Introduction

Part 1

16.1.1 Outline of issue    
16.1.2 Comment    
16.1.3 Guidelines

Part 2    

16.2.1 Outline of issue    
16.2.2 Comment    
16.2.3 Guidelines

Part 3    

16.3.1 Outline of issue    
16.3.2 Comment    
16.3.3 Guidelines

Part 4    

16.4.1 Outline of issue    
16.4.2 Comment    
16.4.3 Guidelines

Part 5    

16.5.1 Outline of issue    
16.5.2 Comment    
16.5.3 Guidelines

Part 6    

16.6.1 Outline of issue    
16.6.2 Comment    
16.6.3 Guidelines

People, assets and information move ever more easily and more frequently across borders. These trends have been accelerated by the Internet and other developments in information and communications technology, which enable New Zealand consumers and businesses to access a wide range of goods and services from overseas suppliers, and to supply goods and services to purchasers overseas.

These developments have important consequences for policy making and legislation. In many areas, policies and the legislation that gives effect to them must take into account the likelihood that cross-border issues will arise: issues relating to persons outside New Zealand, activities outside New Zealand, acts done in New Zealand that have effects overseas, and cross-border recognition or enforcement of regulatory or judicial decisions. Issues of this kind are important in many fields, including family law, employment law, criminal law and business law.

Where cross-border issues arise, three very practical questions confront people seeking to understand and apply the law:

• which rules apply? New Zealand law, or the law of another country?
• who will make decisions in particular cases? a New Zealand court or decision-maker, or an overseas court or decision-maker?
• what effect will a decision have? will a New Zealand decision be effective overseas? will an overseas decision be treated as effective in New Zealand?

The starting point for addressing cross-border issues in any policy process is to identify the nature and significance of the cross-border linkages that are relevant to the policy being developed, at present and in the foreseeable future. The next step is to identify the proposed scope of application of the New Zealand regime in the light of those linkages, the international law principles concerning jurisdiction, and practical issues in relation to enforcement. When should the New Zealand rules apply? When should a New Zealand court or decision-maker determine an issue? How will New Zealand decisions be made effective? What is the status and effect of an overseas decision?

Legislation can then be designed to reflect the proposed scope of the regime, drawing on a range of techniques for specifying the scope of application of legislation, and for giving effect to rules with cross-border implications.

The increasing frequency with which cross-border issues are encountered sometimes leads policy makers to attempt to provide for New Zealand laws to apply despite the presence of such issues - since otherwise the effect of the legislation will be reduced. But there are some important limits on how far New Zealand legislation can go in addressing these issues, both as a matter of principle and from a practical perspective. International law principles limit the extent to which it is appropriate for New Zealand legislation to regulate matters occurring outside New Zealand, or to provide for determinations to be made which affect the rights and obligations of persons outside New Zealand. From a practical perspective, the ability to enforce civil and criminal judgments and regulatory decisions remains essentially territorial. So attempts to regulate conduct outside New Zealand, or to determine the rights or obligations of people outside New Zealand, may not be practically effective.

This chapter explores the implications of cross-border issues for legislation, and identifies techniques for addressing cross-border issues in a manner that:

• supports the policy goals of the legislation;
• reduces uncertainty and unnecessary costs;
• is consistent with international law principles in relation to the circumstances in which it is appropriate for New Zealand laws to govern extraterritorial conduct (jurisdiction to prescribe), or for domestic courts or other bodies to determine the rights and obligations of persons abroad (jurisdiction to adjudicate);
• is as practically effective as possible.

Issues discussed

The following issues are discussed in this chapter:

Part 1: Are there cross-border issues that should be addressed?

Part 2: What is the intended scope of the NZ legislative regime?

Part 3: Are special rules required for civil claims with cross-border elements?

Part 4: Are special rules required for criminal offences with cross-border elements?

Part 5: Will any regulatory agency responsible for the regime be able to perform its role effectively in cross-border cases?

Part 6: Should the legislation provide for recognition or enforcement of overseas decisions in New Zealand, or vice versa?

Are there cross-border issues that should be addressed?

At an early stage in any policy development exercise, it is important to identify whether there are any significant cross-border issues that are relevant to the policy goals that have been identified, or the proposed methods of giving effect to those policy goals.

Some policies are concerned almost exclusively with events and people within New Zealand. For example, a law prohibiting smoking in public transport vehicles in New Zealand has no direct implications for conduct outside New Zealand, and enforcement activities are likely to be limited to people in New Zealand. Even if the vehicles are owned and operated by a company incorporated overseas, it will be carrying on business in New Zealand, so it can be served with criminal or civil proceedings, and enforcement activity can be directed against its assets in New Zealand.

But such cases are increasingly rare. Even issues that superficially appear to be concerned with events in New Zealand can have cross-border implications, at least at the enforcement stage. Consider, for example, legislation establishing a new dispute resolution tribunal to hear claims relating to defective buildings. All the building work will have occurred in New Zealand. But what happens if the builder has moved to Queensland - can the builder be required to defend the claim before the tribunal? And what happens if a builder claims that an overseas supplier of materials failed to provide proper instructions on the use of the materials - can that supplier be required to participate in the hearing, and be bound by the outcome? Is the answer different if the supply contract is governed by foreign law, or if it contains an arbitration clause providing for arbitration overseas?

The starting point for addressing cross-border issues in any policy exercise is to identify whether acts done outside New Zealand, or cross-border dealings, or the location of certain people or assets outside New Zealand, need to be taken into account in developing the policy and preparing legislation. This Part provides a checklist of the types of cross-border linkage that are most common, to assist with this process. It is important to ask whether these linkages are present now - and also to look forward, and ask whether such linkages are likely to develop, or become more important, over the life of the proposed legislation.

Distinguishing between substance and jurisdiction When working through the checklist, it is helpful to bear in mind the two principal contexts in which a decision-maker may need to consider whether or not to apply a New Zealand statute, where cross-border elements are present.

First, there may be issues of jurisdiction - the "who decides" question. A New Zealand court or regulator may need to decide whether, in the circumstances of a particular case, that decision-maker has the power to act - or whether their power is limited to cases which do not have the foreign elements in question. For example, can a New Zealand court grant a divorce where the applicant, but not the respondent, is resident in New Zealand? Can the Securities Commission prohibit publication of a deceptive advertisement about an investment scheme, if it is published by a New Zealand company in an Australian newspaper? Can a New Zealand court try allegations of bribery of a foreign judge by a New Zealand citizen, if all the relevant events occurred overseas?

Second, there may be issues of substantive law - the "which rules apply" question. In civil law cases, courts distinguish between questions of jurisdiction and questions of applicable law.[187] It does not follow automatically from the fact that an issue is being decided by a New Zealand court that the court will apply the substantive law of New Zealand to all the issues before it. In some cases, significant links between the substantive dispute and another country will result in the court applying the law of another country to resolve particular issues. Courts look to private international law principles to determine when foreign law should be applied, and when domestic law should be applied, where there are relevant overseas linkages. Private international law is a body of New Zealand law, mostly common law, which addresses (among other things) these "choice of law" issues. In the absence of express provisions in a statute, the courts will apply these choice of law rules, and general principles of statutory interpretation, to ascertain whether a New Zealand statute should be applied to a case with a foreign element. Thus for example in contract disputes a New Zealand court will apply the "proper law" or "governing law" of the contract to determine a wide range of issues including the substantive validity of the contract, its interpretation, and the rights of the parties where there is a breach. If New Zealand law is not the proper law, the provisions of the New Zealand contract statutes which address these issues will not apply.

