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The passage last night of the Arbitration Amendment Bill will remove the controversial “quick-draw” mechanism from the New Zealand statute books.
This is arguably the most significant change achieved by the new law, which was introduced at Select Committee stage in response to submissions, including from the Arbitrators and Mediators Institute of New Zealand (AMINZ), and expert advice from the Hon Paul Heath QC.
The ‘quick-draw’ provision
This allowed that when the parties to a dispute were unable to agree on an arbitrator, either party could give notice to the other that they were in “default” and that, unless that “default” was remedied within seven days, the notifying party’s nominated arbitrator would be automatically appointed.
Hence “quick draw” as it rewarded the first person to pull the trigger.
Not only is this a fairly draconian mechanism for an alternative dispute resolution (ADR) procedure, but it has never been clear exactly what constitutes a “default” and how it is to be “remedied”.
Removal welcome and overdue
The Law Commission recommended in 2003 that the provision be repealed, however a 2007 Select Committee did not take the opportunity, partly due to concerns that the alternate default procedure for appointing arbitrators, requiring a High Court application, was too cumbersome.1 Since 2017, however, AMINZ has been the default appointing authority,2 obviating the need to go to the High Court.
When the Bill came before the Select Committee, it did not include any provision seeking removal of the quick-draw procedure. AMINZ, however (represented by Chapman Tripp partner Daniel Kalderimis) conveyed the importance of taking the opportunity to repeal this “repugnant”3 aspect of the current law. Assisted also by the Hon Paul Heath QC’s expert advice, the Select Committee carefully considered the position and recommended its removal be included in the Bill (after asking the Business Committee to extend the powers of the Committee of the whole House to consider the removal, following concern the removal was out of the Bill’s scope).
Other features of the Bill
The Bill began life as a Private Members’ Bill and has changed course as it has moved through the legislative process, so much so that most of its original provisions have been removed, and the removal of the quick-draw procedure added. Removed provisions include:
- changes governing the validity of arbitration clauses in trust deeds, as these are now being considered under the Trust Bill, and
- allowing arbitration-related court proceedings to be held in private, as the Government is satisfied that the current legislation strikes the appropriate balance between open justice and the private nature of arbitration.
How Chapman Tripp can help you
The evolution of the Bill demonstrates it is important to engage effectively with the policy and Parliamentary process if you want your views reflected in legislation. For further advice or help, including with preparing a submission, please contact the lawyers featured.
Our thanks to Julian Brown and Danae Wheeler for writing this Brief Counsel.
1. Justice and Electoral Committee, “Arbitration Amendment Bill” 4 April 2007 at pg 2-3.
2. Previously, Article 11 provided for appointments to be made by the High Court. The Arbitration Amendment Act 2016 replaced the High Court with an “appointed body” nominated by the Minister. On 2 March 2017, the Minister nominated AMINZ.
3. See, eg, Body Corporate 200012 v Naylor Love Construction Ltd HC Auckland CIV-2017-404-247, 26 April 2017 at  per Muir J.