COVID-19 Commercial Lease Disputes: Free Arbitration and Mediation available now

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Update 1 July 2021: Please note that the Government funded scheme has now come to an end but you can still access NZDRC’s low cost fixed fee scheme

Many commercial tenants found their leases were inadequate to deal with the consequences of the COVID-19 restrictions.  In a welcome step, the Government has established a scheme allowing parties with a qualifying dispute to access fully subsidised arbitration or mediation services (the Scheme).

Commercial leases without solutions

For those who have commercial leases, there were questions around whether there is a right for tenants to obtain rent relief as a result of the COVID-19 lockdown restrictions and, if so, what that relief should look like. Some leases contained a clause allowing a fair proportion of rent to be suspended during an emergency situation, but it was not clear what a fair proportion might mean.  Other leases did not expressly provide for any reduction of rent in such circumstances.

When we wrote about this previously, we explained how arbitration or mediation could help parties reach a resolution.  The usefulness of alternative dispute resolution has clearly been recognised by the Government.

Qualifying disputes and eligibility criteria

The Government’s initial proposal announced in June to amend the Property Law Act 2007 to allow for COVID-19 rental disputes to be referred for arbitration or mediation has had an overhaul. The Government has now put in place a fully funded dispute resolution scheme for qualifying disputes where landlords and tenants meet the eligibility criteria.

Qualifying dispute

A dispute will qualify if:

  • the dispute it is about the payment of rent and outgoings, where the tenant has experienced a material loss of revenue during a lockdown period because of Government lockdown restrictions put in place to combat COVID-19; and
  • the payment of rent and outgoings during the relevant lockdown period has not already been the subject of an agreement or arbitral award between the parties to the dispute.

Eligibility criteria

The eligibility criteria are clearly aimed at supporting smaller, New Zealand businesses.  As a result, there are two eligibility criteria that must be met before parties can access the subsidised Scheme:

  • the landlord and tenant must have a New Zealand based business; and
  • the business must have 20 or fewer full-time equivalent staff:
    • in the case of the tenant, per lease site;
    • in the case of the landlord, in total.

Mediation and arbitration by NZDRC

NZDRC is providing fully subsidised arbitration and mediation services as part of the Scheme.  As a result, no fee will be payable by the landlord or tenant.  Those who wish to take advantage of the fully subsidised Scheme will need to apply no later than 31 March 2021.

For lease parties who do not meet the eligibility criteria, NZDRC can still offer you low cost and fixes fee arbitration or mediation services.

To learn more about your options, and the difference between mediation and arbitration download our Introductory Guide.

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How to access the NZDRC services

Whether parties choose to arbitrate or mediate, they will need to agree to engage in that process. This can be done by completing the special form agreement to arbitrate or special form agreement to mediate, copies of which may be downloaded below:

Download a template Agreement to Mediate

Download a template Agreement to Arbitrate

Once the agreement has been signed, you can apply online or, if you have anyquestions, contact the Registry team who will guide you and your advisers through the process.

Other resources you might like

If you found this article helpful and are interested in learning more, there is a wealth of other resources available on our website. We have a wide array of articles and guides on a variety of topics, each designed to provide you with a deeper understanding of the subject matter. We encourage you to explore these resources and deepen your knowledge.

A modern hallway with a wall displaying signs for various legal and dispute resolution centers, including the New Zealand Centre for Alternative Dispute Resolution. The area has large windows, plants, and a railing on the left side, allowing natural light to enter.

NZDRC Commercial Lease Scheme on the News

Close-up of three pieces of Whittaker & Sons dark chocolate with a textured surface, partially stacked on each other. The image highlights the rich, dark brown color and rough edges of the chocolate pieces against a blurred brown background.

Husky Food Importers & Distributors Ltd v JH Whittaker & Sons Ltd [2022] ONSC 1679

New Zealand confectionary and chocolate manufacturer, JH Whittaker & Sons Ltd (Whittaker’s), has brought a successful motion to stay litigation commenced against it by Husky Food Importers & Distributors Ltd (Husky) in the Ontario courts in Canada. The Ontario Superior Court of Justice found it was arguable that a valid arbitration agreement existed and that the dispute was covered by the arbitration agreement, and referred the parties to arbitration administered by the New Zealand International Arbitration Centre (NZIAC).

Not only is the decision to be applauded given its adherence to orthodoxy regarding the ‘competence-competence’ principle and its pro-arbitration stance, it provides valuable lessons for drafting – particularly with respect to the incorporation of standard terms of trade.
A person sits reading a large open book, possibly a religious text, wearing a white prayer shawl with black stripes and a black hat. Their hand is on the page, and the text is in Hebrew.

An Orthodox operation of religious arbitration

In Tayar v Feldman [2022] FCA 1432, the Federal Court of Australia considered the enforcement of an arbitral award at the intersection of Orthodox Jewish law and the secular Commercial Arbitration Act (Victoria) 2011 and Bankruptcy Act 1966 (Cth).

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