Hon JUDITH TIZARD (Minister of Consumer Affairs) on behalf of the Associate Minister of Justice: I move, That the Arbitration Amendment Bill be now read a second time. On behalf of the Minister I thank the Justice and Electoral Committee for its careful and efficient consideration of the bill. I agree with and wholly support the committee’s amendments. The changes, I believe, improve the bill and will help encourage the use of arbitration as an alternative means of dispute resolution. The Arbitration Amendment Bill is the first of four bills giving effect to Law Commission reports that the Associate Minister of Justice is responsible for. The Wills Bill and the Succession (Homicide) Bill now await their second readings, while the Property Law Bill is currently before the Justice and Electoral Committee.

The Arbitration Amendment Bill follows the Law Commission’s review of the Arbitration Act in 1996, which was completed in 2003. The Law Commission found that although the Act was working well, some minor improvements were desirable. The Arbitration Act 1996 provides an important and increasingly preferred method for resolving civil disputes, especially where underlying relationships must be maintained. Common examples include construction projects, landlord and commercial tenant disputes, and sharemilking agreements. The bill makes a number of minor amendments to the Arbitration Act 1996 to improve its operation, with the goal of enhancing arbitration as a means of dispute resolution in New Zealand. The bill is consistent with the underlying themes of the Act—party autonomy, limited scope for judicial involvement, appropriate powers for the arbitral tribunal, and the promotion of New Zealand as a place for international arbitrations. All of the amendments contained in the bill reflect one or other of these main themes.

I now turn to the committee’s recommendations. At present under schedule 1 of the Act, if a party is having difficulty with a witness or obtaining evidence, that party is required to approach the arbitral tribunal for its assistance. Clause 8, as introduced, proposed to remove that requirement, instead enabling parties to go straight to the District Court or High Court for a subpoena. Following public submissions, the committee considered that the amendment to this provision was not necessary. Submissions revealed that in practice the arbitral tribunal is generally able to resolve any issues that parties are having in regard to witnesses and evidence, without needing to engage the courts.

The effect of the proposed amendment would be to reduce the control the tribunal has over the process, instead providing for easier access to the courts. This is at odds with the underlying themes of the Arbitration Act—namely, reduced judicial intervention and increased control of the process by an arbitral tribunal. The committee recommends the removal of this proposed amendment to leave the current provisions in force, and the Minister agrees with the committee’s recommendations.

The committee has also made a similar recommendation in relation to clause 9, which amends schedule 2 of the Act. Clause 9 would have removed a default procedure for the appointment of an arbitrator, where parties were unable to agree. The proposed amendment would have allowed parties to agree in their arbitration agreement on a process to resolve any difficulties they were having in appointing an arbitral tribunal. The committee recommended the removal of this proposed amendment. It was pointed out by submitters that in practice there are few problems with the current provision; under the status quo, parties are already able to avoid the default procedure by providing for an agreed process in their arbitration agreement. As a result of the committee’s recommendations, the default procedure will remain in the Act. I welcome the committee’s amendment.

The committee has also recommended the inclusion in the bill of further amendments not initially proposed. The Arbitration Act is based on the model law on international commercial arbitration adopted by the United Nations Commission on International Trade Law in 1985. In December 2006 the United Nations General Assembly adopted changes to the model law, which were agreed to by the United Nations Commission on International Trade Law earlier last year. The committee considered that it was suitable for the amendments to be included in the bill. The additional amendments are found in clause 8, and include a more comprehensive regime for dealing with interim measures during the course of arbitral proceedings. Arbitral tribunals will be better able to ensure, for example, that evidence and assets are preserved while the process occurs. This means that a party to the arbitration will be prevented, for example, from destroying or concealing evidence, from taking assets out of the country, and also from dealing with assets in a manner that would make enforcing a judgment by the other party worthless.

The amendments to the model law now contained in the bill provide a lot more detail and guidance than what is currently found in the Act around the use of interim measures. The changes also include the introduction of preliminary orders, where a party can apply for an addition to an interim measure. A preliminary order, which may be granted without a hearing, acts as a bridging device until the proper hearing for the interim measure application can be arranged.

