Arbitration Amendment Bill

I move, That the Arbitration Amendment Bill be now read a second time.

It’s an absolute pleasure to be talking on the Arbitration Amendment Bill, second reading. This is, in fact, the first time that I’ve had the opportunity to talk on this bill. This is because this bill was originally introduced under the name of my former colleague Paul Foster-Bell in mid-2017. Unfortunately, Paul is no longer a member of the House, and he asked me to continue to steer this bill through the House, which I gladly accepted. So this bill has had a long gestation period just to get to this second reading stage.

The original genesis of this bill came from members of the Arbitrators’ and Mediators’ Institute of New Zealand Inc. At this stage, I’d like to acknowledge the significant contributions of the renowned arbiters such as Sir David Williams QC and Mr John Walton. They and other members of the institute quite rightly highlighted that New Zealand has an enviable reputation as a place to do business. International commercial arbitration has grown significantly in the last 20 years, and promoting New Zealand arbitration, New Zealand arbiters themselves, New Zealand law, and New Zealand as a destination for conducting international commercial arbitrations is consistent with the policies of both our Government and the previous Labour Government.

But improving arbitration proceedings generally in New Zealand is also an important objective. This is because when disputes arise, many New Zealanders genuinely want to be able to access a professionally run alternative resolution process rather than having to immediately resort to going to the courts. There are many reasons for this, and they are varied. Arbitration is a bona fide option, as it offers the following advantages: it’s, first of all, a much cheaper process for resolving disputes; it’s often much quicker compared to a court process; it’s less confrontational; and it’s logical as a first step in seeking to resolve disputes.

What many people do not know is that our arbitration rules in New Zealand are based on the United Nations Commission on International Trade Law model law. In fact, New Zealand was one of the first countries in the world to adopt the 2006 amendments. We also ratified the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, and we are regional leaders in arbitration. However, having got ourselves into that leadership position, places such as Singapore, Hong Kong, and increasingly Pacific Island States such as Fiji have and will deliberately target their respective areas as centres to undertake international arbitration dispute hearings. In fact, the Asian Development Bank is actively seeking to support Pacific nations to improve their standing and adopt the model law legislation. The reason for this is that it’s highly desirable. Big international arbitration disputes regularly cost over a million dollars per case and naturally benefit local experts. It also enhances the country’s reputation as a place where local laws are regarded as robust and fair, and enhance the country generally. These attributes are exactly what New Zealand offers, and this bill seeks to promote that.

Unfortunately, there are some aspects of our current legislation that need to be reformed. I’m grateful that the Justice Committee has agreed to address some of these issues. In reaching this position, the committee was advised by the Hon Paul Heath QC—a retired High Court judge—as well as hearing submissions from a range of participants involved in New Zealand arbitration. The agreed changes are, first of all, to avoid a late jurisdictional objection—this is article 16(4) in schedule 1, inserted by clause 6(1)—to deal with the issue of parties to arbitration deliberately using a provision to wait until the end of the arbitration proceedings and, if they’re unhappy with the outcome, to then claim that the arbitration tribunal did not have the jurisdiction to rule on the proceedings. This clause seeks to specify that a party must make a timely request—and that’s the insertion—on the tribunal’s jurisdiction, otherwise that right is lost. It’s an important aspect.

The second change that’s been agreed to is the application to set aside as recourse against an award, and this is covered in an amendment to article 34 in schedule 1. The committee agreed with the need to replace the reference to “the schedule” with “the Act”, as this amendment corrects the original drafting of the 1996 Act, which incorrectly used the word “schedule” rather than “Act”.

The third aspect is what is commonly referred to as the “quick-draw procedure”. Clause 1 of schedule 2 in the Act sets out default procedures for the appointment of arbiters where parties have reached no agreement as to the appointment. This appointment process, commonly referred to as the “quick-fire appointment process”, allows one party to the proceedings to appoint the arbiter if they’re quick enough in the process, and this is in conflict with the principles of good arbitration. The committee was keen to address this issue but was concerned that the issue was outside the scope of the bill’s original intent. For this reason, the committee asked the Business Committee of Parliament to extend the powers of the committee of the whole House in considering the Arbitration Amendment Bill. I’m again grateful that the Business Committee agreed to allow the committee to address this issue and has proposed to introduce a Supplementary Order Paper at the time that this bill is considered in the committee of the whole House.

The other aspect is around confidentiality. Madam Deputy Speaker, I’m just worried about the time.

💬 DEPUTY SPEAKER: I have the correct time, so you keep going.

You have? OK. Whilst these changes are important, they still put New Zealand at a disadvantage when it comes to trying to attract investment arbitration disputes to New Zealand. The core issue is the risk that if arbitration proceedings fail, then the New Zealand courts operate on a rebuttable presumption of open justice—that is, all evidence is heard in open court hearings. Privacy and confidentiality are frequently cited as defining characteristics and valuable benefits of arbitration over litigation. In fact, a recent survey said that 87 respondents in the international arbitration survey believed that confidentiality is one of the most important.

