As the acceptability of arbitration proceedings as against court room litigation increases in the sphere of dispute resolution, one major consideration that has consistently made arbitration more attractive is the assumption that arbitral proceedings are private and confidential. The extent of these assumptions is however debatable. On one hand, assumption of privacy in arbitral proceedings is essentially correct and statutorily recognized.Third parties who are not parties to the arbitration agreement are excluded from the proceedings at the arbitral tribunal. As regards the second assumption, questions may arise as to whether or not arbitral proceedings are indeed confidential under English law. This write up attempts to clearly set out the boundaries of confidentiality obligations under English law.

Is there an obligation of confidentiality in arbitration?

As a general rule, parties to a dispute are not to publish, disclose, or communicate any information relating to arbitral proceedings under the agreement or to an award made in those proceedings. There are however, exceptions to this rule, which would be discussed later. The question of whether there is an obligation of confidentiality or not, depends,on one hand, on the law at the seat of the arbitral tribunal. It may also depend on the rules (where the parties choose any) that have been agreed and adopted by the parties as part of their arbitration agreement.

As to who is bound by the confidentiality clause or agreement. The question of confidentiality is made complex by the fact that various persons are involved in the arbitral proceedings. It is worth mentioning that the duty of confidentiality ought to bind all persons involved in the arbitration, which includes parties, witnesses, the arbitral panel, translators and transcribers in the arbitration. This is so as it would amount to a futile attempt for parties alone to be bound by a confidentiality clause while others who have also become aware of confidential information and documents disclosed in the course of the arbitration not to be bound likewise.

Legal framework for the obligation of confidentiality

It would have been thought that in every arbitration the duty of confidentiality of tribunal proceedings, which is a necessary implication from its privacy, and which the parties, witnesses and the tribunal are bound by, is a must and applicable without regard to whether confidentiality is a part of the arbitration agreement or not. However, this is not always the case. Thus, two scenarios arise in order for the obligation of confidentiality to be inputted in an arbitration. The first, where the parties expressly state in the arbitration agreement that all documents and information disclosed in the course of the arbitration shall not be disclosed to third parties, admitting of certain exceptions. The second scenario is where parties fail to include a confidentiality clause in the arbitration agreement.

In the absence of a clear stipulation on confidentiality in the arbitration agreement, the duty of confidentiality, as stated earlier is inputted based on the law at the seat of the arbitration, where parties fail to include an agreement to that effect. In England, although the Arbitration Act 1996 is silent on the issue of confidentiality, English case law has imposed an obligation of confidentiality on the parties and the arbitrators in relation to the arbitration hearing, as well as to documents disclosed or generated in the arbitration. In order to fully grasp the implied obligation set out by case law, two cases are worth appraising.

In Hassneh Insurance Co. of Israel v Mew the rule on an implied obligation of confidentiality was laid. In that case, the Court laid down the “reasonable necessity” test in appraising the existence of an obligation of confidentiality. The Court stated that since there exists an implied obligation of privacy there ought to exist an obligation of confidentiality since privacy without confidentiality would be meaningless.The Court held that the requirement of confidentiality must extend to documents (transcripts, witness statements and pleadings) disclosed or created for the purpose of that hearing notwithstanding the fact that there is no express term to that effect in the arbitration agreement. The disclosure to a third party of such documents would be almost equivalent to opening the door of the arbitration room to that third party. The Court also stated that witness statements, being so closely related to the hearing, must be within the obligation of

confidentiality. The Court however stated that the disclosure of the reasoned award of the arbitrator is an exception to the duty of confidentiality.

The second case is the case of Ali Shipping Corporation v. Shipyard Trogir where the English Court of Appeal held that the duty of confidentiality between the parties to arbitration did not come from the parties but arises as a matter implied by law. Thus, the duty of confidentiality is taken as a matter of law imposed on parties, witnesses and the tribunal.In that case, the defendant was not allowed to disclose evidence obtained in a previous arbitration involving the plaintiff, in a new arbitration commenced against the Plaintiff’s sister company. The Court held that the obligation of confidentiality is implied as a matter of law and not as a matter of reasonable necessity and would be upheld unless identified exceptions apply. The court therefore held that since no such exceptions were established in this case, the boundaries of the obligations of confidence which thereby arise have yet to be delineated.

In contrast, the Australian High Court by a majority decision, ESSO Australia Resources Ltd v. Plowman held that though arbitral proceedings are private, documents produced at arbitral proceedings are not confidential. It held that confidentiality cannot be an implied part of the arbitral proceedings in absence of an express provision. The court went on to hold that the witnesses in the proceedings were at liberty to disclose the proceedings they had witnessed. The decision followed the decision in the United States’ case of United States v. Panhandle Corp, where the court held that there is no implied confidentiality until and unless the parties agree to it.  The Court therefore concluded that parties are not to be taken on the basis of arbitration’s privacy, to have agreed to keep absolutely confidential all the documents they produced and the information they disclosed to one another. The position is the same in Sweden.

Exceptions to the confidentiality obligation

In Ali Shipping v Shipyard Trogi while recognizing the implied obligation of confidentiality, the Court acknowledged that this obligation was not absolute and thus listed exceptions to it. One of the primary exceptions to the obligation of confidentiality where disclosure would be reasonably necessary for the establishment or protection of an arbitrating party’s legal rights against a third party or to enforce or challenge an award in bona fide legal proceedings before a state court or other judicial authority. Also, where parties consent to the disclosure, such information or document may be freely disclosed to third parties.

Also, in Emmott v Michael Wilson and Partners though the English Court of Appeal recognized the existence of an implied obligation of confidentiality, the Court noted, inter alia, that where disclosure is required in the interest of justice, the obligation may be validly breached. Mwenda further argues that disclosure or communication of information is also permissible in cases where such dissemination is required by law. It is not prohibited where the dissemination is to a professional or other adviser of one or more of the parties; He states that it is also permissible where the dissemination is done by an arbitral institution or a person authorized in writing by an arbitral institution, but in such a manner as to maintain the anonymity of the parties and to reveal only facts which may be necessary for the understanding of the subject of the arbitration and the decision of the arbitral tribunal. Lastly, where a court’s order or leave is sought and granted, such disclosure may be allowed.

Conclusion and recommendation.

In conclusion, it has been settled that confidentiality obligations in arbitral proceedings would only arise where parties have agreed clearly to that effect in the arbitration agreement. However, where parties fail to include a confidentiality clause in the agreement, the obligation of confidentiality will be implied to exist, however, subject to certain exceptions. It is therefore recommended that in order to ensure the utmost privacy and confidentiality of arbitral proceedings, parties must include an encompassing clause on confidentiality in the arbitration agreement, not withstanding the applicable rules or implied obligation set out under English law.