On 26 March 2020, New Zealanders began a period of unprecedented, government-ordered self-isolation (known here as a Level-4 alert). As we “shelter in place”, our personal liberties have been significantly curtailed and only essential services may operate. A state of emergency has been declared. The Level-4 alert will continue for at least four weeks.
The New Zealand courts, whilst still operating, are understandably focusing on “priority proceedings” (see Message from the Chief Justice to New Zealand Legal Practitioners, 25 March 2020) where an individual’s liberty or their personal safety and well-being is in jeopardy. Most civil fixtures have been vacated. Only “time-critical” civil litigation will proceed. We must accept that what we used to consider urgent is no longer urgent – even if the issue remains important. Delays in most commercial court cases are inevitable.
There are questions over when these fixtures will return to court. And our clients are asking other questions: How do I get an affidavit sworn during a lock-down? How do I file documents with the court? How do I pay filing fees if the court counter is closed? What do I do if my matter is urgent but does not meet the definition of “time-critical” for the court’s purposes? What does a court hearing now look like? The courts are taking steps to address these important questions. The Epidemic Preparedness Act 2006 empowers judges to modify rules of court during an epidemic. However, modification will take time and parties will continue to face uncertainty.
These same concerns do not arise with arbitration. That is because arbitration is inherently flexible and agile. Now is the time to seriously consider arbitration as an alternative method of dispute resolution. There is no reason why many commercial disputes, of whatever size, cannot go ahead. Lawyers are working as they always do: in front of a computer, over the phone – just from a different location. Fellow arbitrators and arbitration counsel continue to arbitrate domestic and international disputes. Indeed, in the arena of international arbitration, disputes are still being commenced and progressed without any obvious delays. Arbitral institutions are still working, albeit differently. Here in New Zealand, the New Zealand Dispute Resolution Centre (NZDRC) and the New Zealand International Arbitration Centre (NZIAC) continue to operate. The Arbitrators’ and Mediators’ Institute of New Zealand (AMINZ) has shifted its staff to remote working and remains available to assist with the appointments of arbitrators. In short, arbitration is open for business.
This article briefly considers the following topics:
(1) Urgent arbitrations;
(2) The flexibility of arbitration;
(3) Key factors when drafting your arbitration agreement; and
(4) A general overview of arbitration as a form of dispute resolution, including what disputes can be arbitrated.
(1) Urgent hearings in arbitration: emergency and expedited arbitrations
Arbitration is capable of resolving urgent disputes.
- Arbitrators can award urgent, interim relief, pending the outcome of the substantive dispute.
- Arbitrators can, unless the parties agree otherwise, “award any remedy or relief that could have been ordered by theHigh Court” (s 12 of the Act).
- Arbitration is capable of resolving urgent disputes.
- Arbitrators can award urgent, interim relief, pending the outcome of the substantive dispute.
- Arbitrators can, unless the parties agree otherwise, “award any remedy or relief that could have been ordered by the High Court” (s 12 of the Act).
- If you require urgent relief, consider emergency arbitration with an emergency arbitrator.
- An emergency arbitration is akin to obtaining an injunction. An emergency arbitrator awards emergency relief pending the outcome of the substantive dispute.
(i) AMINZ has drafted provisions on emergency arbitrations that may be of relevance if you are drafting your agreement to arbitrate.
(ii) Where urgent interim relief is sought under NZDRC’s or NZIAC’s Arbitration Rules, they expressly provide a procedure for the appointment of the arbitral tribunal “under urgency” with appointment being made within one working day (NZDRC Arbitration Rules 6.9-6.19).
- If you wish the substance of your dispute to be resolved as quickly as possible, consider an expedited proceeding.
(i) By contrast, an expedited arbitration is the fast-track resolution of the substantive dispute.
(ii) The NZDRC has a number of expedited rules available for urgent arbitrations. For example: the ECA45 Arbitration Rules are specifically designed to allow the quickest and most cost effective resolution of commercial disputes involving relatively modest amounts at issue. They provide for a documents-only arbitration procedure and are specifically designed to result in a final award being issued within 45 working days. Similarly, the ECA90 Arbitration Rules provide for an arbitration, including the hearing, to be within 90 days.
(iii) Even without applicable rules, the parties can agree on an expedited procedure.
(2) Arbitration is inherently flexible
- Arbitration in New Zealand is governed by the New Zealand Arbitration Act 1996 (the Act).
