Introduction

Confidentiality is generally perceived to be one of the main advantages of arbitration and is indeed one of the reasons why arbitration is preferred to other processes for the resolution of commercial and investment disputes. The private nature of arbitral proceedings has led to a presumption of their confidentiality. However, there are legal exceptions to the presumption that all aspects of the arbitral process are confidential.

Legal exceptions to confidentiality exist in certain jurisdictions where disclosure may be required if ordered by the court or agreed by the parties, if rights are to be asserted against third parties, if the award needs to be enforced, or if State regulations impose disclosure. These exceptions may come into play both during and after the arbitration and concern the production of documents and production of the final award. They may have a significant effect on the parties, the outcome of the arbitration and any related parallel or subsequent procedures.

The effect of legal exceptions to confidentiality may vary from jurisdiction to jurisdiction depending on the applicable law. This article will examine how such exceptions have been applied in various jurisdictions and analyse the arguments raised for and against confidentiality.

There are several stages at which confidentiality may become an issue in an arbitration. At the most general level, it will concern knowledge of the very existence of the arbitration. Here, one or both parties or the arbitrators may fear the negative effects of it simply being known that they are involved in an arbitration. 1

Next, confidentiality may arise as an issue in connection with aspects of the arbitration process. Here, parties may fear negative effects on their business as a result of the publication of an award containing information and documents they have agreed are confidential. To a lesser extent, arbitrators may be concerned that their award may be scrutinized by the public.

Some institutional rules now explicitly set out the conditions in which arbitration awards may be disclosed to third parties. For example, Article 75 of Arbitration Rules of the World Intellectual Property Organization ('WIPO') provides that an award may be disclosed to a third party where both parties consent, or where it 'falls into the public [Page24:] domain as a result of an action before a national court or other competent authority', or where disclosure is a legal requirement imposed on a party or for the purpose of establishing or protecting a party's legal rights against a third party. 2 WIPO retains the right to include information regarding the arbitration in aggregate statistical data that its secretariat publishes concerning the institution's activities. 3

In addition, the different players in an arbitration-arbitrators, parties, witnesses, experts-may be subject to different confidentiality obligations under institutional rules depending on their role in the arbitration. 4 Their obligation to keep information confidential may vary over time and according to the circumstances in which the disclosure is sought. Some institutional rules allow the existence of an arbitration to be disclosed after the award has been issued, but do not allow for the disclosure of details about the arbitration such as the names of the parties or the documents produced in the proceedings.

A. Disclosure required during litigation in State courts

Courts in several jurisdictions have found that there is an implied duty of confidentiality in an agreement to submit disputes to arbitration. 5 Alternatively, that duty may be mentioned explicitly in the relevant contract or appear in the applicable rules6 or in another document. If such a duty exists, whatever its origin, complications are likely to arise if and when the dispute or an aspect of the dispute is brought before a State court, for it is of fundamental importance that litigation be conducted in public and on the record. What therefore happens to a duty of confidentiality in arbitration when litigation is undertaken? Do information and materials exchanged in the underlying arbitration cease to be confidential?

Commentators have asserted that '[i]t is generally considered that the arbitral award, like the existence of the arbitral proceedings, is confidential'7 and that 'it is fundamental to commercial arbitration that it is a private dispute resolution process and it would be completely anomalous if enforcement of an award required disclosure of it to the world at large'. 8 The question of the existence and scope of a duty of confidentiality remains contentious and beyond the scope of this article. In the words of Mistelis:

Confidentiality, in its purest form, means that the existence of the arbitration, the subject matter, the evidence, the documents that are prepared for and exchanged in the arbitration, and the arbitrators' awards and other decisions cannot be divulged to any third [Page25:] parties. It also means that only parties to arbitration, their legal representatives and those who are specifically authorised by each party can attend the arbitration hearing. Each of and all those individuals are considered to be subject to the duty of confidentiality on behalf of the party they are representing. 9

Under certain circumstances, information and materials exchanged confidentially between the parties to an arbitration may be subsequently disclosed pursuant to a court order. This exception is explicitly mentioned in the WIPO Arbitration Rules: Article 73(a) provides that the confidentiality obligations imposed by Article 73 do not apply where disclosure is 'necessary in connection with a court challenge to the arbitration or an action for enforcement of an award.'