Similarly, there are civil cases which come before foreign courts where issues fall to be determined by reference to New Zealand law. If New Zealand law is applicable in accordance with that foreign country's rules of private international law, a relevant New Zealand statute will be applied. The foreign court has jurisdiction, but that court will treat New Zealand law as the relevant substantive law.

Checklist The following cross-border issues often arise, and can raise difficult questions (which rules apply? who decides? how will the decision be made effective?):

• dealings across borders;
• persons outside New Zealand whose conduct affects persons in New Zealand;
• persons in New Zealand whose conduct affects persons overseas;
• civil proceedings in New Zealand involving overseas parties;
• civil proceedings in New Zealand concerning dealings governed by foreign law;
• civil proceedings overseas raising issues of New Zealand law;
• information or evidence overseas required for the purpose of detection and investigation of breaches, and enforcement action;
• whether New Zealand determinations will be recognised or enforced overseas, and vice versa;
• whether cooperation with other States is needed to give effect to the policy;
• whether there are applicable treaties, or other international obligations.

Each of these is discussed in more detail below. 

Dealings across borders Where legislation seeks to regulate transactions entered into by private citizens or businesses, or communications between them, it is important to identify whether the relevant transactions or communications take place solely within New Zealand, or whether a significant number of such dealings take place between people in New Zealand and people overseas. If the legislation relates to consumer protection, for example, cross-border issues will arise as a result of the increasing frequency with which consumers in New Zealand purchase goods or services from overseas suppliers (including via the Internet), and also as a result of the supply of goods and services by New Zealand businesses to consumers overseas. Legislation concerned with publication of certain classes of information (eg pornography, or the identity of victims of certain crimes, or advertisements for prescription medicines) needs to take into account the movement of such material to and from New Zealand, both physically (eg magazines) and electronically (eg via the Internet).

Where dealings frequently occur across borders, questions will arise in relation to both jurisdiction and substantive law. Policy makers should take care to identify which dealings the legislation is intended to apply to, from each perspective. The answer may not be the same: for example, substantive rules about employment contracts in New Zealand employment legislation could apply to employment contracts which are governed by New Zealand law, or which relate to work to be performed in New Zealand; but the exclusive jurisdiction of the employment institutions could extend to any dispute about an employment relationship that comes before a New Zealand court, whether or not the employment contract is governed by New Zealand law or relates to work to be performed in New Zealand.

In any context where cross-border dealings are common, it is necessary to consider the scope of application of New Zealand legislation that is required to give effect to the underlying policy, and the scope of application that is practically achievable. This leads into the important question of selection of connecting factors, discussed in section 16.2 below.

Persons outside New Zealand - conduct affecting New Zealand A closely related set of issues arises where the legislation seeks to regulate certain activities with adverse effects in New Zealand, and the persons engaged in those activities may be situated outside New Zealand. Do the policy goals extend to the conduct of persons outside New Zealand? To conduct that occurs partly within, and partly outside, New Zealand? To conduct outside New Zealand by New Zealand citizens or residents, or persons with some other link to New Zealand? Are the substantive rules in the legislation intended to apply in such cases? Are any offence provisions intended to apply in such cases? If any powers are conferred on a New Zealand court or regulator, are those powers intended to be available in such cases?

Consider, for example, insider trading by persons outside New Zealand in respect of shares issued by a New Zealand company, and listed on the New Zealand stock exchange. The policy of the legislation clearly extends to such conduct. To what extent does New Zealand law apply? What steps can be taken in New Zealand by the Securities Commission, the company or an aggrieved shareholder? What orders can a New Zealand court make in such cases? How will any direction given by the Securities Commission, or a court, be enforced if a person outside New Zealand does not comply? There are significant cross-border issues in this context.

Persons in New Zealand - conduct affecting persons overseas Conversely, does the policy extend to regulation of the conduct of persons in New Zealand engaged in activities which have adverse effects outside New Zealand? Do the substantive rules in the legislation apply in such cases? Are any offence provisions intended to apply in such cases? If coercive powers are conferred on a New Zealand court or regulator, are those powers intended to be available in such cases?

Although the answer in the past has often been that New Zealand is not concerned to regulate conduct in New Zealand that has no adverse effects within this country, it is becoming more common for such conduct to be covered by New Zealand legislation.

The principal reason is that this can facilitate cross-border cooperation in enforcement activities. For example, if the New Zealand Securities Commission can take action against wrongdoers in New Zealand targeting Australian investors, it is more likely that the Australian Securities and Investments Commission will be willing to take action against Australian firms targeting New Zealand investors, against whom the New Zealand Securities Commission would otherwise be powerless. This sort of international cooperation is increasingly important, if regulatory regimes are to be effective. Ensuring that a New Zealand regime extends to cases where the conduct occurs in New Zealand, but the adverse effects are felt elsewhere, provides an important foundation for such cooperation. Cooperation arrangements of this kind are discussed in section 16.5 below.

A second reason is that in some cases, failure to regulate externally directed conduct can affect the reputation of all New Zealand suppliers in a market. In some areas, for example, regulation of externally directed conduct may be justified to ensure that legitimate New Zealand suppliers of a product are not disadvantaged by the actions of unregulated suppliers who give New Zealand a reputation for poor quality or dangerous products.

Civil proceedings in New Zealand involving overseas parties If the legislation creates rights of action before the courts or a tribunal, or rights to apply for certain benefits to a decision-making body, is it likely that people overseas will seek to exercise those rights, or that people in New Zealand will seek to make claims against persons overseas? In addition to the question of whether the substantive rules in the legislation apply if one party is not in New Zealand at the relevant time, important questions arise in relation to jurisdiction - is the court, tribunal or decision-maker expected to make decisions affecting the rights and obligations of persons outside New Zealand?

Bear in mind that even if all the relevant events have occurred in New Zealand, parties may have been temporarily present in New Zealand, or may have left the country to live abroad before the issues emerge, or are resolved. Consider, for example, a road accident in New Zealand involving tourists from overseas. Recognising that cross-border issues will arise reasonably often, the ACC regime contains rules which determine when overseas visitors are covered by ACC, whether they receive the same compensation as New Zealand residents, whether costs incurred overseas can be recovered, and whether they can bring proceedings in New Zealand or overseas (and the implications of any recoveries for entitlement to compensation in New Zealand). The ACC legislation also addresses other cross-border issues, such as the position of a New Zealand resident injured abroad.

In some contexts, in particular where legislation establishes a new specialist court or tribunal, special rules may be needed to enable overseas parties to be joined in the proceedings. This is discussed in more detail in section 16.3 below.

Civil proceedings in New Zealand concerning dealings governed by foreign law If the legislation sets out substantive rules affecting contracts, trusts or other transactions, is it intended to apply to transactions governed by foreign law? Is it necessary for the legislation to apply in such cases, in order to achieve its objectives?