- The Act provides for a wide discretion on procedure (Article 19, Schedule 1 of the Act):
- The parties are free to agree on arbitral procedure, failing which, the arbitrator may conduct the arbitration as it considers appropriate; and
- The arbitrator has the power to determine admissibility, relevance, materiality and the weight of any evidence.
- There are very few mandatory requirements identified in the Act, namely:
(i) Equal treatment of parties;
(ii) (Loosely speaking) statements of claim and defence;
(iii) Notice of hearing, if a hearing is held (they can be on the papers or online);
(iv) Rules applicable to substance of dispute;
(v) The award shall be in writing, signed and dated; and
(vi) Natural justice.
- Your evidence, documentary, fact and expert, can be adapted to suit your needs:
- You do not need to go to the expense or stress of court-style disclosure. You can forego disclosure altogether or agree to targeted and narrow documents production (e.g. “Redfern schedules”).
- Arbitrations are regularly paperless and operate using advanced technology so that the core bundle is accessible by all parties online.
- Unless you have expressly agreed as such, you do not need to submit sworn affidavits or formal “briefs of evidence”.
- Experts can provide expert reports in their own style.
- “Two-party” arbitral hearings with two parties are routinely held by video- or tele-conference. Multi-party virtual hearings can also be accommodated but careful thought is required to ensure that the hearing is fair and runs smoothly. Parties can agree for a hearing to be on the papers.
- The arbitrator’s decision (the award) will be signed by the arbitrator and emailed to the parties. Hard copy originals can be posted or delivered.
(3) Key things to consider when drafting your agreement to arbitrate
Your arbitration agreement is fundamental to a successful arbitration and the enforcement of your award.
(i) The scope of the agreement: do I want contractual disputes only? What about tortious, statutory or equitable claims?
(ii) Whether to arbitrate under the Act or under the rules of an arbitral institution such as NZDRC or NZIAC.
If the parties are particularly litigious, institutional rules can provide structure.
(i) If the dispute may become urgent, consider rules that provide for an emergency arbitrator or for expedited rules.
(ii) The number of arbitrators (one arbitrator is the default position under the Act).
(iii) The scope of the agreement: do I want contractual disputes only? What about tortious, statutory or equitable claims?
(iv) Whether to arbitrate under the Act or under the rules of an arbitral institution such as NZDRC or NZIAC.
(v) If the parties are particularly litigious, institutional rules can provide structure.
(vi) If the dispute may become urgent, consider rules that provide for an emergency arbitrator or for expedited rules.
The number of arbitrators (one arbitrator is the default position under the Act). What law applies to my dispute? For most, it will be New Zealand law. For international contracts, the issue of the governing law of the contract is more nuanced (as will be the law governing the arbitration agreement and the choice of the arbitral seat).
(4) A basic overview of arbitration and what disputes can be arbitrated
- Is not (and should not be) commercial litigation.
- Is a consensual and neutral form of dispute resolution.
- Is private and confidential.
- Enables parties to choose their decision-maker and therefore opt for someone with the requisite expertise.
- Can be agreed to at any time. Even if your contract does not contain a dispute resolution clause, you can agree to a “submission agreement” whereby you agree to submit the dispute to arbitration.
- Results in a final and binding award. It can easily be enforced in New Zealand and for international awards, overseas.
- Is flexible. As explained above, it can adapt comfortably to this unprecedented situation.
- Does not require strict rules of procedure or evidence (unless the parties agree).
Any commercial dispute and some trust disputes can be arbitrated – as long as the parties agreed to arbitrate and the agreement is not contrary to public policy (e.g. an illegal contract):
- Depending on the scope of the arbitration agreement, contractual, tortious, restitutionary, statutory and equitable causes of action can be arbitrated.
- Disputes under shareholder agreements, agile contracts, distribution agreements, marketing agreements, commercial contracts, insurance policies, lease agreements, sale and purchase agreements, IP contracts (save for disputes concerning the granting of the IP), IT contracts, franchising agreements and ICT contracts are all arbitrable.
- Trust disputes are now, in principle, arbitrable in New Zealand (but do get expert advice).
- Disputes over whether an agreement breaches anti-trust laws or claims under the Fair Trading Act are arbitrable.
Remember: an agreement to arbitrate survives the termination, cancellation or frustration of a contract. An arbitrator can still determine questions of termination and cancellation and whether a contract is in fact frustrated.