The significance of confidentiality in arbitration
It is often said that one of the main reasons business-people choose to use arbitration to resolve their issues instead of litigation is a desire to keep their disputes away from the public gaze. National courts are public forums and litigation brought in court is open to public scrutiny. This means the existence and the details of a dispute are openly available to the public. This can mean highly sensitive business information coming into the public domain.
The concept of confidentiality plays a pivotal role in arbitration. The general rule is that the proceedings, evidence, and awards are and remain confidential. This enables parties to maintain their privacy, protect sensitive business information such as formulae, strategies, and price lists, and preserve their reputation. Win, lose or draw, they can avoid the perception of washing their dirty linen in public. An award issued by an arbitral tribunal is not generally publicly available, whereas a court judgment nearly always is.
Where does arbitral confidentiality come from?
Arbitration is a form of private dispute resolution. The parties will have contracted, under an arbitration agreement, to use arbitration to resolve disputes that may arise under their principal contract. Being private, the arbitration processes and the arbitral hearing will be conducted in private and anyone who is not connected with the arbitration will be excluded.
Further, because arbitration arises from the contractual arrangements between the parties, the parties can determine (subject to some exceptions, which I discuss below) whether and to what extent an arbitration and the documents and evidence produced during the arbitration should be treated as confidential. In relation to arbitrations conducted in England & Wales, the arbitration will be subject to the Arbitration Act 1996. The Arbitration Act provides no specific provision for confidentiality, but Section 1 permits the parties to determine how their disputes are to be resolved subject only to the safeguards that may be necessary in the public interest. The parties can, therefore, provide in their arbitration agreement that their arbitration proceedings should be confidential to whatever degree they like.
Many arbitration agreements incorporate the rules of arbitral institutions such as ICC, LCIA, or SIAC for example. The rules of those institutions thus become incorporated into the arbitration agreement. Most arbitral institutions, but not all, will have a rule on confidentiality to a lesser or greater extent. But, even if there is no specific provision for confidentiality, the Tribunal can be asked to make an order for confidentiality to the extent that the Tribunal and the parties consider it may be necessary.
For arbitration whose seat is in England and Wales, even where there is no express term of confidentiality, the courts will imply a term of confidentiality into the arbitration agreement[1]. There is a presumption towards confidentiality. This may be helpful where, for example, an institution’s rules are silent on the question of confidentiality, or where the arbitration may be ad hoc and not subject to any institutional rules.
The ring of confidentiality
The obligation of confidentiality will apply to the parties, their representatives and the arbitrators. It prevents the disclosure to a third party of any documents produced for the arbitration or disclosed during the arbitration. It covers the arbitral hearing, and the award. The more difficult consideration is, do witnesses who are not a party to the arbitration agreement have a duty of confidentiality? Witnesses are not generally bound by any contractual requirement of confidentiality. However, this can be addressed by the Tribunal specifically requiring a witness to keep confidential any document they see or information they hear during the arbitration.
It is for the Tribunal to rule on issues of confidentiality as between the parties while the arbitration is in progress and the Tribunal still has jurisdiction. Issues of confidentiality arising after the arbitration has closed or relating to third parties would need to be dealt with by the court.
Exceptions to the duty of confidentiality
Absolute confidentiality may not always be possible to maintain. Here are some of the exceptions which can apply from time to time:
Enforcement: on seeking to enforce an arbitral award, it is necessary to commence enforcement proceedings before a national court, this means that the parties’ identity and the fact there was an award will fall into the public domain.
Appeals[2] on points of law and Challenges[3] for Irregularity: such appeals and challenges can only be made to the court, and often this means details of the arbitration, the points in issue, and the award, become public knowledge.
The mutual agreement of the parties to waive confidentiality: they are free to do this.
Where a court orders the disclosure of a document.
Where it is in the public interest and for the protection of legal interests.
The private and confidential nature of arbitration is one of the key features that make it an attractive method of dispute resolution, but the extent of the obligation of confidentiality should be understood by the parties and their advisers. Lawyers should consider the question of confidentiality when preparing the arbitration agreement or considering which institutions rules to refer to in the arbitration agreement. During the proceedings the parties can always ask the tribunal to determine questions of confidentiality that may arise.
[1] Ali Shipping Corporation v Shipyard Trogir [1997] EWCA Civ 3054
[2] Section 69 Arbitration Act 1996
[3] Section 68 Arbitration Act 1996