Where legislation is concerned with aspects of contract law, or trust law, it will usually be confined to transactions governed by New Zealand law.[188] If an Act dealing with such matters is silent on whether or not it applies to foreign law transactions, courts will generally conclude that it was intended to be limited to New Zealand law transactions. This approach reflects one of the core goals of private international law, which is to ensure that the same substantive rules are applied to determine a dispute wherever it may be litigated - if a foreign court considering the matter would not generally apply New Zealand law where the contract or trust is governed by foreign law, difficulties can arise if New Zealand courts take a different approach.

On the other hand, some policy goals require New Zealand legislation to be applied by a New Zealand court regardless of a contract's governing law - for example, certain provisions in insurance contracts are rendered unenforceable by the Insurance Intermediaries Act 1994 (s 7), whether or not the contract is governed by New Zealand law.

Where legislation affects a class of transactions some of which will be governed by foreign law, it is generally desirable to specify whether or not the legislation is intended to apply to transactions governed by foreign law. Legislation which affects substantive rights, as opposed to procedural matters, should be extended to such transactions only if it is necessary to do so to achieve the policy goals of the legislation, as doing so can create a risk of inconsistent outcomes depending on where a dispute is determined. That risk is significant where the likelihood of litigation overseas is real - it is less of a concern if any disputes are, realistically, likely to be decided in New Zealand.[189]

Civil proceedings overseas raising issues of New Zealand law If the legislation sets out substantive rules governing certain activities, is it likely that disputes in connection with activities to which the statute applies will come before foreign courts?

If so, would the foreign courts before which such disputes are likely to be tried apply the New Zealand statute, or would private international law rules in the relevant country or countries point to other systems of law? Answering this question may involve some research - but if litigation overseas in relation to the issues in question is likely, this is an important issue which is relevant to the integrity and effectiveness of the legislative scheme.

Information or evidence overseas How likely is it, in the context in question, that a regulator or decision-maker will require access to information situated overseas - documents, or information from persons overseas?

Obviously New Zealand legislation alone cannot provide for access to overseas information. But if access to information overseas is likely to be critical to the effectiveness of a regulatory regime, it may be appropriate to provide for the New Zealand regulator to have the ability to receive information from, and provide information to, agencies with corresponding functions overseas. It may also be desirable to go further and provide for the exercise of information-gathering powers at the request of overseas agencies, with a view to establishing reciprocal arrangements. Information sharing regimes are discussed in more detail in section 16.5 below.

Will New Zealand determinations be recognised or enforced overseas, and vice versa? Is it likely that the regime will only be effective if determinations made under the New Zealand regime are recognised or enforced overseas? Are there existing recognition or enforcement regimes that apply to such determinations, the continuation of which may be affected by changes to the New Zealand regime? Is it desirable to develop such regimes in the near future, to enhance the integrity and effectiveness of the scheme?

For example, under the Trans-Tasman Mutual Recognition Arrangement (TTMRA), a person entitled to practise a registered occupation in New Zealand is entitled to practise that occupation in Australia. A modification of the standards for registration in New Zealand has implications for the corresponding profession in Australia, and for the TTMRA more generally, which need to be taken into account.

Part 3A of the Children, Young Persons, and Their Families Act 1989, which deals with trans-Tasman transfer of protection orders and protection proceedings, is a recent example of a regime designed to ensure that determinations by certain officials and by the courts can be made effective throughout Australasia. These provisions are intended to ensure that child protection regimes are effective in an environment where families can and do move readily between New Zealand and Australia.

To take another example, consider child support payments. While the regime can operate without cross-border enforcement, the frequency with which New Zealanders travel and settle abroad means that the integrity of the regime would be enhanced considerably if there were appropriate reciprocal enforcement arrangements with other countries. There are already some bilateral arrangements, and a multilateral agreement has been proposed. It makes sense to design a New Zealand regime to accommodate these possibilities, by providing for requests to be made for enforcement overseas, and for giving effect to requests from other countries.

Is cooperation with other States needed to give effect to the policy? An issue closely related to the topics of recognition and enforcement, and information sharing, is the question of regulatory reach. In some contexts, the need for cross-border cooperation in information gathering and enforcement activity is so great that it is not possible to achieve the relevant policy goal without a high degree of international cooperation. In any given policy context, it is important to ask whether New Zealand can regulate the relevant issues unilaterally, or whether coordination with other States is required to achieve the policy goals. If coordination is necessary, then coordination initiatives should be pursued prior to, or in tandem with, domestic legislation, and domestic legislation should be designed to facilitate that coordination.

Applicable treaties and other international obligations Where cross-border issues arise, it is particularly important to check whether there are any treaties or other international law obligations which are relevant to the development of the New Zealand legislation. Chapter 6 of the Guidelines addresses this topic in more detail. It is important to bear in mind that treaties and other international obligations may be relevant in two ways:

• they may be directly concerned with the subject-matter of the legislation - for example, the Climate Change Response Act 2002 is intended to enable New Zealand to implement the Kyoto Protocol to the UN Convention on Climate Change;

• they may address general "overarching" issues that are relevant in many different policy contexts - to take two very different examples, consider the International Covenant on Civil and Political Rights, which is relevant whenever legislation affects the basic rights protected by that instrument, and the 1958 New York Convention on the Recognition and Enforcement of Arbitral Awards, which is relevant whenever New Zealand legislation seeks to prescribe a particular method of resolving disputes that may involve cross-border elements, as it requires New Zealand courts to give effect to international arbitration agreements.

At an early stage in any policy process, it is important to identify the nature and significance of the cross-border linkages in that field. Consideration should be given to whether the following factors (described in more detail in section 16.1.2) are relevant to the policy goals, and should be taken into account in developing the policy and any implementing legislation:

• dealings across borders;
• persons outside New Zealand whose conduct affects persons in New Zealand;
• persons in New Zealand whose conduct affects persons overseas;
• civil proceedings in New Zealand involving overseas parties;
• civil proceedings in New Zealand concerning dealings governed by foreign law;
• civil proceedings overseas raising issues of New Zealand law;
• information or evidence overseas required for the purpose of detection and investigation of breaches, and enforcement action;
• whether New Zealand determinations or New Zealand law obligations will be recognised or enforced overseas, and vice versa;
• whether cooperation with other States is needed to give effect to the policy;
• whether there are applicable treaties, or other international obligations.

What is the intended scope of the NZ legislative regime?

Where there are significant cross-border linkages in a particular area, it is usually desirable for legislation to set out expressly its intended scope of application, by reference to the relevant cross-border factors - for example, whether the legislation applies to contracts governed by New Zealand law, or which relate to certain work to be carried out in New Zealand, or which fall to be litigated before a New Zealand court. In particular, the legislation should usually provide clear answers to the questions:

• when do the (substantive) rules in the legislation apply?
• when can any decision-making powers in the legislation (of a court, or a regulator, or any other person) be exercised?

Failure to specify the relevant connecting factors which determine whether or not the Act applies in cross-border cases can lead to unnecessary uncertainty and costs, and may result in outcomes which are inconsistent with the policy underpinning the legislation.

