Confidentiality in International Arbitration: Contractual Agreement and Institution Rules

This is the third article in Clyde & Co’s latest international arbitration series covering the topic of confidentiality in international arbitration. In this piece, associate Natalie Armstrong from our London office provide the legal perspective from England and Wales.

Introduction 

Where disclosure of commercially sensitive information into the public domain would cause significant harm to a party’s business, the English common law duty of implied confidentiality is imperative. As noted by Sir George Jessel MR in Russell v Russell (1880) 14 Ch D 471, 474: “As a rule, persons enter into these contracts with the express view of keeping their quarrels from the public eyes, and of avoiding that discussion in public, which must be a painful one, and which might be an injury even to the successful party to the litigation, and most surely would be to the unsuccessful.”

In protection against such injury, English courts have traditionally distinguished themselves from other jurisdictions by confirming an implied contractual duty of confidentiality in arbitration agreements. Other jurisdictions, such as Australia,¹  are not as forgiving, offering no preliminary safety net of an implied duty. Under English law, the duty is recognised even where the agreement contains no specific mention of confidentiality. However, the often touted benefit of confidentiality and privacy in English law arbitration has come under stress in recent years, as it has been confirmed as non-absolute. Indeed, there will be instances where “confidentiality is eroded”²  and disclosure concerning an arbitration is permissible.

Whilst the purpose of this article is not to analyse the details of the UK Supreme Court’s decision in Halliburton Company v Chubb Bermuda Insurance Ltd [2020] UKSC 48, the case is useful in outlining circumstances where disclosure of information would be allowed, namely where there is:

1. Express or implied party consent;
2. A court order mandating it (although courts have no general discretion to lift the obligation of confidentiality);
3. Reasonable necessity for the protection of a party’s legitimate interests;
4. A requirement in the interests of justice; or
5. A requirement for public interest.

In consideration of the above, parties should be careful not to assume the sanctity of confidentiality in arbitrations. Halliburton showed an arbitrator may disclose an appointment or proposed appointment in an arbitration to parties who have already engaged them on a first arbitration. That case highlighted that high-level disclosure may not be ring-fenced, as parties to whom such disclosure is made could seek further information to enable them to assess whether they should agree to the arbitrator taking the further appointment, or not. 

Separately, the interplay of arbitration proceedings with the English courts prompts an array of instances for confidentiality to be scrutinised. For example, when an award is being enforced by parties (Arbitration Act 1996, section 66) or where an award is being challenged (Arbitration Act 1996, sections 67, 68). Another example of a common pitfall for parties is the adoption of an arbitration institution’s rules into the arbitration agreement. This article will explore both of these further.

The Interplay of Arbitration with the English Courts

Litigation is underpinned by the principle that justice be administered in public, i.e. that it be done, and be seen to be done. Information deployed in open court is therefore readily available to the public. Rule 5.4C of the Civil Procedure Rules (“CPR”) which govern English court procedure, allows any third party to obtain copies of statements of case, orders, or judgments from the court record. Third parties, such as journalists, can further apply for permission to obtain copies of any other document filed by a party, or any communication between the court and a party or another person. By comparison, in the US, all civil litigation documents can be accessed and downloaded on PACER via a subscription service without any need for the subscriber to provide reasons for accessing the documents.

Conversely, the premise in arbitration is that proceedings are conducted in private with parties, Tribunal members, and institutions, keeping the proceedings and documents generated during them confidential and strictly unavailable to third parties. No non-party may know of the arbitration and often there is no ready means of discovering one’s existence. However, confidentiality may be lost when an award is enforced or challenged through the court process. 

There are further instances when arbitrations will be forced into the courts and, where processes become interlinked, arbitral confidentiality risks contamination. This occurs, for example, where parties are forced to apply to a court for a specific ruling which is outside the limitations of an arbitral Tribunal’s toolkit, such as (i.e. CPR Rules 62.2, 62.12) or injunctive relief. The CPR does not provide for any blanket confidentiality in such cases (albeit there are provisions such as CPR Rule 62.10 allowing scope for the application to be heard in private).