One change that was not made to the model law but that the committee has recommended is the inclusion of security for costs as an interim measure for international arbitrations. The proposed measure is very similar to the practice in New Zealand court proceedings. Again, the Minister agrees with the committee’s inclusion of these additional amendments to the bill. The purpose of the revision of the model law is to ensure that the model law continues to meet the needs of its users, reflecting best practice in the field of international arbitration. Having New Zealand law reflect international best practice can only enhance New Zealand’s reputation in this area of law and dispute resolution.

The thorough consideration given to this bill by the Justice and Electoral Committee has resulted in a much-improved bill being returned to the House. The Minister greatly appreciates the work of the committee and its efforts to ensure that this bill achieves its aims of improving the operation of the Act and enhancing arbitration as an alternative dispute resolution method in New Zealand. I commend this bill to the House.

CHRISTOPHER FINLAYSON (National) : As the Minister Judith Tizard, speaking on behalf of the Associate Minister of Justice, said, three reports that were commissioned by the Law Commission have resulted in technical legislation. The first of these is the Arbitration Amendment Bill, the second reading of which we are dealing with right now.

It is interesting to observe that this bill is a result of a discussion paper published by the Law Commission in September 2001, and it raises—as the Minister quite correctly and accurately observed—a number of technical matters. Why it has taken so long to get back to the House in the form of legislation, I do not know. Certainly, the Justice and Electoral Committee dealt with the issues as quickly as possible. The same applies, really, to report No. 38 of the Law Commission, dealing with homicidal heirs and succession, which was published in July 1997, and the Wills Act proposals of the Law Commission in report No. 41, which was published in October 1997. So it took 10 years for that legislation to get back to the House. I suggest that is very poor indeed.

There are only two things I want to say in this second reading speech about the Arbitration Amendment Bill. The first is to endorse what the Minister said about the control of the arbitral tribunal in relation to witness subpoenas, because the select committee recommended that clause 8(1) be deleted from the bill. The Minister has explained the rationale for that. We were trying to ensure that the tribunal’s control over the arbitration process would be maintained, and that parties to an arbitration could not shoot off to the court to seek that subpoenas be issued, without at least involving the arbitral tribunal.

The second matter, which was of some interest—and perhaps Mr Chauvel, if he takes a call, will address it—concerns interim measures. A number of proposals to amend the model law were adopted by the United Nations Commission on International Trade Law (UNCITRAL) some months ago, and it was very timely that this bill was before the select committee, because we could address those. As the Minister said, we have included those matters by amending clause 8 to pick them up. One of the issues that the select committee looked at—and it is a very interesting issue—is whether, when UNCITRAL proposes changes to the model law, there is some mechanism to update the New Zealand law in some way without the need to have recourse to Parliament. After consulting the clerk and after reflecting on the issue, we decided there was not any way other than to introduce amending legislation.

They were the matters that I wanted to address. The bill is a technical piece of legislation. It is good that it will shortly be law. The real issue is why it has taken so long for a straightforward, technical matter to come before this House. This Government’s law reform agenda is pretty pathetic and the way it carries it out is even worse.

LYNNE PILLAY (Labour—Waitakere) : As the chair of the Justice and Electoral Committee, it is a pleasure to speak in support of the Arbitration Amendment Bill. In doing so I want to acknowledge, as the previous speaker Christopher Finlayson acknowledged, that the committee worked in a very efficient and timely manner, and—I am very pleased to say—in a very constructive manner, which is not always the case with legislation but certainly was this case with this bill. We were able to present a unanimously supported report back to the House that not only supported the bill but also made some very constructive recommendations.

Obviously, the bill is an alternative disputes resolution bill. Arbitration and mediation are a growing trend in New Zealand, and I think it is a very commendable trend. It is one that this Government certainly supports. Arbitration encourages the private resolution of disputes in both a timely and a cost-efficient manner, thereby enabling the resumption of commercial or other contractual arrangements and relationships. Arbitration provides a forum that is less adversarial than traditional litigation. It achieves results in a way that enables parties to move forward and progress to be made in a timely manner, and, effectively, life goes on.

The purpose of this bill is to enhance arbitration as a means of private dispute resolution in New Zealand. Confidentiality, consumers’ rights, and choice of arbiter are all enhanced through this bill. Examples of where this bill would be used include construction projects, both landlord and commercial tenants’ disputes, and such things as sharemilking agreements.

