There is a notable presumption that confidentiality is a self-evident feature of international commercial arbitration. Yet there seems to be a disconnect between this presumption and the current meaning of confidentiality. Confidentiality has been taken for granted, though it has become one of the most undetermined matters in international arbitration. This article provides a brief analysis of the current degree of confidentiality in international commercial arbitration, along with a few suggestions on how to tackle the challenge of protecting confidentiality.
International arbitration has become the principal method of solving disputes between states as well as corporations in international trade.1 It is a leading dispute resolution method originating from the contractual relationships between the parties. This less formal method of conflict resolution is often regarded as business-friendly, especially where litigation might be a time consuming and expensive process.2 Moreover, arbitration is increasingly utilised because arbitral awards are easier to enforce internationally than national judgements.3
Confidentiality has traditionally been regarded as a prominent feature of arbitration. It is of the essence to many commercial parties in arbitration who might depend on controlling the flow of information to avoid damaging publicity. This has been the focus of much judicial literature, where Rothman for one, has argued that confidentiality '(...) may be more important to some parties than either speed or economy.'4
It was discovered in a survey conducted by Christian Buhring- Uhle in the mid-nineties, that:
'(...) the most important features that drove parties to arbitration were the neutrality of the forum and the guarantee of international enforcement of awards due to countries' widespread ratification of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Other reasons, in order of importance, were the confidentiality of proceedings (rated as the least questioned aspect), followed by the absence of appeals and limited discovery. (...) Judging by recent developments, this ordering of importance remains roughly unchanged.'5
While the use of arbitration as a dispute solving mechanism increases, the question of how and when confidentiality can be expected becomes more significant. It can be argued that the confidential nature of arbitration has been a matter more assumed than explicitly recognised.6 In a recent survey of in-house counsel conducted by the School of International Arbitration at Queen Mary University in London, it was discovered that as much as 50% of the interviewed, considered confidentiality to be an unequivocal part of international arbitration.7 However, such a view might not reflect the current situation as arbitration now faces the challenge of demand for a more transparent process.
For reasons easy to imagine, businessmen do not want their business strategies, contracts, financial results or any other types of business information to be publicly accessible, as would commonly happen in court proceedings. This article provides an overview of the degree of confidentiality in international commercial arbitration as reflected by the most important arbitration rules, national laws, and practices of arbitral tribunals and domestic courts.
In international arbitration, and throughout this paper, the term 'confidentiality' refers to the extent to which information is protected from disclosure to parties not involved in the arbitral proceedings. This is not the same as the 'privacy' of the hearings. 'Privacy' conventionally means freedom from being observed or disturbed by other people and in arbitration it describes the fact that the arbitration is not open to the public.8 Both 'confidentiality' and 'privacy' limits the access of other actors than the parties to the arbitration.
That arbitration is a private process as far as the arbitral hearings are concerned, is a feature of most institutional arbitral systems.9 For instance does Article 26(3) of the International Chamber of Commerce (ICC)10 Rules11state that:
'(...) The Arbitral Tribunal shall be in full charge of the hearings, at which all the parties shall be entitled to be present. Save with the approval of the Arbitral Tribunal and the parties, persons not involved in the proceedings shall not be admitted.'
Similar provisions are included in most commonly used arbitral rules. Though hearings generally are held in private, this does not necessarily ensure confidentiality.
Unlike privacy, confidentiality is traditionally seen as conceivably applying to the arbitral process as a whole. Smeureanu argues that confidentiality can be 'said to refer to a "state" of secrecy permeating the contents of the arbitral process as a whole.'12
The term 'international' is used to mark the difference between domestic arbitration, and arbitration that in some way transcend national boundaries. This paper focuses on 'commercial arbitrations', i.e. arbitrations that involve commercial parties, or in some cases state parties acting in a commercial capacity. What is considered 'commercial' might differ from one country to another, but generally it can be said that the term encompass all disputes that are related to business and trade, and which are arbitrable under the laws of the country that is the seat of the arbitration.
Other forms of international arbitration are inter-state arbitration, and investment-arbitration, based on bilateral investment treaties. These will not be treated here. Another expression that will be used is that of 'transparency'. This term will be used to examine the accessibility of international commercial arbitration.
I.2. Outline of the thesis
Throughout this paper confidentiality will be examined in an attempt to synopsize its role in international commercial arbitration today. The focus will be on what challenges one might face when seeking to secure confidentiality in arbitration. Can one still argue that confidentiality is a valuable feature of arbitration? Does an expectation of confidentiality still exist, and how does this affect the practicality of arbitration? This will be attempted by way of presenting a selection of representative approaches to the issue of confidentiality. Confidentiality remains a contentious subject and the focus of this paper is the examination of confidentiality de lege lata.
The overview will focus on outlining how and when confidentiality reasonably can be expected through the examination of recent cases along with relevant literature. First, the possibility of confidentiality will be explored through a presentation of the options open to a commercial party seeking confidentiality (section II). Second, the practical challenges of a duty of confidentiality are outlined (section III). Finally, the consequences of a breach of confidentiality will be studied (section IV).
The assessment of confidentiality will rely primarily on cases illustrating the Swedish, English, Australian and US approach, as these jurisdiction represent significant directions in arbitration and also are frequently used as seats of arbitration.
I.3. Sources and method
The role of confidentiality, and how it shapes arbitral proceedings will be reviewed through the examination of relevant, and available sources. Pertinent sources include, but are not limited to: national law, case law, international conventions and treaties, arbitral rules, previously rendered arbitral awards, treatises and monographs, as well as legal articles.
When it comes to arbitral rules, they represent a 'private' source of law that many judicial practitioners are unaccustomed to. Because of the unique issues involved in international commercial arbitration, these rules may be more likely to address all of a party's necessary concerns.13
Another important source of reference is national judgements relating to the recognition, enforcement or challenge of partial or final arbitral awards as well as requests for interim measures or other administrative requests brought before national courts. These are often available, though the arbitral award, from which the conflict arises, might not be.14 National judgements are significant because they are essential in the enforcement and recognition of arbitral awards. Due to the contractual nature of arbitration, an award will often need to be recognised by a national court to ensure its enforcement. The involvement of national courts in arbitral proceedings sometimes provide scholars with an opportunity to 'peek' into the otherwise private process.
I.4. Arbitral awards as sources of law in arbitration
A few comments need also be made about previously rendered arbitral awards as a source of law. Arbitration is traditionally seen as a private form of justice. Most arbitral awards are not, at least not in their entirety, made available to the public. Additionally, an arbitral award, when published, is initially nothing more than a remark on that particular case. Whether it will guide future awards only time will show. With no apparent doctrine of precedent in arbitration it can be argued that the tribunal must decide each case without looking to previous decisions. Still, many arbitrators have much experience in arbitration and draw from their own experiences as well as those of their colleagues. And there is already a widespread application of arbitral awards in arbitration, as seen in Owners, Master and Crew of the Tug "Hamtun" v Owners of the Ship "St. John",15 where the Admiralty Court looked to a selection of arbitration awards to decide the case.16 Br'khus argued that previously rendered arbitral awards provide an important source in the examination of the subject of arbitration.17
The use of arbitral awards as a source of law is not without reservations. A significant aspect is the limitations relating to the confidential nature of the process. Fleischer argues, in relation...