Arbitration Act 1996

Arbitration in New Zealand is governed by the Arbitration Act 1996.

When the Arbitration Act 1996 came into force on 1 July 1997, it fundamentally changed New Zealand’s existing legal framework for arbitrations which was then the outmoded Arbitration Act 1908 based on the English model. The main feature of the Arbitration Act 1996 was to incorporate the UNCITRAL Model Law into New Zealand Law, which is founded upon the principles of party autonomy, reduced judicial involvement in the arbitral process, increased powers for the arbitral tribunal and consistency with laws in other jurisdictions.

The principles that underpinned the Act were designed to ensure that the object of arbitration was met, namely to obtain the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense and that parties should be free to agree how their disputes are resolved, subject only to such safeguards as are necessary in the public interest.

Legislative history

Trusts Act 2019, section 164

The Trusts Act 2019 came into force in January 2021 with the aim of making the law on trusts more accessible. One change within the Trusts Act 2019 is that it explicitly provides that alternative dispute resolution can be used by trustees to settle disputes.

In its review of New Zealand’s trusts regime, the Law Commission highlighted the benefits of ADR. The Law Commission noted that compared to court hearings, ADR involved lower costs, quicker resolution, finality, confidentiality and privacy. It was also noted as being less adversarial.

Section 164 of the Trusts Act 2019 inserts section 10A into the Arbitration Act 1996. The effect of this is that sections 142 to 148 of the Trusts Act 2019 apply to arbitration relating to a “trust matter”. At section 10A(2), “trust matter” adopts the meaning of “matter” in section 142 of the Trusts Act 2019. That means:

  • a legal proceeding brought by or against a trustee in relation to the trust; or
  • a dispute in relation to the trust between a trustee and a beneficiary, or between a trustee and a third party, or between 2 or more trustees, that may give rise to a legal proceeding

A “trust matter” does not include a legal proceeding or dispute about the validity of all or part of a trust.

The alternative dispute resolution provisions of the Trusts Act 2019 can be summarised as follows:

Section 143 – a trustee may refer the matter to an ADR process, subject to the agreement of each party to the matter. Section 143 applies even if the trust is silent on the matter of dispute resolution.

Section 144 – the High Court must appoint representatives for any beneficiaries who are unascertained or lack capacity.

Section 145 – the High Court may enforce any provision in the terms of a trust that requires a matter to be subject to an ADR process.

Section 146 – a trustee may give binding undertakings in relation to the trustee’s future actions as trustee, as it concerns an ADR settlement or agreement.

Section 147 – a trustee can avoid liability in proceedings related to an ADR agreement or award if it complies with section 25 of the Trusts Act 2019 and any duty specified in the terms of the trust.

Section 148 – the Arbitration Act 1996 governs the arbitration of matters under the Trusts Act 2019.

Arbitration Amendment Act 2019

The Arbitration Amendment Act 2019 was enacted with three core goals:

  1. clarify jurisdictional challenges;
  2. clarify the setting aside and enforcement provisions; and
  3. remove the ‘quick draw’ provisions for the appointment.

Prior to the passing of the Act in May 2019, a loop-hole had existed allowing parties to make unexpected and untimely challenges to awards on the basis of jurisdiction.

Provisions also allowed for a ‘quick draw’ procedure for appointing arbitrators when parties were unable to agree. The ‘quick draw’ provision allowed either party to a dispute to give notice to the other that they were in ‘default’. If the ‘default’ was not remedied within 7 days, the notifying party’s chosen arbitrator would automatically be appointed.

In Hitex Plastering Ltd v Santa Barbara Homes Ltd [2002] 3 NZLR 695, the High Court held that such a procedure required a genuine attempt to be made to agree before the parties could resort to the default appointment procedure.

Arbitration Amendment Act 2016

The Arbitration Amendment Act 2016 came into force in March 2017. The Act amended the Arbitration Act 1996 by:

  1. Broadening the definition of ‘arbitral tribunal’ in section 2

The expansion sought to include arbitral institutions and emergency arbitrators, which allowed awards rendered by emergency arbitrators to be enforced upon application to a court of competent jurisdiction.

  1. Adding section 6A

The change required the Minister of Justice to appoint a suitably qualified body to appoint arbitrators in accordance with article 11 of Schedule 1, instead of the High Court.

District Court Act 2016, section 261

The District Court Act 2016 came into force in March 2017 with the aim of consolidating each District Court into a unified entity.

Section 261 of the Act applies the amendments contained in Schedule 2 for the Arbitration Act 1996. These amendments instructed that references to “a District Court” be replaced with “the District Court” in section 10(2) and, within schedule 1:

Schedule 2 also replaced section 16(b) with “in the case of the District Court, under section 228 of the District Court Act 2016”.

Senior Courts Act 2016, section 183(b)

The Senior Courts Act 2016 came into force in March 2017 with the purpose of consolidating the Judicature Act 1908 and the Supreme Court Act 2003. This created a single piece of legislation governing the High Court, Court of Appeal and Supreme Court.

Section 183 of the Act applies the amendments contained in Schedule 3. Thus, in section 16(a) of the Arbitration Act 1996, “section 51C of the Judicature Act 1908” is replaced with “section 148 of the Senior Courts Act 2016”.

Limitation Act 2010, section 58

The Limitation Act 2010 came into force in January 2011 with the purpose of clarifying the law on limitations. The Act also introduced a 15-year longstop defence. It also allowed claimants to bring proceedings at least 3 years from when they discovered the claim.

Section 58 of the Act applies the amendments contained in the Schedule. This removed the reference to the Limitation Act in Schedule 4 of the Arbitration Act 1996.

Arbitration Amendment Act 2007

When the Arbitration Amendment Act 2007 came into force on 18 October 2007, New Zealand became the first country in the world to adopt the whole of the new United Nations Commission on International Trade Law (UNCITRAL) legislative provisions on interim measures and preliminary orders with only a few minor modifications.

The Arbitration Amendment Act 2007 introduced several relatively technical amendments to the Arbitration Act 1996 to strengthen arbitration as a means of private dispute resolution in New Zealand and enhance the use of arbitration as an agreed method of resolving commercial and other disputes.

The Arbitration Amendment Act 2007 significantly improved the skeletal confidentiality provisions of the Arbitration Act 1996, eliminated appeals which attempt to “dress up” questions of fact as questions of law and enhanced consumer rights and improved consumer protection.

Arbitration Amendment Act 1998

The Arbitration Amendment Act 1998 came into force in July 1997. The Arbitration Amendment Act 1998 made amendments to article 7(1) of Schedule 1 and to Schedule 4.