New Zealand Court of Appeal allows appeal against anti-enforcement injunction
(By Maria Hook)
The New Zealand Court of Appeal has allowed an appeal against a permanent anti-suit and anti-enforcement injunction in relation to a default judgment from Kentucky, which the plaintiff alleged had been obtained by fraud: Wikeley v Kea Investments Ltd [2024] NZCA 609. The Court upheld the findings of fraud. It also did not rule out the possibility of an injunction being an appropriate remedy in the future. However, the Court concluded that an injunction could only be granted as a step of last resort, which required the plaintiff to pursue its right of appeal against the Kentucky judgment. For further analysis and comment, see this blog post over on conflictoflaws.net.
Conflict of laws in the Contracts of Insurance Act 2024
(By Maria Hook and Jack Wass)
Last week Parliament passed the Contracts of Insurance Act 2024, which includes some interesting provisions relating to the conflict of laws. The purpose of this note is to provide a brief discussion of these provisions. In the interests of full disclosure, we should point out that we made several submissions on the Bill.
Third party claims against insurers in cross-border cases
Part 3, subpart 6 of the Act deals with third party claims against insurers. It reforms the law previously found in s 9 of the Law Reform Act 1936, which was uncertain and unsatisfactory, particularly in cases that had an international element. Overseas authorities were divided on whether third party claims are to be characterised as contractual, tortious or proprietary for the purposes of identifying the applicable law. In Ludgater Holdings Ltd v Gerling Australia Insurance Co Pty Ltd [2010] NZSC 49, [2010] 3 NZLR 713, the Supreme Court applied the lex situs, on the basis that s 9 of the Law Reform Act 1936 had the effect of imposing a proprietary charge over the insurance monies.
The Act now specifies the territorial scope of the legislation by defining who qualifies as a “specified policyholder” in s 86(2). In essence, specified policyholders are policyholders that are subject to insolvency in New Zealand. This means that subpart 6 applies if the insolvency event underpinning the right of direct action is taking place in New Zealand.
This departure from the lex situs approach in Ludgater is both necessary and appropriate, for two reasons. First, unlike the now-repealed s 9 of the Law Reform Act, the new rules do not create a property right in the insurance debt. Second, the approach addresses concerns raised by the Supreme Court in Ludgater that New Zealand law should not be applied in a way that might interfere with foreign insolvency proceedings (at [23], [29]). The new right of action is designed to modify the ordinary rules that would apply in insolvency or administration proceedings. Those are matters that are generally governed by the law of the forum. It makes sense, therefore, to characterise the right of direct action in a way that aligns with such proceedings for conflict of laws purposes. A precedent for this approach is the Third Parties (Rights Against Insurers) Act 2010 (UK), which applies if the insolvency event underpinning the right of direct action is taking place in England (see, more generally, Louise Merrett “Direct action” in Jürgen Basedow and others (eds) Encyclopedia of Private International Law (Edward Elgar, 2017) 531 at 537).
Any doubt whether s 86 may still be subject to common law (or other) choice of law rules has been removed by s 97, which clarifies that the application of subpart 6 does not depend on another choice of law rule being satisfied:
97 Cases with overseas element
(1) The application of this subpart does not depend on any of the following (except to the extent that any of the following is required under section 86(2)):
(a) whether or not the insured liability was incurred in, or under the law of, New Zealand:
(b) where any of the parties are domiciled or living:
(c) whether or not the contract of insurance (or a part of it) is governed by the law of New Zealand:
(d) the place where sums due under the contract of insurance are payable.
(2) However, this section does not prevent a court from having regard to a matter referred to in subsection (1) when it is deciding whether to give or refuse leave under section 88.
However, the fact that the claim involves a specified policyholder within the meaning of s 86(2) does not mean that the New Zealand court must apply the Act in every cross-border case that comes before it. The court’s exercise of cross-border jurisdiction under subpart 6 is not mandatory. The court has a discretion to decline jurisdiction if there is an insufficient connection to New Zealand and a third party claim would be better resolved in another country – for example, because there are already insolvency or administration proceedings taking place overseas that would be recognised as a foreign main proceeding (particularly where an order from the New Zealand court would have the potential to interfere with that insolvency), or because the underlying facts have a tenuous connection to New Zealand (for example, where the claim related to activities of the policyholder overseas). Thus, s 88 provides that a proceeding may only be brought with the leave of the court, and that the court “may refuse to give leave if it considers that New Zealand is not the appropriate forum for the proceeding” (s 88(2)).
The inclusion of s 88(2) may not have been strictly necessary, considering that the court has a general discretion to decline jurisdiction under the common law doctrine of forum (non) conveniens. However, s 88(2) makes it clear that the question of appropriate forum is distinct from the question whether s 86(2) applies on its terms. The fact that a case falls within s 86(2) is not a pointer that New Zealand is necessarily the appropriate forum.