The Use of Arbitral Institutions

Specific care should be taken by parties in choosing the arbitration institution specified in the agreement. This is because, in looking at whether there is express or implied party consent, the court will consider the arbitral institution adopted in the parties’ agreement, and the type of arbitration. 

London Court International Arbitration (“LCIA”)

Although the LCIA refuses to provide information about pending or completed arbitrations to anyone other than a proper party or a legal representative of a party, the LCIA Rules echo the common law position insofar as confidentiality does not survive where disclosure is required by “legal duty to protect or pursue a legal right, or to enforce or challenge an award in legal proceedings before a state court or other legal authority” (Article 30).³  In such a case, parties may be left exposed with the LCIA Rules offering no specific protection. Therefore, thoroughly worded arbitral agreements that protect confidentiality are needed as a safety net against this lacuna.

Grain and Feed Trade Association (“GAFTA”)

Interestingly, GAFTA Arbitration Rules No.125 contain no mention of confidentiality nor privacy. Indeed, what they do permit is that where a party “defaults” on a final award, the Council of GAFTA may alert all Members to this fact (Rule No. 24). Indeed, by adopting GAFTA Rules into their arbitration agreement, parties are deemed as having consented to this action. Parties should therefore consider whether this is a risk they would like to adopt when using GAFTA.

London Maritime Arbitrators Association (“LMAA”) and World Intellectual Property Organization (“WIPO”)

LMAA Rules allow a Tribunal, subject to party objection (Provision 29), to publicise an arbitral award in cases where they consider publication merited. Whilst party anonymity is preserved in publications, this is something for parties to be aware of, especially if the award contains any unusual distinguishing factors which would identify the parties. Conversely, WIPO Rules are expressly designed to protect confidentiality and trade secrets, an important consideration for certain disputes.

Knowing how far confidentiality and privacy is protected or jeopardized by specific arbitral institutions is therefore paramount to understanding whether further contractual agreement or practical considerations need to be made by the parties. Even where an agreement does not contain any confidentiality provisions, parties will be deemed as agreeing to the Rules they have incorporated.

Concluding Remarks

Where parties choose arbitration as their contractual mode of dispute resolution, they should pay close attention to the jurisdiction of proceedings and the choice of arbitral institution. In the case of the UK, although a duty of confidentiality is implied into arbitration agreements, significant pitfalls arise in specific situations where, unless expressly contractually provided for, confidentiality and privacy cannot be assumed. 

To manage the risk of confidentiality being eroded, parties should think clearly about the construction of the arbitration agreement, and the use of any ancillary confidentiality agreements. Clear parameters can be expressly provided for to avoid any question of “implied party consent”. For example, where expert witnesses use third parties to assist in producing reports, or where translators and transcribers are used, parties should consider whether to engage these individuals or companies via contracts outlining their duties to maintain confidentiality, the extent of that confidentiality, and what breach would entail.

Caution should be taken where disputes are particularly commercially sensitive, or where reputation or trade secrets are at stake. Parties can avoid the risk of information or documents from the arbitration being disclosed either in open court, by an arbitral institution, or for any other statutory, regulatory or insurance requirement by incorporating an obligation of confidentiality into the arbitration agreement, or by signing an inter-party confidentiality agreement. 

Careful consideration should be given, and specific legal advice taken.

This series will continue next week with the position from France. 

1 Esso Australia Resources Ltd v The Honorable Sidney James Plowman (Minster of Energy and Minerals) & 2 Others (1995) 128 ALR 391 where The High Court of Australia decided that a general duty of confidentiality is not implied into an agreement to arbitrate.
2 Halliburton Company v Chubb Bermuda Insurance Ltd [2020] UKSC 48 at [188].
3 (NB. This is largely the same as in the Dubai International Arbitration Centre (DIAC) 2022 Rules at Article 38).