Appeals on Questions of Law: An Update on Statistics

By Dr Anna Kirk

A distinct feature of domestic arbitration in New Zealand is the ability to appeal an arbitral award on a question of law (Clause 5, Schedule 2 to the Arbitration Act).

In 2012, Amokura Kawharu wrote an important article analysing the success (or otherwise) of appeals on questions of law in the High Court between 1 January 2000 and June 2011.

Professor Kawharu found that of the 55 applications for leave to appeal on a question of law filed during that period, around one third were successful. Not all successful applications for leave resulted in an appeal being filed, which implies that some cases may have been settled after application for leave was successful. Of those that did proceed to a hearing on the merits (12 cases), six appeals were successful. Over the same period, there were 13 appeals on questions of law by agreement (i.e., no leave required). Three of these appeals were successful – making nine successful appeals in total.

Last year, an article written myself and Lauren Lindsay updated these statistics by analysing clause 5 appeals between July 2011 and August 2020. We found that the number of successful appeals continues to be low. Interestingly, we observed a noticeable drop in the number of appeals and leave to appeal applications that were filed between July 2011 and August 2020, only 42 applications (compared with 68 applications in the period from 2000-June 2011). Although it is not possible to know the reason for this drop in applications, the low success rate of the previous period may well be a contributing factor.

Of the applications for leave to appeal between July 2011 and August 2020, just under one third were successful. This is a similar figure to that found by Professor Kawharu. Of those that proceeded to a hearing on the merits (six cases), four were successful. Over the same period, about one third of appeals on questions of law by agreement were successful.

These statistics suggest that, while the ability of appeal on a question of law remains a valued attribute of domestic arbitration, such appeals are not common and are rarely successful. It appears that most parties accept the outcome of an arbitration and that the “finality” of arbitration (touted as one of arbitration’s key attributes) remains important in a commercial context.

Amongst the above statistics is the well-known Ngāti Hurungaterangi case, which involved a successful appeal for lack of a sufficiently reasoned award. In a more recent case (not included in the above statistics), Fitzgerald J provided useful clarification on the obligation of arbitrators to provide reasons in their awards, noting three important principles: (i) the context of the arbitration is relevant to the degree of reasoning required; (ii) arbitral awards need not exhibit the same level of reasoning as a court judgment; and (iii) an arbitrator is not required to give detailed reasons on every aspect of the case/evidence (see Stevely-Cole v Dilworth Trust Board [2020] NZHC 2843). Fitzgerald J also questioned whether lack of reasons was more properly raised as an issue for set aside of an award (art 34, Sch 1), rather than as a question of law under Schedule 2 of the Act.

Finally, a brief word on some clarifications in recent cases regarding appeals on contractual interpretation issues:

(a) In Ex UCL Ltd v Solarix Networks Ltd [2015] NZHC 1474, Whata J confirmed that a party may appeal an arbitrator’s interpretation of a particular contractual word “in the wider context of the agreement as a whole” as an error of law (but not an issue arising out of a factual finding). In a further appeal in the same case (after the arbitrator declined to apply the Court’s interpretation of the contract), Muir J confirmed that an error of law occurs if an arbitrator either (i) misstates the principles of contractual interpretations or (ii) misapplies those principles when interpreting the contract.

(b) In Milk New Zealand (Shanghai) Co Ltd v Miraka Ltd [2019] NZHC 2713, Walker J held that not all errors in contractual interpretation are properly characterised as errors of law. A more nuanced approach is required to ensure that the identified error is not in reality a challenge to factual inferences or sufficiency of evidence. It is noted that Fitzgerald J discussed at length the difficulties that arise in attempting to distinguish questions of law from questions of fact in Stevely-Cole above.

[1] Note that Schedule 2 applies to domestic arbitrations unless the parties opt-out. Parties to an international arbitration can choose to opt-in to Schedule 2.

[1] A Kawharu “Arbitration appeals” [2012] NZLJ 137.

[1] A Kirk and L Lindsay “Arbitration” [2020] NZ L Rev 639. See this article for a full analysis of the statistics and the successful cases.