Appendix 4: Statutory arbitrations
1. As para 96 of the Report says, a .number of statutes provide for arbitration for the resolution of specified categories of disputes. A slightly amended and supplemented list of 30 statutes appears at the end of this appendix. On their face, the arbitration they provide for departs from the central element of arbitration as usually understood - it appears to be compulsory and not to be based on the consent of the disputing parties. As the Law Commission discussion paper indicates, the law of arbitration is based in large part on that element of the consent of the parties; how is that autonomy to be balanced against the general public law which might supervise that autonomous action? On the face of it that law with that balance is not designed for a case in which the procedure is being imposed compulsorily.
2. As the Report confirms so clearly, the law provides two basic compulsory methods for the binding third party settlement of disputes between individuals or between individuals and the State courts and tribunals. If the decision requires specialist input then that can be provided through the appropriate composition of the court or tribunal and by expert witnesses.
3. Accordingly, in this appendix we consider whether the powers in question might be better exercised by a court or tribunal. First we put to one side 3 powers which have just been or are being considered in other reviews. The section of the Mining Act 1971 which regulates disputes about the rate of mining royalties should be considered as part of the Mining Act review. The provisions of the Cooperative Companies Act 1956 and the Cooperative Freezing Companies Act 1960 which relate to the valuation of shares should be examined in the context of the Law Commission's review of company law. We also leave to one side the provisions for arbitration in the labour context which have been recently enacted Labour Relations Act 1987 ss147-149. We have already mentioned appeal provisions which name the appeal body handling licensing appeals as an "arbitrator" para 138. The Arbitration Act 1908 does not appear to be applicable to them notwithstanding s25 and we do not consider them further here. We note only that the choice of the title is unusual. The lawyer in question could be called a tribunal or simply appointed to decide the appeal.
4. It also appears to be the case that the arbitral procedures established by or under 9 of the provisions are in fact based on the consent of the parties and might, if the power of decision continues, accordingly remain subject to arbitration (paras 17-25 below). But some of the other powers should perhaps be exercised by the courts and some by tribunals. We consider those possibilities now.
Possible Court Functions
5. A number of the provisions refer matters to arbitration which involve the enforcement of legal obligations and the determination of entitlements. In such cases the parties might agree to final private settlement by arbitration, but there appears to be no reason for the law to impose that process on them.
6. Three statutes make provision for arbitrators to settle disputes about the compensation due from the Crown to the owner for the value of livestock destroyed because of disease They are the Animals Act 1967 s42, the Poultry Act 1968 s10 and the Apiaries Act 1969 s152. These matters might appropriately be dealt with by the District Court as is provided in related local government legislation, see schedules 14, 15 and 16 to the Local Government Act 1974.
7. The Trees Electric Lines Regulations 1986 rr4-13 make provision for arbitrators to hear disputes between tree owners and electrical supply authorities. Similarly these disputes could be heard appropriately by the District Court.
8. The Building Research Levy Act 1969 imposes a levy on the basis of the value of the work done. Section 52 of that Act provides that where the Building Research Association and the builder do not agree on the value of the work and it has not been specified in the work permit, the issue should go to arbitration. This question, which is simply one of the extent of the legal obligation to pay a levy, appears to be a matter for the regular courts.
9. Other levy statutes provide for court enforcement of the levy. The Berryfruits Act 1967 gives the power of final assessment to a departmental official and it might be questioned on that account. The Wheat Research Levy Act 1974 does not provide any expert procedure for objections to the levy assessment. Both of the latter statutes make it clear that the levy is a debt owed to the Crown and therefore not a suitable matter for agreement. Any dispute could be taken to the competent court.
10. Section 79(2) of the Survey Act 1986 is an unusual provision under which the Survey Board may require the Institute of Surveyors to make a financial contribution to its work. If there is a dispute about the amount the matter goes to arbitration. The section imposes an absolute obligation on the Institute to contribute "such sums as are necessary to enable the Board to perform its functions". Given that duty, the case appears to be one for enforcement through the regular courts, but the criteria for decision seem .to be inappropriately wide for any third party decision-maker court or arbitrator.