Connecting factors Some New Zealand statutes expressly set out their scope of application. The most important example of this is the Crimes Act 1961, which provides in sections 6 and 7 that:

• no act done or omitted outside New Zealand is an offence under New Zealand law, unless the Crimes Act 1961 or another enactment expressly provides for an act or omission outside New Zealand to constitute an offence under New Zealand law;
• for the purpose of jurisdiction, where any act or omission forming part of any offence, or any event necessary to the completion of any offence, occurs in New Zealand, the offence is deemed to be committed in New Zealand, whether the person charged with the offence was in New Zealand or not at the time of the act, omission, or event.

Sections 7 to 8A go on to provide for jurisdiction in respect of certain offences committed outside New Zealand, in certain circumstances. Other provisions of the Crimes Act address cross-border issues in the context of particular offences. For example, sections 105C to 105E of the Crimes Act 1961 specify the circumstances in which the bribery of a foreign public official constitutes an offence under New Zealand law.

Further examples of statutory provisions that expressly address their scope of application are found in the Credit Contracts Act 1981, which provides that it only applies to contracts governed by New Zealand law, the Insurance Intermediaries Act 1994, which provides that certain provisions apply whether or not the relevant contracts are governed by New Zealand law, and Part II of the Children, Young Persons, and Their Families Act 1989, which provides that certain matters establish that a child or young person is in need of care or protection whether or not the relevant conduct occurred in New Zealand.

In each of these cases, the drafters of the statute have identified the potential for cross-border issues to arise, and have anticipated that these will raise questions about whether or not the legislation applies where that cross-border element is present. In the context of the Crimes Act 1961, the cross-border linkage that has been identified is that there will be cases where conduct that meets the description of an offence under the Act has occurred wholly abroad, or partly abroad and partly in New Zealand. The Act anticipates the question "when does this Act apply, if some or all of the relevant conduct occurred overseas?" In the context of the Credit Contracts Act 1981, the linkage identified is that some credit contracts that are litigated before a New Zealand court may be governed by foreign law. The Act anticipates the question of whether its substantive provisions were intended to apply to such contracts.

Each of the statutes referred to above addresses the anticipated cross-border issues by expressly setting out the connecting factors that determine what sort of connection with New Zealand is (or is not) required in order for the statute's provisions to apply. They either point the user of the statute to particular connecting factors that are required (as in the Credit Contracts Act 1981), or make it clear that the statute applies whether or not a particular connecting factor is present (as in the Insurance Intermediaries Act 1994 and the Children, Young Persons, and Their Families Act 1989).

The importance of expressly addressing connecting factors In any policy exercise where there are significant cross-border linkages, identifying the connecting factors that must be present in order for the policy to apply is an important step in the policy development process. The answers should usually be set out expressly in the legislation - the more likely it is that cross-border issues will arise, the more important it becomes to anticipate them and provide for them in the legislation.

Where connecting factors are not set out expressly, the courts will attempt to ascertain whether or not the Act was intended to apply from general principles of private international law, and from the overall scheme and purpose of the Act (see, eg, Dicey & Morris (13th ed) paras 1-032 to 1-059). However where an Act contains no clues as to its application in cases with a foreign element, this is a rather uncertain and unsatisfactory process. If it is clear that issues of this kind are likely to arise, it is preferable that they be addressed in the legislation.

Failure to specify connecting factors in legislation can result in significant uncertainty and cost. It also creates a risk of outcomes inconsistent with the policy underpinning the legislation. The absence of express connecting factors in one New Zealand statute enacted in 2000 led to its application being litigated on four separate occasions over a period of two years, with different Judges reaching different conclusions on whether the Act did or did not apply.

These questions may also fall to be considered by foreign courts. In cases where it is not clear whether or not the New Zealand statute was meant to apply to cases before foreign courts, or with other links to foreign countries, the foreign court will obtain considerable assistance from express connecting factors in the New Zealand statute.

Different connecting factors may be appropriate in relation to different aspects of an Act, in particular where the Act includes both substantive rules and rules relating to determination of disputes. The example of employment legislation was given earlier in this chapter - the connecting factor for the substantive rules is different from the connecting factor for the jurisdiction of the employment institutions.[190]

Common connecting factors Connecting factors which are referred to in New Zealand statutes include:

• whether certain conduct or events occurred in New Zealand;
• whether a person is present/resident/habitually resident/ordinarily resident/domiciled in New Zealand at the time of certain events, or at the time proceedings (civil or criminal) are commenced against them, or the relevant process is served on them;
• whether a person is a New Zealand national;
• whether a transaction is governed by New Zealand law;
• whether certain property is situated in New Zealand;
• whether certain consequences occur in New Zealand, and the level of knowledge of the person concerned as to whether those consequences would occur in New Zealand.

International law principles relevant to selection of connecting factors International law, and in particular international customary law, limits the extent to which it is appropriate for New Zealand to assert jurisdiction in respect of matters which take place outside New Zealand, or persons outside New Zealand. These limits take the form of principles, rather than precise rules. They are derived from fundamental principles concerning the legal competence of States, and from the practice of States.

It is helpful to consider jurisdiction to prescribe (ie jurisdiction in respect of substantive matters) and jurisdiction to adjudicate separately.

Jurisdiction to prescribe is essentially territorial. The starting point is that New Zealand legislation can always properly impose requirements in respect of conduct occurring within New Zealand territory.[191] This includes conduct that occurs partly within and partly outside New Zealand, so long as there is a real and substantial connection with New Zealand.[192]

It is also consistent with international law principles for New Zealand law to impose requirements in respect of conduct outside New Zealand of New Zealand nationals, and others owing allegiance to the Crown. However the potential for overlapping jurisdiction in such cases requires the exercise of restraint in the assertion of this ground of jurisdiction.

It is also increasingly widely accepted that a State can properly apply its law to matters occurring outside the State that produce effects within it, though the parameters of this doctrine remain controversial in some respects. Considerable restraint is however appropriate in applying New Zealand legislation to conduct occurring wholly outside New Zealand, solely on the grounds of effects produced in New Zealand: such rules have the potential to interfere with the domestic jurisdiction of other States, and can place those subject to them in the difficult position of being subject to multiple overlapping legal requirements, or worse still to inconsistent requirements. It is generally preferable to limit the application of laws of this kind, with extraterritorial application, to cases involving an element of conduct directed at New Zealand, or at the least to conduct where it is foreseeable that effects will result in New Zealand.

A closely related principle is the "protective" or "security" principle, under which many States assume jurisdiction in respect of acts done abroad (whether or not by their nationals) which affect the security of the State - a concept described by one leading commentator as extending to currency, immigration and economic offences.[193]

In some cases, treaties to which New Zealand is a party permit or require New Zealand to exercise jurisdiction in respect of matters occurring outside New Zealand. For example, the OECD Anti-Bribery Convention provides for States which are parties to exercise jurisdiction to prosecute their nationals for bribery of a foreign public official that occurs abroad. Section 105D of the Crimes Act 1961 gives effect to this commitment. In some cases, treaties simply provide for jurisdiction to be exercised in circumstances that are consistent with established principles of international law. The treaty is not itself a source of jurisdictional competence. In a very few cases, the treaty itself provides the authority for jurisdiction to be exercised in circumstances where this would not otherwise be appropriate. There are obvious limits on how far a treaty can go in this respect, in particular so far as the interests of non-party States are concerned. Where jurisdiction is asserted in accordance with a treaty provision of this kind, it is important that the legislation accurately reflects the parameters of the jurisdiction provided for in the treaty.

