Arbitration Amendment Bill

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

It’s an absolute delight, and, I’ve got to say, with a certain amount of relief, to be talking on this third reading of the Arbitration Amendment Bill. It has certainly been a long road to get to this stage.

Before starting on the bill, I want to first acknowledge certain people. This bill was originally lodged in the name of Paul Foster-Bell, but I took it over when he left Parliament in 2017, very unfortunately. Since then, I’ve become what feels like a semi-permanent member of the Justice Committee as we’ve thrashed out various elements of the bill. Part of this involved appointing the Hon Paul Heath QC as our specialist adviser, given the technical nature of the bill. I thank him for his assistance, and also the Hon Andrew Little for allowing the committee to appoint such an esteemed expert as the adviser to the committee. I am also grateful to the various contributions from a range of submitters, but particularly Sir David Williams QC, John Walton, and Jeremy Johnson of Wynn Williams and Co., as well as Deborah Hart of the Arbitrators’ and Mediators’ Institute of New Zealand. I’m very pleased to see Deborah Hart in the gallery. I also want to acknowledge Paul Foster-Bell, present here in the House today for this third reading. I also just want to acknowledge the support and expertise of the Hon Chris Finlayson QC. Hopefully, he might soon be called “Your Honour”.

So why all this effort? Simply, arbitration is a very cost-effective and timely method of resolving commercial and other disputes. In essence, it reduces the caseload on courts. It is estimated that there are between 300,000 and 500,000 trusts in operation in New Zealand. Many people establishing these trusts, known as settlors, and the beneficiaries of these trusts often wish and specify the use of arbitration to resolve disputes rather than going down the expensive and often very time-consuming path of getting a court hearing.

One of the objectives of the bill is to improve the laws relating to the arbitration proceedings. I am grateful the committee was able to agree on some of the changes covered by the bill. In essence, these are: firstly, the issue relating to the late jurisdiction issue or objection relating to amendment to clause 6(1). It provides for a new article 16(4) in Schedule 1 to deal with the issue of parties to arbitration deliberately using the provision to wait until the end of the arbitration proceedings and, if they’re unhappy with the outcome, then claim that the arbitration tribunal did not have the jurisdiction to rule in the proceedings. This cuts across the principle of fairness. Amending clause 6(1) makes it consistent with the provisions in article 16(3) of Schedule 1 of the principal Act. The amendment clause specifies that a party must pursue a request on the tribunal’s jurisdiction in a timely manner; otherwise, the right is lost.

The second issue that the committee dealt with was deletion of clause 6(2) from the bill, and that related to the application to set aside recourse against an award. The committee agreed with the provisions in clause 6(2), which would amend article 34(2)(a)(iv) of Schedule 1. The original draft of the bill incorrectly used the word “Schedule” rather than “Act”, which is addressed in the bill. Our current Arbitration Act has borrowed heavily on model law signed by 154 countries, but the clause relating to the amendment was structured differently by inserting it in as a Schedule, and the drafting inadvertently limited its application and created confusion. Currently, awards are protected from challenge when a tribunal changes its procedures to avoid violating a mandatory provision in Schedule 1. However, if a tribunal changes its procedures to avoid violating a mandatory provision under other elements in the Act, then the award is not protected. This amendment addresses this issue.

The third key issue is referred to colloquially as the quick-draw procedure, and it revolves around the issue of the appointment process for arbiters. The committee received strong representations from submitters that clause 14(2) of Schedule 2 of the principal Act should be repealed. This relates to the appointment process for determining the arbiter. Currently, if only one party in a dispute acts quickly enough, they can end up appointing the arbiter they choose, rather than going through the jointly-agreed process for appointing the arbiter. This clause is known as the quick-draw procedure and is unfair.

This ability is fundamentally unfair and brings New Zealand into disrepute by potentially allowing one party to pre-empt the appointment process. A fundamental part of arbitration is the ability for parties to agree on an arbiter or to have one independently appointed, and provision exists under the Arbitrators’ and Mediators’ Institute of New Zealand (AMINZ). However, the committee considered that the repeal provision may be outside the scope of the bill’s initial intent and, consequently, we asked the Business Committee to extend the powers of the committee of the whole House to consider this issue. Again, I am grateful that the House supported my Supplementary Order Paper to delete clause 6(5) and amend Schedule 2 accordingly.

Whilst the changes made above are important and helpful, they still put New Zealand at a significant disadvantage when it comes to trying to attract international arbitration disputes to New Zealand. International arbitration involves the resolution of cross-border disputes, and is one of these areas that have developed significantly during recent decades. Cross-country border disputes not only relate to the area of international commercial arbitration but also regional conflicts. This opportunity is increasingly occurring as the world turns towards Asia, and it is important, given the number of cross-border financial transactions and international treaties containing arbitrational clauses that have grown over time.

The core issue for New Zealand is that if it is to become an important centre for resolving these types of complex disputes, there’s a risk that arbitration proceedings are referred to our New Zealand courts and, therefore, under current New Zealand law, they would operate under the rebuttable presumption of open justice—that is, all evidence is heard in open court hearings. Unfortunately for these offshore international disputes, privacy is regarded as one of the key issues of why people choose to go down the arbitration processes.

Other jurisdictions in the trans-Pacific region—and, most notably, Singapore and Hong Kong—have enacted legislation and developed arbitration law that has as a major feature provisions for the protection of arbitration in court hearings related to international arbitration proceedings. Just recently, two-thirds of legal practitioners and in-house counsel in Asia who were involved in cross-border transactions chose Singapore as their preferred venue for dispute resolution. Our New Zealand arbiters are among the foremost practitioners in the world, and it’s only logical that these members of the AMINZ would wish to ensure New Zealand is regarded as an attractive destination for conducting these international commercial arbitrations. Without making changes, we will remain uncompetitive as a chosen destination, and this represents a real commercial loss of opportunity.

We tried to develop a proposal that didn’t overturn the presumption of open justice but may have given judges more discretion—as they currently do—to decide whether or not, and in the right circumstances, to allow such arbitration proceedings to be held in private, but, unfortunately, we were unable to persuade the committee. However, I am still very grateful for the progress that we have made as a committee. There are not many members’ bills that receive cross-party support.

I want to pay special tribute to the members of the Justice Committee, who continued to keep an open mind to my arguments, and I also particularly wish to acknowledge the chair, Mr Raymond Huo, for his role in trying to achieve a better legal outcome for those in the future who may wish to avail themselves of the use of arbitration. I realise the rarity of this opportunity and I’m most grateful, and I commend this bill to the House.