Other jurisdictions in the Trans-Pacific region—and, notably, Singapore and Hong Kong—have enacted legislation and developed arbitration law that has, as a major feature, provisions for the protection of confidentiality in court hearings related to international arbitration proceedings. Given the quality of our legal profession and particularly those involved in arbitration, this represents a real loss of commercial opportunity for New Zealand.

The recommendation that I propose is that New Zealand not overturn the important principle of rebuttable presumption of open justice, but to give judges more discretion when deciding whether or not to proceed to hear international arbitration cases in private. The clause I proposed was an insertion to section 14H. This was an important aspect, in my view, as it would have provided some flexibility for New Zealand judges to respect the rights of international parties who choose to undertake their international arbitration proceedings in New Zealand. And, of course, such a change would ensure that New Zealand would become a far more attractive destination for international arbitration awards.

Unfortunately I wasn’t able to convince Government members of the advantages of this approach. Without such an amendment, we will still be at a significant disadvantage. However, we have made significant progress, and any progress is a good thing. I want to thank all the members of the committee and particularly the Hon Paul Heath QC for his support during this process, and, as a wider context, I’m heartened that arbitration issues are also being dealt with in the Trusts Bill that the committee is currently considering. I look forward to debating and talking about this issue further. Thank you, Madam Deputy Speaker.

Just before I call the next speaker. For the benefit of those newer members in the House: the timers up there are for your assistance. Actually, the Speaker controls the times, so the Speaker always has control of the clock. So even if they’re not working, the Speaker is actually controlling the time—you can rest assured.

Thank you, Madam Deputy Speaker. I would like to start by acknowledging the member who has just resumed his seat. As the member who is sponsoring this bill, Mr Andrew Bayly should be feeling lucky, as seldom do members’ bills, especially technically driven ones, attract so much attention. On that note, I’d like to acknowledge the initial sponsor of this member’s bill, Mr Paul Foster-Bell, who is present in the House tonight.

I want to thank our officials, advisers, and PCO—the Parliamentary Counsel Office. Without their knowledge, experience, input, and, should I add, their patience, we could not have achieved what we have achieved now. I want to also thank the Minister Andrew Little for his leadership, support, and, should I add again, patience and tolerance, without which we cannot achieve what we have achieved in terms of both the substance and procedure in terms of the progress of this bill.

We might have made history, or at least set a rather unusual precedent. If members are not quite sure about the historical side of that, at least members can agree that we had a very robust process and had robust debate and worked constructively on this bill. We considered two departmental reports: one from the advisers from the Ministry of Justice and another one from our independent adviser, the retired High Court Judge Justice Paul Heath QC. This bill has also attracted the attention of Chief Justice the Rt Hon Sian Elias. To a large extent, the views expressed by the Chief Justice have helped shape my own views and also others’ views in terms of fundamental principles, as well as specific provisions proposed under this bill.

Lastly, this bill went all the way back to the Business Committee, where we as the Justice Committee sought advice and sought instruction from the Business Committee for that committee to determine whether a particular amendment to a provision which would be outside of the scope of the bill could be considered by the House, and the Business Committee has duly determined that the amendment could be considered by the House. That particular point concerns clause 1(4) of schedule 2 of the Arbitration Act 1996—the primary legislation. The Justice Committee received strong representations from submitters that that clause should be repealed. That provision sets out a default procedure for the appointment of arbitrators where parties cannot agree. It gives rise to a problematic aspect called “quick-draw procedure”.

Let me read out one direct quote from Paul Heath QC’s report: “It would be undesirable for an arbitration that had continued for … months to be challenged successfully at a late[r] time on the basis that [Arbitrators’ and Mediators’ Institute of New Zealand] had no power to make the appointment.” That’s a direct quote from QC Paul Heath’s report, therefore clarity is required. However, the proposed repeal of clause 1(4) of schedule 2 is not contained in the bill, and a question of scope therefore arises.

Another important issue concerning this bill is open justice. Arbitrations are conducted in private by default, and confidential information cannot usually be disclosed. However, when arbitration proceedings are elevated to the court, our laws provide that proceedings are conducted in public by default, although a party can apply for private proceedings. One of the key and contentious proposals of the bill was to extend the presumption of confidentiality to cover court proceedings related to arbitration.

What the advisers from the Ministry of Justice provided in the departmental report is that the current section 14F provides a process for a party to apply for a private hearing. Before ordering a private hearing, the court must consider, basically, three elements. The first one is public interest in the judgment, the second one is the private nature of arbitration, and the third one is the open justice principle. Paragraph 64 of the departmental report made it clear that where hearings are open to the public, the courts can still order that information not be published if there is a compelling reason to do so. As noted by law partner Jeremy Johnson during his oral submission, it is rare that courts will decline an application to anonymise their judgment.

I do not intend to spend too much of the House’s time at this stage simply for two reasons: (a) I’m very much looking forward to the committee of the whole House stage, where I understand certain Supplementary Order Papers will likely be introduced; and (b) I’d like to come back to some other important issues, including open justice and also the views expressed in the two letters of the Chief Justice, which, again, helped to shape my own view and, I believe, shaped the committee’s view. So I look forward to the progress of this bill. Thank you very much.

Thank you, Madam Deputy Speaker. I rise to speak to the second reading of the Arbitration Amendment Bill.

