Adjudication Framework

We think there is an opportunity to contribute to New Zealand’s economic productivity, growth, and access to justice by enabling a new private dispute resolution process that is specifically designed for speed and can be used as an alternative to arbitration or the courts.

The 2023 Wayfinding for Civil Justice National Strategy noted that the formal justice system sits within a wider alternative dispute resolution environment and stressed the need for coordinated and accessible dispute resolution mechanisms.

While the government and wider justice sector are implementing efficiency improvements in the formal justice system, we could also be looking at innovative ways to encourage and enable faster private dispute resolution. This would provide more choice for businesses who prefer speed over finer legal distinctions to help maintain cashflow and business continuity.

There is nothing stopping people using out of court dispute resolution voluntarily. Court rules and lawyer conduct codes allow judges and lawyers to suggest that people try to resolve their issue before going to court. Businesses can include dispute resolution clauses in binding contracts, including clauses setting out private adjudication as the agreed dispute resolution process. Many industry organisations require members to use a nominated scheme. These voluntary options do not appear to have resulted in lower out of court dispute resolution times.

While many sectors have access to a legislated dispute resolution scheme that lays out a clear dispute resolution process, defined timelines and enforcement remedies, a large number of sectors and groups do not, and may benefit from extra choice. This includes disputes between businesses in sectors such as technology, services, retail and wholesale, healthcare, manufacturing, transport and logistics, and hospitality and tourism. 

The Disputes Tribunal provides a generic low-cost option but is limited in its financial jurisdiction. The only generic legislation governing out of court dispute resolution that anyone can use is the Arbitration Act 1996. While arbitration is effective, it is not fast or low cost. The average time to complete an arbitration is nearly 11 months. Costs are similar to taking a claim to the courts.

The design of an adjudication framework could be guided by the following principles:

Efficiency: The framework needs to enable fast and low-cost resolution of disputes and be simple to implement and use.

Suitability: As it does not include all the checks and balances of a court process, statutory adjudication is not suitable for criminal matters or situations where there might be an abuse of power or human rights, or disputes that have a wider impact on society. The focus is on speed, so cases need to be relatively low complexity – i.e. low public interest, no other affected parties, largely cordial relationships, and evidence needs to be in a form that can be quickly and easily reviewed by an adjudicator. We also need to consider any overlapping legislation when considering the applicability of the process to different types of disputes.

Flexibility: The legislation will allow parties to choose resolve disputes differently. It should be able to be used by a wide range of sectors. It should also not limit different adjudication approaches, for example, Māori dispute resolution that requires adjudicators experienced in tikanga, or potential future methods like adjudications that make use of artificial intelligence.

Public confidence: Parties need to trust that the process will be effective and impartial. They need to be confident that private adjudicators have the ability and expertise to resolve their disputes and that the determination can be enforced.

Safeguarding natural justice: There should be a fair opportunity for both parties to be heard and a reasoned decision.