The Importance of giving Dispute Resolution Clauses your Attention

The Court of Appeal recently issued a decision refusing to grant special leave to allow a party to proceed with an appeal of an arbitrator’s decision; Antipodes New Zealand Ltd v Accel (HK) Company Ltd.1

This decision is a useful reminder of one of the potential downsides of the arbitration process. An arbitrator’s award will usually be final. A party may only appeal to the High Court on a question of law and, if the factors that were laid down by the Court of Appeal in Gold and Resource Developments (NZ) Limited v Doug Hood Ltd2 also favour it. Those factors are:

• the strength of the challenge and the nature of the point of law;
• how the question arose before the arbitrator(s);
• the qualification of the arbitrator(s);
• the importance of the dispute between 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 is domestic or international.

The fact that a party is unable to appeal factual disputes and hurdles involved with successfully obtaining leave means that the majority of arbitrators’ decisions are not appealable.

This was the case for Antipodes. A substantial sum of money was involved; over $2 million USD. However, the Court found that Antipodes’ arguments were, in reality, factual issues dressed up as law. The Court of Appeal considered that only one argument “potentially” constituted a question of law (a question about whether s 50 of the Contract and Commercial Law Act 2017 had been properly applied), however, the Court did not accept that the arbitrator had not properly considered that section of the Act.

Often when parties enter into commercial contracts, they give little thought to the dispute resolution provisions. It is important, however, to review whether a disputes resolution process prescribes the use of a certain resolution process and, if it does, whether that process is a suitable one for you or the nature of your contract.

In terms of arbitration, this process does have many advantages including; the ability of the parties to agree on the decision maker (where they can agree), often a speedier outcome, usually the ability of parties to have more control over the process and, in many cases, the fact that there is no appeal right (this obviously suits the winner). However, arbitration can be just as expensive as Court proceedings and, if an arbitrator makes mistakes, there is most often nothing that can be done about that.

You should therefore take the time to consider what a dispute resolution clause is proposing, and to understand the implications of any particular provision with us, before finding out you are bound to use an option that you may not like

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1 [2025] NZCA 18.

2 [2000] 3 NZLR 318.

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This article is current as at the date of publication and is only intended to provide general comments about the law. Harkness Henry accepts no responsibility for reliance by any person or organisation on the content of the article. Please contact the author of the article if you require specific advice about how the law applies to you.