As others have said, this has had a long gestation. If I could commend the sponsor of this bill, Andrew Bayly, for his hard work, tenacity, and not inconsiderable political skills in guiding this through a rather fraught process, and also to acknowledge the architect of this bill, Paul Foster-Bell, who is in the Chamber with us tonight.

As a relatively recent person coming onto the Justice Committee and following on from our chair, I would have to say that this was full of technical complexities. We were dealing with the Trusts Bill at the same time and if members would like to look, this is a small amount of the paperwork that the arbitration bill generated. This is not to say that whole forests were chopped down in this bill coming to where it is tonight, but I would have to say that there were a number of technical disagreements around the way that this bill was originally conceived, and its interaction with the Trusts Bill.

I absolutely agree with what the chair has just said, that we needed the influence and intervention and understanding of Minister Andrew Little. So I’m very grateful that that occurred. We also had, bringing with him a great degree of intellectual rigor and legal experience, the Hon Christopher Finlayson QC, who also brought a lot of wisdom to this process, which was a long and involved one.

It was a very pivotal turning point, I think, when the retired High Court judge, the honourable Paul Heath QC, came in to really pull this together. We could’ve got bogged down, and we did, actually, in the international arbitration area. And I’m not surprised. As somebody who didn’t know very much about this area before I came into the committee, I’d have to say we were fully lawyered up. We found out a lot about arbitration, how important it is as an effective resolution for commercial and other disputes, but also that there’s not a great deal known about this in the world. Many nations have established arbitration centres, and apparently Hong Kong and Singapore are the best at that. But many other nations, perhaps a little bit like ours, are scrambling to establish themselves as arbitration hubs of one sort or another. So it was timely but complex and needed to be done.

Arbitration is a very good thing on a whole lot of levels, one of which is that it reduces the caseload in the courts, therefore making it a more cost-effective method of resolution and the mediation of the international commercial disputes without jurisdictional issues, so I guess the least complex ones. International arbitration, which is the determination around cross-border disputes, is one of those areas that really has developed significantly and the issue of confidentiality was one of the most crucial ones that needed to be negotiated. There were, indeed, some very choppy waters that this particular bill had to circumnavigate.

As well as international, we’ve also done regional conflict resolution, which is something that successive New Zealand Governments have really come around to acknowledging that it needs more support. So I think, for example, the model law that we adopted in 1996, which was “to encourage the use of arbitration as an agreed method of resolving commercial and other disputes;” was something that has long been on the minds of lawmakers and legislators and we, as Andrew Bayly has indicated, had a number of very high-powered and high-level QCs and others who came in to give their wisdom. There was not always agreement. That was why it was very important to argue it through very carefully.

I was interested to find out that every arbitration case that’s heard in New Zealand is worth, on average, $1 million dollars to the local economy. So there are incentives and perhaps perverse disincentives that can come to clash here. But such things as international conference venue hires, accommodation, food, travel, legal, and secretariat support is yet another industry, if you like, around this arbitration area that will also benefit from this legislation going through.

So it is complicated. There are a number of issues that we will examine in more detail as we go through to the third reading and the committee of the whole House. But I would have to say, as an exercise in discussion which sought to get the best possible outcome for New Zealanders and for people who wanted to argue arbitration not before the full courts but to try and achieve some resolution, this is a bill that is very much needed in this country. So I commend its authors and I commend this bill to the House.

Thank you, Madam Deputy Speaker. Congratulations to a somewhat subdued Mr Bayly over at the other side of the House for getting his bill to this stage. As the Hon Maggie Barry said, he did so with some real political acumen, because certainly there were a number of tricky questions to be addressed.

It must be remembered that arbitration is, in a sense, the privatisation of justice. I don’t say that in a bad way, but it’s taking the dispensing of justice outside of the public realm into the private realm. There are places where that is entirely appropriate. But one of the important philosophical threads, if I can say it, of the select committee procedure was the discussion around the importance of having the backstop of the courts retain their open justice principle. I can entirely understand why particularly large commercial parties would want to have a pretty much closed procedure for the resolution of their commercial disputes. Indeed, the court procedures themselves allow for this in some instances. But there is a very strong presumption, a right presumption, in favour of open justice.

Mr Bayly made very persuasive arguments that didn’t ultimately sway the day, but very persuasive arguments that there was business to be done, that we could create a market for arbitrations in New Zealand. I think the committee was rightly cautious in going down that path. Because whilst the court system is a precious resource, and whilst having international arbitrations is all very nice, and I absolutely encourage it, I’m not sure that we should be selling our courts to international parties who have no connection with New Zealand, and thereby overburden the courts again. So, ultimately, the suggestion that there should be a presumption of secrecy in arbitrations did not find its way past the select committee. I must say the Chief Justice had provided very firm views, as entirely appropriate as the head of the courts, about the role of the courts, about the role of open justice. As the chair Mr Huo said, that was very persuasive indeed.

