ARBITRATION MODEL CLAUSES

The settlement of disputes by arbitration is an important feature of the domestic commercial and legal landscape.

The primary objective of modern commercial arbitration is the fair, prompt, and cost effective determination of any dispute, in a manner that is proportionate to the amounts in dispute and the complexity of the issues involved.

NZDRC recommends parties to contracts include a model arbitration clause to ensure they can access arbitration as a dispute resolution option of choice without delay should a dispute arise between them.

There are two options available to parties depending on whether they wish any arbitration to proceed on an ad hoc basis under the Arbitration Act 1996 or under the NZDRC Arbitration Rules.

What about mediation? At any stage the parties can still attempt to mediate (or negotiate) their dispute and, in the case of arbitration under the New Zealand Dispute Resolution Centre Arbitration Rules (option 1 below), there will be a mandatory stay of the arbitration proceeding where the parties wish to refer the dispute to mediation after the arbitration has commenced.

The two options for arbitration are:

  1. Arbitration under the New Zealand Dispute Resolution Centre’s Rules – this model clause will ensure that any dispute is automatically filtered into the most proportionate arbitration process based on the value of the dispute (the parties can always agree on another process, but the default is the most proportionate option in terms of time and cost):
    $2.5M or greater Standard Arbitration Rules

    Timetable to be agreed by the parties or determined by the arbitral tribunal

    Hearing, unless parties agree otherwise
    $1M up to $2.5M ECA90 Arbitration Rules

    90 working days to an award

    5 working day hearing, unless parties agree otherwise
    $250k up to $1M ECA60 Arbitration Rules

    60 working days to an award

    3 working day hearing, unless parties agree otherwise
    Up to $250k or declaratory relief ECA45 Arbitration Rules

    Documents only

    Fixed fee service available*

    45 working days to an award

    * terms and conditions apply

     

  2. Ad hoc arbitration – this model clause ensures you can access the New Zealand Dispute Resolution Centre’s case management and administrative oversight and support.

Either option allows the appointment of the arbitral tribunal to be agreed by the parties. However, in the absence of agreement (which is often the case), either model clause will ensure the parties have an effective mechanism for the prompt and efficient appointment of the arbitral tribunal, allowing the arbitration to proceed without unnecessary delay.

Model Clause for Arbitration under NZDRC’s Arbitration Rules

The following clause should be included in contracts where the parties wish to have any future disputes resolved by arbitration under the New Zealand Dispute Resolution Centre’s Arbitration Rules:

“Any dispute or difference arising out of or in connection with this contract, or the subject matter of this contract, including any question about its existence, validity or termination, shall be referred to and finally resolved by arbitration in accordance with the Arbitration Rules of the New Zealand Dispute Resolution Centre.”

 

Note: parties to an existing dispute that have not incorporated the NZDRC Model Arbitration Clause into a prior agreement may still agree to refer that dispute to arbitration under the NZDRC Arbitration Rules by signing the Arbitration Agreement in the form found at Appendix 2 to those Rules.

Model Clause for ad hoc Arbitration under the Arbitration Act 1996

The following arbitration clause should be included in contracts where the parties wish to have any future disputes resolved by arbitration under the Arbitration Act 1996:

“Any dispute or difference arising out of or in connection with this contract, or the subject matter of this contract, including any question about its existence, validity or termination, shall be referred to and finally resolved by arbitration in accordance with the Arbitration Act 1996. The arbitral tribunal shall be appointed from the panel of arbitrators maintained by the New Zealand Dispute Resolution Centre and, in the event the parties are unable to agree on the composition of the arbitral tribunal within seven days of written notice of the dispute being given, the arbitral tribunal shall be appointed by the New Zealand Dispute Resolution Centre upon application by any party to this agreement.

 

The number of arbitrators shall be one. [or may choose three]

 

The language to be used in the Arbitration shall be English. [or choose another language]

 

The governing law of the contract shall be the substantive law of New Zealand. [or choose another country]”

 

Note: parties to an existing dispute that have not incorporated this NZDRC Model Clause into a prior agreement may agree to refer that dispute to arbitration under the Arbitration Act by signing one of the Arbitration Agreements available on the Arbitration Guides and Resources page.
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