SUBMISSIONS ON THE DEPARTMENTAL REPORT FOR THE JUSTICE COMMITTEE ON THE ARBITRATION AMENDMENT BILL 2017 To Justice and Electoral Select Committee Parliament Buildings Wellington Submissions by Sir David A R Williams KNZM, QC Bankside Chambers Auckland and Singapore Essex Court Chambers, London
2 Contents: A. Introduction... 4 B. Departures From The Uncitral Model Law On Arbitration... 4 C. Asia-Pacific Uncitral Arbitration Jurisprudence... 6 D. Legislative Directive To Promote Arbitration... 6 E. Additional Reasons To Enact Clause 5 On Confidentiality... 7 F. Modification Of Proposed Clause 5 On Confidentiality... 8 G. Possible Alternative Of Following UK Position... 8
3 Appendices: 1. Cook Islands Arbitration Act 2014, Sections 15E and F 2. Asia-Pacific Arbitration Reporter Comparative Analysis of Arbitration Laws and Decisions 3. Regional International Arbitration Conference: The Dawn of International Arbitration in the South Pacific (12 13 February 2018) 4. Letter dated 22 February 2018 from Mr Raymond Huo 5. Sir David Williams KNZM, QC Arbitral Privacy and Confidentiality and the Current Dominant Principle of Open Justice in Arbitration-Related Cases The Arguments for a Change in New Zealand Paper presented at the 2018 AMINZ- ICCA International Arbitration Day Conference (April 2018) 6. Draft Amendments to Part 26 of the New Zealand High Court Rules 2016
4 SUPPLEMENTARY SUBMISSIONS ON THE ARBITRATION AMENDMENT BILL 2017 WITH PARTICULAR REFERENCE TO CLAUSE 5 : CONFIDENTIALITY OF COURT PROCEEDINGS CONCERNING ARBITRATION MATTERS A. Introduction BY SIR DAVID WILLIAMS KNZM, QC Bankside Chambers Auckland and Singapore Essex Court Chambers, London 1. I have carefully considered the Departmental Report on the Arbitration Amendment Bill (Departmental Report). I note that it opposes every single provision in the Arbitration Amendment Bill 2017 (the Bill). Considering the knowledge and experience of those who support the Bill, this is a remarkable outcome. 2. All of those who proposed the Bill, including myself, are very experienced in relation to the law and practice of arbitration in New Zealand and elsewhere. I am the co-author of a prize-winning New Zealand text on arbitration, Williams & Kawharu on Arbitration. In the Preface to the Second Edition which was published last year, the President of the Court of Appeal made the following statement Williams & Kawharu deservedly stands among the great New Zealand legal texts. Its vivid scholarship is the direct product of profound knowledge and experience of the daily practice of arbitration not only in New Zealand but in other jurisdictions. 3. I drafted the Cook Islands Arbitration Act 2014 at the request of the Cook Islands Government. It largely follows the New Zealand Act, but in Section 15E and F (attached), it follows the Arbitration Acts of Hong Kong and Singapore on confidentiality which create a presumption of continuing confidentiality when arbitration matters go to Court i.e. they take the view which is sought to be introduced in the Bill. B. Departures from the UNCITRAL Model Law on Arbitration 4. The limited understanding of those who have written the report becomes clear when one reads the comment in paragraph 18 which asserted that: States are encouraged to make as few changes as possible when incorporating the Model Law into their legal systems. That statement is true as far as it goes because obviously the whole purpose of a uniform International Commercial Arbitration Act such as the UNCITRAL Model Law on International Arbitration is to have consistency. However, it has always been accepted that each country should be able to modify the Model Law in any way it thinks appropriate. I give the following examples to support the proposition that the Departmental Report has quite wrongly over-emphasised the need for consistency generally and has also failed to mention the desirability of consistency within regions of the world which have common legal heritages. This is why, in the Williams & Kawharu textbook, we have sought to introduce case law from