The other important part of this bill, and I don’t want to be too negative, I want to explain, particularly from this side of the House, why the bill has not been adopted in its entirety. This was the use of arbitration in trust disputes. Now, once again, I am a huge advocate of alternative dispute resolution. We know that the earlier a dispute is settled at the lowest level of formality is pretty much always the best for all parties. Trust disputes pose particularly difficult problems for arbitration, problems that are addressed in the Trusts Bill, as Mr Bayly points out, but in slightly different ways. A really difficult problem is the fact that beneficiaries may not be identified or they may not be well represented. So we’ve got to be really cautious about how we address arbitral provisions in trust deeds. We want to absolutely make sure that, for example, child beneficiaries under a trust deed aren’t simply steamrolled by an arbitral procedure which is essentially dishonestly designed to side-line them. The supervisory jurisdiction of the court is of critical importance there. Miss Barry waved a wad of paper which represented some of the deliberations on this bill. The Trusts Bill magnifies that somewhat, but that’s where those provisions will be found.

But that’s not to say this is not a useful and an important bill. Mr Bayly did an outstanding job in teasing out some of the really important technical provisions. I think our arbitral law will be significantly better for his and his predecessors work in this area. One of the points was the clarification around objecting to jurisdiction. You can’t just haul someone into an arbitral tribunal before an arbitrator, the parties must have agreed to it, and it must meet certain bare minimum thresholds. Every so often—a good example is the consumer, not many people know that a consumer cannot be compelled to arbitrate unless they agree after the dispute has arisen. So there’s a jurisdictional problem. In some of these situations the parties might simply let the procedure grind on without raising any jurisdictional objections.

That’s not a good thing, because what we want in any dispute is a speedy, straightforward, procedurally robust dispute resolution procedure. Now, what this does is require anyone who has a procedural objection to, essentially, raise that and pursue it promptly. So you can’t simply say “You’ve got no jurisdiction.” and then sit on your hands, because that’s unfair on the party pursuing the dispute resolution procedure. You’ve got to actually pursue it.

The other important point that was raised here—another great improvement—is the use of what’s been called the quick-draw procedure, and, really, its utility has been superseded by the Arbitrators’ and Mediators’ Institute, because the quick-draw procedure is what the parties resort to where they cannot agree on the appointment of an arbitrator. It’s essentially a default locus procedure whereby one party says “Well, here’s my chosen arbitrator. You’ve got seven days to object.”, and, of course, nine times out of ten, the objection comes too late and it’s a default appointment. Now, it can be a sneaky way to appoint an arbitrator who isn’t impartial. It cuts across what arbitration is supposed to be.

What we do have in the Arbitrators’ and Mediators’ Institute—and I recognise them now as a really important and a highly respected institution—is a professional body which can now fill that appointment vacuum. Really, all that’s needed is to go to the institute and make that appointment, so that’s a much better outcome. So what we have here is some really significant improvements, and I note the fact that that’s had to go to the Business Committee because it is something that may not have been in the original bill.

The other tidy-up is just around some tidying of the language of the Act. Mr Bayly referred to references to “schedule” when it should be “Act”. Again, we want to make sure it’s consistent. The arbitral law sits within an international framework, so it is, in fact, very important—particularly for international arbitration—that our domestic law tracks pretty much exactly the international framework. So that’s another thing that we’ve done here.

So look, I know that this bill doesn’t meet all of the expectations of its proponents, but I do hope that they’re happy that we had a really robust process in which we were extremely well advised, not only by some of the most high-quality submissions I’ve seen from real specialists in the area who took an interest but also by Mr Paul Heath, former High Court judge, a former law commissioner, and Queen’s Counsel, who, I must say, gave some of the most thorough advice, but, frustratingly, never gave us his own view on exactly what we should do—because we were desperately looking for it on some occasions. But what we have now is a piece of legislation or a position which says, “Look, on policy grounds, open justice is paramount.”

Parties can have private arbitrations, but when we get to the court system, the court must be free to make a decision about what information becomes closed. The court has an ability under its existing procedural rules to close some information and not other information, so that is entirely up to the court. Now, it may well be that this doesn’t create a thriving international arbitration market, but, for policy reasons, I think that’s where we’re going to sit. I’m confident that we have a judicial system which is highly respected, and people will come here for the quality of our judiciary, the quality of our advocates, and the fact that we have an extremely transparent country and they can trust what goes on here. So well done, Mr Bayly—another win for justice.

Thank you, Madam Deputy Speaker. It’s a pleasure to rise on behalf of New Zealand First to speak to the Arbitration Amendment Bill. First of all, with your forbearance, I’d just like to acknowledge the former member Paul Foster-Bell in the House—a hard-working and determined member of Parliament in his time—and I would like to take the opportunity to congratulate him for his work in bringing this bill to the House and publicly commend him for the work he’s doing now. He’s a great guy doing a great job.

It then makes it hard—no, it doesn’t!—to speak to Andrew Bayly, the current sponsor of the bill and congratulate him for his advocacy, actually. He has taken the proverbial bull by the horns, as it were, and has been a strong advocate for this legislation. He has undertaken a lot of work behind the scenes and has been very willing and open in his discussions with all members who are interested and who want to know more about what it is that is being aimed for within this bill.

I think it’s appropriate to point out that when this bill was first introduced to the House, by Paul Foster-Bell, New Zealand First spoke quite strongly in terms of reservations. We spoke about the fact that we had concerns that the bill would introduce new presumptions of confidentiality in relation to proceedings concerning arbitration, in contrast to court proceedings, which, as has been aired repeatedly this evening, are normally open proceedings. They are open to the public, and the information itself is accessible by the public. So this is a well-established principle in New Zealand’s legal system.