11. Section 30 of the Trustee Banks Act 1983 refers disputes between Trustee Banks and their depositors or security holders to arbitration. On our present understanding we see no reason why these questions of legal obligation should not be able to be heard in the regular courts, although again the banks and their customers might of course agree to arbitration.
Possible Tribunal Functions
12. Applications for compulsory licenses and endorsements and for the revocation of those licenses under the Patents Act 1953, are made to the Commissioner of Patents (ss46-51). We understand that applications for compulsory licenses are extremely rare. An appeal lies to the High Court from the decision of the Commissioner where an objection is made. Alternatively under s53, the parties may consent to arbitration or if the Commissioner thinks that a scientific or local investigation is required the Commissioner has the choice whether to refer the matter to arbitration. An appeal from that decision is available to the High Court and the Court of Appeal (if the case involves the revocation of a license) (ss97&98). The matters considered have a quantitative element and there is a provision for the Attorney-General to be heard in an appeal to the court. Together with some copyright matters (see para 92 of the Report) these questions might be transferred to the jurisdiction of the Commerce Commission or the High Court.
13. The Fisheries Act 1983 s28D makes provision for disputes over the value of compensation for the reduction of individual transferable quotas to go to arbitration. The Fisheries Act already provides a number of grievance procedures in the fishing area. This may be a case where the desirability for consistency and a national policy points to a specialist tribunal as the best place for resolution of these disputes. As we say in the Report (para 140) this whole area is in need of review.
14. Section 3(2) of the Napier Harbour Board Empowering Act 1974 enables the Board to sell land to existing lessees on the basis of its unimproved value as determined by a registered valuer appointed by the Board. Disputes about the value of the land are to be resolved by arbitration. The Unit Titles Amendment Act 1979 s9(6)(b) also provides for arbitration where the assessment of value by the valuer-general or a registered valuer is disputed.
15. In both cases the value of the land is not a matter of agreement but is subject to an objections procedure Other objections to valuations are regularly handled by the Land Valuation Tribunal under the Valuation of Land Act 1951. In terms of our principal recommendations these matters might be dealt with by the proposed resources tribunal (see para 128).
16. The Wanganui Harbour Board Empowering Act 1972 is a slightly different case in that the original value is assessed by the Harbour Board. We raise the question whether the original assessment should be made by a valuer, as is required by the other legislation.
Arbitrations based on agreement
17. The third category of disputes arises where the parties have failed to reach an agreement. These are disputes which involve an element of consent or negotiation and for which arbitration may be appropriate.
a valuations
18. The Marine Farming Act 1971 provides that where a lease is terminated or expires then the valuation of the improvements and the stock should be agreed upon between the outgoing and incoming lessee. In the event of a dispute the matter goes to arbitration. There is a voluntary element in the sense that successive leases apply for the lease and will wish to take over and hand on the improvements and the stock. It is comparable to successive lessees in commercial premises where in the absence of agreement arbitration is common.
19. Similarly, the Gas Act 19$2 makes provision for disputes about the value of the assets between the incoming and outgoing holder of the gas franchise to be resolved by arbitration.
20. A private Act, the Tokoroa Agriculture and Pastoral Association Empowering Act 1968 gives effect to the agreement relating to a sports ground between the A and P Association and Matamata County. The legislation allows for compensation to the Association if it no longer uses the ground and for arbitration if the amount cannot be agreed upon. Again the provision appears to be based upon agreement and arbitration procedures are apposite.
21. The Public Bodies Leases Act 1969 may come under this heading as well. Public bodies under that Act, leasing land, have a choice of different types of lease. In some cases where there is a dispute about valuation (for instance on renewal or in respect of compensation for improvements) arbitration is provided for. That provision can be seen as agreed by the parties to the lease, and such a provision for valuation arbitration in respect of land is of course common.