In terms of the bill, as Mr Finlayson has acknowledged, the Law Commission reviewed the 1996 Arbitration Act in 2003 and presented a report. Although acknowledging that the Act was working very well, the commission recommended some amendments to make the Act work better. This amendment bill is based on the Law Commission’s recommendations, and I take this opportunity to thank the Law Commission for the work it has done on this bill. Indeed, it has prepared many reports that come before the Justice and Electoral Committee, and it is a pleasure to improve the Acts that we have in our system as a result of the work undertaken by both the Law Commission and the select committee.

The bill is divided into two parts. The first amends the Arbitration Act, the second the Disputes Tribunals Act. Many of the features of this bill are relatively small and technical changes, such as clarifying definitions. The most significant change comes in clause 6, and ensures total confidentiality in arbitral proceedings, with a few very well-defined exceptions. Confidentiality is a feature that makes arbitration very attractive to parties considering dispute resolution, but it is currently only an assumption. As a general rule, court action that takes place after arbitration is conducted publicly.

The Justice and Electoral Committee has made a number of changes to the bill. It recommends that clause 8(1) be deleted. At present, under schedule 1 of the Act, if a party is having difficulty with a witness or with obtaining evidence, that party is required to approach the tribunal for assistance. The committee members had considerable discussion about this, because the bill as introduced proposed to remove that requirement and, instead, enable parties to go straight to the District Court for a subpoena. Following public submissions, however, we gave strong consideration to what the submissions revealed, which was that, in practice, the arbitral tribunal is generally able to resolve any issues parties are having in regard to witnesses and evidence, and the parties do not need to go to the court. The effect of subclause (1) would have been to reduce the control that the arbitral tribunal has over the process, and to provide parties with easier access to the court without their having first exhausted the tribunal process.

This, we believe, does not quite fit in with the themes of the Arbitration Act, which are to reduce judicial intervention and to increase control of the process by the arbitral tribunal. Therefore, the committee has recommended the removal of that subclause and keeping what is, in effect, the status quo. I believe that was very constructive consideration, and I can see Chris Finlayson nodding wisely in agreement.

Charles Chauvel: There’s a first time for everything!

LYNNE PILLAY: There is a first time for everything, another member says, but certainly in this instance Chris is agreeing. It was a very constructive process undertaken by the committee. I commend it for the assistance it gave. I also acknowledge all the advisers and staff, who worked very efficiently and helpfully on this bill and report.

As I said before, I am very happy to stand in this House, acknowledge the bill, and recommend it to the House. Thank you.

Dr RICHARD WORTH (National) : We have been entertained and informed by the speech that Mr Finlayson made on behalf of the National Party concerning this important legislation, the Arbitration Amendment Bill—legislation that National supports. I am just going to make some brief comments with particular reference to the hard work of the Justice and Electoral Committee. Perhaps I will start by saying that arbitration is probably the oldest adjudicative form of resolving disputes. If one were to look at a continuum, one would see that it would run from the top with consultation, then there would be negotiation, then there is a concept called good offices, then there is mediation, then there is arbitration, and finally there is judicial determination.

As is well known, arbitration has a number of significant advantages. The object of an arbitration is to resolve a dispute and to have resolution of the dispute recorded in an enforceable award. So it is quite different from mediation. It is generally intended that the award should be final and unchallengeable. As others have said, the benefits of arbitration in a private law context flow into international law and they include advantages relating to the ability of the parties to determine what the key issues are, such as the composition of the arbitral tribunal, the rules of procedure, the pace of the dispute resolution programme, and—if appropriate—the remedies available to the arbitral tribunal.

So when this bill was introduced—a bill that had as its purpose a plan to make “a small number of relatively technical amendments designed to strengthen arbitration as a means of private dispute resolution in New Zealand.”—we saw that these particular amendments focused on increasing party autonomy, which is very much the hallmark of arbitration, while reducing judicial involvement in the arbitral process.

Others have spoken about the work that the Justice and Electoral Committee did in terms of substantive change to the bill. I just note that work has been done in connection with control of the arbitral tribunal in relation to witness subpoenas, and with an important new section relating to interim measures.

Mr Finlayson, in his thoughtful comments to the House, spoke about the interesting issue whereby one has a model law sitting outside a country that changes. This issue is commonly encountered in the world of delegated legislation, where we have international standards that may be updated or amended in some way, yet the law in New Zealand remains static. That is why the Parliamentary Counsel Office, in the delegated legislation context, has devised templates that will enable the law to be kept up to the mark. That is much more difficult to do in primary legislation like this, where the voice of the legislature must be heard and the process must be seen with every substantive law change.