Thank you, Mr Assistant Speaker. I’d like to acknowledge the member Andrew Bayly, who has just resumed his seat, and also I’d like to acknowledge former National MP Paul Foster-Bell, the bill’s initial sponsor, who is in the debating chamber with us this evening. I want to thank again our officials, our advisers, the Parliamentary Counsel Office, and our independent adviser, the retired High Court judge Justice Paul Heath QC. I acknowledge members of the Arbitrators’ and Mediators’ Institute of New Zealand and renowned arbiters such as Sir David Williams QC and Mr John Walton. I want to thank the Minister of Justice, Andrew Little, for his support, understanding, and, should I add, patience and tolerance.

Former National MP the Hon Christopher Finlayson QC attended most of the sessions. Mr Finlayson QC brought, obviously, a lot of wisdom and legal expertise to this process. I still remember the phrase he used when the advisers took the committee through the departmental report. The phrase he used, if my memory serves me well, was “hot tub”. The hot tub, or “hot tubbing process”, as I understand it, is a useful tool that challenges experts and gets to the truth more efficiently. Someone has suggested that that particular method originated from the Australian Competition Tribunal practice in the 1970s, and others suggested that it originated from arbitration hearings. So, basically, it involves tandem witness examination where experts collide, holding opposing views.

Following that spirit, I reckon, I presented the case to Minister Little, and we decided to release the departmental report earlier to attract further submissions, and also appointed our independent legal adviser, Mr Paul Heath QC. I am confident that the committee has made the right decision, because it was not only honouring the sector but also getting some of the fundamental principles right, because, as Chief Justice the Rt Hon Sian Elias stated in her two letters to the Justice Committee, this bill, although a member’s bill, did touch upon some important issues dealing directly with a court function.

What I want to reiterate is that a subsequent evaluation of those issues and, in particular, the report from the independent adviser, Mr Paul Heath QC, basically confirmed that the officials’ views spelt out in their departmental report are correct. It is very important for me and for us to acknowledge it to that extent.

Unlike other bills, no matter whether they are Government bills or members’ bills, we have deleted most parts and most provisions from this bill. So in that regard, Mr Bayly, if he likes, may regard himself as a successful failure but in a very positive sense, because he has and we have achieved a lot in terms of this legislative process.

Indeed, there are some key changes and points I wish to highlight at the bill’s third reading. The first one—as Mr Bayly acknowledged—is obviously clause 1(4) of Schedule 2 of the Arbitration Act 1996. The Justice Committee received strong representations from submitters that the clause should be repealed. That provision gives rise to a problematic aspect called the “quick-draw” procedure. However, the proposed repeal of this clause is not contained in this bill. So a question of scope arose, and we went all the way to the Business Committee, seeking a new mandate that the Business Committee has duly granted.

Another problematic provision was clause 4 of the bill, which proposed a new section 10A. As drafted, the clause would bind all beneficiaries, including unborn children and incapacitated and unascertained beneficiaries. The effect of the clause would be to exclude beneficiaries’ entitlements to refer the conduct of trustees to the court. Needless to say, the court would have always exercised supervisory jurisdiction over such matters. The Chief Justice called it “a radical exclusion of beneficiaries’ entitlement” and said it “is not warranted”.

The third issue is concerning the presumption of confidentiality versus the rebuttable presumption. We are of the view that open justice is a fundamental part of the New Zealand justice system, in terms of both the public scrutiny and as a safeguard for the proper administration of justice. The court can always order a private hearing if a party applies and/or where the public interest in a public hearing is outweighed.

Lastly, I want to say that I am a strong advocate for New Zealand business and “New Zealand Inc.” in general. I do agree that international commercial arbitration has grown significantly in the past 30 or so years, and it is vital to promote New Zealand arbitration and promote New Zealand as a business-friendly destination for international commercial arbitration hearings. The Asian Development Bank has embarked on a project to improve international arbitration laws in the South Pacific region. There is no reason why we shouldn’t follow good examples in jurisdictions such as Hong Kong, Singapore, and in terms of Pacific nations such as Fiji, and specifically promote New Zealand as a business-friendly destination for international arbitration hearings.

Sir David Williams QC offered insights into the use of confidentiality provisions overseas, and some reasons why it might now be an appropriate time to promote New Zealand and New Zealand arbitration and promote New Zealand as a seat of international arbitration. Paul Heath QC also, in his report for the committee’s consideration, cited a bifurcated model as a possible model for a confidentiality regime.

My personal view is: let’s not regard the third reading of this bill as the end of this conversation. Rather, we should regard this third reading debate as a beginning of many thought-provoking discussions about good ideas of how to promote New Zealand as a business-friendly destination for international commercial arbitration hearings. So my message to the sector is: let’s work together. Thank you.

Thank you very much, Mr Assistant Speaker. It’s a pleasure to rise and make a contribution on the Arbitration Amendment Bill. It’s traditional in the case of members’ bills to start by acknowledging the member himself or herself, but this time I’ll make my acknowledgments chronological, and I’ll start, in fact, Mr Bayly, with Paul Foster-Bell—PFB, “Fozzie Bear”—who is the architect of the bill. I understand it’s legitimate to refer to those who are no longer members of the House in that fashion, but perhaps I shouldn’t have, all the same. Moving on now, if I may—and I feel I should—I do want to acknowledge the member whose name the bill is, in fact, now under: Andrew Bayly. Both of those gentlemen, I know, have worked hard to bring us a product that is worthy of our consideration and, indeed, our vote here tonight. I’m pleased to observe that that will be the case across the House.

Mr Bayly has acknowledged others who have contributed to that process, including in the arbitration sector, so I won’t belabour that point, but I do note that Raymond Huo and others who were on the Justice Committee no doubt made a positive contribution in helping to shape the bill in the way that’s already been described.

I’d like to emphasise in my contribution the interaction of this bill with the justice system, specifically the courts portfolio, which I hold for my party. Of course, the nature of arbitration is that it’s separate to the judicial branch of Government. It’s precisely because it’s separate that it is so important in the context of the court system. I’ll explain, I suppose, by observing, in the first instance, that arbitration is a subset of what’s known as alternative dispute resolution. In other words, it’s a manner of resolving disputes that doesn’t require the standard process, I suppose, as we might view it traditionally, of going off to court and having a judge preside and decide the matter. Instead, of course, what we have is a system that is specifically designed to avoid that. So although it’s outside the area of the strained New Zealand court system, it’s important for the court system precisely because it can relieve some of that strain if done well.

The purpose of the bill, of course, is to improve the system that already exists, and to do it not only well but better, and it seems to me that it does that in a very admirable fashion. So just to finish off on that line of thought, the backlog that the New Zealand court system has been developing in various different jurisdictions and various different levels over a number of years may be relieved somewhat if the arbitration sector is able to deal with as many disputes as possible. So there’s an issue of timeliness and there’s also an issue of access to justice, such that an arbitration can be dealt with not only more quickly but also in a more cost-effective manner for the parties, and that is a thing to be encouraged.

