul Foster-Bell but I took it over when he left Parliament in 2017 very unfortunately. Since then I've become what feels like a semi-permanent member of the Justice Committee as we've thrashed out various elements of the bill. Part of this involved appointing the Hon Paul Heath QC as our specialist adviser given the technical nature of the bill. I thank him for his assistance and also the Hon Andrew Little for allowing the committee to appoint such an esteemed expert as the adviser to the committee. I am also grateful to the various contributions from a range of submitters but particularly Sir David Williams QC John Walton and Jeremy Johnson of Wynn Williams and Co. as well as Deborah Hart of the Arbitrators' and Mediators' Institute of New Zealand. I'm very pleased to see Deborah Hart in the gallery. I also want to acknowledge Paul Foster-Bell present here in the House today for this third reading. I also just want to acknowledge the support and expertise of the Hon Chris Finlayson QC. Hopefully he might soon be called Your Honour".So why all this effort? Simply arbitration is a very cost-effective and timely method of resolving commercial and other disputes. In essence it reduces the caseload on courts. It is estimated that there are between 300000 and 500000 trusts in operation in New Zealand. Many people establishing these trusts known as settlors and the beneficiaries of these trusts often wish and specify the use of arbitration to resolve disputes rather than going down the expensive and often very time-consuming path of getting a court hearing.One of the objectives of the bill is to improve the laws relating to the arbitration proceedings. I am grateful the committee was able to agree on some of the changes covered by the bill. In essence these are: firstly the issue relating to the late jurisdiction issue or objection relating to amendment to clause 6(1). It provides for a new article 16(4) in Schedule 1 to deal with the issue of parties to arbitration deliberately using the provision to wait until the end of the arbitration proceedings and if they're unhappy with the outcome then claim that the arbitration tribunal did not have the jurisdiction to rule in the proceedings. This cuts across the principle of fairness. Amending clause 6(1) makes it consistent with the provisions in article 16(3) of Schedule 1 of the principal Act. The amendment clause specifies that a party must pursue a request on the tribunal's jurisdiction in a timely manner; otherwise the right is lost.The second issue that the committee dealt with was deletion of clause 6(2) from the bill and that related to the application to set aside recourse against an award. The committee agreed with the provisions in clause 6(2) which would amend article 34(2)(a)(iv) of Schedule 1. The original draft of the bill incorrectly used the word "Schedule" rather than "Act" which is addressed in the bill. Our current Arbitration Act has borrowed heavily on model law signed by 154 countries but the clause relating to the amendment was structured differently by inserting it in as a Schedule and the drafting inadvertently limited its application and created confusion. Currently awards are protected from challenge when a tribunal changes its procedures to avoid violating a mandatory provision in Schedule 1. However if a tribunal changes its procedures to avoid violating a mandatory provision under other elements in the Act then the award is not protected. This amendment addresses this issue.The third key issue is referred to colloquially as the quick-draw procedure and it revolves around the issue of the appointment process for arbiters. The committee received strong representations from submitters that clause 14(2) of Schedule 2 of the principal Act should be repealed. This relates to the appointment process for determining the arbiter. Currently if only one party in a dispute acts quickly enough they can end up appointing the arbiter they choose rather than going through the jointly-agreed process for appointing the arbiter. This clause is known as the quick-draw procedure and is unfair.This ability is fundamentally unfair and brings New Zealand into disrepute by potentially allowing one party to pre-empt the appointment process. A fundamental part of arbitration is the ability for parties to agree on an arbiter or to have one independently appointed and provision exists under the Arbitrators' and Mediators' Institute of New Zealand (AMINZ). However the committee considered that the repeal provision may be outside the scope of the bill's initial intent and consequently we asked the Business Committee to extend the powers of the committee of the whole House to consider this issue. Again I am grateful that the House supported my Supplementary Order Paper to delete clause 6(5) and amend Schedule 2 accordingly.Whilst the changes made above are important and helpful they still put New Zealand at a significant disadvantage when it comes to trying to attract international arbitration disputes to New Zealand. International arbitration involves the resolution of cross-border disputes and is one of these areas that have developed significantly during recent decades. Cross-country border disputes not only relate to the area of international commercial arbitration but also regional conflicts. This opportunity is increasingly occurring as the world turns towards Asia and it is important given the number of cross-border financial transactions and international treaties containing arbitrational clauses that have grown over time.The core issue for New Zealand is that if it is to become an important centre for resolving these types of complex disputes there's a risk that arbitration proceedings are referred to our New Zealand courts and therefore under current New Zealand law they would operate under the rebuttable presumption of open justice—that is all evidence is heard in open court hearings. Unfortunately for these offshore international disputes privacy is regarded as one of the key issues of why people choose to go down the arbitration processes.Other jurisdictions in the trans-Pacific region—and most notably Singapore and Hong Kong—have enacted legislation and developed arbitration law that has as a major feature provisions for the protection of arbitration in court hearings related to international arbitration proceedings. Just recently two-thirds of legal practitioners and in-house counsel in Asia who were involved in cross-border transactions chose Singapore as their preferred venue for dispute resolution. Our New Zealand arbiters are among the foremost practitioners in the world and it's only logical that these members of the AMINZ would wish to ensure New Zealand is regarded as an attractive destination for conducting these international commercial arbitrations. Without making changes we will remain uncompetitive as a chosen destination and this represents a real commercial loss of opportunity.We tried to develop a proposal that didn't overturn the presumption of open justice but may have given judges more discretion—as they currently do—to decide whether or not and in the right circumstances to allow such arbitration proceedings to be held in private but unfortunately we were unable to persuade the committee. However I am still very grateful for the progress that we have made as a committee. There are not many members' bills that receive cross-party support.I want to pay special tribute to the members of the Justice Committee who continued to keep an open mind to my arguments and I also particularly wish to acknowledge the chair Mr Raymond Huo for his role in trying to achieve a better legal outcome for those in the future who may wish to avail themselves of the use of arbitration. I realise the rarity of this opportunity and I'm most grateful and I commend this bill to the House."