International law also recognises universal jurisdiction in respect of certain crimes, such as piracy, war crimes, and crimes against humanity. Crimes that fall into this category may be punished by any State which obtains custody of the accused. New Zealand law provides for jurisdiction in certain cases falling within this category - see in particular the International Crimes and International Criminal Court Act 2000, the Geneva Conventions Act 1958, and sections 92 to 97 of the Crimes Act 1961.

Special jurisdictional regimes apply in certain contexts, in particular on the high seas, the continental shelf, the exclusive economic zone, Antarctica, and outer space.[194]

It is generally inappropriate for New Zealand law to seek to impose requirements on a person resident abroad that would require that person to take action in another country that would be contrary to the laws of that country. This limit, which reflects the general international law principle of non-intervention in the territorial jurisdiction of other States, is important where New Zealand law is applied to conduct outside New Zealand on the grounds of effects produced in New Zealand, or on the grounds of nationality. New Zealand legislation generally goes further still, and requires that the conduct be unlawful in the country in which it takes place.[195] This ensures that there is no inconsistency between the requirements of New Zealand law and the requirements of the local law, and that persons overseas acting lawfully under the local legal regime, which they reasonably believe governs their conduct, are not unwittingly exposed to criminal sanctions under New Zealand law. Exceptions to this "double criminality" requirement are rare - in cases where there is no explicit double criminality requirement, either the person whose conduct is in issue should reasonably expect New Zealand law to govern their conduct even though they are outside New Zealand, or the conduct in question is unlawful under international law, so can be treated as unlawful everywhere without the need for reference to national laws.

Although the principles in relation to jurisdiction to prescribe outlined above are usually referred to in the context of criminal law, they are equally applicable to civil law to the extent that it seeks to impose liability as a consequence of certain conduct, or to compel persons to engage in (or refrain from) certain conduct. Competition/antitrust law is one field in which there has been an active debate in recent years over the extent to which a State can properly assert jurisdiction based on the adverse economic effects in that State of conduct occurring outside that State.

Jurisdiction to adjudicate is also essentially territorial. It is consistent with international law principles for New Zealand legislation to provide for jurisdiction in civil or criminal matters to be exercised against persons who are present in New Zealand when the proceedings are commenced against them (which in New Zealand is effected by the issue of the relevant process and its service on the defendant).[196]

It is also consistent with international law principles for New Zealand legislation to provide for civil proceedings which affect a person's rights and obligations to be commenced against that person despite their absence from New Zealand at the time of service, where they have agreed to submit to New Zealand jurisdiction, or where there is some other real and substantial connection between the person and New Zealand sufficient to justify an assertion of jurisdiction.[197] New Zealand law makes general provision for service of High Court and District Court proceedings outside New Zealand in appropriate cases: for when the general rules are adequate, and when special rules are required, see section 16.3 below.

New Zealand law does not provide for criminal proceedings to be brought against persons outside New Zealand by serving the proceedings on them abroad and conducting a trial in their absence (natural persons who commit serious offences in New Zealand may however be extradited to New Zealand to stand trial, in accordance with the procedure set out in the Extradition Act 1999).[198] But New Zealand law does provide for New Zealand courts to exercise criminal jurisdiction against persons found in New Zealand in respect of conduct occurring wholly outside New Zealand, in certain circumstances. Questions of jurisdiction to prescribe and jurisdiction to adjudicate overlap in this context in New Zealand, as a consequence of the combined operation of sections 6 and 9 of the Crimes Act 1961. These issues are discussed in more detail in section 16.4 below.

Practical issues relevant to selection of connecting factors The selection of connecting factors in any legislation should also reflect the practical limits on New Zealand's ability to apply and enforce New Zealand laws. There is not much point in designing a regulatory regime that requires enforcement against persons overseas if it is to operate effectively, and providing for the extraterritorial application of the regime (for example, by reference to harm caused in New Zealand) on paper, in the absence of practical mechanisms for enforcement (for example, through cooperation with other States).

In any context where cross-border factors are significant, and are likely to arise reasonably frequently, it is usually desirable to set out expressly in the legislation the connecting factors that determine whether or not the legislation will apply, where cross-border factors are present. Connecting factors referred to in New Zealand statutes include:

• whether certain conduct or events occurred in New Zealand;
• whether a person is present/resident/habitually resident/ordinarily resident/domiciled in New Zealand at the time of certain events, or at the time proceedings (civil or criminal) are commenced against them, or the relevant process is served on them;
• whether a person is a New Zealand national;
• whether a transaction is governed by New Zealand law;
• whether certain property is situated in New Zealand;
• whether certain consequences occur in New Zealand, and the level of knowledge of the person concerned as to whether those consequences would occur in New Zealand.

Connecting factors should be consistent with international law principles in relation to jurisdiction to prescribe and jurisdiction to adjudicate. A clear justification is needed for the application of substantive New Zealand law (civil or criminal) to conduct occurring outside New Zealand, or for the exercise of civil jurisdiction against persons outside New Zealand in novel circumstances (see section 16.2.2). The Ministry of Justice and the Legal Division of the Ministry of Foreign Affairs and Trade (MFAT) should be consulted where new rules of this kind, extending the application of New Zealand law or providing for service of proceedings abroad, are proposed. In selecting connecting factors, it is also important to bear in mind the practical limits on New Zealand's ability to apply and enforce New Zealand laws.

Are special rules required for civil claims with cross-border elements?

Where New Zealand legislation creates civil rights of action, and cross-border issues are likely to arise, the statutory liability regime should accommodate these cross-border issues either by ensuring that existing general rules apply, or by making specific provision for those issues. In particular, it is necessary to consider whether the regime makes adequate provision for:

• the jurisdiction of New Zealand courts or tribunals - can claims be pursued against persons situated outside New Zealand, in appropriate cases?
• the possibility of claims under the New Zealand statute being pursued in overseas courts (for example where the defendant is outside New Zealand, and a judgment obtained in New Zealand could not be enforced against the defendant where the defendant resides).

Jurisdiction in civil proceedings Where legislation creates a civil right of action that can be pursued in the High Court or the District Court, proceedings can be brought by any person in those courts, whether or not that person is resident in New Zealand. There are general rules governing when proceedings can be brought against a person overseas: see High Court Rules, rules 219, 220; District Court Rules, rules 242-243; Laws of New Zealand, "Conflict of Laws: Jurisdiction and Foreign Judgments" paras 14-17.

In most cases the general rules will be appropriate, and legislation need not address these issues expressly. In particular, where legislation provides for proceedings to be brought in the High Court or the District Court, there would need to be very clear reasons to depart from the standard rules on service of proceedings outside New Zealand.

However if a new tribunal or court is being established, the question of jurisdiction becomes very important. The basic common law rule is that civil proceedings before a domestic court or tribunal cannot be served on any person outside New Zealand unless this is expressly authorised by legislation. Courts do not have any inherent jurisdiction to authorise service against persons situated abroad.[199] So if a new court or tribunal is being established, and claims may be made against persons overseas, the legislation should expressly provide for service abroad. To ensure that service abroad only occurs in appropriate cases, it is often desirable to require the prior approval of the new court or tribunal, or of the High Court.