Here we have, as others have said, the picking up of a change of the model law, which has been able to be incorporated in this legislation. It is probably in the area of interim measures that the big changes occur. Those changes centre on clause 8, where there is a definition of “interim measure”. One of the problems in litigation and in arbitration is that because of the delays that can occur in those processes, the parties may take steps to try to stymie an outcome and to try to compromise a position. That is why provision for interim measures, which will perhaps hold the ground, become so important. So interim measures are defined in the bill; and, in addition to that, conditions for granting interim measures are set out.

It is worth noting finally, perhaps, that this is an amendment bill; it is not a bill in its own right. So it sits alongside the Arbitration Act of 1996. If members look at that particular legislation they will see that it contains three schedules in the back. Two of those schedules are those that contain all of the procedural rules that in general terms, unless the parties opt out of them, are the rules that govern, in process terms, what occurs in the arbitration context.

So I commend this legislation to the House. I look forward to more scintillating comments flowing from members as particular passages in the bill are analysed in greater depth.

NANDOR TANCZOS (Green) : I begin by thanking members for their various contributions, both in the House today and in the Justice and Electoral Committee. I think there was quite a valuable and an open discussion about a number of issues that have been raised here. I make the point, in echoing the comments of Dr Worth, that the Arbitration Amendment Bill is important legislation. There were few submissions on it, but that is an indication of the technical nature of the bill rather than it being any slight on the bill’s importance. By my reckoning we had six submissions, but they were mostly reasonably substantive in the sense of recommending quite specific technical changes—and I will touch on those in relation to the select committee’s report in a second.

I thank Dr Worth for giving us a good context for how we should view arbitration within the scheme of different methods of resolving disputes. The Greens are very supportive of methods of dispute resolution that operate at a lower level of formality and a lower level of cost than the courts. Hence, we are supportive of mediation, arbitration, and other processes. But, as Dr Worth pointed out, what makes arbitration a little bit different from other processes is that it is recordable, it is enforceable, and the intention is that it be final and unchallengeable. So in that sense it is important that we get the framework for arbitration right, and that we update our law in line with international best practice. This bill is important in that regard. The bill, as has been said, is designed to strengthen arbitration as a means of private dispute resolution and focuses on increasing party autonomy, reducing judicial involvement in the process, and ensuring that we are consistent with other jurisdictions.

Mr Finlayson has referred to some discussions about whether we could use a speedier process for adopting new innovations in the model law into New Zealand law. Of course, there are issues of constitutionality about the right place for making certain changes, and, certainly, to amend primary legislation through some of the processes we explored would be inappropriate. The other point is that not all countries adopt all the elements. There has to be some recognition of the differences in different jurisdictions, because there is a certain element of inconsistency in any case. That is just an element that we have to live with.

I will refer to just a couple of submissions, because of the response of the select committee to them. The first one was the submission of the Arbitrators and Mediators Institute of New Zealand. That organisation, in its submission, opposed the removal of the default appointment provision. It said the invocation of that provision often leads to the early appointment of an arbitrator, whether by mutual agreement or by the operation of the measure in clause 1 itself. The institute said there was sufficient safeguard in the gloss placed on the provision by the Hon Justice Rodney Hansen in the Hitex Plastering case, namely that the use of the clause was not permissible unless there had first been a reasonable attempt to resolve differences as to an appointment, and the abolition of the provision would force many parties into lengthy and costly High Court proceedings. That is something that the committee put its mind to, and we have recommended that clause 9(2) be deleted from the bill. That is the clause that would remove the default procedure for the appointment of an arbitrator where parties are unable to agree.

The other submission I refer to is that of the New Zealand Law Society. It referred to the position of the Arbitrators and Mediators Institute in proposing the establishment of a private arbitration appeal tribunal. It said that the introduction of that tribunal would have significant implications for the courts in terms of the development of New Zealand commercial and civil law, and it proposed that new section 14F in clause 6 be amended to provide a presumption that court proceedings in relation to arbitral awards should be held in private, with confidentiality preserved unless the court orders otherwise. Again, that is something that we considered in our consideration of the bill, but we have not recommended that it be amended as the Law Society suggested. That section has been left in the bill as introduced.