Law applicable to insurance contracts
The Act includes a general provision on the law governing insurance contracts. Section 7 clarifies that insurance contracts continue to be subject to existing common law choice of law rules, except that choice of law clauses in consumer insurance contracts are of no effect.
Thus, s 7(1)(a)-(b) provides that the Act “applies to a contract of insurance if the contract is governed by the law of New Zealand or would be governed by the law of New Zealand but for a choice of law provision in the contract”. Subsection (1)(b) removes the parties’ ability to select the law governing their insurance contract. However, according to subsection (2), subsection (1)(b) “does not apply to a non-consumer insurance contract”. This means that parties to a non-consumer insurance contract are still able to select the governing law. The meaning of “non-consumer insurance contract” is defined in s 10 as a contract of insurance entered into by a policyholder that is not “a contract of insurance ordinarily entered into by a policyholder wholly or predominantly for personal, domestic, or household purposes”.
The Act will only be applicable if the proper law of the contract is New Zealand law. This means that the overall effectiveness of s 7 depends on the common law choice of law rules for contracts. In the absence of party choice, the proper law is the law with the closest and most real connection to the contract. There is no specific choice of law rule for consumer contracts, so there is no guarantee that New Zealand law will apply to contracts with New Zealand consumers. However, it is reasonable to expect that courts will have particular regard to the policyholder’s place of residence in determining the law with the closest and most real connection to the contract (but cf Mary Keyes “Improving Australian Private International Law” in Andrew Dickinson, Mary Keyes and Thomas John (eds) Australian Private International Law for the 21st Century: Facing Outwards (Bloomsbury, 2017) 15 at 33-34).
On the face of it, s 7 seems to be concerned only with express choices of law (because it refers to a “choice of law provision”). However, it should be immaterial for the purposes of s 7(1)(b) whether the parties have entered into an express or implied choice of law agreement. It is unlikely that a court would entertain an implied choice of law in these circumstances (based on, for example, a foreign jurisdiction clause): cf Akai Pty Ltd v People’s Insurance Co Ltd (1996) 188 CLR 418 at 437.
It should be noted that the original version of s 7 provided for a wider exclusion of party autonomy, which would have rendered choice of law clauses ineffective in all insurance contracts except for reinsurance contracts. This would have amounted to a significant restriction of party autonomy (see, eg, Akai Pty Ltd v People’s Insurance Co Ltd [1998] 1 Lloyd’s Rep 90, where the English High Court granted an anti-suit injunction restraining the Australian proceedings under the Australian Insurance Contracts Act 1984 in order to give effect to the parties’ choice of English law and jurisdiction). The change to the scope of s 7 was made at the Select Committee stage (“to ensure that commercial parties retain autonomy to choose which law governs their contracts”). On the other hand, Parliament did not consider that the limitation on party autonomy should also cover small trade contracts (cf the extension of the UCT regime in the Fair Trading Act to small trade insurance contracts: Contracts of Insurance (Repeals and Amendments) Act 2024, ss 10-11). This was a defensible balance to strike. By comparison, the European approach has been to allow a free choice of law in non-consumer insurance contracts covering “large risks” (and a more limited choice in other insurance contracts): Regulation 593/2008 on the law applicable to contractual obligations [2008] OJ L177/6, art 7(2).
‘No contracting out’: jurisdiction agreements in consumer insurance contracts
Section 166 states that the provisions of the Act “have effect despite any provision to the contrary in any contract of insurance or other agreement”. The section does not clarify its scope with respect to choice of law agreements and jurisdiction agreements. In light of the implicit recognition of party autonomy in non-consumer insurance contracts in s 7, s 166 cannot have been intended to exclude the effect of such agreements in non-consumer insurance contracts even if their ultimate effect is to “contract out” of the Act. In other words, courts will be able to give effect to choice of law agreements and jurisdiction agreements in non-consumer contracts despite s 166.
What is less clear is whether s 166 is intended to invalidate foreign jurisdiction agreements in consumer insurance contracts (that would ultimately lead to the application of foreign law contrary to s 7(1)(b)). Section 67 provides that arbitration clauses in consumer insurance contracts are not binding, but there is no equivalent section for jurisdiction clauses. The effect of ‘no contracting out’ provisions on jurisdiction agreements is rarely clear-cut and can involve difficult questions of statutory interpretation: see The Conflict of Laws in New Zealand at [4.73], [2.397]. In Akai Pty Ltd v People’s Insurance Co Ltd (1996) 188 CLR 418, the High Court of Australia considered that an English jurisdiction clause was invalid under a ‘no contracting out’ provision in the Insurance Contracts Act 1984 because the English court would have given effect to the parties’ choice of English law, in circumstances where the Act excluded the parties ability to select a foreign proper law.
The better view may be that the Act does not directly regulate the effectiveness of jurisdiction clauses in consumer insurance contracts, but that a court would ordinarily exercise its discretion to decline enforcement of such clauses, at least where this would be necessary to give effect to the consumer protection policy reflected in s 7: see Advanced Cardiovascular Systems Inc v Universal Specialties Ltd [1997] 1 NZLR 186 (CA) at 190–191.
