The Ministry of Justice (MoJ) is consulting on a "world first" statutory adjudication framework aimed at providing businesses with a fast, efficient and cost-effective alternative to resolve disputes. Modelled on the adjudication framework under the Construction Contracts Act 2002 (CCA), the proposal would transform how civil commercial disputes are handled by implementing a prescribed statutory process.
This is part of a broader initiative by the government to improve access to justice, ease pressure on the courts and promote faster dispute resolution pathways for the business sector. It further reflects a policy shift towards legislated alternative dispute resolution (ADR).
The MoJ is inviting feedback on the proposed statutory adjudication framework, with submissions due by Friday 19 September 2025. Businesses, industry bodies, lawyers and dispute resolution professionals are encouraged to engage, as the legislation will be shaped by consultation feedback.
What is statutory adjudication?
Statutory adjudication is a legislated process in which parties agree to appoint a qualified, impartial adjudicator to investigate their dispute and make an enforceable decision. Adjudicators are given broad discretion under an empowering act and are usually experts in the relevant field. Adjudication sits apart from other ADR processes as it is still determinative unlike mediation and does not mirror the court processes like arbitration.
In most cases adjudications are determined 'on the papers', meaning that the adjudicator decides the case based solely on written submissions and evidence, without the need for a hearing or formal proceeding. This allows parties to avoid the procedural complexity, extended timeframes and costs associated with litigation or arbitration.
Why is this being proposed?
The MoJ describes the proposal as a "fresh approach to dispute resolution for business" and "filling a gap in the system". The initiative benefits New Zealand on two key fronts:
- Better for businesses: Most civil claims involve businesses. A faster, low-cost process designed for businesses supports cash flow, preserves relationships and allows commercial operations to move forward.
- Reduces strain on the justice system: Providing an alternative to the courts, tribunals and arbitrations helps spread the workload and reduces delays for all parties in the justice system, including non-business litigants.
This proposal is particularly suited to small and medium enterprises (SMEs) and lower value disputes where the cost of traditional dispute resolution methods can be disproportionate to the amount at stake, and not economical. Parties would still have the option of court proceedings, but adjudication offers an additional, more flexible choice.
How would it work?
The MoJ has drawn inspiration from the adjudication model in the CCA, which has been successful in resolving disputes in the construction sector. The proposed framework is in draft form and is currently subject to consultation. Key features include:
- Fast resolution: Prescribed timeframes (6-8 weeks) to maintain consistency and efficiency.
- Voluntary participation: Both parties must agree to adjudication.
- Confidentiality: Adjudications are private unless the parties agree otherwise.
- 'Pay now, argue later' principle: Determinations must be complied with immediately, even if challenged in court or arbitration. This ensures that cashflow is preserved during disputes.
- Enforceable determinations: Successful parties can seek enforcement via the District Courts, mirroring CCA adjudication and tribunal determinations.
- Non-final but binding: The adjudicator's decision stands until overturned in subsequent court or arbitral proceedings.
- Business-centric: Initially limited to disputes between businesses.
Impacts for businesses?
If implemented, this framework could:
- improve efficiency in resolving commercial disputes;
- reduce legal costs by shortening timelines and avoiding lengthy hearings;
- provide greater certainty by establishing a prescribed statutory dispute resolution process; and
- offer flexibility for businesses to decide how they want to approach a dispute.
Potential risks
While the 'pay now, argue later, principle works well under the CCA in disputes over payment between principals, contractors and subcontractors, it may be less suited to broader commercial disputes. As adjudication is non-final, parties can still litigate or arbitrate afterwards, which risks prolonging matters rather than resolving them. In high-stakes disputes, the 'pay now, argue later' principle could result in businesses paying substantial sums with no guarantee of recovery if they later succeed in court.
Furthermore, adjudicators must be qualified, experienced and regulated to ensure that decisions are accurate and consistent. Furthermore, the system must have the resources to handle the number and breadth of commercial disputes. Commercial parties want predictable decision-making, especially when an outcome dictates the viability of the business. Without a strong accreditation system, regulated oversight, and the necessary resources, there is a danger of inconsistent rulings undermining confidence in the system.
If its application remains voluntary, it remains to be seen whether adjudication will be widely adopted, as responding parties may refuse to engage. It may be that parties can 'opt in' at the contract formation stage.
We recommend reviewing the proposal carefully and submitting feedback before the due date (Friday 19 September 2025).
Next steps
Consultation is underway, and commercial parties should consider:
- whether they would use such a process for their disputes;
- any exclusions or safeguards they believe the legislation should include;
- what qualifications and standard should be required of adjudicators; and
- how the proposal would change their approach to business and disputes.
The proposed statutory adjudication framework could reshape the commercial dispute landscape offering a path that balances speed, cost and enforceability. Whether or not it will be widely used remains to be seen.
More details can be found on the MoJ website here: New private statutory adjudication process for civil disputes | New Zealand Ministry of Justice
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