In some jurisdictions, court procedures have been adapted to preserve the confidentiality of the underlying arbitration proceedings when litigation is initiated relating to those proceedings (such as a challenge to enforcement or an application to set aside the award). For instance, Rule 62.10 of the English Civil Procedure Rules allows the court to hear arbitration claims in private, and paragraph 5.1 of the Practice Direction-Arbitration permits the claim form initiating the litigation to be inspected only with the permission of the court. In the City of Moscow case, 10 the English Court of Appeal held that the consensual nature of the arbitration ceased to apply once litigation was initiated and that parties' names would usually not be suppressed, unless there was justification of special sensitivity. 11

The Court of Appeal in the City of Moscow case also remarked that regard must be had to the parties' expectations when the arbitration agreement was concluded: a balance must be struck between the public interest in seeing that the correct standards of fairness are applied in the conduct of arbitration and the parties' interest in preserving the confidentiality they were led to expect. If litigation is commenced in violation of an arbitration agreement, the documents filed with the court (including those filed prior to a stay of the litigation proceedings in favour of arbitration) cannot be accessed by third parties, unless (i) all parties to the dispute consent thereto, (ii) there is an overriding public interest in their being so accessed, or (iii) the documents are essential to the preservation of legal rights. 12 This applies even before a stay of the court proceedings is sought and represents an exception to the usual principle of maintaining confidentiality. 13 In Glidepath, Colman J. rejected a request for access to documents filed in court that were alleged to contain evidential relevance, saying that the adoption of so low a threshold 'would represent a most undesirable invasion by the courts of the confidentiality of arbitration in this country'. 14

Flexibility is built into the 'reasonable necessity' exception to confidentiality in English law. In the words of Lord Justice Potter in Ali Shipping (a case discussed in more detail below):

When the concept of 'reasonable necessity' comes into play in relation to the enforcement or protection of a party's legal rights, it seems to me to require a degree of flexibility in the Court's approach. For instance, in reaching its decision, the Court should [Page26:] not require the parties seeking disclosure to prove necessity regardless of difficulty or expense. It should approach the matter in the round, taking account of the nature and purpose of the proceedings for which the material is required, the powers and procedures of the tribunal in which the proceedings are being conducted, the issues to which the evidence or information sought is directed and the practicality and expense of obtaining such evidence or information elsewhere. 15

The Swiss Supreme Court has addressed the tension between these competing interests in the case known as X v. Y. Pierre-Yves Tschanz summarized the debate as follows:

Swiss law recognizes not just the parties' right, under the European Convention on Human Rights and the Swiss Constitution, to public proceedings, but also the right of the general public to know how justice is administered. Therefore, the parties cannot simply waive such right; rather, they must demonstrate that their interest in confidentiality outweighs this public interest. 16

In France, the Nouveau Code de procédure civile says nothing about the confidentiality of arbitration and related litigation (other than that the deliberation of arbitrators must take place in private (Article 1469)). However, in the Aïta case, 17 the Paris Court of Appeal not only confirmed that French law incorporates a duty of confidentiality in respect of arbitration, but awarded substantial damages against the party responsible for the litigation. In the court's view, 'it is inherent in the nature of arbitral proceedings that the utmost confidentiality should be maintained in resolving private disputes as both parties had agreed'. In Nafimco, 18 on the other hand, the same court rejected a claim for damages due to the breach of an arbitration agreement. Here, the court took the view that, if there was no abuse of a party's right to confidentiality in arbitration, the claimant must demonstrate the existence of a duty of confidentiality in the French law on international arbitration. 19

Even where court procedures are adapted to accommodate a degree of confidentiality arising from an underlying or preceding arbitration, there will still be cases not caught by such adaptations. For example, a suit in negligence against a lawyer for failings in the conduct of an arbitration would not constitute an arbitration claim and therefore would not be covered by provisions such as those of the English Civil Procedure Rules mentioned above. In such circumstances, a party wishing to preserve the confidentiality of the arbitration process and documentary records would need to make an application under general court rules. 20 Each case would be judged on its own merits and by reference to the applicable national standards. However, there is no certainty that such an application would be granted if the duty of confidentiality to which it refers is tangential to the issues before the court. The party wishing to preserve the confidentiality of the arbitration process and documentary records would need to show why the public interest in transparency should be trumped by a duty of confidentiality arising in separate arbitral proceedings. [Page27:]

In certain jurisdictions, an award or documents created in an arbitration may be disclosed to a third party in subsequent arbitration or court proceedings in order to enforce a right (other than the award itself) of one of the parties to the arbitration or for public policy reasons.