As I said at the beginning of my speech, this is technical legislation. Nevertheless, it is very important legislation in terms of supporting arbitration, supporting private dispute resolution, preserving and increasing party autonomy, and limiting judicial involvement in the arbitral process. We think that is important, and we support this bill.

HONE HARAWIRA (Māori Party—Te Tai Tokerau) :Tēnā koe, Madam Assistant Speaker. Tēnātātou te Whare. When we first came into Parliament, I think a lot of the public and, I know, a lot of the politicians thought that the Māori Party would be a one-issue party—the foreshore and seabed, with maybe a bit of social justice chucked in on the side. Now, however, when people ask what issues are important to us, they are no longer surprised when we tell them, “Everything.” I am proud to say that after only 18 months in the House, everybody now knows that every issue, every bill, and every policy statement will be responded to by the Māori Party with a strong, independent, and, hopefully, influential Māori voice. We want to be able to accentuate the positives of the indigenous world, to use those values to improve our wider society, to enhance social justice, and to help us all live up to the expectations of the Treaty of Waitangi.

The big question, of course, is how that influence and those values might impact on this Arbitration Amendment Bill. We know that Māori occasionally use arbitration to deal with rental reviews of Māori land, and although there has not been much consultation with Māori over this bill, we know from our own discussions with Māori over land issues that the significance of land to tangata whenua is absolutely fundamental. Toitū te whenua, whatungarongaro te tangata; the land is permanent, though man disappears.

Of course, we have only to think of some of the issues that have occupied the nation’s attention this year to know how important land issues are for Māori, including the repossession of Rangiputa Station on the Karikari Peninsula by the people of Ngāti Kahu; NgātiHei’s land claims over Ngātea and Whenuakite, resulting from Crown action under the native lands legislation to render the tribe virtually landless; the concerns of the people of Whanganui and Tūwharetoa over the sale of the Taurewa block south of Tūrangi and a nearby block at Raurimu; and the Government’s mishandling of land belonging to Taranaki hapūNgāti Tama a Hūroa and Tītahi. Indeed, so important are land issues for Māori that we are considering an amendment to this bill to refer all Māori land disputes to the Māori Land Court.

Arbitration as a method of solving disputes is a useful tool, particularly in commercial litigation, but we do not think arbitration of Māori land issues should go through either the District Court or an arbitration appeals tribunal. The Māori Land Court has the expertise to handle complex Māori land issues and is able to deal with land disputes in a more user-friendly way because of its awareness of tikanga Māori, and Māori attitudes towards land. The other alternatives are either too lawyer-driven or too costly. So we will recommend that when Māori land or general land owned by Māori, as defined in Te Ture Whenua Maori Act 1993, is in dispute, the matter should be dealt with not by arbitration but by application to the Māori Land Court.

There are precedents. Under the Fencing Act and under property law jurisdiction, Māori land disputes have been referred from the general court to the Māori Land Court under the terms of Te Ture Whenua Maori Act.

I also want to look at other areas of the Arbitration Act, particularly the area of consumer protection, which this bill aims to improve. I note that arbitration can take effect only if it has been agreed to by both parties, and that the jurisdiction of disputes tribunals can be set aside if both parties agree to arbitration. As an example of arbitration highlighting the need for consumer protection I turn to the legacy of Sir Apirana Ngata, as we farewell his mokopuna, the legendary Māori broadcaster Hēnare Te Ua. One of Sir Apirana’s dreams was to set up a fund to help Māori World War I veterans, and in 1954 some 63 applications were received for grants from the Maori Soldiers’ Fund for needy Māori veterans. One of these applications was approved for a sum of £16,000 by arbitration, but for some reason the Government’s appointee said that “for many reasons it seemed equitable to ask much less …” and the figure was reduced to £8,000. The fact that the compensation was reduced by half after arbitration had already been agreed does not say much for the arbitration of the past.

We are also interested to note the proposal to extend the Arbitration Act to cover employment arbitration, which is currently managed through the dispute resolution procedures of the Employment Relations Act. Although that is outside the scope of this bill, we certainly agree that it is an idea worthy of further consideration. We do not want to threaten or dilute the good-faith obligations under the Employment Relations Act, but it would not hurt to have access to this type of arbitration in the area of employment law.