Grant v Arena Alceon NZ Credit Partners LLC: the reach of s 261 of the Companies Act
By Jack Wass (Stout Street Chambers)
The Court of Appeal will this week hear an appeal on the question of whether s 261 of the Companies Act 1993 – which permits a liquidator to obtain documents and information about the affairs of an insolvent company – has extraterritorial effect. In Grant v Arena Alceon NZ Credit Partners LLC [2023] NZHC 3048, Associate Judge Gardiner held that the liquidators had not overcome the presumption against extraterritoriality, so that a liquidator could not make a demand under that section to a person who was overseas, and the court did not have the power to order an overseas person to comply with such a demand.
It is established that the court does have that power in relation to directors of the insolvent company, who by taking appointment have submitted themselves to New Zealand law: Grant v Pandey [2013] NZHC 2844.
The Associate Judge recorded that she was initially attracted to the idea that s 261(1)—which empowers the liquidator to demand documents that belong to the company—might have extraterritorial effect, while s 261(3)—which confers a broad power to require anyone “having knowledge of the affairs of the company” do things, including attending to be examined on oath—does not. But the Judge was ultimately satisfied that the liquidators could not overcome the presumption against extraterritoriality on either limb, emphasising that the liquidators’ powers were not conditioned by a need to obtain court permission first, and exposed the recipient to criminal sanctions. Where courts in England and Australia have been prepared to interpret similar provisions as having extraterritorial effect, they have emphasised the court’s power to decline to make an order where there is an insufficient connection with the jurisdiction to justify extraterritorial relief operates as a safety valve. Although under the New Zealand legislation the court has a role if the recipient refuses to comply and the liquidators seek an order under s 266, the Judge found that the logically prior question is whether s 261 has extraterritorial effect in the first place, which must involve a binary inquiry.
In its most recent consideration of cross-border statute problems, the Court of Appeal emphasised that legislation does not operate extraterritorially (in the sense used in Poynter v Commerce Commission [2010] NZSC 38, [2010] 3 NZLR 300) where the matter that is being regulated is within New Zealand, even if the defendant is (and acted) overseas: see Body Corporate No DPS 91535 v 3A Composites GmbH [2023] NZCA 647 at [70] where it was the supply of goods to New Zealand consumers that provided the necessary link. Likewise, the Court emphasised the importance of conducting the necessary statutory interpretation exercise in light of the choice of law rules or principles.
Here, one might argue that both of those principles might have a role to play in considering the distinction between s 261(1) and (3) suggested by the Associate Judge. As to the latter, there is much to be said for the proposition that a power that is essentially equivalent to an extraterritorial subpoena would have to conferred expressly by Parliament in circumstances where subpoenas themselves are not enforceable outside the territory. But so far as the power under s 261(1) to obtain documents of the company is concerned, there is room for argument: the fact that the recipient of the notice may hold the document overseas does not change the fact that it is a document that belongs to the New Zealand company, and the general choice of law rule is that the affairs of a company are governed by the law governing its incorporation (Hook & Wass at [10.17]). While there is an argument to be made, the better view may remain that remedies under the Model Law on Cross-Border Insolvency are a more principled way of dealing with the problem, and that if a gap still persists it is for Parliament to fill it expressly.
2024 Supplement to the Conflict of Laws in New Zealand
The first edition of The Conflict of Laws in New Zealand was published in 2020. Since then, there have been a number of important cases and developments of relevance to the field. To ensure that CLNZ remains up-to-date, LexisNexis have kindly agreed to the publication of a supplement, which is available for free on this blog. Just click on the link at the bottom of the right-hand sidebar of this blog to get your copy.
Australasian Association of Private International Law
(By Professor Reid Mortensen)
The Australasian Association of Private International Law (‘AAPrIL’) is being established to promote understanding of private international law in Australia, Aotearoa New Zealand, and the nations of the Pacific Islands. By ‘private international law’ (or ‘conflict of laws’), we mean the body of law that deals with cross-border elements in civil litigation and practice, whether arising internationally or, in the case of Australia, intra-nationally.
To make AAPrIL a reality, we need your help. Please join us by attending the first general meeting of members of AAPrIL, which will be held online on Thursday 11 July 2024. The meeting is necessary to establish AAPrIL, approve a Constitution, and elect AAPrIL’s first officers.
The beginnings of our Association
The proposal to establish AAPrIL comes from an organising group* of Australian and New Zealand scholars and practitioners who have been working together in private international law for a long period.
We believe that there is a need for a permanent regional organisation to provide support for regular events and conferences on private international law, and to help coordinate, manage and publicise them. Our vision for AAPrIL is that it will:
- Regularly distribute a newsletter on recent decisions, legislative developments and publications, and on hot topics and upcoming events on private international law in Australasia.
- Organise proposals and submissions for law reform in private international law.
