The High Court has clarified the enforceability of arbitration clauses in multi-contract arrangements. In Acanthus Ltd v Watercare Services Ltd [2025] NZHC 749, decided earlier this year, the Court confirmed that a broadly worded arbitration clause in an earlier contract can still apply to disputes that arise under subsequent, related agreements between the same parties. This principle applies even where those subsequent contracts contain differing dispute resolution mechanisms and entire agreement clauses. However, there may still be disagreements over which dispute resolution procedure should apply.
Background: Multiple agreements
The dispute arose in the context of a staged subdivision project. In 2018, the parties entered into an agreement for the construction of wastewater infrastructure (2018 Agreement). The 2018 Agreement included a broad, multi-tiered arbitration clause. Due to project delays, the parties then entered into a series of subsequent agreements for temporary wastewater servicing and an infrastructure funding agreement. The dispute resolution clauses in these subsequent agreements called for the use of “informal dispute resolution techniques… that may be agreed between the parties” and contained entire agreement clauses that excluded prior agreements unless expressly incorporated. When issues arose, the developer, Acanthus, initiated High Court proceedings. Watercare sought a stay under the Arbitration Act 1996 on the basis that the disputes were connected to the 2018 Agreement and were required under this agreement to be resolved through arbitration.
The Court’s approach
The key question in this case was one of scope. Specifically, whether the parties’ disputes fell under the scope of the 2018 Agreement or the subsequent agreements, and therefore which dispute resolution procedure governed the process. The Court stated that the question is entirely one of construction but provided helpful guidance.
The starting point is that “a clause in one contract was probably not intended to capture disputes more naturally seen as arising under a related contract.” Each clause is treated as applying only to the contract it is written in, unless the wording or context clearly shows otherwise. A broad, purposive and commercially-minded approach is to be followed. Where the clauses are part of a series of agreements, they should be interpreted in the context of the overall scheme. The Court recognises that businesspeople are unlikely to intend similar claims to be the subject of inconsistent dispute resolution mechanisms. Instead, competing clauses will be interpreted on the basis that they are not overlapping and each deals exclusively with its own subject matter. If it is unclear which dispute resolution procedure governs a dispute, the parties may decide. If the parties cannot agree, the Court may determine the issue.
Arbitration clause prevailed
The High Court granted Watercare’s application for a stay because:
-
There was an arbitration agreement: The 2018 Agreement contained a broadly worded arbitration clause that was valid and enforceable.
-
The disputes fell within the scope of the 2018 Agreement: At their core, all the causes of action were most closely connected to the 2018 Agreement. These were breach of contract, breach of statutory duties, equitable set-off, breach of confidentiality, breaches of the Fair Trading Act, and defamation.
-
The arbitration clause in the 2018 Agreement was not incorporated into the subsequent agreements: There was no clear objective intention to do so, and the entire agreement clauses in the later contracts were effective in superseding the prior dispute resolution provisions.
-
The arbitration clause had not been repudiated: The Court rejected the developer’s argument that Watercare had repudiated the arbitration clause by failing to engage in good faith discussions: a precondition to arbitration. The Court found that the developer had been in breach, not Watercare, and could not take advantage of its own wrongdoing to avoid arbitration.
-
Pre-conditions to arbitration were not a barrier: An arbitration clause may be enforced (including by way of a stay of court proceedings) even before any preconditions to arbitration have been fulfilled. Where the parties have complied imperfectly with any preconditions or have attempted to avoid arbitration by refusing to comply, then the Court may order the parties proceed to arbitration.
-
The Court could exercise its residual discretion to stay proceedings: Though some of the disputed issues arguably fell under later agreements, the Court exercised its discretion to stay the entire proceeding to avoid inefficiencies and inconsistent findings. The parties could apply for the stay to be lifted if issues remained after arbitration.
Implications for construction projects
Acanthus v Watercare confirms the enduring strength of arbitration clauses in construction disputes and the Court’s willingness to uphold them, even across multiple contracts, when they are broadly framed and closely connected to the dispute. This case is notable for the construction industry, where it is not uncommon on large, complex projects for parties to enter a series of related contracts.
This decision provides guidance for developers, contractors and consultants navigating evolving contractual relationships:
-
The crucial lesson is that when multiple contracts are used across different phases or components of a development, dispute resolution clauses should be aligned unless there is a clear and deliberate reason for divergence.
-
While entire agreement clauses are powerful, they may not exclude earlier dispute resolution clauses if the dispute remains substantively connected to the scope of an earlier contract.
-
Steps prior to arbitration including mediation or negotiation may amount to preconditions that form part of the agreement to arbitrate. Where these preconditions are mandatory, the parties will have to comply before proceeding to arbitration. However, imperfect compliance with such preconditions may not preclude the enforcement of an arbitration agreement.
For industry participants, the message is clear: draft with precision, align your contracts, and treat dispute resolution clauses as key operational clauses.
This article was co-authored by Ria Shon, a Solicitor in our Construction and Infrastructure team.
Key contacts
Speak with one of our experts.
