Interim measures

An interim measure is a temporary order (whether or not in the form of an award) by which a party is required, at any time before an award is made in relation to a dispute, to fulfil all or any of the obligations listed in Article 17 of Schedule 1 of the Arbitration Act 1996 (Act), as set out below. Generally, the measure must be in the form of interim relief, and will not provide a permanent remedy to the dispute.

Under Article 17A of Schedule 1, an arbitrator can grant interim measures. As a matter of public policy, this is intended to encourage parties to seek such orders from the arbitrator rather than the Court. In parallel, Article 9 of Schedule 1 allows parties to apply to the Court, in appropriate circumstances, to obtain orders for interim measures. However, the Court will be reluctant to grant interim measures unless it is either impossible or impracticable for the arbitral tribunal to deal with the matter itself. The courts are typically reluctant to intrude on arbitrators’ powers [1]. The Court’s role is ancillary, with the purpose of interim measures complementing the arbitration rather than substituting it [2].

It is important to understand that interim measures under the Act are a different remedy to interim injunctions under the High Court Rules 2016. Parties need to be clear about which jurisdiction applies to their dispute as the application procedure and available relief both differ under each regime. Where parties have expressly agreed that arbitration will govern their dispute, it is very difficult to convince a Court to rely on its inherent jurisdiction under the High Court Rules. To date, the Courts have tended to interpret carve out clauses narrowly, finding them to be ineffective in preserving the Court’s inherent jurisdiction to grant interim relief where the Act is found to be engaged [3].

What are the interim measures?

Article 17A of Schedule 1 to the Act confirms that an arbitrator has the power to grant interim measures. The five categories of interim measure orders are found in Article 17 of Schedule 1. We discuss these below:

1. To maintain or restore the status quo: This measure is used where the objective is to prevent escalation of the dispute or further injury to the party seeking orders. Examples include ordering the continuation of a party’s obligations under an agreement or seeking that a party refrain from a course of action pending dispute resolution. This measure has been granted where an applicant sought to prevent a contractor from suspending or terminating the contract in reliance on default notices in order to maintain the status quo by requiring the contractor to remain on site [4].
2. To prevent harm: The prevention of harm measure relates to orders which ensure that a party is prevented or required to refrain from taking action that is likely to cause current or imminent harm to the arbitral process itself. 
3. To preserve assets: This measure is used to preserves assets out of which a subsequent award may be satisfied. This could include restraining a party from relocating moveable assets out of the jurisdiction or ordering the provision of suitable security [5].
4. To preserve evidence: The object of this category of measure is to preserve evidence that may be relevant and material to the resolution of the dispute. Orders may be necessary to retain relevant goods for examination, pending resolution of the dispute [6].
5. To provide security for costs: The Arbitration Amendment Act 2007 made it clear that security for costs is available as an interim measure. This clarification follows the English approach. The Court also has the power to order the giving of security of costs under Article 9(2) of Schedule 1, but the general principle is that the tribunals should decide to award security rather than the Court [7]. The defendant must satisfy the Court or arbitrator that there are reasons to believe that the plaintiff is unable to meet an award of costs payable to a successful defendant [8].

Test for granting orders

The interim measures regime is flexible, empowering arbitrators to award a range of remedies across the different categories of measure. However, the regime sets a high threshold for granting interim measures: [9]

• the harm which is likely to result if the measure is not granted is not adequately reparable by an award of damages;

• the harm substantially outweighs the harm to the respondent that is likely to result if the measure is granted; and 

• there is a reasonable possibility that the applicant will succeed on the merits of the claim. 

The discretion to award interim relief arises only after the applicant establishes the mandatory criteria. 

An interim measure is binding on the parties and enforced by application to Court, unless otherwise provided by the tribunal. It is important to check first whether the party’s requested measure is available under the Act and second, when making the application for an interim measure, to be clear on the type of order which is being sought under Article 17 of Schedule 1.

Emergency arbitrators

A party can apply to appoint an emergency arbitrator to decide an issue that must be determined as a matter of urgency, before the arbitral tribunal is formed. The emergency arbitrator is able to award measures that protect the interests of a party in the interim. Once the tribunal has been officially appointed, any emergency interim measures can be reconsidered, vacated or modified. 

Footnotes 

[1] Marika Eastwick-Field and Nathaniel Walker (ed) Sim’s Court Practice (online ed, LexisNexis) at [AART9.2]. 
[2] Sensation Yachts Ltd v Darby Maritime Ltd HC Auckland CIV-2005-404-1908, 16 May 2005.
[3] In Foundation Village Ltd v Growing Spaces Ltd [2023] NZHC 2638, there was a carve out clause saying “[n]othing in [the arbitration agreement] will prejudice the right of any party to institute proceedings to seek urgent interlocutory or injunctive relief”. The applicant applied under the court’s jurisdiction for an interim injunction, partly due to the fact that their remedy sought was not included in Article 17. The Court ultimately found that it did not have jurisdiction to determine the dispute and the interim measure regime under the Act was the more appropriate avenue to seek relief. Also see Rau Paenga Ltd v CPB Contractors Pty Ltd [2023] NZHC 2974 where there was a similar carve out clause, but the applicant successfully applied under the interim measures regime of the Act. See also Janine Stewart and Oscar Read “Limits to consensual dispute resolution” [2024] NZLJ 145.
[4] Rau Paenga Ltd v CPB Contractors Pty Ltd [2023] NZHC 2974.
[5] South Pacific Industrial Ltd v United Telecoms Ltd [2012] NZHC 688.
[6] Anthony Willy and Terry Sissons Alternative Dispute Resolution – Arbitration — A to Z of New Zealand Law (online ed, Thomson Reuters) at [9.2.5].
[7] Willy and Sissons at [16.4.2].
[8] Willy and Sissons at [4.A.11.2.3].
[9] Article 17B of Schedule 1.

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