Arbitration, of course, can be a positive and meaningful way of getting justice. It can be even further enhanced through greater recognition and utilisation of tikanga Māori in dispute resolution. This revised bill does much to enact the recommendations of the Law Commission’s 2003 report Improving the Arbitration Act 1996, and on that basis the Māori Party is happy to support this bill at its second reading. Kia ora tātou.

CHARLES CHAUVEL (Labour) : In taking a call on the second reading of the Arbitration Amendment Bill I shall start by pointing out a little of the history of the legislation, in response to some comments made by Mr Finlayson, which I thought were an unfortunate and ungracious reflection on the generally bipartisan way in which the legislation has proceeded.

The facts of the matter as to the timing of the legislation are as follows. The Law Commission report—report No. 83, Improving the Arbitration Act 1996—was published in 2003. The Law Commission then provided draft legislation in October 2004. Cabinet approved the introduction of a bill in late 2005, and the bill was duly introduced in 2006. It simply is not justifiable to suggest that there has been any delay in expediting this very good report from the Law Commission. I hope it is in order to start by setting the facts straight right at the outset.

Indeed, I was fortunate, in August last year, to attend the Law Commission’s 20th anniversary conference, where some speakers expressed some disquiet at the habit, over the past dozen years, of Governments letting certain Law Commission reports languish on the bookshelves, and I am glad to say, as the acting Minister signalled in her speech, that that criticism certainly cannot be levelled at this Government. If members look at the Succession (Homicide) Bill and the Wills Bill, which, I suspect, we will shortly be debating, and at the fact that the Property Law Bill is now before the Justice and Electoral Committee, they can see that the expert and very good work of the Law Commission, across the areas of its technical expertise, is being taken seriously and expedited by this Government.

In fact, if one looks at the history of the Arbitration Act itself, one can see quite a contrast between the records of this Government and the previous one. As speeches on the first reading of the bill demonstrate, the Arbitration Act 1996 was also legislation that was developed in response to a Law Commission report. That was the 1991 Law Commission report entitled Arbitration. But the Government of the day did not move to adopt the report. It languished for 5 years, until it was adopted by a member, Mr Peter Hilt, and introduced as members’ legislation.

That bill, when it was enacted, repealed the 1908 Arbitration Act, which had been based on English legislation. The legislation that was introduced to replace it, based on the Law Commission report, was modelled on the United Nations Commission on International Trade Law (UNCITRAL) model law, which has been mentioned by previous speakers. Coincidentally, the Westminster Parliament, in the same year that we did—1996—repealed its old arbitration legislation and adopted an arbitration law that was also based on the UNCITRAL model law. So it can be seen that it is a good thing to keep abreast with developments in this area. Our international trade partners are moving to a uniform series of models for matters such as private sector arbitration. The UNCITRAL model is an example of that, and it is one that we should keep ourselves up to date with, which is something that this legislation achieves.

It can be seen from the Law Commission report that, generally speaking, the Law Commission thought the Arbitration Act was working well. The courts were consistently applying the Act, with its four major underlying principles: party autonomy, reduced judicial involvement in the arbitral process, consistency with laws in other jurisdictions, and an increased set of powers for the arbitral tribunal itself.

Before I move on, I would just like to make sure that appropriate tribute is paid to Justice Heath, or Paul Heath QC as he then was, who is acknowledged as the author of this report. This Parliament is clearly in his debt for the careful and very well-thought-out recommendations that have made their way into the amendment bill.

I would like to turn now to the changes recommended by the Justice and Electoral Committee. I am very pleased and proud to be a member of that committee, and to have been there since February, working with my colleague Lynne Pillay, the chair, and you, Madam Assistant Speaker, and the other members of the committee. I think the fact that the acting Minister has signalled and other parties have indicated that the amendments recommended by the committee will be adopted is a tribute to the fact that the committee worked well in this area.

I would like to mention in detail two of the changes recommended by the committee. Others have touched on the other two. The four in total are enhancing control of the arbitral tribunal, dealing with interim measures, dealing with default procedures and questions of law, and employment arbitration. I want to deal with just the interim measures question and the employment arbitration question.

