Should the courts assess the merits of a dispute referred to arbitration?
Article 8(1) of Schedule 1 of the Arbitration Act 1996 requires courts to stay proceedings brought on a matter which is the subject of an arbitration agreement except where there is in fact no dispute. The Court of Appeal in Zurich v Cognition interpreted this exception as allowing the courts to assess whether the defendant has an arguable defence to the summary judgment proceedings brought against it. By allowing the court to assess the merits of a dispute referred to arbitration New Zealand is inconsistent with the theoretical and international understandings which require the independence of international arbitration. Court proceedings on a matter referred to arbitration have the potential to rob the parties of the benefits of persisting with arbitration. It is therefore necessary to consider alternatives to art 8(1) which are principally, comparatively and practically sound.