In the English case Emmott v. Michael Wilson & Partners Ltd, 21 for example, the defendant wished to produce in proceedings in New South Wales and the British Virgin Islands documents from a prior arbitration in England that had been abandoned. In deciding the case, the English Court of Appeal considered whether the lower court's decision to grant the defendant's request to disclose documents from the abandoned English arbitration was in the interests of justice. The court found that disclosure constituted an exception to the general duty of confidentiality as the documents were deemed 'reasonably necessary for the protection of the legitimate interests of an arbitrating party'. It considered that foreign courts would or could be misled if disclosure were not allowed, for the defendant had shown that non-disclosure would allow the plaintiff to assert materially inconsistent claims arising from the same facts in parallel proceedings. As a result, the English Court of Appeal allowed the documents to be disclosed in order to protect the interests of the defendant in the case.

The US and Australian courts have taken a very different approach. In Australia, disclosure to a third party of documents produced in arbitration has been allowed where public policy outweighed confidentiality. In Esso Australia Resources Ltd and others v. The Honourable Sidney James Plowman (The Minister for Energy and Minerals), 22 the Minister sought a court declaration that information and documents disclosed by Esso Australia to a public agency during arbitral proceedings were not subject to a duty of confidentiality. The High Court ruled in favour of the Minister, taking the view that confidentiality is not an essential attribute of commercial arbitration and that where, as here, the State was a litigant, public policy concerns may outweigh the need for confidentiality. The Ministry of Energy and Minerals was therefore entitled to discovery of arbitration-related documents and information submitted by Esso and other producers in arbitration. Although an implied duty of confidentiality in arbitration was not said to be inexistent in Australian law, it was placed on a lower footing than in France, Switzerland and England, which effectively results in the creation of an exception to confidentiality.

In the United States, courts have held that a duty of confidentiality in arbitration is only created by express contractual agreement. For example, in United States of America v. Panhandle Eastern Corp. et al., 23 a dispute arose over a guarantee of bonds issued by the Commerce Secretary for the construction of two LNG tankers. After the shipper invoked force majeure and ceased making shipments under a transportation agreement, ICC arbitration proceedings were commenced to resolve a dispute with a private company, Sonatrach of Algeria, aggrieved by the non-shipment. Ultimately, the shipper concluded a settlement agreement. The US government, on behalf of the Maritime Administration, sought to obtain documents disclosed in the ICC proceedings between the shipper and Sonatrach. The US District Court of the Federal District of Delaware granted the US government's request, holding that there is no inherent duty of confidentiality incumbent on arbitrating parties and that the ICC Rules did not [Page28:] indicate an expectation of privacy. Such a duty, the court held, may only be formed through express contractual measures.

Although national courts have differed in their interpretation of the assumption of confidentiality in arbitration proceedings, the procedural exceptions established by some in effect remove confidentiality. Thus, when matters previously submitted to arbitration come before national courts, parties cannot expect that any confidentiality applicable to the arbitration process and its products will necessarily be maintained. There may be controlled or limited disclosure of information, as under the English court rules, but disclosure there may well be.

B. Disclosure in parallel or related proceedings

In the English case Ali Shipping Corp v. Shipyard Trogir, 24 a party sought to disclose materials from one arbitration in a subsequent arbitration. An order was sought to restrain the disclosure of evidence from the earlier arbitration. The Court of Appeal ruled that exceptions to the duty of confidentiality could be allowed only in the following circumstances:

by consent of the parties to the arbitration;

by order of a court;

with the permission of a court where the interests of justice required it; or

where it is reasonably necessary for the protection of the interests of a party to the arbitration.

The court took a strict view in applying these exceptions. In the absence of fraud or an abuse of process, the court held that grounds could be envisaged on which a company might want to prevent its sister company from seeing materials generated in arbitral proceedings. Therefore, the interests of justice did not serve as a basis for circumventing the duty of confidentiality. Relying in part on the rationale of Dolling-Baker v. Merrett25 and Insurance Co v. Lloyd's Syndicate, 26 the court ruled that disclosure was not reasonably necessary for the protection of a party's interests because the party seeking disclosure of the materials could not reasonably expect its arguments to prevail in the second arbitration (an issue estoppel had arisen by reason of the decision of the first tribunal).