We asked officials to consider whether there was some better or less clumsy mechanism for dealing in New Zealand law with amendments to international legislation such as the United Nations Commission on International Trade Law (UNCITRAL) model. Mr Worth touched on this issue in his speech. It seemed to some of us that there must be a better way, rather than reinventing the wheel each time through primary legislation in this House, to incorporate the expert recommendations of an international body dealing in its sphere of expertise with something as arcane as private sector arbitration law. Unfortunately, constitutional objections were raised to the suggestion of incorporating the model law into regulation, for example, and allowing it to be updated by ministerial notice that could go, for example, before the Regulations Review Committee, from time to time when the model law was updated. But I do think that particularly in the field of international commercial law, where transnational regulation is becoming a greater feature of our regulatory system, we have to find a better way than trying to update legislation every time the international model changes, and, worse, picking and choosing from those models so that we do not always get the full benefit of the international system.

The other point the committee dealt with—and Mr Harawira touched on it—is the employment arbitration point. The select committee heard evidence from Mr Pitchforth that at the moment the exclusion of employment arbitration from the Arbitration Act 1996 means that it is possible to go to arbitration with an employment problem, but if people do that, then the UNCITRAL model law procedures in the 1996 Act do not apply, and people have to rely on very old-fashioned, out-of-date English common law. It seemed to a number of us that that was an undesirable situation that ought to be remedied. But, as has been mentioned, an amendment to the Employment Relations Act was thought to be outside the scope of this bill.

Also, as the committee report indicates, the alternative dispute resolution procedures already provided for in the employment sphere—the Mediation Service and the Employment Relations Authority—provide a very satisfactory and speedy form of dispute resolution. So, really, recourse to arbitration in the employment area is largely an academic question at the moment. It may not always be that way, and it is appropriate to signal that at some point it would be desirable to tidy up the law in this area to ensure that if parties to an employment agreement did want to proceed to arbitration, they were able to do so under modern and effective procedures such as those set out in the principal Act and its schedule 1.

So, with the exception of the point relating to the Employment Relations Act that I have just raised, and reserving the position for further thought about the automatic incorporation of changes to the model procedure, I am very pleased to support the second reading of the Arbitration Amendment Bill, to thank witnesses and officials as well as the other members of the committee, and to commend the bill to the House.

NICKY WAGNER (National) : I rise to speak to the second reading of the Arbitration Amendment Bill. The key to arbitration, as we have all been discussing today, is simply that one can use an independent person, often an expert, to resolve disputes between parties. The key to this is the fact that it is quicker, better, more efficient, and cheaper than using the courts. There has been a marked increase in the use of arbitration in recent years. Although there are no statistics to tell us the total number of arbitrations, the number of defended civil cases filed in the High Court dropped about 40 percent between 1999 and 2003.

This tells us that many parties prefer arbitration before proceedings reach courts, and we know why. The whole arbitration process is cheaper, easier, and quicker than going to court, particularly now that many courts are overcrowded and disputes that come before the court take longer and are much more difficult. And, of course, in the modern world, time is of the essence.

The general attitude of business in terms of using arbitration comes from that fact that when it looks at the court system, it can see that even when people win, they lose. So arbitration is a particularly useful alternative.

The amendments in this bill are based on the recommendations of the New Zealand Law Commission of 2003. The key area I would like to look at is the concerns with consumer arbitration. Specific provisions apply when one party is in trade—selling a business, or doing business—and one party is a consumer. The Act recognises that at times arbitrarial clauses can work to the disadvantage of a consumer. So the bill seeks to protect the genuinely uninformed consumer. With that in mind, the definition of consumer has been redefined in this bill. In the past it was generally pretty broad. It included schools, churches, and local authorities. With the changes in this bill, a consumer is now defined as an individual who is not in trade—and that makes sense to me.

The existing law allowed arbitration to be used only if the consumer had signed a separate agreement agreeing to arbitrate at the same time as the original contract was entered into. This became a routine sort of process, and it was often done by consumers without much thought. The bill now allows for consumers to decide whether they want to agree to arbitration after a dispute has arisen, so they would be making a much more thoughtful decision, and arbitration will proceed only if both parties agree.

I believe that this is good common sense and the best course of action. Having two willing parties to arbitration will improve the success rate of the process. To do that, there also needs to be a further technical tweak to the bill, which removes the jurisdiction of the disputes tribunal where a consumer and a business enterprise execute an arbitration agreement. So with those changes in terms of consumers, National supports this bill as an attempt to improve the 1996 Act and to find the most cost-effective and efficient way to resolve disputes.

• Bill read a second time.