5 Australia, Singapore and Hong Kong because there is a distinctive Asia-Pacific UNCITRAL Model Law approach on many matters. It is not without interest that a recently published Australian textbook on international arbitration, Holmes & Brown, The International Arbitration Act 1974: A Commentary, 3 rd Edition 2018, discusses the problem of confidentiality and refers to the situation in Singapore and Hong Kong as to the way in which arbitrationrelated Court proceedings in those jurisdictions are prima facie confidential. Then there is a reference to the New Zealand position and to the Bill which is before our Parliament as follows: Maintaining confidentiality in arbitration related Court proceedings would assist in encouraging the use of arbitration as a method of resolving disputes (s2d(a) of the International Arbitration Act 1974, Australia). For example, in New Zealand, Section 14F of the Arbitration Act 1996 NZ allows a Court in all matters brought before the Court under the Act eg, an application to enforce an arbitral award to make an order that the whole or any part of the proceedings must be conducted in private. It is proposed to strengthen the confidentiality regime in New Zealand with the introduction of the Arbitration Amendment Bill 2017 which, if adopted, will introduce a rebuttal presumption of confidentiality of Court proceedings related to arbitration. The same changes are needed in Australia. 5. The very fact that New Zealand chose to make the UNCITRAL Model Law on International Commercial Arbitration the statute for New Zealand s domestic arbitration regime undermines completely the proposition which the Departmental Report seeks to advance. Not only did New Zealand add a complete Second Schedule to make this Act work for both domestic and international commercial arbitration, but there have been on-going and distinctive changes to the New Zealand Act over the years. For example, in 2017, the Parliament enacted the following changes to the Arbitration Act 1996: Insertion of new section regarding the Minister of Justice s authority to appoint body to resolve matters specified in article 11(3) to (6) of Schedule 1 (Section 6A); and Replacement of the High Court with the appointed body for the purposes of default arbitrator appointment provisions (Article 11, Schedule 1). (AMINZ was subsequently appointed as the sole appointed body) This change was distinctive to New Zealand and clashed with the open justice principle as follows. 6. Until the passage of the 2016 Arbitration Amendment Act, if parties could not agree on the appointment of the members of the Arbitral Tribunal, their only recourse was to go to the High Court where in open Court, unless otherwise ordered, the Court would consider the nature of the dispute, hear argument from the parties about who should be appointed and make the necessary arbitral appointments. In 2017, this form of access to the Court was removed in favour of the establishment of the Arbitrators & Mediators Institute of New Zealand (AMINZ) as the sole Appointing Authority under the 2017 Arbitration Amendment Act. Thus, no longer do such matters go into the Court to be dealt with openly. The appointments are now made by AMINZ in a completely private and confidential fashion.
6 C. Asia-Pacific UNCITRAL Arbitration Jurisprudence 7. The other significant matter which is not mentioned in the Departmental Report is the development of a distinctive Asia-Pacific UNCITRAL Model Law jurisprudence which I have already mentioned. One of the attractions of the Williams & Kawharu on Arbitration text is that it takes account of the various developments in the Model Law countries of the Asia-Pacific region. New Zealand Courts adopt the same approach. A recent example is the Court of Appeal decision in Greymouth Petroleum Holdings Ltd v Empresa Nacional del Petróleo [2017] NZCA 490, [2017] NZAR 1617. That case concerned foreign arbitration proceedings between a Chilean State-owned petroleum company (ENAP) and another Chilean company controlled by a New Zealand company. ENAP sought documents disclosure of parts of a New Zealand court file for use in the arbitral proceedings in order to lift the corporate veil and establish liability against the New Zealand company. After the arbitral tribunal declined ENAP s document disclosure application, ENAP turned to the New Zealand courts for assistance. At paragraph 44 of that decision, the Court of Appeal referred to a Singapore High Court case as well as the Williams & Kawhwaru text. That paragraph reads as follows: There are other examples of courts refusing to allow their procedures to defeat decisions made by properly constituted arbitral bodies. In the decision of ALC v ALF, commented on in Williams & Kawharu on Arbitration, the parties sought to get around an arbitral refusal to order disclosure of documents by using a subpoena in the Singapore High Court. The High Court revoked the subpoena in part on the basis that the parties had agreed to the arbitration procedure and that the IBA Rules made it clear that the arbitrator had the final say on the witnesses who might give evidence at the hearing. The arbitrator was to be the master of the procedure governing the arbitration. The Court even went so far as to say that the defendant s attempt to subpoena the witness was an abuse of process. Thus, relevantly for present purposes, the New Zealand Court of Appeal referred to Singaporean jurisprudence in ultimately reaching its decision to refuse ENAP s application. This passage confirms the idea and desirability of a distinctive Asia- Pacific approach. 