Cosgrove Clayton: Arbitration Amendment Bill — First Reading 
Cosgrove Clayton: Arbitration Amendment Bill — First Reading 
[Volume:634;Page:5580] 
Hon CLAYTON COSGROVE (Associate Minister of Justice) 
: 
 I move  
That the Arbitration Amendment Bill be now read a first time. 
 At the appropriate time I intend to move that the Arbitration Amendment Bill be referred to the Justice and Electoral Committee for consideration. This bill is the result of a review—again by the Law Commission—of the Arbitration Act 1996. I thank the Law Commission for its hard work and effort in reviewing this important legislation. The Arbitration Amendment Bill is accompanied by two other bills that seek to give effect to the recommendations of the Law Commission as we have discussed this afternoon—the Wills Bill and the Succession (Homicide) Bill both of which have been recently introduced. 
Alternative dispute resolution is a growing trend in New Zealand and one that this Government supports. Alternative dispute resolution provides disputants with options other than litigation to resolve their disputes which may better suit their individual situation. In New Zealand the two main forms of alternative dispute resolution are mediation and arbitration. For some industries arbitration has become the main form of dispute resolution. This is particularly true for commercial contracts and property and contractual disputes. Arbitration can be the best option for these kinds of disputes because it offers the benefit of disputants having the ability by mutual agreement to select an arbitrator. The selection is usually based on the technical skill and expertise that the arbitrator can bring to the dispute. In addition many of the kinds of disputes that head to arbitration involve ongoing relationships. Arbitration provides a forum that is less adversarial than traditional litigation so the ongoing relationship is less likely to break down. 
 In 1996 New Zealand’s arbitration system which we inherited from England was overhauled and updated. The resulting 1996 Arbitration Act reflected the model law on international commercial 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 its enactment we have been able to observe how the Act has worked in practice and to consider what improvements if any it may need. 
In 2003 the Law Commission reported on its review of the 1996 Act. The commission concluded that the Act was working well. It did however recommend some amendments to improve the operation of the Act. 
The bill which is divided into two parts reflects the Law Commission’s recommendations. The first part amends the Arbitration Act and the second part amends the Disputes Tribunals Act 1988. Many of the amendments are relatively small and technical—for instance to clarify the operation of a provision or definition. One of the more significant changes is contained in clause 6 and relates to the confidentiality of arbitral proceedings. There is a presumption that proceedings are closed and confidential. The Act contains an absolute prohibition on disclosure of information related to arbitral proceedings. The confidentiality that applies to those proceedings is a major attraction for many parties to arbitration. 
The confidentiality enjoyed by parties to arbitration however does not apply to subsequent court proceedings. Although the Act is silent as to whether the confidentiality provisions apply to subsequent court proceedings the New Zealand courts have decided that any subsequent court proceedings remain open. If for example a party to an arbitral proceeding appealed the decision to the court the court proceedings would be open to the public. 
In addition the Act currently has only two narrow exceptions to the prohibition against disclosing information. The first exception is where the parties otherwise agree. The second exception permits disclosure of such information to a professional or other adviser of any party if the publication of the disclosure of communication is contemplated by the Act. The bill provides a more balanced approach to confidentiality issues which better recognises party autonomy and the private nature of arbitration proceedings. The bill clarifies that as a general rule arbitral proceedings are private and confidential whilst court proceedings are to be conducted in public. 
The current exceptions to this general rule are widened and clarified. For example parties will be able to apply to the court seeking to have all parts of the proceedings conducted in private. The amendment sets out the matters a court must consider when a party makes such an application. 
A related amendment has the clarification of what is meant by “a question of law”. Arbitration decisions can be challenged only on points of law. The bill does not seek to amend that provision because to question the determination of an arbitrator on facts would undermine the confidence the parties have placed in the arbitrator. Parties choose an arbitrator based on his or her technical skill and experience in a particular field. However the bill does clarify what is meant by a question of law because it is not defined in the Act. The amendment clarifies that a question of law does not include perverse findings of fact. 
One of the significant New Zealand departures from the provision of the UN model law is that the Arbitration Act is not restricted to commercial disputes; it also applies to consumers. Current provisions in the Act require a consumer to agree to arbitration as a means of dispute resolution prior to a dispute arising. In entering contracts consumers do not think about which dispute resolution process they would most prefer. Normally the trader says: “Sign here and here and here.” and the consumer does so. This approach does not provide sufficient safeguards for consumers. Arbitration works best when both parties are satisfied that it is the most appropriate dispute resolution forum. 
Under the bill consumer arbitration agreements will take effect only if arbitration has been agreed to as a method of dispute resolution after the dispute has arisen. When a consumer and a trader agree on arbitration the agreement will oust the jurisdiction of the disputes tribunal. Arbitration encourages the private resolution of disputes in a less adversarial manner thereby enabling the resumption of commercial and other contractual arrangements. The purpose of the reforms is to improve the operation of the Act and as a result to enhance arbitration as a means of private dispute resolution in New Zealand. I commend the bill to the House.