Next, I want to emphasise the importance of the bill to the extent that all arbitration provides legally binding awards. That’s the nature of it. That’s the whole purpose of the exercise, of course: for parties to be able to reach an agreement, albeit one that is mediated. I hesitate to use that word because, of course, mediation is a separate beast, technically. But it’s mediated in a sense of having a third party decide a matter that two parties to a dispute have decided to bring before them. So because the stakes are high, because we are talking about a legally binding award that will arise and derive from the arbitration process, it’s all the more important that we have a system that is very clear. The clarity that is provided, for example, by the amendment of Schedule 1, as has already been described, is therefore a good thing that we should be happy to pursue in this House tonight.

💬 Fletcher Tabuteau: Look happy.

The next point that I will make, with all the enthusiasm I can muster for Fletcher Tabuteau, is in relation to the voluntary nature of arbitration. So this is essentially an exercise that parties willingly enter into. They do so voluntarily because it’s in their best interests. As I’ve already explained, it’s in the best interests of New Zealand’s justice system, separate to that. If we are to encourage members of our society—whether it’s natural persons, or corporate bodies, or whatever form a legal person might take—to engage in this constructive way, then we should do everything possible to make the law better for that purpose. As a small-government conservative, this is something that I think Parliament’s time is well spent engaged in, namely, legislating to allow individuals to be able to carry on their business as best as possible without the intervention of the State—although, noting, of course, that might be the most appropriate course of action in any given case.

My next point, essentially, in praise of the bill, is to note that arbitration is, actually, often a first resort option. Often commercial contracts will state within standard terms—and would rarely be varied, in fact—that arbitration would be the first recourse that a party must have if believing that there has been a breach of the terms of the contract. That being so, its significance is heightened: it’s the most likely course of action that parties will take if they feel as though they have been wronged in that contractual way. With the original Act having been passed in 1996, or at least effective in 1996, we’re now 20 years beyond that, so it feels like an appropriate time to consider ways that the Act can be improved, and I think, therefore, that this work in the name of Andrew Bayly is quite timely.

I’ll just touch on each of the different amendments that have been made. The first is the Schedule 1 amendment at clause 6. We see that the phrase “To avoid doubt” is used. This is a pretty good indication, I think, of the purpose to clarify the existing law, and that’s a worthwhile thing to do. We read that the parties are, effectively, waiving a right to object later to the ruling of the tribunal. Of course, if the system is to have any meaning at all, it needs to be relied upon as something that the parties can go to and receive a determination and be able to move forward. That, indeed, is the magic of it—that parties can get on with their lives, their commercial or personal lives, as the case may be. So the clarity about the consequence of going to arbitration is important, not least of all because it provides parties an informed basis to make a decision in the first instance that they are happy to submit themselves to arbitration.

The so-called quick-draw procedure has already been mentioned by both of the previous contributors to the bill. The ability of one party to pre-empt, essentially, the other in the appointment of the arbitrator is one that is something we need to consider in the context of fairness. In terms of the principles of natural justice, we might call to mind the Latin motto “nemo judex in causa sua”—

💬 Fletcher Tabuteau: Sorry, what?

—no person should be a judge in his or her own cause. “Professor” Tabuteau, of course, is well familiar with that. So it’s a bit of a strain, I suppose, if I were to say that a person would be judging their own cause merely by being able to appoint an arbitrator, but it’s the next step removed, I suppose, to have the ability of one person being able to appoint the arbitrator—or the judge, essentially, with a lower case “j”—of the matter above the ability of the other one. That would also unfairly privilege the person who is quicker on the draw than the other, to the point where the one with greater resources or, perhaps, knowledge or, perhaps, who is motivated to come to the table first—we think that they should not have that unfair advantage.

We’ve heard about the presumption of open justice. That’s already been well covered by colleagues on both sides of the House. So I’ll finish by noting that I think the clarification is helpful where the Arbitration Amendment Bill talks about “the composition of the arbitral tribunal” or the procedure in relation to whether that’s “in accordance with the agreements of the parties” and so on—so just highlighting the consequences of a failure of the parties to come to agreement about whether the Act has been observed or not. So on that, I’ll conclude my contribution, again, by congratulating and thanking those involved in its passage so far and, indeed, into law now.

Thank you, Mr Assistant Speaker. The Arbitration Amendment Bill appears to enjoy broad support across the House, and, all going as expected, will pass into law this evening. So it is an important and appropriate occasion to acknowledge those who have contributed to its passage so far. This bill is in the name of our parliamentary colleague Andrew Bayly, and so I acknowledge him. But I also note that he’s probably a little bit like the winger who got passed the ball in open space somewhere inside the twenty-two, and we actually know that the hard-charging No. 8 or, perhaps, the prop who really got the ball up the field was Paul Foster-Bell. So Mr Foster-Bell, our former colleague who’s in the House with us tonight on this occasion, we acknowledge you for your work in initiating this piece of legislation.

I acknowledge all the other members of the House who have worked on this piece of legislation: the chair of the Justice Committee, Raymond Huo, who, as I understand it, chaired and oversaw quite a lengthy and quite an involved and quite a complicated process but one that has none the less reached a point of having good consensus between various parties around that select committee table; and Minister Andrew Little, who, as I understand it, has been engaged in the passage of the bill and supportive of the processes that have allowed us to get to this point.

I have to say I’m a person who is a fan of alternative dispute resolutions, and that comes from my time working as a negotiator in the trade union movement. We didn’t particularly make use of arbitration procedures there. We mainly used mediation as a procedure—it’s a procedure commonly utilised through the provisions of the Employment Relations Act (ERA). In fact, I think one of the things that we could potentially consider more in the employment law world is a greater use of arbitration. The provisions of the ERA tend to take disputes from a place of mediation straight into the courts, and arbitration is only rarely used and it could be made more use of there.

The value of alternative dispute resolution procedures, as has been covered by a number of speakers, is that we do clear up space in the courts by resolving these matters outside of the courts. The use of these measures is usually quicker, it is usually more cost-effective, and it is usually less rancorous. So, I think, as much as possible—whether it is commercial disputes, employment disputes, and others—there is a very strong amount of value in trying to steer disputes down the channel of alternative dispute resolution procedures to, hopefully, be resolved, and if not, you still then have the option of going through the courts.

This bill, to that effect, streamlines and improves our arbitration processes, and I just want to talk about a couple of the ways in which it does that, and also touch on one of the areas in which I think there wasn’t so much agreement during the process but I think is important to talk about in this debate. One of the areas that the bill makes improvements on is in the area of late jurisdictional objections. This is where, fairly late in the process, one party who, perhaps, might see proceedings going in a direction that isn’t entirely pleasing to them will raise a jurisdictional—a process—objection to try and derail proceedings at that point. That would appear to be something that is allowed within the current framework but really is against the spirit of what we want to see achieved through arbitration processes and in some ways is an act of bad faith.