In the Justice Committee, the recommendation around deleting clause 5 from the bill has assessed that “the current regime for arbitration-related court proceedings strikes the appropriate balance between open justice and the private nature of arbitration.”, and then we had some concerns around trusts within this legislation. But I rise in support of this legislation—I thought it appropriate to clarify that at this juncture—and say that of course New Zealand First does support arbitration as an alternative to disputes. As was outlined previously, if two parties can work through issues in a less formal setting, perhaps the less formal the setting is, probably the easier it is to get through the issues that they have cheaper, quicker, and it is ideal for both parties, and the international arbitration here is part of that. So we support this and we support, with professional assistance, of course, this being done.

I think the submitters spoke to how this can be improved. I would note, actually, that some of what is being sought in this legislation actually seeks to align our legislation with international standards and, hopefully, make arbitration more attractive in New Zealand. But I will point out and acknowledge the words from Dr Duncan Webb, the previous speaker, that, actually, the attraction of the New Zealand system is based around our professionalism, the level of integrity, and the competence of those practitioners in the New Zealand legal system. So, in that, we are an attractive proposition to those who would use New Zealand as an international arbitrator, and I suppose I would signal that there is still to be some debate about the way that we move forward in terms of the open justice system in these arbitration-related court proceedings.

So I think I have outlined quite briefly the reasons for our support. I don’t think I need to go through the technical aspects of what arbitration is—

💬 Hon Members: Go on!

—in the New Zealand system, despite the protestations of my colleagues on this side of the House. We support the legislation and we look forward to it proceeding through the House. Thank you, Madam Deputy Speaker.

It’s a pleasure to take a call on the second reading of this Arbitration Amendment Bill. This is one of those bills that are about improving New Zealand’s business laws and are part of the many dozens of things that we need to do well as a country, to protect that reputation that National built during its nine years in Government of New Zealand being a good place to do business. In international surveys, New Zealand is recognised as one of the best places in the world to do business, and, equally so, a reputation that New Zealand should be equally proud of is New Zealand being the least corrupt place in the world to do business.

Can I congratulate Andrew Bayly. He is a member that’s come to this House with a deep level of experience in the business community, and the sort of contribution he’s making to New Zealand’s law is just a fraction of what he will do in the next Government as a person that actually understands how wealth is created and the importance of good law in an area like arbitration.

I want to cover four specific issues. The first is that we on this side of the House recognise that for New Zealand to be successful we need to be globally engaged. And actually, an increasing number of contracts, whether it be for major infrastructure projects, whether it be in terms of the huge amount of trading activity, does involve commercial contracts of New Zealand and other countries. And when those contracts are signed, people have a choice as to whether they want to have an arbitration procedure and where that arbitration will occur. And the advantage for New Zealand having modern, robust arbitration law is that more people will choose to have that arbitration process in New Zealand, and that is to this country’s credit.

The second issue that is important in this bill is the degree to which we limit the scope of our court system to intrude into arbitrations that have been entered into around commercial contracts. And a key part of this bill is actually improving the certainty around the arbitration process and the degree to which the courts can intervene, either in terms of a timely way or putting limits on where our courts may undo what has been decided through an arbitration tribunal.

The further part I want to refer to is this issue of secrecy and openness and where the public interest lies. It is true and I totally agree that where you are dealing with issues of criminal justice and public law that there is a strong argument for transparency. But when you are dealing with private contractual disputes, my view is that the onus is in a different sense and the parties are able to resolve the issues in a private way that is often to the interests of all parties concerned.

My experience prior to coming to this Parliament was in the construction industry, and often, both from the point of view of a client and a contractor where there are reputational issues at stake, people want a confidential, robust, but efficient system to be able to resolve disputes that may amount to many hundreds of millions of dollars in construction disputes. And I think the provisions in this bill that respect the confidentiality of those arbitration processes is an outcome that is in the public interest. I think in that respect New Zealand First is a bit naive. This is not the only area.

💬 Clayton Mitchell: Oh, come on, Mr Smith.

Well, the member opposed the bill on first reading. He’s now supporting it. He’s now accepting the wisdom that is in this bill and the superior knowledge that he has about how the real business world works and also, in my view, a reality of the importance of robust commercial arrangements that can transcend national boundaries and ensure that international commerce occurs on the very best standards.

The Justice Committee has worked hard on this bill. We have made changes. It is a better bill as a consequence. This is not the most exciting bill, but, Madam Deputy Speaker, I tell you what’s important: it is getting every piece of law that’s associated with the business community refined world’s best practice that makes New Zealand a successful economy. That is something the English - Key Government understood. It’s something the National Party understands, and I urge members opposite to understand the importance of detailed commercial law of the sort to be in good shape for New Zealand to be a great place to live.

