5 Grounds on which the court grants leave to appeal

BACKGROUND

106 THE ISSUES THAT WE CONSIDER in this chapter are whether the grounds for seeking leave to appeal should be set out in the Act, and if so, what should they be? We consider this issue having particular regard to the decision of the Court of Appeal in Gold and Resource Developments (NZ) Ltd v Doug Hood Ltd,¹⁵⁸ where the court itself set out eight clear guidelines. By way of elaboration on the background, we reproduce a modified form of paragraphs 20–25 (inclusive) of Preliminary Paper 46 below:

In relation to the granting of leave to appeal to the High Court, clause 5 of the Second Schedule to the New Zealand Act:

may be expressly excluded by the parties as a result of section 6(2)(b) of the Act, which allows parties to a domestic arbitration to contract out of the default rules set out in the Second Schedule;
specifies no criteria against which the High Court will judge whether, in a particular case, leave should or should not be granted; and
states that leave to appeal should not be granted unless determination of the question of law could substantially affect the outcome.

Although the default rules set out in the Act do not expressly permit an appeal to the High Court against a finding of fact made by an arbitral tribunal, it is not clear whether the absence of evidence on which to base a finding of fact is to be regarded as a question of law on which leave to appeal may be granted.

Following a number of conflicting High Court decisions (essentially concerned with whether the restrictive Nema¹⁵⁹ guidelines should apply), the Court of Appeal in Gold and Resource Developments (NZ) Ltd v Doug Hood Ltd,¹⁶⁰ with a view to filling the gap left by the legislature’s failure to give adequate direction, set out the approach that New Zealand courts are to take in exercising their discretion. After a survey of cases and legislation from Australia and the United Kingdom, the Court concluded that Parliament had intended that the parties should normally have to accept the arbitrator’s decision and accordingly the discretion should be construed narrowly. It then set out eight guidelines for the exercise of the discretion, although it emphasised that other factors might be relevant.¹⁶¹ These guidelines were:

the strength of the challenge and/or the nature of the point of law;
how the question arose before the arbitrators;
the qualifications of the arbitrators;
the importance of the dispute to the parties;
the amount of money involved;
the amount of delay involved in going through the courts;
whether the contract provides for the arbitral award to be final and binding; and
whether the dispute before the arbitrators is international or domestic.

The first guideline, which the Court said was the most important, effectively followed the guidelines in The Nema but with a change in terminology. The Court said that if the point on appeal was only a “one-off point” then usually a very strong indication of error was needed. In other cases, a strongly arguable case will normally be required.

In contrast to the New Zealand legislation, section 69 of the Arbitration Act 1996 (UK) states that leave to appeal shall be given only if the court is satisfied:

(a) that the determination of the question will substantially affect the rights of one or more of the parties;

(b) that the question is one which the arbitral tribunal is asked to determine;

(i) the decision of the arbitral tribunal on the question is obviously wrong; or

(ii) the question is one of general public importance and the decision of the arbitral tribunal is at least open to serious doubt; and

(d) that, despite the agreement of the parties to resolve the matter by arbitration, it is just and proper in all the circumstances for the court to determine the question.

In addition to section 69(3) of the Arbitration Act 1996 (UK), section 69(4) requires an application for leave to appeal to identify the question of law to be determined and to state the grounds on which it is alleged that leave to appeal should be granted.

Apart from the requirement in section 69(3)(a) of the UK legislation, that the determination of the question will substantially affect the rights of one or more of the parties, the remaining matters relevant to the grant of leave are not expressly stated in the New Zealand legislation. That it is necessary to establish that the point of law could substantially affect the rights of one or more parties is clear from clause 5(2) of the Second Schedule to the Act.