You might reflect on the way in which, in this House, if we have a point of order to raise, we are required by the Speaker to raise it at the time, not to hold it as a card late in the piece to disrupt proceedings later on—and it feels to me like this is a little bit the same. You can’t raise a jurisdictional dispute very late in the piece because you want to disrupt play. So I think the way in which this bill withdraws that ability to disrupt proceedings will be helpful and will give parties greater confidence to enter into arbitration proceedings.

We’ve also heard, in the debate, about the appointment process for arbitrators. Obviously, one of the most important parts of the process is attempting to agree on an arbitrator who will hear the dispute, and, obviously, what happens if the parties cannot agree in the first instance is that at the moment we have this slightly bizarre situation, which we’ve heard about, and that’s the quick-draw process, where you end up, effectively, having a competition about who can get in first to try and get their way with these things, and that, obviously, is not a particularly good process.

The committee’s adviser, Paul Heath QC, said this of the quick-draw procedure: “it is the most important practical issue from the perspective of the arbitration profession.”—that is, resolving the problems that are created by the quick-draw procedure. We have, through the course of this legislation, been able to settle on another mechanism, which, as I understand it, will involve the Arbitrators’ and Mediators’ Institute of New Zealand supporting the appointment of an arbitrator where the parties cannot agree. That seems like a far more satisfactory path forward.

The other area I just want to cover briefly is the issue of open justice. This is a question which has been raised in a couple of the contributions to date around the initial intention in this bill for there to be a greater capacity for hearings to be heard in secret. That is not something that has been supported by members on this side of the House in the process. The bill’s sponsor, Mr Andrew Bayly, has noted that this could potentially be a lost opportunity. He has pointed to the fact that there are jurisdictions where there is a greater capacity for evidence to be heard in secret, and this may be appealing for some parties, particularly in the area of commercial arbitration.

I suspect that he’s correct in that respect—that, potentially, it would be more appealing for parties in those situations—but I guess my take on this is that what is more important than the commercial opportunity that New Zealand might seek out of such a scenario are the core principles that underlie our justice system. One of those core principles is the notion that we have the initial presumption, and a very strong presumption, that our justice system is open—that its proceedings are conducted in the open and that they can be observed by others. I would be very reticent to see us trade away that principle for what would, effectively, be a process of seeking commercial opportunity for our country. I certainly err on the side, if there’s a dispute between those two notions, of supporting our open justice system.

I do note that the current presumption of openness is a rebuttable presumption. It is possible, therefore, for counsel to argue for and for judges to determine that in some cases it is appropriate for matters to be heard and kept in secret. So that is there within the justice system, and it is the contention of members on this side of the House that it is best to leave it there, within the judgment of the judge to decide, but to leave the rebuttable presumption of open justice in place.

Really, in the greater scheme of this bill, that’s one area in which there has been a difference of opinion, but the overarching message, I think, that we can hear from the contributions in the House tonight is that members across the House are supporting this piece of legislation because it does some very useful things in terms of improving and streamlining our arbitration system, which is a very important part of our alternative dispute resolution measures. For those reasons, I heartily support it in this reading. Thank you, Mr Assistant Speaker.

I call Fletcher Tabuteau. [Interruption]

The reaction I was hoping for—the reaction I was hoping for. I wanted to start this evening by talking about collegiality, by talking about friendship, and by talking about good people and being able to stand up in this House tonight to support legislation that is not only good but is sponsored by good people—well, at least in half the case. I’m kidding—ha, ha!

Actually, I want to carry on with the words from the under-secretary Wood. He spoke about a beautiful rugby metaphor, actually, Mr Wood. I’d like to commend the work of someone I do consider a friend and acknowledge in the House tonight, Mr Paul Foster-Bell—a hard-working member of Parliament and a hard-working gentleman in his current position—and thank him for his efforts. I do acknowledge, Mr Foster-Bell, that New Zealand First did come out quite vehemently in Opposition to your legislation at the time, but I’d like to put that in context. As you know—and it was eloquently put to the House by former MP Mr Denis O’Rourke—the initial legislation very much had this presumption or the intention to have the ability for proceedings to be undertaken in private, and so New Zealand First very much took issue with that.

I suppose I would congratulate the House for it having proceeded to committee. Our people in the justice sector spent a lot of time and a lot of work looking at the bill and making recommendations and actually working through those to come out the other side.

It has been spoken many times this evening that New Zealand is a legal system where its foundation and its premise is very much about an open, public legal system. So I echo the words of those who have spoken tonight, yet again, and acknowledge that whilst there might have been some advantageous pecuniary advantage to especially dual commercial entities who were interested in using the arbitration system here in New Zealand, that is not New Zealand. We would not have wanted those proceedings to be undertaken in private.

I do, however, repeat or acknowledge the words of some international business and legal experts who have acknowledged the legal system in New Zealand and those who practise law here. Our system is admired around the world. We are acknowledged for the sanctity of law here, the honesty of our proceedings, and the expertise of those who would practise law in the New Zealand legal system. That is a huge appeal to those from around the world who would seek to use this arbitration system, and so I think, Mr Bayly, that you would take satisfaction that we have reached a point and a compromise as a Parliament and come to this stage where, under the current drafting of this legislation, this House, in concert, can support your efforts.

On that, I would acknowledge Mr Bayly and his efforts not only in the House in representing this piece of legislation but behind the scenes—his work to engage, to have dialogue, to put people in front of MPs on this side of the House—so that we could appreciate his understanding, his perspective, and, actually, some experts’ perspective on this legislation. I commend Mr Bayly for his efforts and his dogged determination in that. Yes, I simply congratulate him for it.

I think we have here a system based around professionalism that I hope more of the international market will take advantage of, and that is the intent. Although, to put that in context, we are bringing the arbitration system in line with international standards with this legislation, and so that is a successful outcome of this Parliament’s support. I suppose with those few words of congratulations, of endearment, and of support, I do commend this piece of legislation to the House and congratulate the members opposite. Thank you.

It’s a pleasure to take a third reading call on the Arbitration Amendment Bill. The first thing I want to say is that I’m just incredibly proud of the amount of real-world commercial expertise that rests on this side of the House, including my colleague Andrew Bayly. There’s lots of the law that makes for a strong economy that actually relies on what may seem quite complex and not particularly attractive law, such as arbitration law, but if we’re serious about having a strong economy, having good-quality, detailed, workable law in areas like arbitration is actually part of the economic success story that New Zealand needs to have. I compliment my colleague Andrew Bayly, and also Paul Foster-Bell for his original work on this bill.

