Conducting domestic arbitration in New Zealand

Domestic

Why go to arbitration when I have a dispute instead of going to court?

Although both arbitration and litigation are processes that produce similar outcomes (namely a legally enforceable decision on a dispute), the processes themselves are very different.

Autonomy and flexibility of arbitration

On the one hand, arbitration is regulated by statute (see below). But on the other hand, the parties are free to agree on how the process is conducted. By comparison, the litigation process is generally standardised. This means that with arbitration, for example, that the parties to the dispute can negotiate and agree on:

  • The arbitrator’s background (for example, the parties may wish to have an arbitrator with an architectural background to deal with an architectural dispute);
  • Timeframes for pleadings, presentation of evidence, length of hearings, interest on arbitration awards, allocation of legal costs, etc.;
  • Whether the strict rules of evidence apply to the arbitration proceedings;
  • How the arbitrator deals with the evidence, for example, whether witnesses must give evidence in person at the arbitral hearing or by written statement. Also, whether the arbitrator can discuss expert evidence informally with the parties’ experts;
  • Limits the grounds for on appealing the arbitration decision.

Litigants, on the other hand, have virtually no freedom to choose the presiding judge; adopt non-standard time frames, decide whether the strict rules of evidence apply, say how a judge deals with evidence, or limit the grounds for appealing the judge’s decision.

This means that by agreeing on the arbitration processes to deal with your dispute, you can save time and money that you might otherwise lose under the ‘one size fits all’ litigation processes.

Privacy of arbitration

Litigation takes place in the public arena. Whilst the courts have the power to gag the media and restrict the public’s access to trials, the courts seldom exercise that power. This is because ‘justice must be seen to be done’. Often the judgment of the court is ‘reported’ and therefore available to the general public. This means that the courts findings about your credibility, for example, are available to all and sundry.

On the other hand, domestic commercial arbitration takes place in private.

This means that no one else can see, hear, or read about your business processes, intellectual property, commercially sensitive information, market research, company structure, financial position and other issues that you wish to keep private.

Harmonised  procedures

The Arbitration Act 1996 (NZ) [see Schedule 1] reflects the UNCITRAL Model Law on International Commercial Arbitration (commonly known as the “Model Law”). This means that New Zealand commercial arbitration in harmony to most of countries in the World. 

Arbitrator's qualification and industry experience

In domestic commercial arbitration, the parties to a dispute are able to agree that the arbitrator will possess specific qualifications and industry experience.

For example, some judges may only ever preside over one computer software trial in their lifetime. On the other hand, if you agree to an IT expert arbitrating your international computer software dispute, then you will not need to explain complex software codes, structures, languages, performance, specifications, industry standards and practices or design to an IT expert.

This means that an IT expert arbitrator can ‘cut to the chase’, whereas a judge in a courtroom (with no experience in IT) cannot. Appointing dispute specific arbitrators may cut down on extraneous material to describe the ‘nuts and bolts’ of the claim to a non-specialist judge.

Arbitration is economically efficient and fast

In domestic commercial arbitration, you can negotiate and agree on how the arbitration is to proceed. This means that (unlike litigation), you can agree on a process that is economically efficient and fast. For example, you might agree to limited discovery of documents, hearing of some (or all) disputes ‘on the papers’ only, limited hearing times (chess-clock), ‘hot-tubbing’ expert witnesses, ‘witness conferencing’ and other processes which are not generally available in litigation.

Limited rights of appeal

Australian domestic commercial arbitration is subject to limited rights of appeal. You can go further and agree to limit rights of appeal so only the tribunal's findings on points of law are appealable. On the other hand, litigation typically provides an appeal process for all judicial decisions. Appeals can go on to the High Court of Australia, 'highest court in the land'.

What is the difference between “domestic” commercial arbitration and “international” commercial arbitration?

Both domestic and international arbitrations begin with an arbitration agreement. People or companies doing business with each other agree to refer their differences and disputes to arbitration and not to the courts.

Domestic Commercial Arbitration

Domestic commercial arbitration in Australia is regulated by the Arbitration Act 1996 (NZ)  This is because the Act reflects the ‘Model Law’.

International Commercial Arbitration

For our commentary on International Commercial Arbitration, please click here for our page "International Commercial Arbitration".

Where to from here?

Recent types of disputes that we have dealt with include:

  • Building and Construction (infrastructure, road, rail, marine)
  • Transportation (maritime and aviation).

CIArb

Chartered Institute of Arbitrators (UK and Australia)

We have been associated with the Chartered Institute of Arbitrators (“CIArb”) since October 2011. The CIArb is located at 12 Bloomsbury Square, London.

IBA

International Bar Association

We have been a member of the International Bar Association (“IBA”) since October 2011 (War Crimes Committee and European Regional Forum).

NZLS

New Zealand Law Society

We have been a member of the New Zealand Law Society (“NZLS”) since August 2009. We are members of the Wellington Branch of the NZLS.