Most Read Contributor in New Zealand, September 2016
The Supreme Court has clarified New Zealand's
arbitration jurisprudence by ruling that parties generally cannot
avoid promises to arbitrate by seeking High Court summary judgment
Zurich Australian Insurance v Cognition Education
 NZSC 188, delivered on 19 December, is the Supreme
Court's third arbitration decision and its second this
In June, the Court had set aside an arbitration award on the
basis that the parties had invalidated their arbitration agreement
through a drafting error. This raised fears in some quarters that
the Court may be inclining towards a technical, or even
paternalistic, approach to supporting arbitration. Those fears have
been mollified in Zurich v Cognition.
The case concerned when a court is required to stay court
proceedings commenced in breach of an arbitration agreement. Under
New Zealand's international treaty obligations, the courts are
required to do so unless the arbitration agreement is
"null and void, inoperative or incapable of being
performed" (New York Convention, art II.3).
However, the Arbitration Act 1996 (First Schedule, art 8(1))
includes a deliberate gloss on this formula, adding "or
there is not in fact any dispute between the parties with regard to
the matters agreed to be referred" (the added words).
The legislative history of the added words demonstrates that
they were included to retain the courts' summary judgment
jurisdiction in circumstances where there was "not in fact
any dispute". But this begged the question – what
did it mean for there to be no dispute?
Did it mean that the courts should determine – using the
ordinary summary judgment process, and (potentially) considering
extensive legal submissions and affidavits – whether or not
the defendant had an arguable defence to the claim? In this case, a
stay would be simply the converse of a decision not to grant
Or did the words record a threshold which otherwise went
without saying; that there must, in fact, be a dispute between the
parties capable of being referred to arbitration? In this case,
provided the defendant raises a defence in good faith, it is for
the arbitral tribunal, and not the courts, to rule on its
The Supreme Court found – in contrast to the two decisions
below, and the prevailing view for the past decade or two –
that the proper meaning was the second, narrow, one.
An important element in its decision was the principle that
statutes should, if they can, be interpreted in a way that is
consistent with New Zealand's international obligations (at
). These international obligations include promoting party
autonomy and limited judicial intervention in the arbitration
Another factor was the Court's close reading of the relevant
1991 Law Commission report, leading the Court to conclude that the
main passage which appeared to support the broad view carried a
different impression when read in the context of earlier
Chapman Tripp comment
For commercial parties electing to resolve disputes by
arbitration, the decision confirms that the binding effect of
arbitration agreements in New Zealand is not generally subject to
judicial oversight through a summary judgment application.
The information in this article is for informative purposes
only and should not be relied on as legal advice. Please contact
Chapman Tripp for advice tailored to your situation.
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We discuss Robinson Helicopter Company Incorporated v McDermott  HCA 22 .
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