The issue of arbitration law is actually not just important for arbitration disputes that may occur in New Zealand. Actually, there are lots of commercial contracts that are done around the world in which people have a choice to specify in those contracts where they wish to have those arbitration disputes resolved, and the real strength of New Zealand having world-class arbitration law is that those doing commercial contracts will choose to cite our arbitration procedures as the preferred venue in which those disputes will be resolved.

Now, the detail of this bill is right about the certainty that needs to go with arbitration processes, because if the very principle of arbitration is to fly as a preferred mechanism for resolving disputes to the courts, then we need to have law that has as little opportunity as possible for people to be able to game the system and, through an arbitration decision, to then throw it back into the courts. I don’t want this Parliament to be naive about the scale and the sorts of dollar sums that are involved in these arbitration disputes. Both as a Minister and in the construction industry prior to coming to this Parliament, under our Arbitration Act I have seen contractual disputes for many hundreds of millions of dollars being resolved through this process.

Here’s the problem: if there’s even a sliver of a chance that people might be able to relitigate those arbitration decisions in the courts, the financial incentives are for people to disrupt the process in that way. Yes, what they’ll probably do is then get behind closed doors and cut some sort of a deal, but it actually undermines the credibility of those arbitration processes. What the two specific provisions in this bill do is just close down a couple of significant areas where our existing arbitration law—the 2017 Act—enables those sorts of appeals to be nipped in the bud, and to provide that greater degree of certainty.

Now, I’m pleased I’ve followed my colleague from New Zealand First, because I have to say I am continuously surprised by the ambidextrous nature of New Zealand First. Well, I have to say, over 30 years, if there’s any political party in this Parliament that’s got the capacity to say, “Black’s white and white’s black”, it truly is the New Zealand First Party. I know my colleagues will remember an equally important issue, the Trans-Pacific Partnership, and the way in which the New Zealand First Party raged that this was the greatest evil that could ever come to our country, but hold on, if you call it the Comprehensive and Progressive Trans-Pacific Partnership, suddenly, it becomes the biggest deal on the go.

Actually, the one that’s been amusing me this week, which has got an analogy with this arbitration bill, is—I don’t know if any members opposite have picked up the speeches from the now Foreign Minister on the Belt and Road Initiative from China. I tell you, again, you would see that this was one of those great evils. Now, equally so, if we look back on the record of this arbitration bill, this was something about dirty private dealing that was going to be behind closed doors that the New Zealand First Party—I think it was Mr Denis O’Rourke from the New Zealand First Party—railed against this awful legislation. But isn’t it a beautiful thing, how, when New Zealand First gets in Government, somehow all those things that National was proposing to do that were so awful, actually, suddenly become incredibly palatable for members opposite.

I have to say—[Interruption]—well, it’s no wonder I heard someone referring today that New Zealand First has become the “one percent party”. That doesn’t surprise me. They are a party that struggles with the competence of Government because, actually, in Government you need to do the right thing, and what is being done in this bill is the right thing.

💬 Hon Member: Where’s your leader? Is she busy?

The last point—actually, Simon Bridges is going strong. Anybody who saw his performance in the House this afternoon would know that he was top of his game. But you really know you’re getting under the skin of the Government on a bill, and pointing out the contradictions of New Zealand First, when they want to distract and move away from the content that, I’m sure, Mr Assistant Speaker, you would want us to be focused on in respect of this bill.

I want to come back to the core principle. Good quality arbitration law is essential for New Zealand’s commercial success. Again, I stress that the horsepower that exists on this side of Parliament understands that every aspect of commercial law—

💬 Hon Member: Horse and cart.

Well, I’ll match up. Well, I have to say—and I’m happy to match up the skills of colleagues like Chris Penk, the experience of people like Andrew Bayly. We would have 10 times the practical commercial experience of any of the members in New Zealand First. I do refer—

💬 Kiritapu Allan: Chris Penk has been out of law school for about two weeks. You’ve got Duncan Webb over here—he’s written a bloody book on this area.

Well, I quite liked the comment I had at a business meeting in Nelson last week, and a colleague made the comment that “I think Grant Robertson’s great business experience was running the university tuck shop.”

So the reason that you’re getting good, sensible commercial law from this side of the House—actually, it’s what National excels on: providing the sort of laws that will ensure that we have a strong, growing economy. That can only occur if we’ve got businesses that are able to be able to go about their business in confidence, knowing that their compliance costs, the costs of being involved in expensive litigation, are minimised.

So again, I say to the House, I commend this bill, commend the specific changes that are being made to the schedules. No, it’s not the most exciting bill, but I say when you know in practice the hundreds of millions of dollars that are involved in arbitration disputes, these are the details of law that we need to get right. It’s about making New Zealand more competitive. It’s about making our economy grow stronger, not by itself but as, I think, Sir John Key expressed so well, every member of the National team is focused on those little changes that, when added together, make for the “New Zealand Inc.” boat just going that little bit faster. Again, I say to Andrew Bayly, well done. I commend this bill to the House.

Well, thank you, Mr Assistant Speaker. It’s great to go after Dr Nick Smith, and I do hope he stays in Parliament, because we want to keep the unemployment rate down.

I’ve only got two things to say about this bill. Firstly, what we didn’t realise when this started—we thought this was a technical bill that Mr Bayly was pressing on with, like that terrier of an MP that he is, but, in fact, what I realise now in retrospect is that it was quite a deep, philosophical discussion about the place of arbitration and its relationship with the courts. What has been resolved after a lot of quite hard thinking and with a lot of expert advice, not only from Paul Heath QC but also from the great minds around the Justice Committee table, and from some great submissions by very experienced arbitrators, and by the advice of the Chief Justice of the time herself, was that the courts must retain their primacy. There is no place for having arbitration as a dominant means of dispute resolution. The principle of open justice must prevail, and the principle of access to the courts in respect of beneficiaries of trusts must prevail, as well. That is an important principle.

But, having said that, I’ve got one other thing to say, and that is the absolute importance of having alternatives to the court system, because the court systems absolutely do not work for everyone. Sometimes they don’t work because of the complexity and size of disputes which arbitrations—as Mr Bayly noted—relate to, but also for a whole lot of other disputes which may be smaller and require more simple procedures, and, again, arbitration has a part to play there.

So I think it’s a vote of confidence in this bill—the tidying up that’s being done for arbitrations to have a very, very important place in supplementing our justice system. But they must always play second place to the courts, who must always be able to supervise, in an open way, dispute resolution in New Zealand. I commend the bill to the House.