Delinking substantive rights and jurisdiction to adjudicate Where New Zealand legislation creates new civil rights of action, issues arise in relation to both substantive rights and jurisdiction. Some statutes address these issues separately, creating a right to recover damages or obtain other relief in certain circumstances in one provision, and specifying in another provision the court or tribunal in which this right can be enforced. Other statutes merge these issues, by providing that application can be made to a designated court or tribunal for specified relief. The merged approach is appropriate where the issues are purely domestic, and there is no real likelihood of the rights created by the statute being enforced in proceedings in overseas courts. However this approach is less appropriate where it is desirable to allow proceedings under the statute to be brought overseas, for two reasons.

First, reference to a particular New Zealand court raises questions as to whether the rights can be enforced overseas at all, or whether they can only be enforced in New Zealand before the specified court or tribunal. If it is consistent with the policy of the Act for the rights to be enforceable overseas, it is preferable to avoid any uncertainty on this point. It is better to set out the right to relief in one provision, and then to provide separately that if relief is sought in New Zealand, a specified court or tribunal has jurisdiction to hear the claim.[200]

Second, difficulties will arise in proceedings before a foreign court if a New Zealand provision confers a broad remedial discretion, rather than creating a right to certain relief in specified circumstances. Even if the provision on its face purports to give that discretion to any court or tribunal before which the matter falls to be determined, many overseas courts will not exercise a discretion conferred by the legislation of another country, in the absence of express authority to do so in domestic legislation. So the provision may not operate effectively outside New Zealand, rendering the rights conferred unenforceable in practice in cases where the defendant is not amenable to New Zealand jurisdiction.[201] The more likely it is that the statutory claims will need to be pursued outside New Zealand, the more desirable it becomes to provide for rights to relief, rather than relying solely on broad remedial discretions conferred on a designated New Zealand court or tribunal.

For example, significant difficulties could arise in seeking compensation for a breach of the Fair Trading Act 1986 before a foreign court, as s 43 confers a very general discretion to grant relief. This can be contrasted with the corresponding provision in Australia, section 82 of the Trade Practices Act 1974 (Cth), which provides that a person who suffers loss or damage as a result of a breach of certain provisions of that Act may bring an action to recover the amount of that loss or damage. No discretion is involved in an action based on s 82, and there would be no difficulty in bringing such an action in a foreign court, where Australian law was the applicable law in accordance with the private international law rules applied by that court.[202]

Where New Zealand legislation creates civil rights of action, and cross-border issues are likely to arise, careful consideration should be given to questions of jurisdiction, and the relationship between substantive rights and jurisdiction.

Proceedings should be capable of being commenced against defendants outside New Zealand in appropriate cases, either under the general regimes for service abroad that apply in the High Court and District Court, or under a special regime provided for in the legislation. The Ministry of Justice should always be consulted where a special regime for service abroad is proposed.

If it is likely that claims under the legislation will be pursued in overseas courts, the liability regime should be designed to accommodate this possibility, by delinking provisions conferring substantive rights to relief and provisions conferring jurisdiction on a New Zealand court or tribunal to award relief. Where possible, broad remedial discretions should be avoided as foreign courts are generally unwilling to exercise discretions of this kind under another country's laws.

Are special rules required for criminal offences with cross-border elements?

The Crimes Act 1961 sets out default rules in relation to the territorial application of New Zealand criminal law. These rules will be appropriate in most cases. However in some contexts where there are significant cross-border factors, and the policy of the legislation requires a broader scope of application, special provisions may be required. Any such provisions should be consistent with the relevant international law principles, and should take into account the practical limits on New Zealand's ability to enforce its laws outside New Zealand.

The Mutual Assistance in Criminal Matters Act 1992 provides for certain specified forms of assistance in connection with criminal matters to be provided to, and sought from, foreign countries. The Act establishes a set of fairly limited default rules that is appropriate in most cases. But where legislation contemplates a high degree of cross-border cooperation, in particular in operating a regulatory regime, it may be desirable to provide for simplified and enhanced cooperation arrangements in connection with investigation and enforcement activities.

Territorial application As noted above, sections 6 and 7 of the Crimes Act 1961 set out the general principles that govern the territorial application of substantive New Zealand criminal law. New Zealand criminal law does not generally apply to conduct occurring wholly outside New Zealand. However New Zealand law does contain a number of exceptions to this general rule, where jurisdiction to prescribe is exercised in respect of acts done outside New Zealand, based on:

• the nationality or allegiance to the Crown of the person in question;
• the effect on New Zealand's interests of the conduct in question, in particular where it is prejudicial to New Zealand's security;
• universal jurisdiction in respect of conduct recognised as an offence under international law;
• the provisions of a treaty authorising the exercise of jurisdiction in particular circumstances.

The general rules in the Crimes Act 1961 in relation to jurisdiction to prescribe should only be departed from in exceptional cases, where there is a clear case for New Zealand law to apply, and where it is reasonable to expect the persons to whom the legislation will apply to comply with New Zealand law (because of their links with New Zealand, or the links between their conduct and New Zealand), or with international standards which are reflected in New Zealand law.

So far as jurisdiction to adjudicate is concerned, two issues need to be borne in mind. The first is that as noted above, New Zealand law does not provide for criminal proceedings to be commenced against a person abroad and to proceed in their absence following notification to that person abroad.[203] The person must be present in New Zealand at the time when they are notified of the proceedings, and for the trial.[204] This is a very basic rule which is intended to respect the territorial jurisdiction of other States, and to protect the accused's right to a fair trial. It should not be departed from, except:

• pursuant to an arrangement with another State under which that State consents to the service of New Zealand criminal process in the territory of that State; and
• subject to safeguards designed to protect the right of the accused to the minimum standards of criminal procedure protected by section 25 of the New Zealand Bill of Rights Act 1990, and in particular the right to be present at the trial and to present a defence.

The second issue is that New Zealand courts do not hear criminal proceedings for breach of the laws of another country (this is an important difference from the civil context: New Zealand courts can, and do, hear civil claims in respect of wrongs that would not be actionable if they occurred in New Zealand). New Zealand law must provide that the conduct in question is an offence against New Zealand law even though it occurred outside New Zealand, if there is to be a trial before a New Zealand court.[205]

Cross-border investigation and enforcement activity The information gathering and enforcement powers conferred by New Zealand legislation on the police and other agencies can generally only be exercised for the purpose of investigating, and taking action in relation to, breaches of New Zealand laws. In some cases with cross-border elements, this gives rise to practical problems where critical evidence required in another country is situated in New Zealand (or vice versa), or where the proceeds of a crime committed abroad are situated in New Zealand (or, again, vice versa).

The Mutual Assistance in Criminal Matters Act 1992 provides a general mechanism for addressing some of these difficulties, in connection with serious criminal offences. It enables requests to be made for assistance on a case by case basis, from other countries to New Zealand and from New Zealand to other countries. That Act and the Proceeds of Crime Act 1991 also provide for certain orders to be made in New Zealand in relation to proceeds of serious crime situated in this country, where criminal proceedings are pending abroad or where certain types of court orders in respect of those proceeds have been made abroad.