In delivering the principal judgment, Lord Justice Potter concluded: 'I do not think that convenience and good sense are in themselves sufficient to satisfy the test of "reasonable necessity".' This echoed Mr Justice Colman's ruling in Insurance Co: only if a right could not be enforced without disclosure of the confidential material would [Page29:] the duty of confidentiality cease to apply. Lord Justice Potter could see the pragmatic logic in favour of disclosing the material, in part since it would allow one party in the second arbitration to make out its application for an interim payment, but dismissed 'procedural convenience and evidential short-cut' as insufficient to overcome the duty of confidentiality. The proper course would instead be for evidence to be introduced afresh in the second arbitration and only if the witnesses gave evidence at odds with their evidence in the first arbitration would it be possible to adduce evidence from the first arbitration.

However, in Associated Electric & Gas Insurance Services Ltd v. European Reinsurance Co. of Zurich, where there were two arbitrations involving the same parties to a reinsurance agreement, the English Privy Council took a different view. 27 It stated that the principles set out in Ali Shipping apply where there are different parties in the different arbitrations, but not to sequential arbitrations between the same parties. In sequential arbitrations between the same parties, disclosure of materials from the first arbitration is permitted, where non-disclosure would prevent enforcement of an award and thus frustrate the purpose of arbitration.

The first of the two arbitrations in Associated Electric resulted in an award that included an interpretation of an important clause (the arbitration clause) relevant to the second arbitration. European Reinsurance sought to block disclosure of the first award, alleging arbitration confidentiality. Associated Electric argued that the interpretation of the arbitration clause in the reinsurance agreement was decisive for the second arbitration. On appeal from the Bermuda Court of Appeal, the Privy Council allowed disclosure, finding that confidentiality in arbitration did not have the same potential for 'mischief against which the confidentiality agreement [between the parties] is directed' because the disposal of a material issue by the first arbitral tribunal constituted issue estoppel in the second arbitration. The Privy Council noted that the same parties were involved in both arbitrations and held that refusing to allow a finding reached in the first arbitration to be disclosed in the second arbitration would be akin to failing to enforce an arbitration award.

A single set of circumstances often gives rise to a number of potential legal disputes. Sometimes, these involve the same parties, but often not. For example, complex infrastructure projects may involve an employer or owner, which engages a main contractor, which in turn engages a series of sub-contractors. Disputes are often initially between the main contractor and the sub-contractor, but there may also be issues between the employer and the main contractor. One or other party in one of the procedures may want to produce an award or information on claims made in another procedure. But can this be done, given the duty of confidentiality? The question may have been addressed in the arbitration agreements in the underlying contracts. If this is not the case and no provision has been made for the disclosure of materials from one set of arbitral proceedings in another, the parties will need to turn to the applicable law.

The English courts were asked to address these issues in a reinsurance case, Hassneh Insurance Co. of Israel and Others v. Steuart J Mew. 28 A reinsurer sought an injunction [Page30:] restraining the reassured party (which had largely lost in its arbitration claim against the reinsurer) from disclosing in related litigation against a broker some, but not all, of the materials generated in the arbitration. The disclosure of the materials, including the tribunal's full reasoning, had been sought in order to substantiate the reassured party's allegations against the broker of negligence in the selection of the reinsurance contract. The reinsurer argued that disclosure by the reassured party in the litigation would amount to a breach of the confidentiality obligation laid upon it by the arbitration. Colman J rejected the reinsurer's argument, saying that:

I conclude . . . that if, as asserted, it is reasonably necessary for the establishment by the defendant of his causes of action against [a third party] that he should disclose or in his pleadings quote from the arbitration award, including the reasons . . . he should be entitled to do so, without editing either the award or the reasons and without having to apply to the Court for leave to do so. 29

Accordingly, the English courts set out an exclusion (albeit, in Colman J's words, a 'very exceptional' one) to the duty of confidentiality imposed on parties to arbitration by English law.

C. Disclosure required by law, regulation or in the course of business

In this section consideration will be given to the conditions in which disclosure may be required of a State party or a private party-including disclosure of proprietary information or business secrets-by reason of law or regulation, or in the course of business.