Thank you, Mr Assistant Speaker. I rise to speak, with great pleasure, to the Arbitration Amendment Bill, having been the deputy chair of the Justice Committee through some of its gestation through that process. I am delighted, on behalf of Andrew Bayly, who is the sponsoring member of this bill, that as a result of his tenacity, and as a result of the focus of many people on a bill whose time had come, this bill has filled a gap, which needed to be done.

I feel, as well, that we are privileged in this House: we’re not usually in a position where we have the former sponsoring member with us. I would like to acknowledge Paul Foster-Bell, my friend and colleague from the class of 2011 who is with us tonight, who, I suppose, began the bill—the father of the bill. I’m not going to go into the rugby metaphors, because I’m not quite competent to really decide whether Paul Foster-Bell is a hard-charging prop. As Paul said himself, he has never been accused of rugby prowess ever in his life before—

💬 Hon Meka Whaitiri: Soccer! Cricket!

—so tonight is an important occasion on very many levels. There’s a first time for everything, as the Hon Meka Whaitiri is saying, I think. But, you know, this is a bill that is complicated. It has passed through many hands, but it needed to happen. It has had close links with the Trusts Bill, which was another behemoth, another very complicated piece of legislation which needed to occur. But should it involve the Arbitration Amendment Bill, or should it not? So for a number of months, actually, the select committee was deliberating as to where this bill could best be placed.

I am grateful for the involvement of the justice Minister, Andrew Little, because he was able to see the usefulness of the bill and also able to understand and acknowledge, as leaders can, that the advice that we were getting from officials was not up to scratch. Without in any way being personal about the individuals concerned, it was very apparent that there was not enough international arbitration experience or even that wider world experience which was required for a bill of this complexity, and, really, with that international knowledge that was needed. So the officials, I think, and advisers took it in good heart. We had the intellectual rigour of our former colleague the Hon Chris Finlayson as well, which was really important, and I think that in the end what occurred was a very robust process. Paul Heath QC, who is a very experienced and retired High Court judge, was somebody who was able to bring an enormous amount of intellectual rigour, which, again, is the phrase I would use. He was somebody who was able to draw together a number of very complicated opportunities and options and distil them into something which is the bill that we are about to pass tonight.

There are other people as well that I feel ought to be acknowledged in this, because there truly have been many parents for this bill. The prominent economist Hilary Croke has commented very favourably on it, and from a perspective of making the New Zealand economy stronger. That is something that can sometimes get lost in the detail of the law, but to be able to pull back and see that—I think it is about a million dollars for each of these cases that come through—this is potentially a very good earning opportunity for New Zealand. But we did need to change our laws, so it was very useful to get not only Hilary Croke’s perspective on this as a prominent economists, but also I’d like to acknowledge Deborah Hart, who is the CEO of the Arbitrators’ and Mediators’ Institute of New Zealand, who is with us in the gallery tonight and has also contributed a large amount of ideas and intelligent, practical advice. So I acknowledge and thank her for her contribution.

It was a difficult piece of legislation to get through, as its current sponsor, Andrew Bayly, knows only too well, because there was a lot of tension around what should be in the public domain and what should not, and the confidentiality aspect is extremely important—so the idea that someone would go into a confidential arbitration process and try and settle it away from the courts, away from the expense, but also privately so that commercially sensitive material was not going to be broadcast. If it were, it would be a deterrent, really, to the arbitration process. So it was very helpful indeed that we were able to track that through. When we looked at the conflict resolution—which is something that, you know, a number of successive New Zealand Governments have purported to support but have stopped short because of the sort of complexities I’ve referred to. Cross-border commercial contracts, international treaties containing arbitration clauses—all of these things have grown apace recently—and enhanced technology; these are other matters which really needed to be taken into consideration when we updated and brought this particular bill up to modern fit for purpose.

So the globalisation of world trade and investment, which New Zealand has been not the largest player in but certainly an enthusiastic, smaller player, has resulted in increasingly harmonised arbitration processes worldwide. It is very good that this bill makes us a part of that worldwide trend, and, I think, when we look at the case for the greater use of arbitration, why would we not use it more? Why would we clog up our courts? Why would we not have the clarity of the arbitration laws in line with international standards that we really need if we want to do business in the modern international world? Potentially, as an income earner for the country, hundreds of millions of dollars could be something that would work very well for the New Zealand economy. But we do really have to be careful around ensuring that we do things properly, and, without this bill, we would not be able to give any of those assurances.

When it comes to reducing the caseload in the courts, it is a very important consideration. Complex cases of a nature that come before the courts and could be resolved through arbitration prior to that are really an important consideration. Our justice system is groaning under the weight of the cases that come before it. The complexity and all the rest of it means that these cases are better decided quietly and privately in arbitration with experts. I think that by using international and regional conflict resolution, and not just in that area of international commercial arbitration but in the broader spectrum as well, we now have a bill that will enable our very talented New Zealand legal minds, and our commercial companies as well, for that matter, to really robustly engage in gaining business for New Zealand, “New Zealand Inc.”, but also for the reputation and the experience of our very good legal minds.

So there is very little not to like about this bill. We would have liked it to have been more comprehensive, but this is a place of compromise, and, I think, in the end we arrived in a situation where we were all of agreement that this was the best we could do under the circumstances. But that could not have happened without all of us participating and compromising in some ways, not least the sponsor and the original father of the bill. But I think there is—

💬 Andrew Bayly: Oh, he’s a father now?

He’s a father now! Yes, OK, so Andrew Bayly is wondering if there’s been an update on parentals. No; I meant that in the generic sense with this bill. But I think it is important to acknowledge that some bills take a long time to come through the process of Parliament, and the process of select committee was at very real risk of turning out a bill that would not be fit for purpose and would not be of any use to anybody and would not have satisfied anybody and would have been, pretty much, a waste of all of our time. So by bringing in Paul Health QC, by taking the time to really resolve it in a mature fashion, I think it has been an exemplary bill, because it has shown what’s possible with cooperation and with compromise.

So this is a bill whose time has come. I think that internationally it will be fantastic for opportunities for New Zealand. Whether it adds up to a million dollars per case and hundreds of millions of dollars over the years remains to be seen. But the fact is that when this bill passes tonight in this House with the cooperation of all involved, it will position New Zealand in a way that means that we can be internationally competitive and that we can hold our heads high in this area. I think there will be a lot of business coming our way, from what one can gather, through Asia. I have, from my time on the select committee, become much more informed about how the international markets work, and it would appear that with a bill like this going through, there are a lot of opportunities that we could take advantage of as a country, and, for “New Zealand Inc.”, for the National Party, for Andrew Bayly, a friend and colleague, and for Paul Foster-Bell, I’m very glad that the bill has got to the stage, and I recommend it and commend it, wholeheartedly, to the House.

Members, this is a split call—five minutes. I call Simon O’Connor.

