New Zealand-based dispute resolution practitioners are expecting 2015 to result in continued activity in both commercial litigation and arbitration.
The overriding theme in the dispute resolution work of recent years has been the fallout from the global financial crisis, with proceedings arising from the failure of various finance companies causing commercial litigation.
However,
Bell Gully partner
Sophie East, a dispute resolution specialist, said that a change in theme does not necessarily mean a change in volume.
“We seem to be at the tail end of that [financial crisis-related disputes] now, but with a growth in commercial activity there is the potential for a growth in private commercial disputes and an interest by regulators in ensuring that commercial activity complies with the relevant law,” East explained.
“I think this means we shouldn’t assume any decline in the number of disputes this year.”
East said the split between arbitration and litigation would be much the same, depending on the best fit for the client and the circumstance.
“Parties will continue to choose arbitration where they perceive it as the best fit for their circumstance,” she said. “For example, because they believe it has advantages over litigation in terms of confidentiality, expediency, flexibility, party selection of arbitrators, and other reasons,” she said.
“However, in other circumstances parties may take the view that the judicial system offers greater transparency or recourse where there has been an injustice or an error of fact or law – that is, appeal rights.”
East said in many cases these factors will not have been considered at the contract drafting stage and litigation will be the default method.
A recent Supreme Court decision in
Zurich Australian Insurance Limited T/A Zurich New Zealand v Cognition Education Limited will be widely viewed as positive for arbitration in New Zealand, according to East.
In a unanimous judgment, the Court held if parties have agreed to arbitrate any disputes under their contract, there are only very limited circumstances in which a court should hear a summary judgment application, or an argument by a plaintiff that the defendant has no defence to the plaintiff’s claim.
The
Zurich decision was “particularly positive” for arbitration in light of a Supreme Court judgment last year in
Carr v Gallaway Cook Allan.
“In that case the Supreme Court invalidated the outcome of a lengthy and consensual arbitration process on the basis of an error in the arbitration clause. The
Carr case was seen by some as an unwarranted judicial interference in the parties’ agreed arbitration process. The
Zurich case may be seen as exactly the opposite,” East said.
East said the
Carr decision would be unlikely to have a cooling effect on arbitration, and in its detail was actually very supportive of arbitration.
Clients should take a strategic approach to disputes this year, East argues.
“Clients should get timely and good quality legal advice, ensure that those involved in the dispute or who hold material relevant to the dispute understand the process and their responsibilities, have a clear strategy, and put the necessary time into understanding and preparing for their case.”
