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1 The issues

INTRODUCTION

1 ARBITRATION IS A CONSENSUAL METHOD of dispute resolution. It enables parties to identify parameters and determine the rules that they wish to apply to the resolution of their dispute. Fundamental to the process is agreement to appoint a private judge to adjudicate and make a binding decision.

2 One of the expressed purposes of the Arbitration Act 1996 (the Act) is to encourage the use of arbitration as an agreed method of resolving commercial and other disputes.⁶ The object of this encouragement is twofold. First, it reinforces the desirability of disputing parties resolving their differences by methods chosen by them. Second, by having the disputes resolved privately, the burden on courts provided by the State and funded by taxpayers to resolve civil disputes is lessened.⁷

3 In Preliminary Paper 46 we identified two specific issues touching on the question of confidentiality in the context of arbitral proceedings. Both issues need to be considered in the context of section 14 of the Arbitration Act 1996 and the circumstances in which that particular section was passed.⁸ For the purpose of this report we express the issues as follows:

• Does section 14 of the Act deal adequately with issues of confidentiality? If not, how should the Act be amended to deal adequately with this issue? (We refer to this issue as the “default rule” issue.)
• When it is necessary for parties to an arbitral proceeding to have recourse to courts of general jurisdiction, should the (otherwise) confidential nature of the arbitral process yield to principles of open justice applicable in courts of general jurisdiction? (We refer to this issue as the “open justice” issue.)

4 The background to the default rule issue is set out in paragraphs 7–12 of our preliminary paper. We summarise. In Dolling-Baker v Merrett⁹ the English Court of Appeal had held that a duty of confidentiality between the parties to an arbitration was to be implied as a matter of law. Subsequently, but before the enactment of the 1996 Act, the High Court of Australia, in Esso Australian Resources Ltd v Plowman¹⁰ declined to follow the Dolling-Baker decision, on the basis that confidentiality was not an essential attribute of arbitration. As a consequence of Esso, the Select Committee, in considering the Bill that led to the 1996 New Zealand Act, recommended the insertion of the present section 14, which implies a term as to confidentiality, with limited exceptions, into arbitration agreements.

5 Section 14, however, arguably contains flaws: First, the exceptions to the implied term seem insufficiently wide to deal with many everyday situations where disclosure may be necessary. In England, for example, cases have recognised exceptions to their common law rule, which may not be permitted under section 14.¹¹ Second, it is arguable that no statutory implied term can ever set out exhaustively all of the exceptions that may arise; these need to be determined on a case-by-case basis.¹² The issue is, therefore: should section 14 be amended to deal with these potential problems, and if so, how? Alternately, should it simply be repealed?

6 The open justice issue is wider in its scope. There are occasions when the High Court will need to determine whether an arbitral award should be enforced,¹³ or, whether an arbitral tribunal has erred on a question of law.¹⁴ The question is how the presupposition of confidentiality in arbitration should be balanced against the desirability of a court conducting its business openly. That is, pre-eminently, a question of policy to be addressed by reference to the principle of open justice discussed in cases such as Scott v Scott,¹⁵ McPherson v McPherson¹⁶ and Lewis v Wilson & Horton Ltd.¹⁷ We shall refer also to the recent discussion of this issue in the context of family law cases in England and Wales: Allan v Clibbery.¹⁸

7 The open justice issue arose recently for consideration in an arbitral context: Television New Zealand Ltd v Langley Productions Ltd.¹⁹ In that case Robertson J took the view that the confidentiality which the parties had adopted and embraced for their arbitration could not automatically extend to the processes for enforcement or challenge in the High Court.²⁰ The judge also expressed the view that a clear and unambiguous determination of Parliament was necessary for the cloak of confidentiality attaching to the arbitral process to apply to subsequent proceedings in the High Court.²¹

8 We address the default rule and open justice issues in the chapters which follow and then set out our recommendations for reform.