Sorry, Mr Assistant Speaker, did you say it’s a split call?

ASSISTANT SPEAKER (Adrian Rurawhe): A split call, yes.

Oh excellent, a split call—all right. Then, members, I will either halve what I was going to say or I’ll speak twice as fast.

Look, I’m delighted to take a call on this third reading of the Arbitration Amendment Bill, and I will start by acknowledging Paul Foster-Bell and the work that you have done. We’ve been friends and colleagues for years, and I think it’s a pleasure that not only is this piece of legislation going through but you’re here as well. If I might also speak personally, I acknowledge Logan Morton, who has passed. I know he was good friends with many of us here—and you, in particular—and I want to acknowledge, in the House, his passing.

To Andrew Bayly, of course, the member who has shepherded this bill through, thank you for paying attention—that’s good; you can relax now. Look, Andrew, thank you for your work. This is one of those pieces of legislation which is incredibly particular. I think for most members of the House—and there’s relative concord here tonight, and a little bit of humour too, which is welcome—bills like this are relatively rare. What I mean by that is it’s not their size—we have even smaller bills—but this is a very, very particular piece of law and a very particular change. A lot of the legislation we deal with in this House is very, very broad and touches on a number of areas. I would suggest—and it probably is hinted at—that we, obviously, had to bring experts in, and the Parliament and the Justice Committee did.

There are probably few in this House who would fully understand the law. I’ll be honest: I am not an expert in arbitration, but I do understand a good opportunity when we see it. So this was an attempt, if you will—certainly, in my thinking—to create an opportunity for New Zealand, and I think we are mostly there and that’s particularly so in the international space. I mean, one of the fundamental reasons for advancing arbitration is, effectively, as I understand it—and I’m sure those who are more expert will correct me later—to keep things, if you will, out of the courts when not necessary. We try to apply that in a whole lot of ways, and particularly now, in the international context, we are seeing a lot more international arbitration.

I have the good fortune of chairing the Foreign Affairs, Defence and Trade Committee, and the issue of arbitration comes across our committee often and certainly in my discussions with ambassadors, high commissioners, and others—particularly in the commercial sector. So arbitration is a growing area, first and foremost, in demand. There are a number of countries and interconnected global agencies that wish to use the service and, as a consequence, those who are prepared to offer it, and New Zealand’s laws are not as sufficient as they might or could be. So this really is an opportunity for New Zealand. It’s quite important that New Zealand’s laws are well-known and respected, and I think it goes without saying that that is understood in the international context.

I know one of the areas of debate for the select committee and, indeed, for this House, was the transparency of arbitration and, in particular, whether or not the details of an arbitration should be made public. I mean, as members will know here, if something goes into the courts, it, by and large, is and does become public. It’s the nature of our system, one that’s—I was going to say, “Westminster”, but that’s more to do with our Parliament. Law that comes out of the English code of law becomes public, and, as you might anticipate, there are a number of pieces of arbitration engagement. If one thinks of the various international agencies, be they commercial or political, they do not wish to have their issues aired in public, and, arguably, if New Zealand is to look at this both from a legal and from a commercial point of view—and I think that latter element’s quite important. There is a commercial quality here. If New Zealand wants to be able to attract, particularly, these people seeking international arbitration in New Zealand, we should be able to make allowances, in a sense—an exception to our usual protocols and principles—to allow this to be, in effect, in secret so that they can solve their situations. I think that’s, again, a fantastic opportunity for New Zealand, if we were able to fully explore that.

So I think there’ll be further discussions in time, and I think an opportunity that, again, we do need to maximise. Fundamentally—and particularly if it is in the international space—if something is or is not public between two international entities, it doesn’t actually have a material impact on New Zealand. In fact, I’d say that it would have no impact whatsoever, except a commercial and a financial one. Simply put, if we become a well-known area for international arbitration, that’s—I suppose I want to be hesitant in reducing something that’s important and legal to being something simply commercial. But if people are going to come down here, they’re going to have to stay in our hotels and use our taxis and take in the country, drink our very fine wines, and so forth. They are going to actually become part of and contribute to the New Zealand economy and, I would also argue, be able to tap into and understand our legal code.

So I think this is a particularly good bill. Again, I just want to thank all those that have been part of this—from Paul Foster-Bell to Andrew Bayly—for their work, and I commend this bill to the House without arbitration.

Thank you, Madam Deputy Speaker. It is my pleasure to take a short call on the Arbitration Amendment Bill. While I am not a member of the Justice Committee, I am happy to take a call on this bill, and I want to acknowledge the Justice Committee for thoroughly considering this bill and debating this bill. From what I can see from the notes and previous speeches, it went on for some time. It actually came back to the Business Committee to possibly consider something that was a provision that was out of scope, which was agreed to, and so it’s had quite a long time in this process. So I really want to acknowledge the member Andrew Bayly, who is now carrying the bill in his name, and the Justice Committee for their work on it. I also want to acknowledge the Chief Justice, the independent adviser Paul Heath QC, and the submitters on this bill.

The purpose was to improve the framework for arbitration, which is a helpful method of resolving commercial and other disputes. As previously a lawyer and somebody who studied alternative dispute resolution, I too am a fan of encouraging alternative dispute resolution. We are very litigious in New Zealand, and we do love to go to court. The point was made earlier that that can be a lengthy process and quite a costly process, and so this is an alternative to that process which does have some real benefits to it.

The section I did want to talk about was concerns around open justice and it being a fundamental aspect of the New Zealand justice system. The point that has been made well tonight in terms of, in arbitration, information is kept confidential, but when it is taken up to the courts—the proposal as it was first introduced in the bill was something that Labour wasn’t supportive of, but through the process of the select committee, the right balance has been met, and so I thank the committee for the work that they did on that and the collaboration. I commend the bill to the House.

Thank you, Madam Deputy Speaker. I rise on behalf of the ACT Party in support of the Arbitration Amendment Bill, and I’m going to make a contribution of equal value to those made by Nick Smith, Chris Penk, and Maggie Barry combined, but much, much shorter.

Thank you, Madam Deputy Speaker. I commend this bill to the House.

Thank you, Madam Deputy Speaker. There has been a particularly jovial mood across the House, I’ve noticed, tonight, as the reading of this bill has been proceeding.

💬 Chris Penk: Don’t kill the mood!

Ha, ha! I wanted to begin by congratulating Andrew Bayly for bringing this bill to the House and tonight having it passed by consensus across this House, and also to congratulate the Justice Committee for their work in a cooperative, amicable way that has brought this bill to us in such a way that we can all agree on it. I also wanted to congratulate that committee for their fine appointment of Paul Heath QC, who was always my favourite of the High Court judges, and what a loss to the bench but a huge asset, I see, to the committee on this particular bill. It is nice to have cross-party support for anything that comes before this House.