- Promote the study of private international law in universities.
- Provide a forum for the exchange of information and opinions, debate and scholarship on private international law in Australasia.
- Connect with other private international law associations worldwide.
The proposed Association already has a website and a LinkedIn page.
To our delight, the Honourable Dr Andrew Bell, Chief Justice of New South Wales, has agreed to serve as patron of the Association. His Honour is well-known as co-author of Nygh’s Conflict of Laws in Australia, and the author of many other publications on private international law. Before being appointed to judicial office, he had a significant Australia-wide practice in cross-border litigation and international arbitration.
How do you join?
You can join the Australasian Association of Private International Law by signing up on the Membership page of AAPrIL’s website.
There is initially no membership fee to join. At the meeting to establish AAPrIL, there will be a proposal to set membership fees for 2024-2025 at:
Individual members: AUD 100
Corporate members: AUD 300
Student members: AUD 20
However, membership fees for 2024-2025 will not be requested until after the first general meeting.
What will happen at the general meeting on Thursday 11 July?
Those who join as members by 18 June 2024 will be sent a notice of meeting for the general meeting on 11 July 2024. The agenda will include proposed resolutions:
- To establish the Australasian Association of Private International Law.
- To adopt the Constitution of the Association. If members have any questions about the proposed Constitution before the meeting, could you please direct them to me: mortensen@unisq.edu.au.†
- To appoint the President, Treasurer and Secretary of the Association, and potentially an Australian Vice-President, a New Zealand Vice-President and Pacific Islands Vice-President. If any member wishes to propose another member for one of these offices, please email your nomination to me: mortensen@unisq.edu.au.†
- To set membership fees for the financial year 2024-2025.
The organising group will also present plans for the activities of the Association.
We are looking forward to this exciting development for those of us who are rightly fascinated by private international law. We hope you will join us!
Best wishes
Professor Reid Mortensen
On behalf of the AAPrIL interim executive
*******
* The organising group comprises Dr Michael Douglas (Bennett, Perth), Professor Richard Garnett (University of Melbourne), Associate Professor Maria Hook (University of Otago), Professor Mary Keyes (Griffith University), Professor Reid Mortensen (University of Southern Queensland), Ms Cara North (Corrs Chambers Westgarth, Melbourne) and Mr Jack Wass (Stout Street Chambers, Wellington).
† I will be on leave from 3-14 June 2024, but will answer any enquiries that are made in that period as soon as possible afterwards.
High Court declares asymmetric jurisdiction clause in viagogo’s terms and conditions an unfair term under the FTA
The High Court recently decided that a foreign jurisdiction clause in a contract entered into with New Zealand consumers was an unfair term: Commerce Commission v Viagogo AG [2024] NZHC 713. The Commerce Commission had sought relief against viagogo AG, a company incorporated in Switzerland, under the Fair Trading Act 1986 (FTA). viagogo operates a global website for the re-sale of tickets to live events. The terms and conditions entered into with New Zealand consumers included a Swiss jurisdiction and choice of law clause. The Commerce Commission argued that the clause was an unfair contract term under s 46L of the FTA. Peters J agreed, but only insofar as the clause related to jurisdiction (rather than choice of law). On that basis, Peters J was wiling to declare that the jurisdiction clause was an unfair contract term, to the extent that it applied to consumers within the reach of the FTA (at [227]).
A term is unfair under s 46L if the court is satisfied that it would cause a significant imbalance in the parties’ rights and obligations arising under the contract; and it is not reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term; and it would cause detriment (whether financial or otherwise) to a party if it were applied, enforced, or relied upon.
Unfairness of the jurisdiction clause
The jurisdiction clause provided that “[a]ll disputes arising out of or in connection with this Agreement … shall be resolved exclusively by the competent Courts of Geneva, Switzerland”, while also reserving an option for viagogo “of taking legal action against You at Your domicile”. In other words, the clause provided for the exclusive jurisdiction of the Swiss courts, except that viagogo could choose to bring proceedings in New Zealand. This is known as an asymmetric jurisdiction clause (see generally Brooke Marshall Asymmetric Jurisdiction Clauses (OUP, 2023)).
Peters J was satisfied that this clause would give rise to significant imbalance in the parties’ rights and obligations under the contract, and that it would cause detriment to the consumer if relied upon (at [209]). This was mainly because of the asymmetrical nature of the agreement (at [210]) and because requiring a consumer to sue in Geneva “rules out any prospect of litigation against it by a consumer” (at [211]), presumably because it is not realistic, as a matter of practicality, that a consumer would go to the trouble of pursuing viagogo in Switzerland. In the absence of the jurisdiction clause, on the other hand, a consumer could commence proceedings in New Zealand, “probably in the Disputes Tribunal”, with relatively little effort and expense (at [210]).
