20 years of the UNCITRAL model law in New Zealand – how are we faring?

What a difference 20 years makes – and what a difference UNCITRAL Model Law on Arbitration has made along with it.

John Walton

Consider, for instance, the relevance of the legislation we are marking this year with what may yet be our country’s most important trade deal. The TPPA deal has brought together 12 economies that together comprise 40% of global GDP and one third of world trade. And the proposed Regional Comprehensive Economic Partnership can only cement the importance of trade in the region.

Yet where would either of them be without the harmonisation brought by the UNCITRAL Model Law, and the benefits of enforcement provided by the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards?

International commercial arbitration would doubtless be mired in relative obscurity. We would be stuck with the ill-starred 1971 Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters, with its skimpy roll of five signatories.

New Zealand acceded to the New York Convention on 6 January 1983 and was an early adopter of the Model Law, with passing of the Arbitration Act 1996 on 2 September 1996. The country also was the first to adopt the 2006 amendments to the Model Law with the Arbitration Amendment Act 2007.

So how did it happen? And how has it fared over the intervening time?

The 1991 Law Commission report recommended adopting the Model Law for both domestic and international arbitrations. But, it was not until Peter Hilt, an MP and member of the Arbitrators’ and Mediators’ Institute of New Zealand (AMINZ), managed to win a ballot for a private member’s bill that the Arbitration Bill was introduced into the House.

It is fair to say that the new Act was greeted with enthusiasm, thanks to its aims of encouraging arbitration, promoting consistency, and clarifying the limits of judicial review of arbitral awards. The judiciary, too, has been generally supportive. Yes, there has been the odd bump along the way. But the overall conclusion is that the New Zealand Act is an exemplary piece of legislation that has enjoyed considerable support.

So, where to from here?

Consider the University of London’s Queen Mary School of International Arbitration’s annual survey of participants in international arbitration.

This extensive exercise consistently shows that a clear majority of corporate counsel have a policy of adopting arbitration in their commercial contracts, despite repeated concerns over cost and delay in international commercial arbitration (for which the parties themselves are partly responsible).

Anecdotally, it would be surprising in New Zealand to come across a dispute resolution clause in a commercial contract which did not provide for arbitration. (Although perhaps those clauses do require more careful thought, in my view.)

But there are a couple of issues where the Arbitration Act requires fine-tuning.

The first has to do with confidentiality. The current position is that any court proceedings relating to arbitration are to be public.

Yet confidentiality is supposed to be a cornerstone of party autonomy – it is what draws the parties to arbitration rather than court action.

To ignore that is to be out of step with other jurisdictions in the Pacific Rim. AMINZ’s view is that the benefits identified by the Law Commission can still be achieved by providing for limited, redacted, publication in the first instance – and full publication in exceptional cases.

The second issue relates to maintaining the validity of an agreement to arbitrate in the face of invalidity.

The purpose of the amendment is to deal with the technical difficulties identified by the Supreme Court. It is to recognise that where the parties have agreed to go to arbitration, and have fully participated in that arbitration before a suitably qualified arbitrator, they should not be able to avoid the inconvenient outcome of the award on technical grounds relating to the original agreement.

These are ultimately relatively minor issues worth raising in order to maintain New Zealand’s position in the region as an exemplary supporter of the Model Law. How they can best be resolved will be at issue when AMINZ marks this milestone at Arbitration Day in Auckland on 1 September 2016.

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John Walton is the president of the Arbitrators’ and Mediators’ Institute of New Zealand, an arbitrator, mediator, adjudicator and a commercial barrister at Bankside Chambers in Auckland.

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