{"id":265409,"date":"2022-04-13T18:09:50","date_gmt":"2022-04-13T12:39:50","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=265409"},"modified":"2022-04-13T18:09:50","modified_gmt":"2022-04-13T12:39:50","slug":"confidentiality-and-open-justice-in-arbitration-disputes-in-court","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2022\/04\/13\/confidentiality-and-open-justice-in-arbitration-disputes-in-court\/","title":{"rendered":"A Conflict of Principles: Confidentiality and Open Justice in Arbitration Disputes in Court"},"content":{"rendered":"

Introduction<\/strong><\/span><\/h3>\n

Arbitration, as an alternative dispute resolution mechanism, was brought in to overcome the difficulties of pursuing litigation. Among several factors like cost-effectiveness and speedy justice, one of the foremost reasons for parties to choose arbitration is confidentiality of the arbitral proceedings.1<\/a> The promise of confidentiality ensures that business strategies and other sensitive information is not divulged to the public at large. Although confidentiality is not always guaranteed, most countries as well as institutional rules provide for the same.<\/p>\n

A primer to confidentiality in arbitration proceedings<\/strong><\/span><\/h3>\n

Confidentiality is an obligation on the part of the parties \u201cto not disclose information concerning the arbitration to third parties or the public\u201d.2<\/a> This obligation often extends to non-disclosure of the hearing transcripts, written pleadings, evidence, materials produced during disclosure and the arbitral award(s) and orders, to third parties.3<\/a><\/p>\n

I. Provisions for confidentiality in the national laws and institutional rules<\/em><\/strong><\/span><\/p>\n

National laws<\/strong><\/span><\/h4>\n

India<\/em><\/strong><\/span><\/p>\n

The Arbitration and Conciliation Act, 19964<\/a> (hereinafter \u201cthe 1996 Act\u201d) has undergone multiple amendments since its inception. The Arbitration and Conciliation (Amendment) Act, 20195<\/a> (hereinafter \u201cthe 2019 Amendment\u201d) officially laid down the ground for confidentiality in arbitral proceedings. Before the 2019 Amendment, the principle of \u201cconfidentiality\u201d was only applicable to conciliation under Section 756<\/a>. Following the recommendations of the 2017 High-Level Committee headed by Justice B.N. Srikrishna7<\/a>, Section 42-A was introduced by the 2019 Amendment8<\/a>. Section 42-A is identical to Section 75, but for arbitration. It imposes the liability of maintaining confidentiality on the parties, the arbitrators and the arbitral institution.<\/p>\n

While it can be seen that confidentiality plays a pivotal role, it is surprising to note that even the 1996 Act does not have a provision imposing punitive measures in case of a breach. Confidentiality must also be imposed upon other persons present in the arbitral proceedings such as witnesses, stenographers and clerks.<\/p>\n

Singapore<\/em><\/strong><\/span><\/p>\n

The laws of Singapore are one of the few that elaborate upon the obligation of confidentiality imposed. It is assumed that the proceedings will be heard in open court unless either of the parties requests otherwise.9<\/a> The Arbitral Tribunal has the power to enforce any obligation of confidentiality.10<\/a> There are restrictions on reporting the proceedings heard in courts other than the ones in open court.11<\/a> Further, on application of any party, the court can give directions as to whether any and, if so, what information relating to the proceedings will be made available to the public.12<\/a> Information will only be published in two circumstances. First, if the parties agree13<\/a> and second, if the court is of the opinion that such information published with directions will not reveal any confidential details.14<\/a> Nonetheless, the court may direct publication of the judgment if it deals with a substantial question of law involving the interpretation of the said section.15<\/a> Even then, information may be concealed at the request of any party.16<\/a><\/p>\n

United Kingdom<\/em><\/strong><\/span><\/p>\n

The UK Arbitration Act, 1996 does not specify anything at all with regards to maintaining confidentiality during the arbitral proceedings. However, an implied obligation of maintaining confidentiality has been imposed.17<\/a><\/p>\n

Institutional arbitrations<\/strong><\/span><\/h4>\n

Indian Institutional Rules<\/em><\/span><\/p>\n

The Delhi International Arbitration Centre18<\/a> and the Mumbai Centre for International Arbitration19<\/a> under Rules 36.2 and 35.2 of their institutional rules respectively, lay down the exceptions in which the party or the arbitrator may reveal confidential information to a third party. Apart from such exceptions, disclosure cannot be made without prior written consent of all parties.<\/p>\n

Singapore International Arbitration Centre (hereinafter \u201cSIAC\u201d)<\/em><\/span><\/p>\n

Under the SIAC Rule 24.4,20<\/a> unless the parties wish to waive off confidentiality, all the proceedings and the documents related to the arbitral proceedings will remain confidential. Furthermore, the confidentiality obligations will be on the \u201cEmergency Arbitrator\u201d as well.21<\/a> Disclosure to a third party is subject to prior consent of the parties and limited to matters such as application for enforcement, challenge to the award,22<\/a> subpoena issued23<\/a>, etc. Interestingly, the Tribunal can impose measures such as sanctions or costs in case of any breach by a party.24<\/a><\/p>\n

The London Court of International Arbitration (hereinafter \u201cLCIA\u201d)<\/em><\/span><\/p>\n

The LCIA Arbitration Rules under Article 30 levy the obligation of confidentiality on the parties and on anyone else included in thearbitration.25<\/a>Except for in cases as provided by the LCIA Rules or the applicable law, the confidentiality requirement will continue to apply.26<\/a> No award will be published without prior written consent of all the parties and the Tribunal.27<\/a><\/p>\n

ii. Need for confidentiality <\/strong><\/span><\/em><\/p>\n

A host of reasons are responsible for making confidentiality so important to the parties. During the arbitral proceedings, submissions are made in the form of documentary and oral evidence. Such supporting evidence, depending on the nature and content matter of the dispute, can reveal a variety of private information, which if disclosed could have negative repercussions. Trade secrets and sensitive information such as pricing information, business plans, manufacturing knowhow, plans, sketches, and other corporate records are extremely confidential.28<\/a> If such information becomes public knowledge, it can negatively impact the reputation of such party. It can also lead to a media trial. More importantly, competing organisations being privy to such information can threaten the very existence of a business.<\/p>\n

Confidentiality, on the presumption of which arbitration is invoked, is guaranteed only for the duration of the arbitral proceedings. The key factor for analysis is what happens when a party appeals against the award granted in such proceedings or seeks enforcement of such an award in a court of law.<\/p>\n

Contrasting principle of open justice<\/strong><\/span><\/h4>\n

Contrary to the principles of confidentiality and privacy, common law courts are based on the principle of open justice. As Jeremy Bentham stated, \u201cPublicity is the very soul of justice, it is to publicity more than to everything else put together, that the English system of procedure owes its being the least bad system yet extant, instead of being the worst.\u201d The heart of this principle is \u201cjustice must not only be done, it must manifestly be seen to be done\u201d.29<\/a><\/p>\n

The principle of \u201copen justice\u201d has a number of precepts:<\/p>\n

    \n
  1. the entitlement of an interested person to attend court as a spectator;<\/li>\n
  2. the promotion of full, fair and accurate reporting of court proceedings;<\/li>\n
  3. the duty of Judges to give reasoned decisions;30<\/a>and<\/li>\n
  4. public access to judgments of courts31<\/a>.<\/li>\n<\/ol>\n

    Although, the origin of this doctrine is unknown, courts all across common law jurisdictions have provided various reasons elaborating on the importance of this principle. These include:<\/p>\n