The Judge was also satisfied that the clause was not reasonably necessary to protect a legitimate interest of viagogo. viagogo argued that it had a legitimate interest to confine litigation against it to its home jurisdiction, referring to some Australian authorities in support (at [212]). Peters J dismissed this argument, referring to the particular context of the case (at [217]). The “likely scenario” was that claims against viagogo would relate to events held in New Zealand and would involve local witnesses. There was “no obvious reason” why viagogo could not participate in New Zealand proceedings, “whether by audio visual link or by appointing a representative to attend any hearing on its behalf”. The dispute could be “determined quickly by the Disputes Tribunal” (at [217]).
The Court’s emphasis on the potential role of the Disputes Tribunal is interesting. Considering the practical difficulties faced by consumers to obtain access to justice, and the complexities of cross-border litigation, it made sense to place reliance on the fact that there seemed to be a quick and cost-effective option available to consumers in New Zealand (that would not impose an undue burden on viagogo). However, it is not clear that the Disputes Tribunal would have jurisdiction over claims against foreign defendants such as viagogo. Personal jurisdiction over defendants that do not have a presence in New Zealand depends on there being a statutory basis for service outside of the jurisdiction. The Disputes Tribunal Rules 1989 do not seem to contemplate this possibility.
More generally, the decision provides useful ammunition to any consumer seeking to bring proceedings in New Zealand despite the existence of a foreign jurisdiction clause, especially where the clause is asymmetric. The more obvious route for consumers might be to rely on the court’s common law discretion not to give effect to a jurisdiction clause, on the basis that there are strong reasons for not doing so: The Eleftheria [1970] P 94 (Prob) at 99–100; see Karpik v Carnival plc [2023] HCA 39). This does not mean, however, that consumers may not also attempt to attack the validity of the jurisdiction clause directly under s 46L (assuming that s 46L would be applicable to determine the validity of the clause as an overriding mandatory rule), although a claim under s 46L would probably be less fact-specific (and, depending on the facts, may be more difficult to make out).
No unfairness of the choice of law clause
The same clause in viagogo’s terms and conditions also provided that the contract would “be governed by and interpreted in accordance with the Swiss laws, with the exclusion of its conflict of laws rules…”. The Commerce Commission argued that this part of the clause was unfair “because it imposes a prohibitive layer of cost on a consumer, being the cost of taking legal advice on Swiss law” (at [219]).
Peters J did not accept this argument. A consumer, when bringing proceedings against viagogo in New Zealand, would not be under an obligation to plead Swiss law. It would be up to viagogo to adduce evidence of the content of Swiss law if it wanted to rely on it (at [221]).
There was also no evidence to show that the application of Swiss law would give rise to a significant imbalance in the parties’ rights and obligations when compared to New Zealand law (at [221]). In fact, it was not clear what the proper law of the contract would be in the absence of the clause. It “would not inevitably be New Zealand law” (at [223]).
Three points in particular may be of interest here.
The first is that it is not inconceivable that a decision by viagogo to plead Swiss law could come with additional expense for New Zealand consumers. If viagogo decided to plead Swiss law, and Swiss law was found to be applicable, New Zealand law would no longer apply by default, and the presumption of similarity, too, may be unavailable to a consumer: see Brownlie v FS Cairo (Nile Plaza) LLC [2021] UKSC 45, [2022] AC 995 at [113]-[153].
The second point is that Peters J’s reasoning demonstrates a potential willingness to apply s 46L to the substantive effects of choice of law agreements. For example, if there was evidence that, under Swiss law, the consumer would have significantly fewer rights than under New Zealand law, then the clause could be considered unfair under s 46L, assuming that the objective proper law of the contract would actually be New Zealand law. However, it is not clear whether s 46L ought to be applied in this manner. The function of choice of law agreements is not to create rights and obligations under the chosen law (see Maria Hook The Choice of Law Contract (Hart Publishing, 2016 at ch 8, pt IIIA and ch 5, pt IIIB(2)), so it may not be right to say that the agreement would “cause a significant imbalance in the parties’ rights and obligations arising under the contract”.
Third, if a consumer sought to rely on s 46L to argue that a foreign choice of law clause is unenforceable, it might be faced with an argument that the foreign law, as the putative chosen law, should govern the validity of the clause, as opposed to New Zealand law. However, the consumer would still be able to argue that s 46L applies to the choice of law clause as an overriding mandatory rule (see The Conflict of Laws in New Zealand at 4.156).
Fourth, the Commerce Commission apparently did not argue that the choice of law clause was misleading, on the basis that consumers may consider themselves unable to seek relief under the FTA or the Consumer Guarantees Act 1993 (CGA) (cf Australian Competition and Consumer Commission v Valve Corporation (No. 3) [2016] FCA 196). It is unlikely that the choice of law clause would make relief under the FTA and the CGA unavailable. In a way, the continued availability of relief under these statutes might have been another reason why the choice of law clause was not unfair in substance, and may offer an additional explanation why the Court was not too concerned about the clause.