8. In relation to confidentiality, which is the subject that I propose to address in this submission, it is a striking fact the two leading arbitral jurisdictions in the Asia- Pacific region, as well as the Cook Islands, adopt the basic presumption that arbitration proceedings in Courts will be conducted otherwise than in open court unless the Court orders otherwise. So, if we are talking consistency, all one needs to see is that the two leading jurisdictions in Asia, which are major arbitration centres, have the same situation as that which is proposed under this Bill. D. Legislative Directive to Promote Arbitration 9. Another matter which is overlooked completely by the Departmental Report is Section 5(a) of the Arbitration Act 1996, which says that a primary purpose of the Act is to promote arbitration as a means of dispute resolution. As is well-known, confidentiality is a crucial attraction of arbitration, especially for those in the commercial world, when they enter into commercial agreements and if they end up in dispute. Therefore, to reverse the open justice presumption as it now exists, in
7 my view, wrongly in the New Zealand Act, is to take a major step toward promoting arbitration. Nobody doubts the importance of the open justice principle in general Court proceedings but that principle needs modification in the arbitration context. 10. For all the foregoing reasons, I consider that the Department s position on Clause 5 of the Bill is both unduly negative and lacking in understanding. E. Additional Reasons to Enact Clause 5 on Confidentiality 11. As I said in my earlier submission on page 2 the disharmony between New Zealand and the three jurisdictions that I mention, Singapore, Hong Kong and the Cook Islands is unfortunate for several reasons and I now summarise what I said earlier. 12. First, New Zealand is a part of the Asia-Pacific arbitration world where the UNCITRAL Model Law has primacy. Model Law countries in the region should have arbitration laws which closely follow each other on crucial elements of the arbitral process such as confidentiality. 13. Secondly, because in the Asia-Pacific arbitration arena there is a large measure of consistency in arbitral regimes there is also cross fertilisation by way of published comparative analyses of arbitration laws and decisions in the region. This is exemplified, for example, by the Asia-Pacific Arbitration Reporter (latest edition index attached). 14. Thirdly, the Asian Development Bank currently has a major project where it is providing assistance to smaller South Pacific countries on international arbitration law reform. It sees effective cross border dispute resolution as fundamental aspects of successful investment and trade. It also seeks to achieve legislative uniformity in the South Pacific region as far as possible. The first country which has received such assistance from the Asian Development Bank was Fiji, and the result was that Fiji passed an International Arbitration Act last year. This event which was celebrated by a major ADB Conference on Asia-Pacific arbitration in Fiji last February: see attachment. 15. Finally, I wish to mention the relevance of the possibility of New Zealand becoming an arbitration centre for the Asia-Pacific region. I need to bring to the attention of the Committee that when this Bill was before the Justice Committee under the Chairmanship of Mr Raymond Huo, I mentioned the possibility of establishing an International Arbitration Centre in New Zealand. I received, after making the submissions, a letter from him which followed up my suggestion of trying to establish an Arbitration Centre in New Zealand. Mr Huo asked whether I could assist in the formulation and plans for such a centre. I am presently involved in preparing a report for Mr Huo on that very matter (attached). It would obviously be of assistance to New Zealand in seeking to establish an Arbitration Centre if its confidentiality provision was in line with the leading Asia-Pacific jurisdictions. 16. I stand by everything that I have said in my previous submission. I am deeply disappointed at the negative Departmental Report and I urge your Committee to
