b. the Trusts Bill sees the court appoint the arbitrator and also sees the court appoint any representative of unborn, minor and unascertained beneficiaries – the Bill does not leave arbitrator choice to the parties (or general law) and the appointment of a representative to the arbitrator; and c. the Trusts Bill does not mandate arbitration when an arbitration clause is in a trust deed in contrast the Bill mandates arbitration where an arbitration clause is included in a trust deed.4 The Trusts Bill provisions are unrealistic. Few parties will apply to the court for an arbitration; it will lead to delay, additional cost and, until a series of judicial decisions dealing with when a court will order arbitration, uncertainty of outcome. It is also unclear if the court must also approve arbitral awards given the requirement for a court to approve an ADR settlement and the definition of ADR settlement used in the Trust Bill. If that is the case then an arbitral process becomes entirely pointless given the court must approve the outcome. The Trusts Bill provisions actually undermine arbitration and are contrary to New Zealand's previously arbitration friendly approach. The Trusts Bill does not do what the Report represents it does. Consistency with the law of trusts and court supervision Contrary to the Report the Bill is more consistent with the basic law of trusts than the Trusts Bill. That is because this Bill automatically validates arbitration clauses in trust deeds whereas the Trusts Bill does not. Adhering to the terms of a trust deed has been described as a fundamental duty of trustees.5 Yet the Trusts Bill only recognises this in relation to when the settlor excludes arbitration of trust disputes. It does not recognise this when the settlor mandates the arbitration of trust disputes.
In this regard the Trusts Bill demonstrates howit is not pro-arbitration and how it is not consistent with this fundamental tenet of trust law. By giving effect to the trust deed – if it includes an arbitration clause – the Bill is both pro-arbitration and more consistent with trust law. The Report has a clear focus on the need for court supervision of arbitrations (for example at [46]). It is this that seems to drive both: a. the need for court approval of arbitrations; and b. the court's role in appointing arbitrators and representatives for minor, unborn and unascertained beneficiaries. This focus is misplaced. For example the Report states: [t]rusts are a creation of equity and common law developed over many centuries. The law of trusts is highly complex and specialised for this reason, and the High Court historically exercises an inherent jurisdiction to supervise and intervene in the administration of a trust. This is a sweeping generalisation made without context. In fact: a. there are a number of areas of the law – such as maritime insurance law – where development of the law was court led yet arbitration is considered appropriate;