Arbitration - a private process. Or is it?

Privacy and confidentiality are essential features of English arbitration and a significant consideration in many parties' choice to arbitrate in England. Commercial parties in particular enter into arbitration agreements with the express intention of keeping their disputes, together with the documentation and material created in relation to them, from the public eye. The privacy of arbitration is almost universally recognised by the various institutional rules governing arbitrations.

Contrast the privacy of arbitration with the position in litigation. Since October 2006, non-parties to proceedings have been entitled, for a small fee, to access the court files to obtain copies of statements of case (filed since 2 October 2006) and orders made by the court in public. In arbitrations, access to documents by strangers to the arbitration is not permitted. In litigation, court proceedings themselves are generally open to, and can be attended by, the public, including the press and the parties' competitors. In arbitration, the hearing is in private. Judgments of the courts are published whereas arbitral awards are kept confidential.

Arising out of the privacy of the process is the implied obligation on both parties not to disclose or use for any other purpose any documents prepared for and used in the arbitration, or disclosed or produced during it and not to disclose the evidence that has been given in the arbitration. That obligation is not limited to what would be termed commercially confidential information in the traditional sense, such as trade secrets.
 
But, such confidentiality is not an absolute bar to the enforcement of production of documents. As with most rules, there are exceptions, some of which may be included within the institutional rules themselves. The Court of Appeal's recent judgment in Michael Wilson & Partners Ltd v Emmott reaffirmed the general exceptions as being:

• Compulsion by law. A court might order disclosure of documents generated by an arbitration for the purposes of a later court action or arbitration. It should be noted that there is no general discretion to lift the obligation of confidentiality and the court will undertake a balancing exercise paying high regard to the obligations of privacy and confidentiality of arbitration when considering whether to order disclosure.
• Public interest or interests of justice. Disclosure might be ordered where inconsistent evidence provided in an earlier arbitration might lead to a judicial decision being reached on the basis of untruthful or inaccurate evidence of a witness or expert.
• Protection or establishment of one of the parties' legal rights vis a vis a third party. Disclosure might be necessary to establish a cause of action against a third party or to defend a claim brought by that third party or, for example, where an insurer needs to be advised about the details of the arbitration.
• Consent of the party who produced the document. This might be express or implied.

In Emmott, it was the interests of justice exception that prevailed and, to some extent was extended by the Court. The issue in Emmott was whether certain documents (Amended Points of Claim, Defence, skeleton argument) generated in an English arbitration could be disclosed in proceedings in New South Wales (NSW) and the British Virgin Islands (BVI). Emmott was not a party to those proceedings although his associates were. Allegations of fraud were being made by the claimant against Emmott in the NSW and BVI proceedings. Similar allegations had been dropped in the amended pleadings in the London arbitration. Emmott wished to disclose the amended documents from the London arbitration to the defendants in the NSW and BVI proceedings so they could then be disclosed to the courts in those jurisdictions. The argument was that the claimant's amended case in the arbitration (dropping the allegations of fraud) was materially inconsistent with that advanced in the NSW and BVI proceedings (where the fraud allegations were being maintained) and the claimant was therefore presenting those courts with a misleading or inaccurate picture. Disclosure was said to be in the interests of justice.

The Court of Appeal agreed. Furthermore, the Court held that the interests of justice were not confined to the interests of justice only in England and Wales. The international dimension of the case required a broader view and this particular exception was extended to include the interests of justice in other jurisdictions as well as in England and Wales.

The Court also suggested, albeit obiter, that disputes about the limit of this implied agreement as to confidentiality are within the scope of the arbitration agreement and should ordinarily, during the currency of the arbitration, be determined by the arbitral tribunal itself, rather than the court.

Comments

Although disclosure was ordered here, it should be remembered that the overwhelming majority of arbitrations in England are conducted in private and with complete confidentiality. There is no suggestion that that will not continue to be the case.

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