Concluding remarks
The judgment is a useful addition to the New Zealand jurisprudence on cross-border consumer contracts. New Zealand does not have general rules restricting the enforceability of dispute resolution clauses in consumer contracts per se. This approach is different from the approach taken in the European Union. The European Rome I Regulation, for example, submits consumer contracts to the law of the consumer’s place of habitual residence (provided the other party pursues their commercial or professional activities in that place, or directs their activities to that place); and it allows a choice of law to the extent that it will benefit the consumer (see art 6). Similar protections are available in relation to jurisdiction, under the Brussels I Regulation. In the absence of such general provisions, it is especially important that courts make use of the varied tools that are available to them to regulate the enforceability of jurisdiction and choice of law agreements in consumer contracts.
Carr v Peters: a potential case of trans-Tasman defamation
By Jack Wass (Stout Street Chambers)
A trans-Tasman controversy arose this week, when Australia’s former foreign minister, Bob Carr, accused New Zealand’s foreign minister and deputy prime minister, Rt Hon Winston Peters, of defamation. The allegation arose out of comments Peters made on Radio New Zealand’s Morning Report during a discussion of the Aukus partnership and the role of China in the region.
Carr has reportedly written to Peters threatening to bring defamation proceedings. Peters responded that this was not his “first legal rodeo”, and indeed he has given his name to a number of important decisions on the tort in New Zealand.
1News reports that Mr Carr intends to bring proceedings in New Zealand (rather than New South Wales, where he might have been be met by an argument that New Zealand was the appropriate forum).
The more interesting question is what law the New Zealand Court would apply in determining whether the statement was defamatory or is protected by privilege. Peters will no doubt argue that he should be judged according to New Zealand law when speaking in his official capacity about matters relevant to New Zealand’s public interests on a New Zealand radio station; Carr might argue that where Peters made comments calculated to damage his reputation, he should answer for them under the law of the place where Carr will suffer that damage. While both New Zealand and New South Wales law recognise defences of honest opinion and qualified privilege for political statements, it would not be safe to assume the outcome would necessarily be identical under both laws.
This tension has long existed in cross-border defamation cases, since both the place of the statement and the place of the damage will have obvious relevance. Unlike the United Kingdom, there is no special rule for defamation claims under the Private International Law (Choice of Law in Tort) Act 2017. That Act says that where the events in a tort claim arise in two different countries, the court applies “the law of the country in which the most significant element or elements of those events occurred” unless it is “substantially more appropriate for the law of another country” to apply, and there is a general safety-valve where the court can refuse to apply foreign law if it would conflict with principles of public policy (generally a high threshold). There is a sense in which these questions are question-begging, and ultimately the judge would have to make a judgement call about what connecting factor should be given the most weight in the circumstances. There is a prospect (whether appropriate or not) that that judgement itself might be informed by the Judge’s view of whether the statement in question was defensible.
Carr might elect to sue under New Zealand law and avoid this debate. If he does not, the court may well conclude that while New South Wales might be the place where the most significant element of the tort occurred, it is nevertheless more appropriate that a New Zealand court applies New Zealand law to political statements made by a New Zealand politician.
A-Ward Ltd v Raw Metal Corp Pty Ltd: no anti-suit injunctions to enforce jurisdiction agreements under the TTPA
The High Court recently decided that there is no role for anti-suit injunctions under the Trans-Tasman proceedings regime to enforce jurisdiction agreements falling within the scope of the regime: A-Ward Ltd v Raw Metal Corp Pty Ltd [2024] NZHC 736. This is an issue on which the secondary literature had been divided. An analysis of the judgment is available at conflictoflaws.net: https://conflictoflaws.net/2024/no-role-for-anti-suit-injunctions-under-the-ttpa-to-enforce-exclusive-jurisdiction-agreements/
Seminar: Hague Conventions on International Civil Procedure – Pathway to Adoption
This Friday (12 April) at 3 pm, Jack Wass and Maria Hook will be giving a seminar at the University of Otago on their project “Hague Conventions on International Civil Procedure – Pathway to Adoption”. This project, which is funded by the Borrin Foundation, explores a pathway for New Zealand to adopt four key treaties on international civil procedure developed by the Hague Conference on Private International Law – the Service Convention 1965, the Evidence Convention 1970, the Choice of Court Convention 2005, and the Judgments Convention 2019. The purpose of the project is to try and dislodge the inertia within the executive that has resulted in consideration of these Conventions stalling, by producing a briefing paper and draft legislation for the implementation of the treaties. The seminar will focus on the proposed pathway for adoption of the Conventions and discuss its potential effectiveness in encouraging New Zealand’s participation in international treaties (as well as in achieving law reform more generally).
There is a Zoom link available for anyone who would like to attend the seminar but is unable to do so in person. Please contact me if you would like to attend. It would be great to see you there.
