participating, non-participating and boycotting parties under proposed Article 16(4)
By Albert Monichino QC
Introduction On 1 October 2018, the Justice Committee of the New Zealand Parliament (‘Justice Committee’) published its Final Report on the Arbitration Amendment Bill (‘Final Report’), recommending that the Arbitration Amendment Bill (‘Bill’) ‘be passed with the amendments shown’.1 The Bill seeks to amend several aspects of the Arbitration Act 1996 (NZ) (‘Arbitration Act’), including the consequences of failing to seek review of an Arbitral Tribunal’s preliminary ruling on jurisdiction. The Bill awaits a Second Reading before the Parliament. If passed, the Bill would amend Article 16 of the UNCITRAL Model Law on International Commercial Arbitration (‘Model Law’), which is contained in Schedule 1 of the Arbitration Act,2 by inserting an Article 16(4) that declares that failure to request a review of a preliminary decision on jurisdiction (as allowed by Article 16(3)) constitutes waiver of any right to later object to jurisdiction. Effectively, this would preclude parties that fail to seek court review of an Arbitral Tribunal’s preliminary ruling on jurisdiction from subsequently challenging, or resisting enforcement of, a final award on the merits on jurisdictional grounds. The Article 16(4) contained in the Final Report is a revised form of the original provision that was contained in the Bill. Notably, the Final Report rejected the advice of the Ministry of Justice annexed to the Arbitration Amendment Bill Interim Report of the Justice Committee (‘Interim Report’)3 to the effect that the proposed Article 16(4) be omitted from an amended Arbitration Act. This article proceeds as follows. First, the reasons for the amendment to the Arbitration Act are explained. Second, the drafting process of Article 16(4) is outlined. Third, the original Article 16(4) and the revised Article 16(4) are compared, demonstrating that there is no substantive change between the respective versions. Fourth, the Final Report’s statement that Article 16(4) ‘would not apply when a party does not participate in the arbitration at all’ is analysed.4 Finally, it is argued that Article 16(3) should not have a preclusive effect on boycotting parties (ie parties that withdraw from the arbitration before or immediately following a preliminary ruling on jurisdiction). This article also offers a proposed amendment to the revised Article 16(4) contained in the Final Report. The Impetus for the Amendment: First Media The proposed Article 16(4) is a legislative response to PT First Media TBK v Astro Nusantara International BV (‘First Media’).5 That case emanated from a failed joint venture to provide multimedia services in Indonesia contained in a subscription and shareholders’ agreement (‘SSA’) between certain companies belonging to the Indonesian conglomerate, Lippo, and certain companies belonging to a Malaysian media group, Astro. The SSA was governed by Singaporean law and contained an arbitration clause providing for arbitration in Singapore according to the Rules of the Singapore International Arbitration Centre (‘SIAC’). Notably, certain companies related to the Astro Group, who were not party to the SSA (‘the Additional Astro Parties’), provided substantial funding and services to the joint venture in anticipation of its closing. When it