In some contexts, however, the general regime in the Mutual Assistance in Criminal Matters Act 1992 is too narrow, or too slow and cumbersome. In particular, where New Zealand and one or more other countries have closely coordinated regulatory regimes, the integrity and effectiveness of those regimes will often be enhanced by more extensive cooperation in investigation and enforcement activities, and shared policy objectives and cooperation arrangements remove the need for many of the substantive and procedural safeguards provided for in the 1992 Act.

Options for information sharing and cooperation in the exercise of information gathering and investigation powers are discussed in section 16.5 below. The possibility of more extensive provision for cross-border enforcement of regulatory decisions and court-imposed sanctions is discussed in section 16.6 below.

The general rules in relation to criminal jurisdiction should only be departed from in exceptional cases. New Zealand legislation should not provide for jurisdiction to prescribe or jurisdiction to adjudicate in criminal matters in respect of acts done outside New Zealand, unless there is a clear case to do so. Any special jurisdictional rules should be consistent with the principles of international law outlined in section 16.2.2 above. The Ministry of Justice and the MFAT Legal Division should always be consulted before making special provision for New Zealand courts to have criminal jurisdiction in respect of matters occurring outside New Zealand.

In some cases it may be appropriate to supplement the general rules in relation to cross-border assistance in criminal matters with tailored regimes for cooperation in investigation and enforcement activity. Special regimes of this kind are most appropriate in the context of cross-border regulatory arrangements with other countries. These issues are discussed in more detail in sections 16.5 and 16.6 below.

Will any regulatory agency responsible for the regime be able to perform its role effectively in cross-border cases?

Where legislation establishes a regulatory agency, or confers new responsibilities on a regulatory agency, it is important to consider whether the agency is likely to encounter cross-border issues which the legislation should take into account. Appropriate mechanisms should be included in the legislation to facilitate cooperation between regulators and cross-border enforcement activities, to support the integrity of the regulatory regime.

The increasing ease of communications and dealings across borders has significant implications for many areas of regulation. Dealings that were almost exclusively domestic as little as a decade ago are now often carried out across borders - consider gambling, the provision of financial intermediary services, and purchase by consumers of goods and services using the Internet. These developments emphasise the limits of the regulatory reach of any one State, and require policy makers to explore the mechanisms that are available to achieve the goals of regulatory regimes despite these limits on regulatory reach.

Many New Zealand statutes provide for information sharing by New Zealand regulators with their overseas counterparts. The regulator is expressly authorised to provide information which it holds to corresponding agencies, subject to certain safeguards, and to receive and use information provided by those agencies. This represents a basic level of cooperation with overseas regulators, that should normally be provided for in the absence of clear reasons to the contrary. Regimes of this kind work reasonably well where the conduct that is being investigated by the overseas agency also falls within the purview of the New Zealand regulator.

However sophisticated parties can circumvent regimes of this kind, by locating their operations in one country and targeting their activities at one or more other countries. The result is frequently that the conduct is unlawful in the targeted country, but none of the investigative or enforcement powers conferred under the law of that country can be exercised in practice; in the country where effective action could be taken, on the other hand, there is no breach of the law. Prior to the 2002 amendments to the Securities Act 1978, for example, a firm in New Zealand offering investments to Australian investors without a prospectus in either country would be in breach of Australian law, but not New Zealand law. The Australian Securities and Investments Commission (ASIC) could not use its powers to obtain evidence, as all the relevant persons and documents would be in New Zealand. The New Zealand Securities Commission could not take any enforcement action in New Zealand to assist ASIC, as there was no breach of New Zealand laws, and the enforcement powers conferred by the Securities Act could only be used to investigate and prevent breaches of the New Zealand Act.

A number of legal mechanisms are available to address these difficulties, where they impair the integrity and effectiveness of a regulatory regime. One response which is often appropriate is to provide that the New Zealand regulator's powers to obtain information can be exercised at the request of a corresponding overseas regulator, whether or not there has been a breach of the New Zealand regulatory regime. The provision of such assistance should generally be discretionary, and subject to appropriate safeguards including:

• a requirement for prior Ministerial consent, either on a case by case basis or in respect of classes of requests;
• provisions which ensure that the rights conferred by the New Zealand Bill of Rights Act 1990 are respected. In particular, the privilege against self-incrimination should be taken into account where coercive powers are used to require a person to provide information in New Zealand for use overseas. Either the person should be permitted to assert the privilege and decline to answer questions, or assurances should be obtained from the overseas agency as to the use to which the information will be put.[206]

In some contexts, it may be appropriate to go further and provide that certain conduct in New Zealand targeted at overseas countries falls within the scope of the New Zealand regulatory regime, and is unlawful. This has the effect of enabling both investigative and enforcement action in New Zealand. This approach is generally appropriate only where the conduct is always unlawful, and is not capable of being authorised by the regulator in the foreign country. Thus, for example, it may be desirable to extend a prohibition on misleading or deceptive advertisements concerning investments to advertisements published by a New Zealand company that are directed at overseas investors. But it would not be appropriate to extend a prohibition on offering securities to the public without a prospectus to offers from New Zealand to overseas investors, as if the offer is lawful in the target jurisdiction, it is positively undesirable to criminalise such conduct in New Zealand and restrict lawful cross-border commercial activities.

Provisions of this kind often need to be coupled with practical arrangements for cooperation between the New Zealand regulator and key overseas regulators (generally governed by memoranda of understanding between those regulators). Where cooperation arrangements will be essential if the regulatory regime is to operate effectively, it may be desirable to signal this in the legislation by expressly providing for the agency to have the power to enter into such arrangements.

Where coordination with one or more other countries is essential for the effective operation of a regulatory regime, it may also be appropriate to provide for:

• a power to prohibit actions taken in New Zealand that do not contravene New Zealand law because they are directed at persons outside New Zealand, but which would contravene the New Zealand regime if they were directed at New Zealanders. For example, it may be appropriate to enable a regulator to prohibit, or to seek a court order prohibiting, certain offers of goods or services to overseas consumers;

• enforcement in New Zealand of sanctions imposed in the other country for breach of a regulatory regime that corresponds closely with the New Zealand regime. This is only likely to be appropriate in the context of specific cooperation arrangements with another country. For example, the Securities Act 1978 provides for recognition regimes to be entered into with other countries, and contemplates mutual enforcement arrangements being entered into in conjunction with those regimes.[207]

Where legislation establishes a regulatory agency, or confers new responsibilities on a regulatory agency, it is important to consider whether the agency is likely to encounter cross-border issues which the legislation should take into account. In particular, if it is likely that the agency will need assistance from overseas regulators, and will receive requests for assistance from overseas regulators, appropriate mechanisms should be included in the legislation to facilitate cooperation that will support the integrity of the regulatory regime.[208] It may also be appropriate to provide for application of the regulatory regime to cross-border activities, and for cross-border enforcement arrangements.[209]

The Ministry of Justice should be consulted in relation to any legislation providing for a cross-border assistance regime. Where the issue affects cross-border business activities, the Ministry of Economic Development should also be consulted.

should the legislation provide for recognition or enforcement of overseas decisions in New Zealand, or vice versa?