The Court of Appeal on the enforceability of the nikah in New Zealand
The case of Almarzooqi v Salih has had a difficult history. Involving a claim under an Islamic nikah for the payment of a mahr, Ms Almarzooqi first sought to enforce a judgment from a Dubai court that had granted the order for payment. The Court of Appeal refused enforcement of the Dubai judgment on the basis that the court did not have personal jurisdiction over Mr Salih ([2021] NZCA 330, [2021] NZFLR 501). Leave to appeal to the Supreme Court was declined ([2021] NZSC 161, [2021] NZFLR 606). The plaintiff was left with no other option but to bring her claim again in the New Zealand court. The High Court held in the plaintiff’s favour ([2022] NZHC 1170), concluding that the agreement was governed by the law of UAE but that, whatever its proper law, the mahr had become payable. Mr Salih appealed, and the Court of Appeal has now decided that the case is not over yet, allowing the appeal and remitting the case to the High Court for reconsideration ([2023] NZCA 645).
The crux of the Court of Appeal’s decision was that the question of the nikah’s enforceability was governed by New Zealand law; that, pursuant to New Zealand law of contract, the nikah could not be properly interpreted without reference to its cultural context, including general principles of Sharia law; and that there was not sufficient evidence to undertake this interpretive task reliably in this case, due to the particular way the case had developed. Specifically, the question was whether, based on the general principles of Sharia law as applied as part of the factual matrix under New Zealand law of contract, the nikah required the defendant to pay the mahr by reason only of the fact of the divorce (or whether the plaintiff was required to make out specific grounds for divorce and, if so, whether she could do so on the facts).
Facts
I have outlined the facts of the case in previous posts on this blog (see here and here and here). Ms Almarzooqi, the plaintiff, and Mr Salih met on an Islamic dating site. Ms Almarzooqi was living in Australia at the time, and Mr Salih was living in New Zealand. They subsequently got married in Dubai in accordance with Islamic law, which involved the parties entering into a contract of marriage (the nikah). This contract provided that Mr Salih would pay Ms Almarzooqi a deferred mahr of about $230,000 in the event of Mr Salih’s death or the parties’ divorce. Ms Almarzooqi, a citizen of the United Arab Emirates (UAE), moved to New Zealand to live with Mr Salih, who had both Iraqi and New Zealand citizenship. After a few months the couple separated. Ms Almarzooqi subsequently obtained an order for divorce from the Dubai court on the ground that Mr Salih had mistreated her, as well as an order for payment of the mahr.
Promises to pay a mahr are enforceable under New Zealand law
The most important conclusion of the judgment – which is not, incidentally, a conflicts point – is that promises to pay a mahr are in principle enforceable under New Zealand law. This is a fascinating issue that is of practical importance to Muslim communities in New Zealand (see [13]).
The Court of Appeal confirmed that there was no reason why the nikah should not be enforceable on a contractual basis, referring to authorities from other common law jurisdictions ([69]-[91]). The nikah satisfied the pre-requisites for an enforceable contract, so “the mere fact it was entered into in the context of a religious ceremony should not, in itself, preclude it being enforceable as a contract at civil law” ([92]). Statutes like the Property (Relationships) Act 1976 (PRA) or the Domestic Actions Act 1975 (DAA) were no barrier to that conclusion ([94]-[99]). The nikah in this case was not entered into for the purpose of contracting out of the PRA ([98]), although this did not mean that a nikah could not be taken into account when making determinations under the PRA more generally ([99], see also here). The nikah was also not an agreement to marry, which meant the DAA was irrelevant ([94]). Finally, the nikah was not void as contrary to public policy ([100]-[101], referring to Radmacher v Granatino [2010] UKSC 42, [2011] 1 AC 534 in support of the conclusion; and see also here).
However, “[g]reat care” was needed when courts “embark on the task of interpreting a contract made within a particular cultural context” ([104]). The Court considered there were “some parallels with cases decided within the context of tikanga” (with the important difference, presumably, that tikanga is an independent source of law in Aotearoa New Zealand). This meant that nikah “cannot properly be interpreted in any given case without reference to that [cultural] context” ([105]) and required evidence about the general principles of Sharia law. The Court did not explain whether this approach effectively reflects the traditional doctrine of incorporation by reference, which allows parties to incorporate non-national law or principles into their contract to the extent permitted by New Zealand law (see Shamil Bank of Bahrain EC v Beximco [2004] EWCA Civ 19, [2004] 1 WLR 1784).
More specifically, the Court required evidence of general Sharia law as relevant under New Zealand law of contract, not the law of UAE. That is because there were differences in Sharia law as applied in different countries ([106]). Under UAE law, the reason for the divorce was irrelevant to the obligation to pay the mahr, but this did not mean that the position under New Zealand law would be the same. The Court did not elaborate on the interrelationship between general principles of Sharia as applied under New Zealand law, and general principles of contract interpretation. Based on the latter, it seems that there would be a good argument that the parties did not intend the mahr to depend on the reason for divorce, in light of the terms of the written document and the fact that a no-fault divorce would be available to them in the UAE and in New Zealand.