Thank you, Madam Deputy Speaker. The Arbitration Amendment Bill has been one of those bills that one felt that as a new member of the Justice Committee there are certain bills that come through that actually do thoroughly increase your understanding of an aspect of the world, of the law that I knew very little about before. Although, having said that, having been part of an organisation, the only organisation that actually had binding arbitration as its manner of settling pay disputes, I probably didn’t have to understand much about the give and take of the arbitration system. So I do thank the member Mr Bayly for the way in which he has pushed the bill through. It made for quite strong deliberations to the committee and certainly has made sure that when we did come to deliberate on the bill, we were certainly as well informed as we could expect to have been.

The early stage of the debate was of course around making New Zealand bring in a confidentiality clause, so where a case had ended up in arbitration that the presumption of that being heard in public was reversed. So the presumption would actually be that it would be confidential. And the rationale around that, on the surface of it, certainly from the commercial point of view, was that it would assist New Zealand to establish an international base around arbitration, perhaps with the benefits, financial in particular, that would arise. So that really brought us to the nub of the matter in what we did consider much of our debating time.

We heard from some very smart, wise, informed people to the committee. Probably, it would be fair to say that for a member’s bill, the resources that went into it, the advice we got, probably exceeded that that most will ever be allowed or permitted on such a bill. However, it did certainly, when you had people of the likes of Paul Heath QC to advise us through this, ensure that when we did come to the deliberation and it brought us to this stage, we were making sure we were playing with the best information available.

When we did go to the confidentiality, some of the arguments that were brought up were ones that if we did have confidential settlements all the time, then we wouldn’t learn anything. No judgments would be published; therefore, there would be no learnings.

💬 DEPUTY SPEAKER: Order! Can I just interrupt the member’s speech? I have stopped the clock. Chlöe Swarbrick, can I refer you to Speaker’s ruling 16/3 about the device that’s on top of the desk. There is a Speaker’s ruling about that. It is just above the one that refers to knitting in the Chamber, for the members. So can I call Greg O’Connor to resume his speech?

Thank you, Madam Deputy Speaker, and being a student of history, I’d be very wary if, while standing on my feet, people were knitting, knowing what that preceded in the French Revolution.

💬 DEPUTY SPEAKER: Slightly odd juxtaposition.

However, I can go back to the Arbitration Amendment Bill. Again, going back to the fact that much of our discussions were around the confidentiality—this basic principle, really, of confidentiality for public; that justice should be seen to be done and that these things should be conducted in public. And I was certainly left—from the new information that I received, the discussion with some of these very learned gentlemen, and I believe they were all gentlemen, the learned ones that came before us—with the impression that there was certainly no justification that we would actually go against the basic tenets of our justice system, of open justice. So it did take us a while to get there, but we got there, and I think it was something that, because of its importance, we should really deserve the time that we actually spent on it.

When we were considering that there was one celebrated case—the Hawksbury case—that came up about how much, and this is, again, a matter that was considered; it was settled by arbitration but it was around public money. And that certainly became the centre point of much of our discussion around whether, with a confidential settlement surrounding public money, using this legislation could have prevented that being known. So, again, another case came to us that helped us in our decision making.

As we come to consider the second reading of this bill, it goes back again to the basic tenets of this. It was about improving the framework for arbitration as a helpful method of resolving commercial and other disputes. Arbitration or alternative dispute resolutions are very much part of our criminal justice system now with the introduction of pre-charge warnings etc. or alternative resolution, right through to these rather large cases that we will hear of.

At one stage we did also consider, when we were looking at that confidentiality and whether it was possible to set up this international arbitration system, whether we could have a two-tier system to preserve the confidentiality—those basic understandings of the way we do our business in New Zealand—whether, in fact, we could have a system that, provided the two parties had no interest in New Zealand, were domiciled elsewhere, whether we could actually have a system that would allow us to take advantage of the perhaps vast amounts of money that these big corporations coming to New Zealand to do their business might have been able to avail ourselves of, and just then have another system for New Zealand - based companies, which would have to work under the current system.

While there was some work done on that, again, one of our learned QCs—I think Mr Paul Heath was one of the ones who looked at that—came back and, while there was some attractiveness, again, it had that two-tiered justice system, which started to have that smack of a bit of third world about it, and started to make New Zealand start to look like a country that, you know, perhaps was going away from those beautiful, basic justice principles that make us one of the least corrupt countries in the world.

So, again, these were the sorts of discussions that we came to. So I won’t say it was quickly dismissed, but that was one of those suggestions that was brought, explored, and rejected, which brought us then back to the bill we have before us today. The practical purpose, again, to improve—it really is about improving justice, arbitration of course being a helpful method of resolving commercial and other disputes based on the consent of the parties.

One of the other things we spent some time on too was the late jurisdictional change. One of the important things here is that—and again we debated whether it was possible for parties to go through what is inevitably quite an expensive process of going through a whole system of arbitration and then one party being able to object to the jurisdiction. And that’s a case that came out of Singapore, and if one of those parties objected, it was quite possible then for the whole expensive process to have to be restarted or thrown out. That was one of the clauses, again, which we spent some time on. And, of course, it very quickly became obvious that we needed the protection to make sure that wasn’t the case: that an unsuccessful party could stand and say, “Well, I don’t like the result. I’ll look for an alternative.” So we were very fortunate to have time to consider that.