22. A number of the provisions direct that in the event of a failure to reach an agreement disputes between different local authorities should be referred to arbitration. Some disputes involve the allocation of different responsibilities and the determination of financial contributions between different local authorities. That is the case with the Auckland Metropolitan Drainage Act 1960 (ss35, 48, 78 & 95) and the Hutt Valley Drainage Act 1967 (ss25, 27 & 83). The voluntary nature of the agreement is made more prominent in the Tauranga City Council and Mount Manganui Borough Council (Tauranga Harbour Bridge) Empowering Act 1972 where the statute refers the parties to arbitration as agreed in their scheduled deed. These disputes appear to be subject appropriately to arbitral processes.
b provisions which promote the choice of arbitration
23. The legislation relating to friendly societies and credit unions provides that certain disputes arising within those bodies may be resolved in the ways that the rules of the body provide. Those methods might include arbitration (Friendly Societies and Credit Unions Act 1982 ss78-80). The Building Societies Act 1965 s109 sets up certain rules about the appointment of an arbitrator in the event that the parties agree to arbitration.
24. In these two cases the legislation assists the agreements entered into by the members. It facilitates the method of dispute resolution in advance of the dispute arising.
25. By contrast the Town and Country Planning Act 1977 s165 allows local authorities and other statutory bodies to agree to arbitration instead of exercising their statutory rights of appeal to the Planning Tribunal. The provision only applies where all the parties to litigation are public authorities. Presumably it is intended to avoid the spectacle of public authorities litigating against each other in public at the public expense. The use of this procedure enables public authorities to avoid a public hearing and perhaps to avoid having to give effect to the decision of the arbitrator. Matters which could be the subject of arbitration under s65 are public business. While we understand that the provision is rarely invoked, we raise the question whether the public interest might be threatened by the opportunity to elect this private process. The issue should be considered in the resource management law reform.
PROVISIONS FOR STATUTORY ARBITRATION
Government and Local Government
Patents Act 1953 s53 Auckland Metropolitan Drainage Act 1960 s95 Animals Act 1967 s42 Hutt Valley Drainage Act 1967 s83 Poultry Act 1968 s10 Tokoroa Agricultural and Pastoral Association Empowering Act 1968 s6(2) Building Research Levy Act 1969 ss5(2),6 Apiaries Act 1969 sl5(2) Public Bodies Leases Act 1969 2nd Schedule ss7, 14, 22 and 1st and 2nd schedules Marine Farming Act 1971 ss24,39 Mining Act 1971 s86(2),(3) Tauranga City Council and Mount Maunganui Borough Council (Tauranga Harbour Bridge) Empowering Act 1972 s24 Wanganui Harbour Board Empowering Act 1972 s3(2) Napier Harbour Board Empowering Act 1974 s3(2) Broadcasting Act 1976 s34A(8) Town and Country Planning Act 1977 s165 Gas Act 1982 s29(3) Fisheries Act 1983 s28D Trees (Electric Lines) Regulations 1986 rr4-13 Survey Act 1986 s79(2)
Statutory Corporations carrying out Commercial Activities
Trustee Banks Act 1983 s30
Private Corporations Created by or under Statute
Co-operative Companies Act 1956 s9(b) Co-operative Freezing Companies Act 1960 s9(2) Building Societies Act 1965 s109 Unit Titles Amendment Act 1979 s9(6)(b) Friendly Societies and Credit Unions Act 1982 ss78,80
Licensing Appeals
Poultry Board Act 1980 S25 Game Industry Board Regulations 1985 reg33(3) Berryfruit Marketing Licensing Regulations 1983 reg29(3) New Zealand Horticultural Export Authority Act 1987 s43 Labour Relations Act 1987 ss147-149