The proper law of the nikah
Insofar as questions of the conflict of laws are concerned, the Court of Appeal’s decision is interesting for two reasons: its (implicit) acceptance that the question of the nikah’s enforcement was to be characterised as contractual for choice of law purposes (for further analysis of this question, see here); and its particular approach to the identification of the proper law.
In relation to the latter, the Court set out the general test for the identification of the proper law of a contract: that the law governing a contract is the law the parties intended to be applicable or, in the absence of a choice by the parties, the law with the closest and most real connection. Interestingly, the Court did not seem to see a role for implied choice, saying that “in the absence of an express choice of law the task for the Court is to identify the jurisdiction with the closest and most real connection to the contract” (at [30]). The New Zealand position on implied choice of law has not been entirely clear (and the boundaries between express choice, implied choice and closest connection can be blurred in individual cases), but the evidence is now mounting that New Zealand courts treat implied choice as being of lesser general importance than some other common law courts (see Maria Hook and Jack Wass The Conflict of Laws in New Zealand (LexisNexis, 2020) at [6.13]-[6.16]).
The Court rejected the argument that the parties had made an express choice of UAE law. While the nikah showed an intention to be bound by Sharia law, this “did not equate to an express choice of UAE law” ([55]).
The law with the closest and most real connection was to be determined by reference to all the relevant circumstances, including “the place the contract was entered into and the circumstances in which it was entered into”, the form of the contract, the place of performance, and “the enforceability of the contract in the two jurisdictions, and any barriers to that process” (at [30]).
In the High Court, Simon France J had considered it particularly relevant that the parties had travelled to UAE to be married there in accordance with Sharia traditions (at [22], [26]). The intended residence in New Zealand was given less weight, partly because the obligation to pay the mahr “is unaffected by the place of residence” and “becomes relevant once the marriage is ended” (at [23]). Finally, despite the universality of the nikah (and the mahr), it was also relevant that UAE law – unlike New Zealand law – was a system reflecting Sharia principles (at [25]).
The Court of Appeal, on the other hand, considered that “the place where the contract would be performed, and the parties’ residency were significant” ([61]). There was an expectation that the couple would live permanently in New Zealand, and “[t]here was no reason to play down this aspect by suggesting that they might not do so” ([62]). If the marriage ended, the place of payment was likely to be New Zealand ([63]). What is more, there was a widespread practice of Muslim couples marrying by nikah in New Zealand in a domestic context, and New Zealand law was able to give effect to Sharia law concepts as part of the factual matrix of the contract. In these circumstances, the Court was “cautious” about the Judge’s reliance on the fact that UAE was a system reflecting Sharia principles ([66]-[67]). The parties married in the UAE to satisfy the wishes of the plaintiff’s family that “the couple marry in the UAE in a religiously appropriate ceremony”. The motivation for marrying in the UAE was not to “[secure] access to UAE law” ([68]).
The Court examined the issue carefully. Nevertheless, there are aspects of the reasoning that invite further analysis. For example:
- The (objective) proper law of the contract must be determined by reference to the circumstances as they existed at the time the contract was entered into. At that point, the plaintiff had not yet started her life in New Zealand, although the expectation was that the couple would live here. It is easy to imagine circumstances in which the parties could have changed their plans of settling in New Zealand (say, because of a job offer in Australia). In such circumstances, would it be unfair to subject a party in the plaintiff’s position to New Zealand law, to which she would have had no meaningful connection? This suggests that the expected place of residence ought to be treated with some caution, although the Court of Appeal was unpersuaded by the point. To the extent that the nikah is designed to protect the interests of the wife, it may also be appropriate to give greater weight to connecting factors that are focused on the wife, such as the country of the wife’s nationality or residence (here, the UAE).
- It does not seem unreasonable to assume that parties who enter into a contract would ordinarily expect that contract to be governed by a law that is well suited to give meaning to the contract. Here, UAE law seemed to have a clear answer to the question whether the fact of divorce was enough to trigger the obligation to pay the mahr. The position under New Zealand contract law, based on general principles of Sharia law, is more complex. In these circumstances, could the application of New Zealand law be understood as defeating the parties’ reasonable expectations as to choice of law? The Court of Appeal did not think so, emphasising the widespread practice of Muslim couples marrying by nikah in a New Zealand domestic context. However, the fact that Muslim couples in New Zealand are able to do so under New Zealand law, does not change the fact that, in a cross-border setting, foreign law might be a better fit and provide a more straightforward answer.
Some lingering characterisation issues
One of the main grounds of defence, which was only introduced on appeal, was whether the nikah was unenforceable as being contrary to the DAA and PRA. The Court rejected these arguments. From a conflicts perspective, it may be worth noting that the Court addressed these issues on the basis that the proper law of the nikah was New Zealand law. In other words, the Court seemed to suggest that the issues would not have arisen if the proper law had been UAE law (see [16]). However, it is not clear that issues under the DAA or PRA should be subject to the proper law of the contract (see here), although on the facts these characterisation questions were irrelevant.