Again, going back to the matter we talked about, about the benefit of New Zealand being a venue for overseas arbitration, being considered. And William Somerville, one of those submitters, said it “should not drive [a] weakening [of] a fundamental constitutional principle.”

That was really where we arrived. What we have now, this Arbitration Amendment Bill—I’m very happy to commend this bill to the House and again congratulate—as it’s turned out. Because knowing that I’ve been part of the very hard-working Justice Committee, I’ll remind, as I have before, that at one stage I was reminded that two-thirds of the sittings of the select committees in this House were the hard-working Justice Committee. I see Mr Bishop over there nodding his head vigorously, as a fellow member of that extremely hard-working Justice Committee. So I am happy to commend this bill to the House.

E Te Māngai, tēnā koe. Tēnā koutou e Te Whare. It’s a pleasure to rise on behalf of the Green Party to, and I’ll front foot it, commend this bill to the House. I want to lend my congratulations to Andrew Bayly, as the member in charge of shepherding this piece of legislation through the House and, indeed, through the select committee process, and also, obviously, to the member formerly in charge, who introduced this legislation into the 51st Parliament, if the record is correct, Paul Foster-Bell, whom, I would note just for the sake of some fun for law students who may later be going through the Hansard, I met on the bus a few weeks ago. So I might say there is hope for that blue-green idea yet.

What this piece of legislation does—and a number of speakers before me have really spoken to the crux of it—is improve the arbitration process. It was actually Barry Coates, a former Green Party MP, who spoke at the introduction of this bill, at the first reading, about the importance of supporting transparency but also about the importance of practical changes to the arbitration process to make it work better for those who engage in it.

As a number of speakers have addressed, the arbitration process is an important part of the alternative dispute resolution cachet in that it keeps the courts free of those disputes which can be settled in those rooms that are somewhat more private but, obviously, somewhat a bone of contention, I would note, given the points made around open justice. I would refer members to the submission of William Somerville, who, I think, summarised it quite well. I believe it was the Hon Maggie Barry who spoke to how arbitration cases from overseas bring in, on average, approximately a million dollars each. That is evidently quite a high financial incentive, but as William Somerville put it—and I quote—“The suggested benefit of promoting New Zealand as a venue for offshore arbitration is legitimate, in itself, but should not drive weakening a fundamental constitutional principle.”, that being open justice. I think that’s a really critical point; so I would commend the committee on what, I am sure, were incredibly robust discussions and debates. And this, I know, is one of the most weighty reports that I’ve seen back from a select committee; so I will tautoko the point made by Greg O’Connor that it is evidently a hard-working committee—hey, Chris Bishop!

On the point around trusts, this is, as I understand, going to end up being dealt with in a Government bill, which is being dealt with by the same Justice Committee, and there are also a number of technical amendments proposed within this legislation—those being, avoiding late jurisdictional objection and application to set aside as a recourse against award.

I’d note the point, which has been alluded to by other speakers, around the appointment process for arbitrators. This is an interesting one, which a number of submitters chose to use their submission time to speak to, despite the lack of clarity as to whether it could end up being included or was out of scope of the member’s bill.

The problematic area, which I hope is capturing the attention of the Hon Alfred Ngaro, who asked for Greg O’Connor to put this in a poem—this is a fun fact, Alfred Ngaro—is quick draw procedure, which is where a party can trigger a process to appoint an arbitrator if the other party fails to respond to communication within seven days. The more you know! And it was Paul Heath QC, who advised on removing the quick draw procedure, who said—and I quote—“It is the most important practical issue from the perspective of the arbitration profession”. My understanding, listening to the debate but also delving through the interim report of the Justice Committee, is that this point was put before the Business Committee and that it could be considered as an amendment before the House. So I think that the committee of the whole House stage will be very interesting as a debate.

As a member who had not known that they would be speaking on this bill until about two hours ago, I hope that I have made a somewhat meaningful contribution and would like to echo the sentiments of former speakers to the legislation thus far and commend this bill to the House.

Oh, thank you very much, Madam Deputy Speaker. Look, can I just say, in response to Miss Swarbrick’s speech, that she may not have thought she was planning on speaking on the bill, but it was a more learned contribution than Greg O’Connor’s, who was actually on the Justice Committee, which is slightly embarrassing for Mr O’Connor, but well done, Miss Swarbrick.

This bill has had a long and complicated legislative history, and it’s a testament, really, to the fine work of Andrew Bayly, my colleague, that we are at a second reading and it looks like it will receive unanimous approval of the House. This bill came into being with the lamented Paul Foster-Bell, who left the Parliament at the 2017 election. He introduced it in May 2017, it had its first reading, and it was sent off to what was then the Justice and Electoral Committee. I think we opened for submissions and I think that they came in, but we didn’t actually hear any. That was left to the newly reincarnated Justice Committee of the 52nd Parliament, and that’s where things got interesting. Andrew Bayly, the member in charge of the bill, is nodding his head. I won’t discuss exactly what went on at the committee, but it was an interesting process. We heard the submissions, and they were very learned submissions. We heard from noted arbitrators like Jeremy Johnson down in Christchurch, from Wynn Williams and Co. We heard from David Williams QC—we heard from a variety of different QCs, actually. We heard from the Arbitrators’ and Mediators’ Institute of New Zealand—AMANZ—and we carried on.

