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For your eyes only? Limits to arbitral confidentiality

Posted on 31 October 2019

Introduction

Confidentiality is often cited as a distinguishing feature of arbitration, especially in the context of international commercial arbitration as opposed to investor-state arbitration. Although the English Arbitration Act 1996 (the "Act") makes no mention of arbitral confidentiality, and Article 30 of the LCIA Rules is a rare example of an arbitral institution making an explicit reference to a duty of confidentiality in its rules, it has long been assumed that arbitration with an English seat is private and confidential.

The draftsmen of the Act omitted a reference to confidentiality because it was simply too difficult to address the myriad of exceptions to the general implied duty of confidentiality. It is widely accepted that the duty of confidentiality does not, for example, prevent any mention whatsoever of the arbitration.  The exceptions to the duty of confidentiality fall into three broad categories: (1) disclosure of documents following consent, order or permission of the court; (2) disclosure reasonably necessary to protect legitimate interests; and (3) disclosure in the public interest/interests of justice. All three categories are, to a greater or lesser extent, elastic concepts and the subject of extensive case law and commentary.

A recent decision of the English Commercial Court – The Chartered Institute of Arbitrators v B and others [2019] EWHC 460 (Comm) – is an important reminder of the limits of arbitral confidentiality, and specifically the potential breadth of the "interests of justice" exception.

The facts

In that case, the Chartered Institute of Arbitrators (the "CIArb") appointed an arbitrator in a dispute between Party A and Party B, at the request of Party A. Party B made a challenge application to the English court for the removal of the arbitrator on grounds of bias. That application was granted. In a separate development after the appointment of the arbitrator, the CIArb commenced disciplinary action against the same arbitrator following a complaint from a third party, also alleging bias and other improper conduct.

In order to facilitate those disciplinary proceedings, the CIArb made two applications to the court: firstly for documents relating to the challenge application by Party B (such as statements of case, witness statements, written submissions and skeleton arguments) and secondly for permission to rely on those documents.

Mrs Justice Moulder granted both applications. The English Civil Procedure Rules, which apply to litigation before the English court but not arbitral proceedings, permit non-party access to statements of case, as well as judgments or orders made in public. Non-parties are only entitled to other documents at the discretion of the court. The judge determined that there was a balance to be struck between the preservation of confidentiality on the one hand and the interests of justice on the other.  The disciplinary proceedings would have been rendered impossible unless the documents were made available to the CIArb and so access was granted and a declaration made that the CIArb could rely on the documents arising from the dispute between Party A and Party B. However, the court refused to allow the CIArb to rely on documents arising from other arbitrations involving unrelated third parties in which the arbitrator had been appointed.

Comment

The facts of this case are somewhat unusual. While parties and indeed non-parties to an arbitration may in certain circumstances seek to rely on documents arising from an arbitration for a collateral purpose, it is unusual to see an arbitral institution seeking the release of documents relating to an arbitration and permission to rely on those documents so it can pursue a disciplinary process against an individual arbitrator accused of improper conduct. Nevertheless, there are some interesting lessons to be learned from the decision.

Firstly, parties should not embark on arbitration proceedings in the expectation that the proceedings will necessarily be and remain confidential. While the majority of arbitrations in England proceed without either side threatening to breach the implied duty of confidentiality, a party that seeks to rely on documents arising from a London seated arbitration in order to protect its legitimate interests, such as founding a cause of action or a defence in different proceedings, or in furtherance of the public interest, may well find that the English court is sympathetic. The court will be slow to uphold the duty of confidentiality if in so doing that order serves to protect a wrongdoer.

On a related theme, parties should be aware that the scope of the duty of confidentiality varies widely from jurisdiction to jurisdiction. In some jurisdictions, there is no implied duty of confidentiality at all.  It simply cannot be assumed that documents arising in an arbitration will remain confidential in all circumstances. If parties have chosen in their underlying agreement that disputes between them shall be resolved by arbitration on the basis that any arbitration arising will be confidential, it is as well to deal with the issue of confidentiality in the arbitration agreement, or to incorporate arbitral rules such as the LCIA Rules which deal expressly with the issue of confidentiality. That may not prevent disclosure of documents in all circumstances, but it should at least provide an additional layer of protection, depending on the form of words used.

Secondly, the decision of Mrs Justice Moulder creates a potential opportunity for parties seeking to use documents arising from an arbitration for a related but different purpose, especially if that purpose is in the public interest. Just as the court found that the public interest in ensuring that CIArb members meet their professional standards outweighed the confidential nature of arbitration, it is at least conceivable that a claimant could rely on this decision to justify the use of documents arising from an arbitration to report a recalcitrant respondent to a professional regulator. In that scenario, the interests of justice would demand that the respondent is held to account for its actions, and the claimant for its part may also see tactical advantages in deploying documents arising from the arbitration in that way.

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