Recent University of Otago law school graduate Sarah is currently working as a Clerk with the New Zealand Dispute Resolution Centre (NZDRC)
Arbitration:
44.1 UNLESS any dispute or difference is resolved by mediation or other agreement, the same shall besubmitted to the arbitration of one arbitrator who shall conduct the arbitral proceedings in accordance with the Arbitration Act 1996 and any amendment therefore or any other statutory provision then relating to arbitration. … 44.3 THE procedures described in this clause shall not prevent the Landlord from taking proceedings for the recovery of any rent or other monies payable hereunder which remain unpaid or from exercising the rights and remedies in the event of such default prescribed in clause 28.1 hereof.3
In considering the application for summary judgment and the relevant arbitration clauses in the lease, the Court dismissed the defendants’ claim to have the application for summary judgment stayed. The Court found that the effect of the relevant lease provisions, particularly clause 44.3, preserved Drake’s right as landlord to pursue separate legal proceedings for the recovery of any rent or other monies payable under the lease. The Court held that pursuant to the terms of the lease, the parties had expressly agreed to exclude claims for rent and other monies payable by the tenant (ipso facto the defendants as guarantors) under the lease from reference to arbitration. Consequently, there was no dispute capable of reference to arbitration by the Court in relation to Drake’s claim for rent and other outgoings.4
The Court held that the defendants’ reliance on Zurich was misconceived, as there was in fact no dispute to refer to arbitration concerning Drake’s claim for rent and outgoings. While the defendants’ claims of misrepresentation and purported lease breach by Drake were in fact disputes which should be referred to arbitration pursuant to clause 44.1, the fact those disputes should be referred to arbitration did not prevent Drake from taking the current separate proceedings to recover rent and outgoings.
Comment
This is an important decision, illustrating the application and potential limits of the Supreme Court’s decision in Zurich. In the present case, the High Court acknowledged the principle of party autonomy in contracting with arbitration clauses unanimously endorsed in Zurich, but demonstrated that any such arbitration clauses will be strictly interpreted, and cannot be relied on to stay summary judgment proceedings outside of the precise category of disputes the parties have agreed to refer to arbitration.
Since Zurich, some have viewed the Supreme Court’s decision as positive recognition from the Courts of arbitration as an alternative dispute resolution method, however others argue that referral to arbitration may cause some parties to be unnecessarily deprived