8 pass this progressive Bill with all its attendant advantages both for arbitration in New Zealand and in the Asia-Pacific region. F. Modification of Proposed Clause 5 on Confidentiality 17. I agree with paragraph 67 of the Departmental Report, which states: If the Committee decides to reverse the presumption of public hearings for all arbitration related court proceedings as the Bill proposes clause 6 will need to be amended to provide a clear presumption that all arbitration related proceedings are to be conducted in private. As it is currently drafted, clause 5 applies restrictions on reporting that are triggered only on the application of a party. However, the clause does not clearly alter the existing default position of open court and publication. Amendments will also need to be made to sections 14G to 14I to ensure consistency with the new presumption of private proceedings. I respectfully suggest that the simplest way forward is to follow exactly the Cook Islands provision (attached). G. Possible Alternative of Following UK Position 18. In paragraph 68, the Department says as follows: If the Committee decides to reverse the presumption of public hearings for procedural determinations only the Committee may wish to follow the UK position which is described in paragraph 59 of this Report. The UK Civil Procedure Rules provide that the Court may order that an arbitration claim be heard in either public or private where the Court does not make such an order the default positions apply. I strongly support the alignment of New Zealand with Hong Kong, Singapore and the Cook Islands on the question of the presumptive confidentiality for Court proceedings involving arbitration. However, in case the Committee is attracted to that alternative, which I discuss in the attached paper, which I presented to the Queenstown conference last week, then I have prepared an adaptation of the English Rule which could be incorporated into the New Zealand High Court Rules 2016 (attached). Respectfully submitted, Sir David Williams KNZM, QC Bankside Chambers Level 22, 88 Shortland Street Auckland, New Zealand Email: david.williams@darwilliams.co.nz DD: +9 367 6896 Mob: +64 21 367 689
Amendments to Part 26 of the High Court Rules 2016 Below are the recommended amendments (in red) to Part 26 of the High Court Rules 2016 so as to make it consistent with Part 62 of the Civil Procedure Rules (UK). 26.1 Interpretation In this Part, Act means the Arbitration Act 1996 arbitration claim means Part 26 Arbitration Act 1996 Subpart 1 Preliminary provisions (a) any application to the court under the Act (except for an application for entry of an award as a judgment under article 35 of Schedule 1); (b) a claim to determine (i) (ii) (iii) whether there is a valid arbitration agreement; whether an arbitral tribunal is properly constituted; or what matters have been submitted to arbitration in accordance with an arbitration agreement; (c) a claim to declare that an award by an arbitral tribunal is not binding on a party; and (d) any other application affecting (i) (ii) arbitration proceedings (whether started on not); or an arbitration agreement. arbitral tribunal has the same meaning as in section 2(1) of the Act Judge includes Associate Judge Schedule 1 means Schedule 1 of the Act Schedule 2 means Schedule 2 of the Act 26.2 Application This Part applies to (a) any arbitration claim; and (b) an application for entry of an award as a judgment under article 35 of Schedule 1. 1
Subpart 2 General 26.3 Hearing of arbitration claims generally (1) The court may order that an arbitration claim be heard either in public or in private. (2) Subject to any order made under paragraph (1) (a) the determination of (i) (ii) a preliminary point of law under clause 4 of Schedule 2; or an award under clause 5 of Schedule 2 on a question of law arising out of an award, will be heard in public; and (b) all other arbitration claims will be heard in private. (3) Paragraph 2(a) does not apply to (a) the preliminary question of whether the court is satisfied of the matters set out in clause 4(2) of Schedule 2; or (b) an application for permission to appeal under clause 5(1)(c) of Schedule 2. (4) The court has all the powers and discretions of an arbitral tribunal to make orders prohibiting the publication of any report or description of the proceedings or any part of the claim. 2