Confidentiality in International Commercial Arbitration

The privacy of proceedings is often cited as one of the major assets of international commercial arbitration when compared to state court litigation. The basic concept of privacy provides that third parties are not permitted to participate in the arbitral proceedings, in particular to attend the arbitral hearings. Sometimes, the notion of privacy is put in context with the concept of confidentiality which obliges the participants in the arbitral process to keep the contents of the arbitration or even the existence of the arbitration from third parties. Whether the – mostly undisputed – privacy of international commercial arbitration in fact implies a duty of confidentiality is widely disputed.

It is widely accepted that arbitrators have the obligation to keep the proceedings and their contents secret. However, the question remains whether there is a corresponding confidentiality obligation for the parties.

Based on the principle of party autonomy, the parties may agree on whether, and to what extent, such an obligation should exist. Sometimes, such an agreement exists by means of reference to a specific set of rules which contain relating provisions. Some institutional rules (e.g. LCIA, DIS, WIPO, Swiss Rules) specifically refer to the privacy of the proceedings or the obligation of the arbitrators to keep the arbitral proceedings secret. The drafters of the 1998 revision of the ICC Rules rejected proposals for general confidentiality obligations and instead provided only for the privacy of the arbitral hearings and arbitral award as there are a variety of circumstances in which legitimate exceptions to confidentiality might arise, which should be addressed by the parties and the tribunal on a case-by-case basis.

On an overall level, most of these rules refer only to the privacy of the hearings or the obligation of the arbitrators to comply with confidentiality, but do not regulate the confidentiality obligations of the parties.

Where an agreement between the parties is lacking, one often has to resort to the applicable procedural law, the lex arbitri, in order to determine this issue. Most arbitration laws do however not stipulate anything on this subject. For example, the UNCITRAL Model Law on International Commercial Arbitration (MAL), which serves as a model for many national arbitration laws, does not regulate the issue of confidentiality. Similarly, most national arbitration laws lack any express provisions on confidentiality, at least with regard to the parties’ obligations. It is sometimes argued that a confidentiality obligation may be established by extensive interpretation of the respective laws (e.g. based on more common provisions on the privacy of the oral hearings) or as an implied obligation arising out of the arbitration agreement. Case law on the issue is sparse, and those decisions that have been published do not help to establish an international standard.

An implied obligation of confidentiality has been inter alia repeatedly recognized by English and French courts. In line with this, it is often argued in English legal literature that, according to the expectations of the parties, the arbitration agreement implicitly contains a confidentiality duty regarding all information of the arbitral proceedings as well as of the arbitral award.

By contrast, in A.I. Trade Finance Inc v. Bulgarian foreign Trade Bank Ltd, the Swedish Supreme Court concluded that the Swedish Arbitration Act 1999 did not regulate the issue of confidentiality and that therefore a general obligation of confidentiality could not be assumed under Swedish law. Similarly, in Esso Australia Resources Ltd and others v. the Honourable Sidney James Plowman, referring to English law, the High Court of Australia expressed that no general obligation of confidentiality exists without an express agreement of the parties.

From an overall perspective, there is currently no indication that an international consensus can be reached on whether the parties to international arbitration proceedings are under any form of obligation to keep the proceedings confidential, and if so, to what extent and subject to which exceptions. Confidentiality therefore has been and will continue to be one of the “hot topics” in arbitration-related discussions, as is also illustrated by this year’s case for the Willem C. Vis International Commercial Arbitration Moot. Among other issues, this year’s case revolves around the issue of confidentiality to be observed by the parties and the potential remedies resulting from a breach of confidentiality.

In the wake of the Vis Moot, there are also several other events and conferences on confidentiality in arbitration, one of which takes place this week in Warsaw. Philipp Peters, Counsel with Konrad & Justich, is one of the speakers in the international comparative panel at this conference, providing insight into the situation under Austrian law.