Anna Mandel, Boston College '11, writes about confidentiality obligations imposed by courts of arbitration and host governments in France and the United Kingdom...
onfidentiality has historically been an attractive element of international commercial arbitration because it is paramount for respondent companies to keep the content of negative allegations unavailable to the public. On the other hand, claimants often wish to expose the existence of a dispute and the monetary damages involved in order to posture themselves as strong and assertive while portraying the respondents as malevolent. Claimants often seek advice from their attorneys on whether they can publish information about an on-going arbitration, especially between a large, well-known respondent corporation and a smaller, lesser-known claimant company.
However, according to a recent international arbitration survey, parties sometimes make the dangerous assumption that confidentiality obligations apply even when an agreement or institutional rule is silent on confidentiality protection. In such cases, national rules on confidentiality in international arbitration would apply. For corporations concerned with keeping information surrounding arbitration confidential, local laws drive decisions on where to hold arbitration. For instance, London and Paris are both popular seats of arbitration, but maintain differing national laws on confidentiality.
A duty of confidentiality can come from a wide variety of sources, including an agreement, institutional rule, or national law. If an agreement specifies parties' duties of confidentiality, a tribunal normally respects the agreement. However, there are certain narrowly drawn circumstances in which the public interest may outweigh parties' rights to confidentiality, such as when public entities or States are involved in disputes. If no confidentiality agreement exists, lawyers review institutional rules such as those of the International Court of Arbitration of the International Chamber of Commerce (ICC) in Paris, or the London Court of International Arbitration (LCIA).
The ICC Rules [PDF] are silent on confidentiality, except for the broad stipulation that a tribunal must "take measures for protecting ... confidential information." If no agreement delimits confidentiality obligations, national laws would apply under an ICC arbitration. To contrast, in keeping with English law's general rule that confidentiality is inherent in private proceedings, the LCIA provides extensive rules on confidentiality, including a default duty of confidentiality refutable only by the express written consent of the parties. However, the duty is accompanied by disclosure exceptions for protecting other legal duties, pursuing legal rights, or enforcing or challenging awards in State courts. Such exceptions touch private legal interests, and national case law is often used to determine when an exception would apply.
Consulting national laws on confidentiality is therefore indispensible when agreements or institutional rules are silent, or when suspicion exists that private interests may override the obligations of confidentiality. Various approaches for filling such a lacuna in the confidentiality legal framework exist: civil law-based States, such as France, tend to favor confidentiality rights with very limited statutory exceptions, while common law States, such as England, provide protection with enumerated exceptions elaborated by case law.
The UK Arbitration Act does not mention confidentiality, but English case law provides an extensive analysis of the topic. Under English law, an implicit duty of confidentiality exists with the conclusion of an arbitration agreement. The duty is based on the principle that arbitration is a private, and consequently confidential, dispute resolution process. Exceptions to this common law principle exist, however. Companies seeking to protect sensitive information and still allow room to reveal information when necessary to protect their interests may therefore look to London as a seat of arbitration.
The Dolling-Baker case articulated the concept of implied confidentiality. The court prohibited one party from disclosing transcripts and an award from a previous arbitral hearing in court. The court affirmed that confidentiality is an "implied obligation arising out of the nature of arbitration itself." However, it hinted at the possibility of exceptions: "if ... disclosure and inspection is necessary for the fair disposal of the action." Such fairness exceptions were expanded in subsequent case law as private interests weighed against confidentiality protections, such as when the interests of justice collide with the implied confidentiality principle when disclosure of information surrounding an arbitration is "reasonably necessary for the establishment or protection of an arbitrating party's legal rights vis-a-vis a third party." The English court tries to protect individual rights insofar as disclosure of information is necessary to secure them; if it merely assists, the exception would not be met.
Further exceptions based on consent, court order, reasonable necessity and the interest of justice were also outlined in a ship-building contract dispute case, Ali Shipping. The confidential information in question was found in an arbitral award, opening submissions and two witness transcripts of oral evidence. One of the parties wished to rely on these documents to refute the allegations of the opposing side, but, citing the reasonableness analysis, the court confirmed that implying confidentiality into an existing contract would depend on "whether it is necessary ... [in order] to give business efficacy" to the contract, thereby necessary to establish or protect the arbitrating party's legal rights vis-a-vis a third party. Before allowing the appeal, the Court required proof of the reasonable necessity of disclosure.
English law thus provides a fair balance between protecting confidential information and ensuring due process by maintaining an implied duty of confidentiality with reasonably necessary private interest exceptions. For commercial actors seeking this type of balance, London is a good choice for arbitration.
In contrast, France, a civil law State, imposes one of the highest duties of confidentiality among popular international arbitration jurisdictions; the duty in France is subject only to a statutory right of information. According to the Paris Court of Appeal in the leading case, Aita v Ojjeh, "it is in the very nature of arbitration proceedings to ensure that the highest level of secrecy governs the resolution of private disputes in accordance with the parties' agreement." The Court ruled that disclosing a previously-rendered arbitral award by attempting to challenge the award in French national court violated the implied obligation of confidentiality of information. It found that challenging the previously-rendered arbitral award in French national court was jurisdictionally improper, and so the act of disclosing the award violated confidentiality. In True North v Publicis, the Paris Commercial Court confirmed that arbitration was a private procedure having a confidential character. True North was fined and prohibited from further publishing information regarding the existence of arbitration with the advertising agency Publicis.
Companies seeking such strong confidentiality protections may therefore look to Paris, where the ICC is headquartered, as a seat of arbitration. Since the confidentiality of information makes arbitration an appealing alternative to litigation, national legislation on international arbitration can alter the arbitral landscape by encouraging (or discouraging) commercial actors to choose certain jurisdictions. In fact, French arbitration law was recently modified to this end. While the new law only applies to domestic arbitration, it is meant to modernize and strengthen existing international arbitration practices, in order to maintain Paris as a popular arbitral seat. In this way, it is easy to see how domestic law often influences companies to act, just as commercial actors' needs or preferences may influence the creation or modification of law. Commercial actors therefore work reciprocally with the law, and this national legislative attention will continue to play an important role in maintaining certain jurisdictions as centers of international commercial arbitration in the future.