SUBMISSIONS

107 Only three of the submissions, which we received, addressed this particular issue. The general effect of the submissions we received was:

There seems to be general agreement that the grounds of appeal identified in Gold and Resource Developments (NZ) Ltd v Doug Hood Ltd were working in practice.
Because circumstances relating to an appeal could vary so much, and it would be impossible for legislation to ascribe the weight to be given to any particular factor in the context of a specific case, legislative intervention was not favoured.
While the guidelines identified in Gold and Resource Developments (NZ) v Doug Hood Ltd could translate into legislative provisions it was appropriate that the Court of Appeal determine applications on the basis of all relevant factors in the particular case.

108 Two submissions addressed a particular sub-issue: whether the fact that a contract provides that the award shall be “final and binding” is a proper factor for the court to consider. We will address that issue separately at the conclusion of the chapter.

RECOMMENDATIONS

109 The basic argument against codifying the guidelines articulated by the Court of Appeal, is that if they were enshrined in legislation, without a “catch all” provision such as “such other factors as may, in the particular circumstances, be relevant”, then the ability for the court to do justice in individual cases may be undermined. And, the insertion of such factors with a “catch all” provision would not change the status quo; though, arguably, accessibility to the criteria would be enhanced.

110 On balance, we are of the view that it is unnecessary to legislate given that the criteria developed by the Court of Appeal to meet New Zealand circumstances appear to be working well. We believe that the criteria are sufficiently well known to those practising in the arbitration field to negate the need for legislative intervention to ensure greater accessibility. Accordingly, we do not recommend any change.

RELEVANCE OF CLAUSE THAT AWARD IS “FINAL AND BINDING”

Submissions

111 One particular issue arising out of the Doug Hood guidelines was the subject of a difference between two submitters. The relevant guideline involves the question where the arbitration agreement provides for the award to be “final and binding”. In Doug Hood the Court of Appeal had said of this guideline:

(7) Whether the contract provides for the arbitral award to be final and binding
Where there is such a clause, it will not be determinative, but it will be an important consideration. It will indicate that the parties did not contemplate becoming involved in litigation over the arbitral award. The High Court should lean towards giving effect to the stated preference of the parties for finality.¹⁶²

112 One view was that a contractual term providing that an award is “final and binding” is not directed to the question of whether the parties intended the award to be subject to appeal for error of law. Rather, the intention of such a clause is to confirm the parties’ agreement that the award is immediately operative and binding on the parties and that no further steps are required to give effect to it. Both article 36(1)(a)(v) of the First Schedule to the Act and article V(i)(e) of the New York Convention¹⁶³ provide that enforcement of an award can be refused by a Court of Appeal if the award has not become binding on the parties. Accordingly, on this view, the agreement that the award is “final and binding” is relevant only to enforcement, and should not be a relevant factor in deciding whether to grant leave to appeal.

113 The alternative view advanced is that the guideline is appropriate and relevant to the question of appeal rights. This view, which seeks to derive support from CBI NZ Ltd v Badger Chiyoda,¹⁶⁴ acknowledges that something more than an agreement between the parties, that an award is “final and binding”, is required to exclude any right to apply for leave to appeal from an arbitral award; but a “final and binding” provision is still relevant. We note that, however, CBI NZ Ltd v Badger Chiyoda was a case in which the parties had expressly agreed that there should be no appeal¹⁶⁵ and the issue, as framed by counsel and adopted by Cooke P was:

[Whether the rule as to inability to oust the jurisdiction of the court] should not apply to international commercial arbitrations in one-off contracts where the parties have freely chosen to exclude the anomalous inherent jurisdiction relating to error of law on face of the award.¹⁶⁶

That issue arose, of course, in the context of the Arbitration Act 1908 and the inherent jurisdiction of the court to review an award for error of law on the face of the award. That jurisdiction has subsequently been overtaken by the appeal provisions contained in clause 5 of the Second Schedule to the Act.

Recommendation

114 We do not think it is necessary to address the opposing views on this issue. Ultimately, the issue is one of contractual intent; that is, did the parties intend that any appeal rights should be excluded, or is the clause directed only to enforcement. This is properly a question for the courts to determine; we do not think that it would be appropriate for legislation to dictate that the words should have a fixed meaning.

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