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Biosecurity and compensation

Getting compensation for loss is never as straightforward as you’d like it to be – whether you are dealing with an insurer, a commercial partner or the government, the process is always time-consuming and often frustrating.

The Ministry for Primary Industries has done some good work with farmers in trying to eradicate Mycoplasma bovis.  It has also done well to simplify the process of getting compensation under the Biosecurity Act for losses caused by the various steps it has taken to control the disease.  There is good information available about what losses are compensable, and how you should go about claiming.

But there is less information available about one key question: what are your options if you can’t agree a compensation figure with MPI?


You have at least three options.

First, you could just give in. Fighting with the government can be exhausting and expensive. If the amount of money you are disagreeing about is relatively small you could quite fairly decide to draw a line under it all and move on with your life.

Second, you could suggest mediation. This involves getting an independent party, often a senior lawyer or accountant, to try to broker a confidential deal. You can’t force MPI to agree to this process but it could be a sensible way of trying to bridge the gap. You’d need to be willing to compromise and you’d probably also need to be able to pay the mediator but the process could allow you to reach a resolution relatively quickly.

Third, you could insist on arbitration.  Arbitration is like a confidential court process, run in front of a senior lawyer. In simple terms, you put your case, MPI responds then the arbitrator decides who is right. You aren’t allowed to take compensation cases to court – the Biosecurity Act requires you to go to arbitration.

If you haven’t experienced an arbitration process you’ll have a number of questions about the process. Answers to some of the more common questions are set out below.

When should you think about arbitration? 

The Biosecurity Act allows you to claim compensation only for losses you have suffered in the last year. So, if you suffered losses more than ten months ago, you need to get your skates on or you might get nothing.

How do you kick off an arbitration?  

The Biosecurity Act 1993 plugs into another piece of legislation, the Arbitration Act 1996. It provides that all you need to do is send MPI a request for your dispute to be referred to arbitration. You’d then try to agree with MPI who the arbitrator should be. MPI will then need to co-operate with you to get the wheels in motion.

What is the process?

It varies but there are some basic steps which are taken in most cases. 

After some initial house-keeping both sides will file what lawyers call a pleading (the formal documents which set out your claims and MPI’s response).  

Both sides will then do a discovery, the process of giving all relevant documents to the other side. You then exchange evidence such as witness statements about what has happened and you might need to get some statements from experts as well.

After that there will usually be a hearing where lawyers and witnesses present in person in front of the arbitrator. 

Then the arbitrator takes time to write up his or her decision. 

It is worth bearing in mind that you can start down the arbitration road then agree to pause it while you try to do a deal, with or without the help of a mediator.

What happens after the arbitrator has issued the decision? 

There can be appeals to the High Court but generally only on narrow legal points. 


How long will all that take?

It depends on how complex the case is and how quickly the parties agree to progress it and whether the decision is appealed but six to nine months might be a reasonable estimate.

How much will it cost?  

Again, this depends.  The process can be tailored to make it as quick and inexpensive as possible. 

A relatively straightforward dispute that progresses fairly efficiently without expert evidence could cost you $50,000 to $100,000. A more complex dispute with experts involved could cost significantly more.  

You also need to bear in mind that, like a court, an arbitrator can make a costs award after issuing the decision. That could work for or against you, as the loser is often ordered to pay the winner a proportion of his legal costs.  You’ll probably also need to cover 50% of the arbitrator’s costs up-front but you might get that back if you win. Making what lawyers call a Calderbank settlement offer early in the process can improve the ultimate costs outcome.

Like all dispute resolution processes, arbitration can seem foreign and expensive and time-consuming.  But in some cases it is the only way of achieving a just outcome, especially if you are not to blame for the spread of the disease.  

It pays to give some early thought to how an arbitration would play out, if only to help you achieve the best possible result in your compensation negotiations.

This article was first published on on 4 March 2019.


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