We did have a lot of difficulty in getting to grips with the recommendations made by—I suppose you’d say we had some difficulty reconciling the views of the submitters, who were very learned and very expert and very knowledgeable in their field, with the views of the officials. Of course, we were also—and still are, in some ways, actually—still considering the Trusts Bill, and there is a degree of overlap between the Trusts Bill—the massive rewrite of our trust law—and this bill, the Arbitration Amendment Bill. So we had to deal with the overlap and the potential overlaps between the two bills, which we were considering at the same time. We issued an interim report; we sort of threw our hands up with a cry for help.

We issued an interim report and we put a departmental report out, and then we hired Mr Paul Heath QC. I think that was a very smart idea, because Mr Heath QC came in like the white knight, and we were able to work with Paul Heath, and between us on the committee, the members—some of whom are, you know, quite au fait with trust law, some of whom are coming at it for the first time, and some of whom, like me, have an entire honours degree in law but absolutely loathe the subject of trusts and arbitration. But, anyway, between us on the committee and Paul Heath QC and the submitters and the officials from the Ministry of Justice, we have managed to fashion, I think, a good piece of legislation.

It’s highly complex. Miss Swarbrick is right that we’re going to have quite an interesting debate, I think, at the committee of the whole House stage, but what we have sought to do as a committee is not adopt every single thing that the submitters wanted. We have amended the bill reasonably substantially, we have made some fine-tuning amendments as well, and we have landed in a space where it looks like it is going to receive majority support. That is really good, because, as the Hon Dr Nick Smith said in his contribution, certainty in the area of commercial law, when it comes to this, is really important. I actually think it’s one of those areas where it is good to have as much cross-party support as possible in the House, because that consensus, or at least unanimity, provides some ballast to the idea that the law is set in stone, and it means that those out there who are making commercial decisions based on what the law is know that if there’s a change of Government, you know, the National Party’s not going to come in and overturn what Parliament’s just passed. You need to be able to make decisions based on some sense of certainty. Hopefully, as we move through the remaining parliamentary stages we will get this.

Just in my final 30 seconds, I want to just tautoko what Nick Smith said about New Zealand as a potential home of commercial arbitration. We have huge potential for it and we did some work on that in Government—the previous National Government. There is huge potential. In the world today, a society based on the rule of law, the certainty of the law, with high-quality legal procedures and legal tribunals, is something to be prized and valued, and this bill further entrenches it. Thank you.

Thank you, Madam Deputy Speaker. What an extraordinary bill this is. I actually almost wish I was sitting on the Justice Committee through all of this.

💬 Chris Bishop: No, you don’t.

Ha, ha! Well, when I’m looking through the list of reports, submissions, QC reports coming out your ears—not yours, Madam Deputy Speaker, apologies—it’s an extraordinary trajectory for a member’s bill. I acknowledge Paul Foster-Bell and Andrew Bayly for the work and for the commitment, clearly, that you’ve put into this, because I know that you have put a lot of commitment into this. There were 10 submitters, a departmental report—I presume that was the interim report—then you heard again from the submitters, and then QCs were engaged to provide advice, and it went on and on.

For those who are listening at home, what we’re talking about is arbitration, which is—it’s basically described as a helpful method of resolving commercial and other disputes, and it’s based not on litigation but on the consent of the parties. That is what we are discussing, and what the original bill set out to do was to try and introduce some significant changes. I think where we’ve ended up is what good legislators should do, which is with important technical tidy-ups with a bigger discussion around the role of arbitration and where New Zealand could fit into that space. But where we’ve also ended up is with a bill that’s come back from select committee with some significant recommendations for taking out two of the key clauses—clause 4 and clause 5—which, ultimately, means that you are left with the technical tidy-ups.

I’d like to just make a couple of comments in the couple of minutes that I’ve got, particularly around the principle of open justice. That was seen as being so important. I just want to refer to the New Zealand Law Society submission and then contrast that with what Nick Smith said earlier. The New Zealand Law Society submitted “that any derogation from the principle of open justice”—and “derogation” means moving away from the principle of open justice—“requires a compelling justification and should be limited to the least derogation necessary to achieve the objective.” They said that “Comparable provisions in other jurisdictions, [such as] Australia and the UK, should be considered.”

Now, from what I can gather, the basis of the discussion to move away from the principle of open justice was based on Singapore and other jurisdictions—Hong Kong—where a lot of arbitration takes place, commercial arbitration. I think the aim was to try and see New Zealand as being a centre for that kind of commercial arbitration, but to do that would be to move away from the principle of open justice. I think that where we’ve ended up is to say that, actually, in our rule of law and the way that our justice system and our democracy operates, we don’t believe that it’s worth it to do that.

That open justice—and I think what Nick Smith was arguing for was a qualified form of open justice. I’d love to hear what Chris Finlayson had to say about that. I hope he does make a contribution in the committee stage around what that actually means. Is qualified open justice worth giving up our principle in order to get more commercial arbitration into New Zealand? We say no to that. We think that we’ve ended up with a bill where there is obviously some unanimous support around the House.

Debate interrupted.

The House adjourned at 10 p.m.