Decision Emphasises Importance Of Defining Scope Of Arbitrator’s Jurisdiction

In Galbraith v Global Metal Solutions Limited [2026] NZHC 382, the High Court considered whether an arbitrator retained jurisdiction to determine a new but related dispute that arose after he had issued his awards on the matters originally before him.

Arbitration is a private dispute resolution process in which parties agree to have their dispute decided by an independent decision-maker, rather than going to court. It is fast becoming a preferred dispute resolution process with arbitration clauses a common feature of commercial contracts. The decision is an important reminder for commercial parties about the significance of clearly defining the scope of disputes referred to arbitration.

Facts of the case

The parties were landlord and tenant under a commercial lease. The landlord, the Hunua Holdings Trust (Hunua), and the tenant, Global Metal Solutions Limited (GMS), had previously referred disputes under the lease to arbitration. The parties agreed to use the arbitrator’s standard terms of appointment (Appointment Agreement), which included a provision that the issues to be determined were to be identified in a schedule, but that schedule was never completed. Instead, the disputes were defined by the pleadings each party filed setting out their case.

The arbitrator issued two partial awards in the original dispute. He found that GMS had misrepresented to Hunua that no land use resource consent was required for its metal recycling operation, and he dismissed GMS’s claim that the landlord was responsible for upgrading the property’s drainage system. He granted relief against cancellation of the lease on the condition that GMS must diligently pursue the required land use consent.

After GMS obtained its land use consent, a fresh dispute arose that was not part of the pleadings. Could GMS, without Hunua’s consent, dig up Hunua’s land to convert the drainage system as required by the consent (the Drainage Consent Dispute)? The arbitrator ruled that he had jurisdiction to determine this new issue, prompting Hunua to apply to the High Court for a declaration that he did not.

High Court decision on arbitrator jurisdiction

The Court determined the question of the arbitrator’s jurisdiction afresh (under Article 16(3) of the First Schedule to the Arbitration Act 1996). Relying on previous case law (the 2017 case of Arnerich v Vaco Investments (Lincoln Road) Ltd & Anor), the Court confirmed that what has been referred to an arbitrator defines the dispute and determines the awards an arbitrator may make; the scope of jurisdiction in this case was determined by what was referred under the Appointment Agreement.

Because the schedule to the Appointment Agreement had not been completed, the Court had to determine whether there was an implied term broadening the scope of the arbitrator’s jurisdiction. The Court applied the established test for implying terms into a contract and held the arbitrator did not have jurisdiction to determine the Drainage Consent Dispute. The Court found that it was not reasonable to imply jurisdiction beyond what was put forward by the parties, that commercial certainty was best served by a defined scope, and that the alleged implied term was not so obvious it went without saying.

GMS argued the “one-stop shop” principle that businesspeople are presumed to want all related disputes resolved by the same decision-maker, but the Court held that this principle applies to choosing a single mode of dispute resolution (i.e. between arbitration versus court proceedings), not to extending an arbitrator’s jurisdiction.

The Court further found that the dispute did not fall within the reserve leave granted (the discrete matter the arbitrator had kept open for the parties to return to in the original award), which was limited to GMS obtaining a land use consent and did not extend to drainage remediation following the grant of the consent.

Practical takeaways for commercial contracts

Arbitration is an appealing alternative to court proceedings that is growing in popularity. This decision underscores several important points for commercial parties who wish to rely on arbitration for disputes.

First, when appointing an arbitrator, clearly define the disputes being referred. Leaving a schedule blank or relying on vague descriptions creates real risk that the scope of the arbitrator’s mandate will later be contested or the matter will not be determined upon.

Second, once an award has been issued, an arbitrator’s role in relation to those issues is generally at an end. Parties should not assume that the same arbitrator will have ongoing jurisdiction to address related disputes that emerge later.

Third, if parties wish to preserve the arbitrator’s jurisdiction over future related matters, this should be expressly provided for in the arbitration agreement or in the award itself.