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04 Mar 2009

Confidentiality in international arbitration

by Michael Pryles, Nicholas Lazarou

Confidentiality in arbitration is determined by the applicable national law, the arbitration rules selected by the parties, and contractual provisions.

Businesses may not want the details of a commercial dispute to be made public for various reasons.

One of the advantages of choosing arbitration for the resolution of commercial disputes is that the parties to the dispute can provide that the procedure and result of the process remain confidential. Confidentiality is therefore often given as a reason for choosing arbitration in contrast to litigation.

The topic of confidentiality in arbitration can be divided into a number of discrete issues. These include the privacy of a hearing, and the question of the confidentiality of documents submitted to and arising from the arbitration.

Privacy

It is well settled that when parties submit their dispute to a private arbitral tribunal, they do so with the expectation of reaching a binding resolution away from the presence of those who are unrelated to the dispute. As a general rule, the arbitration will be private in the sense that the proceedings (and in particular the hearing) are not open to the public, unless the parties have clearly manifested a contrary intention. Only the parties, their representatives and legal advisers have an unqualified right to be present.

Confidentiality

Beyond the hearing, however, there are questions to consider as part of the broader notion of confidentiality in arbitration:

  • What is the status attaching to documents and information obtained during the course of arbitration, including the tribunal’s decision, or Award?
  • What restrictions apply to disclosure by parties to the dispute following the arbitration?

Unfortunately, the national laws of different countries offer different answers to those questions.

Difference in law between Australia and other jurisdictions

There are basically two approaches taken towards the issue of confidentiality of arbitration proceedings. Some countries including England, France and New Zealand hold that information obtained in arbitration proceedings is confidential subject to few exceptions. In England, for example, confidentiality is a duty recognised and implied by the courts while in New Zealand it is an element codified in legislation.

In contrast, jurisdictions such as Australia, the United States and Sweden hold that although the arbitration hearing is private, in the absence of an express contractual provision on confidentiality between the parties, there is no implied duty of confidentiality attaching to documents generated as part of the arbitration or to disclosure by parties to the arbitration following its conclusion.

Providing for broader confidentiality

Therefore, while confidentiality at law in Australia is limited, parties desiring confidentiality should provide for it by express provision in their arbitration agreement.

Parties to contracts specifying the ACICA Rules may achieve this

Designating a particular set of arbitration rules containing appropriate confidentiality provisions is one means of doing this. The Rules of the Australian Centre for International Commercial Arbitration (ACICA), for example, include a confidentiality provision under Article 18 in the following terms:

"18.2 The parties, the Arbitral Tribunal and ACICA shall treat as confidential and shall not disclose to a third party without prior written consent from the parties all matters relating to the arbitration (including the existence of the arbitration), the Award, materials created for the purpose of the arbitration and documents produced by another party in the proceedings and not in the public domain…"

A further instrument available to parties is a tailored confidentiality agreement, concluded as part of the arbitration clause in the contract, dealing with all or any of: the existence of the arbitration, documents and information obtained during the arbitration, and, any award(s).

It should be noted, however, that certain exceptions to confidentiality, whether provided for under the ACICA Rules or by special provision, will arise pursuant to mandatory rules of law in the event of, for example, an application to a relevant court, including application to enforce any award, or pursuant to a requirement by a relevant court or regulatory body to make disclosure.

Conclusion

Confidentiality in arbitration is determined by the applicable national law, the arbitration rules selected by the parties, and contractual provisions. As there is no universal approach within the various jurisdictions around the world, the lack of implied confidentiality in respect of arbitration under Australian law requires parties to manifest their desire for confidentiality in clear terms by, for example, designating the ACICA Rules and/or concluding a confidentiality agreement as part of the arbitration clause in their contract.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.