This bill aims to update and streamline our laws on arbitration, which, if you look at the Arbitration Act, were passed in 1996. So I think it is timely, and, again, congratulations to the member who has actually brought this reform before us, because it has been a long time coming.

Alternative dispute resolution is so important. It is cost-effective, it keeps our courts from being so clogged up, as they have been, and we all know that that’s really important because, of course, access to justice is important, and so we do want to encourage an effective and streamlined process that’s alternative to the mainstream courts so that commercial entities and private citizens can actually avail themselves of that rather than coming into the very overworked and under-resourced public court system. So I do want to support this bill whole-heartedly in actually bringing New Zealand’s arbitration laws in line with international standards.

As everyone has noted here tonight, we’re doing that in such a way that is going to make our laws, actually, and New Zealand, an attractive centre for international arbitration—though, as one of the submitters pointed out, that’s a side-line benefit and not necessarily in and of itself the justification for reform. So we’re doing this for New Zealand, but we are going to get this very attractive outcome as well, that we will be so up to date and so effective in arbitration that we may actually become a hub for this type of dispute resolution internationally.

I do just want to speak about open justice just very briefly, in that that was a concern, I know, of the members of the select committee, and this bill does extend the presumption of confidentiality in arbitration processes. You know, we do note that arbitration is a voluntary process. It’s not part of the public justice system in the same way. So in the way that the transparency and openness of public justice processes is important to the public good, those same standards don’t necessarily apply across the arbitration proceeding and in those contexts. But the members of the select committee did take that seriously, and the bill does, in the end, strike a good balance between the need for transparency and the ability of parties in arbitration proceedings to keep their information confidential and to make those proceedings thereby more effective; so that balance has been struck. Our justice system is coming up to date with 21st century standards and with international standards. So I commend the bill to the House.

Thank you, Madam Deputy Speaker, for giving me this opportunity to speak in the third reading of the Arbitration Amendment Bill. First of all, I would like to congratulate Andrew Bayly for getting this bill through to this stage. I am the last speaker in the third reading—

💬 Andrew Bayly: But most important!

Yes, it is. I would also like to acknowledge Paul Foster-Bell, the original author of this bill, who introduced this bill to the House, which was later on taken by a good friend, Andrew Bayly.

It’s always a pride for any member when their bill is drawn out of the ballot, and I had the privilege of my first bill being drawn out of the ballot. It went through and became a law at a later stage.

💬 Simon O’Connor: Which one was that?

The Military Manoeuvres Act Repeal Bill—a historical bill in this House. I want to remind the House that that was the most uncontentious bill. It went through the whole stages quickly, and I really enjoyed that bill.

💬 Andrew Bayly: That was due to your negotiation.

Yes. My skills.

💬 Hon Iain Lees-Galloway: Show us your skills. Get this one done faster.

Yeah, I will. Don’t worry, Minister. I will. I am just taking some time to explain this bill—what are the pros and—yeah.

This bill is a real opportunity for New Zealand to portray itself for arbitration on an international scale. International arbitration: that is the determining of cross-border disputes and is one of those areas that has developed significantly during recent decades. We have seen that a number of conflicts do arise from time to time, and New Zealand can be a hub for arbitration. We have seen the growth of businesses in Asia, and Singapore and Hong Kong have become the hubs to arbitration in the Asian continent.

There is an opportunity, as the world turns towards Asian economies, at a time when the number of cross-border commercial contracts and international treaties containing arbitration clauses have a growing space. The globalisation of world trade and investment has resulted in increasing harmonised arbitration practices worldwide. Indeed, the New York Convention, which allows the enforcement of arbitrator decisions, is signed by 159 countries across the globe. This is a real opportunity because we have expertise available right here in New Zealand where we can be of benefit to many businesses across Asia and the Pacific.

We were talking to the Ministry of Foreign Affairs and Trade this morning, and they mentioned that the Indo-Pacific area is developing at a great pace, and this is the real opportunity where millions of dollars are spent on arbitration also.

But arbitration also gives us the opportunity to reduce the burden on courts. We have seen that it is very expensive when the courts have to resolve commercial contracts, and it benefits the lawyers, not anybody else. But arbitration is a much cheaper option, where a resolution can be resolved by both the parties.

More recently, the Asian Development Bank has been actively promoting the adoption of model law relating to arbitration, with the express purpose to facilitate increased investment in the Pacific region as well as promoting these countries as an attractive location for conducting international arbitration proceedings—but not so far in New Zealand. That is the key point: that we have to promote New Zealand on the world stage, where we can have the arbitration done over here. That not only gives the experts the opportunity to show their skills, but also gives opportunity for tourism and other businesses to get a connection to the Asian continent and other parts of the world.

It is disappointing that sometimes we see that the opportunity is missed out, but I would like to acknowledge the Hon Andrew Little, who agreed to some of the clauses to ensure that this arbitration clause can be specified. I would like to especially mention clause 1 of Schedule 2, which set out a default procedure for the appointment of arbitrators where the parties have reached no agreement as to the appointment. This is a very important clause which we need to understand. Many times we have seen that the parties do sign the agreement—whether it a commercial agreement, there is a deed of understanding, or it is a business partnership. But they don’t mention, in the clause, how they can resolve the issues if there are issues.

I would like to give an example over here which I think is very important. For example, two people entered into an agreement—say, in the year 2017—Mr Winton Singh and Jas Kaur. They both entered into an agreement and forgot to put the arbitration clause. They promised in that agreement that they will deliver certain things in 2019 which they are not able to deliver now and there is a dispute between Winton Singh and Jas Kaur.

This Arbitration Amendment Bill will be able to help, particularly the clause I just mentioned—clause 1 of Schedule 2—which can help to resolve that issue. So for Winton Singh and Jas Kaur, this is the opportunity of this bill to take the arbitration to resolve their issue.

Another clause, which is clause 1(4) and (5), gives rise to the problematic aspect involving what has been called the quick-draw process. There is a consequential amendment to the cross-reference in clause 1(1). This enables one party to trigger a process to appoint an arbitrator if the other party fails to respond to the communication within seven days of receiving it. So there was a lack of clause available, but this clause will fulfil that and remove the problem.

The courts have expressed the concern that the situation can result in the task of appointing an arbitrator becoming nothing more than a race to issue the first default notice. In another case, a court was critical of the quick-draw procedure, describing it as broadening and—the genuine dispute should be resolved by unilateral notice. So instead of going into the courts and going through an expensive mode, arbitration can be a genuinely cheaper option and quicker option, because we know already that the courts have a lot of burden of cases to resolve, and sometimes these cases which are civil cases are not prioritised. With these words, I commend this bill to the House.

Bill read a third time.