One increasingly common response to the prevalence of cross-border issues is to provide for recognition or enforcement of decisions made by officials, regulators or courts in other countries. Recognition regimes serve a number of policy goals:

• they can reduce compliance costs, by providing that compliance with requirements in an overseas country will be recognised as satisfying the corresponding New Zealand requirements. This provides direct benefits to the persons who would otherwise be subject to multiple regulatory requirements. It also assists in providing New Zealanders with better access, at lower cost, to goods and services from overseas suppliers;
• they can reduce legal uncertainty and costs and remove incentives for forum shopping by providing that a determination on a particular issue in an overseas country will be recognised as determining that issue in New Zealand;
• they can enhance the integrity of a statutory regime where cross-border issues impede enforcement activity, by facilitating cross-border enforcement of orders for compliance, or sanctions for breach.

Recognition and enforcement regimes are not new. The common law has for many centuries recognised foreign decisions affecting a person's status (marriage, adoption etc) and certain decisions of foreign courts in civil cases. There are also generic statutory regimes for the recognition and enforcement of some decisions of foreign courts in civil cases (see the Reciprocal Enforcement of Judgments Act 1934), and for the enforcement in New Zealand of a limited class of orders made in criminal proceedings (see the Mutual Assistance In Criminal Matters Act 1992).

In recent years, however, the increasing frequency with which cross-border issues arise has led to a renewed focus on the benefits of recognition and enforcement regimes.

Recognition regimes to increase certainty and reduce compliance costs In some cases, New Zealand law provides for unilateral recognition of regulatory outcomes in other countries - for example, in relation to safety of electrical appliances. If appropriate standards are applied in other countries, it is often unnecessary to require a separate testing and certification process in New Zealand - the outcomes of the Australian or Canadian or European or United States regimes can simply be accepted as meeting the New Zealand standards.

In other cases, recognition regimes are founded on bilateral arrangements with another country. The most far-reaching example is the Trans-Tasman Mutual Recognition Arrangement, under which New Zealand and Australia permit goods to be sold in one jurisdiction if they can lawfully be sold in the other, and provide for a person carrying on a registered occupation in one jurisdiction to be entitled to be registered to carry on that occupation in the other. Mutual recognition arrangements of this kind depend on a reasonable degree of convergence of the regulatory regimes of the participating jurisdictions - while the domestic regimes may differ in matters of detail and in procedural requirements, it is generally necessary for the minimum mandatory standards underpinning those regimes to be substantially equivalent.

Where New Zealand legislation prescribes standards or establishes regulatory requirements, consideration should always be given to whether there are corresponding regimes in other countries, and if so, whether compliance with those regimes should be treated as satisfying the New Zealand requirements, either without more, or with some limited "top-up" requirements. Because the countries to which recognition is extended and the terms of that recognition may vary over time, it is often appropriate to provide for regulations to be made implementing recognition regimes of this kind.

Enforcement regimes The limits on the regulatory reach of New Zealand and other countries were discussed earlier in this chapter. Cooperation in the detection and investigation of breaches of regulatory regimes can make a significant contribution to addressing those limits, and enhancing the effectiveness of domestic legislation. However difficulties also arise in the cross-border enforcement context where relief is obtained in one jurisdiction, but it cannot be effectively enforced in that jurisdiction. Enforcement regimes go some way to addressing these difficulties.

In the civil context, some final money judgments from other countries can be enforced in New Zealand at common law or under general statutory regimes. But New Zealand law does not generally provide for enforcement of foreign judgments in the nature of penalties, orders of an interim nature (as opposed to final judgments), or injunctions and other forms of non-monetary relief. In some contexts, it may be desirable to provide for enforcement of a wider range of foreign civil orders and judgments, or for the grant of interim relief in New Zealand in support of proceedings abroad. For example, there is a special enforcement regime in the context of certain trans-Tasman breaches of competition legislation, under which a wide range of orders made by the Federal Court of Australia (including interim orders, civil penalty orders, and non-money judgments) can be registered and enforced in New Zealand.

There are also special regimes for trans-Tasman transfer of protection orders and protection proceedings, and for enforcement of maintenance payments and child support payments due under the laws of certain other countries. The child support regime illustrates the potential for enforcement regimes to extend beyond court orders, to obligations imposed by legislation or by some other decision-maker exercising a statutory power.

If a special scheme for cross-border enforcement of decisions made under a statutory regime will significantly enhance the effectiveness of that regime, steps should be taken to negotiate appropriate arrangements with Australia or other relevant countries, and legislation should provide for an appropriate recognition and enforcement regime. Where it is likely that arrangements will be entered into with a number of countries over time, it is often desirable to set out the core recognition and enforcement regime in the legislation, with the ability to specify in regulations the countries and the types of orders to which the regime applies.

Criminal sanctions imposed in New Zealand are not generally enforceable abroad, or vice versa.[210] The only significant exception to this rule is found in the Mutual Assistance in Criminal Matters Act 1992 and the Proceeds of Crime Act 1991, which together provide for enforcement in New Zealand of certain foreign orders relating to the proceeds of serious crimes. In some contexts, especially where New Zealand establishes a cooperative regulatory regime with Australia or another country, it may be appropriate to go further than this general legislation and make specific provision for enforcement of interim orders made by a regulator or the courts in connection with a breach of the regime, and of sanctions imposed for a breach of the regime. It is not likely to be appropriate to provide for enforcement in New Zealand of custodial orders made abroad, but fines and a wide range of remedial orders imposed by foreign courts could in principle be enforced in much the same manner as foreign civil judgments.

A tailored regime of this kind may be appropriate where the integrity of the cooperative regime requires the regime to be effective across borders, and in particular where:

• a regulator in one country has jurisdiction to make orders against a person based in the other country to prevent or remedy breaches of the regime, and in the event of non-compliance enforcement action will be needed in the latter country; or
• court action in one country is likely to be followed by enforcement against persons or assets in the other country.

Where New Zealand legislation prescribes standards or other regulatory requirements, consideration should be given to providing for recognition of corresponding regimes in other countries.

Where legislation provides for civil remedies, and it is likely that enforcement will be required outside New Zealand, consideration should be given to the need for special arrangements for cross-border recognition and enforcement of orders made by the court in order to ensure that the legislation achieves its policy goals. If an enhanced cross-border recognition and enforcement regime is appropriate, the legislation should provide for such a regime, and steps should be taken to enter into appropriate arrangements with other countries.

Where the integrity of a regulatory regime requires the regime to be effective across borders, consideration should be given to the need for a tailored regime for enforcement of orders made by regulatory bodies to prevent or remedy breaches, and of criminal sanctions (fines, and certain other non-custodial orders) imposed by courts in respect of breaches of the regime. If a cross-border enforcement regime is appropriate, the legislation should provide for such a regime, and steps should be taken to enter into appropriate arrangements with other countries.

The Ministry of Justice and the MFAT Legal Division should be consulted before embarking on the design of a cross-border recognition and enforcement regime, or entering into discussions with officials from other countries about reciprocal enforcement arrangements. Where the issue affects cross-border business activities, the Ministry of Economic Development should also be consulted.