National laws may require a party to an arbitration to disclose information and materials otherwise covered by a duty of confidentiality arising out of the arbitration. For example, certain national stock exchanges require a company to inform its shareholders, auditors or insurers of current claims or awards made against it. Yet, the company may have chosen arbitration precisely to avoid the risk of damaging publicity from litigation. This exception is explicitly addressed in the WIPO Arbitration Rules: Article 73(a) provides that the confidentiality obligations imposed by Article 73 do not apply when disclosure to a third party is required 'by law or by a competent regulatory body'.

State-owned companies or agencies may be subject to disclosure obligations under domestic freedom of information legislation. In the United States and Australia, for example, documents relating to arbitrations to which the State is a party, including the award (which may include documents produced during the course of the arbitration), may be subject to disclosure to the public under each country's Freedom of Information Act.

The arbitration rules of the AAA's International Centre for Dispute Resolution, provide that in these circumstances an award may be made public without the consent of all the parties to the proceedings: 'An award may be made public only with the consent of all parties or as required by law.' 30[Page31:]

In New Zealand, there is a duty of confidentiality in arbitration imposed by statute, which originally addressed the possibility of required disclosure only very briefly. 31 An amendment was therefore necessary to clarify the exceptions to the general duty of confidentiality imposed in relation to arbitration proceedings. 32 The new sections inserted in the Act detail the circumstances in which information that is confidential to arbitral proceedings can be disclosed. They include disclosure:

to professional and other advisers;

to ensure that a party can present its case in full, enforce its rights against a third party or make an arbitration-related application to court;

in compliance with a court order or subpoena;

authorised or required by law or a competent regulatory body; or

made in accordance with an order of the arbitral tribunal or the New Zealand High Court. 33

Arbitral tribunals have full discretion to rule on applications for permission to disclose confidential information. 34 However, the High Court can hear appeals against their rulings, or itself determine applications for permission to disclose if the tribunal is no longer sitting. 35

Although Norway ultimately adopted legislation explicitly stating that there is no automatic or implied duty of confidentiality in respect of arbitration proceedings or the tribunal's decisions, 36 the pre-legislation report recommended the inclusion of such a duty, qualified by the right to disclose when required to do so by law.

In Spain, on the other hand, while the Arbitration Law of 2003 provides that '[t]he arbitrators, the parties and the arbitral institutions, if applicable, are obliged to maintain the confidentiality of information coming to their knowledge in the course of the arbitral proceedings', 37 there is no mention of the possibility of a supervening disclosure obligation.

1. State party required to disclose documents

Investors involved in arbitrations against State agencies or State-controlled entities may find that documents from the proceedings or the award are disclosed, despite an agreement between the parties to keep the arbitration confidential. This may occur where the subject matter of the arbitration is considered to be of public interest or where the State party is subject to freedom of information legislation. There are at least [Page32:] 68 different national laws concerning freedom of information. 38 These laws all facilitate access to records held by government bodies. 39

In Australia, the public may inspect government records under the Freedom of Information Act ('the Australian FOIA') and request information relating to an arbitration where there is 'clear public interest' in the matter in dispute. In Commonwealth of Australia v. Cockatoo Dockyard Pty Limited, 40 the Supreme Court of New South Wales granted a request for disclosure, holding that the government's duty to account to the public under the Australian FOIA is not restricted simply because the government is a party to an arbitration.

In the United States, as in Australia, there is no implied duty of confidentiality in arbitration proceedings. 41 Under its Freedom of Information Act ('the US FOIA'), there is a requirement for government records to be generally made available to the public for inspection. Parties to an arbitration against a US government agency will be affected by this law, which may require disclosure of arbitration-related documents. The US FOIA provides that 'each agency, upon any request for records which (i) reasonably describes such records and (ii) is made in accordance with published rules stating the time, place, fees (if any), and procedures to be followed, shall make the records promptly available to any person' unless one of a number of exceptions to the general rule that government records are to be disclosed on request apply. The Act exempts from disclosure documents specifically carved out by statute under § (3). 42

The US statute that defines whether or not documents or other information from an arbitration may be disclosed to the public is the Administrative Dispute Resolution Act of 1990 ('ADRA'), which covers all alternative dispute resolution proceedings between private parties and federal government agencies. 43 The ADRA exempts any dispute resolution communication between a party and an arbitrator from the disclosure requirements of the US FOIA. 44 The ADRA does, however, provide exceptions under which an arbitrator (referred to as a neutral) or a party may be required to disclose a dispute resolution communication or communication provided in confidence to the arbitrator: 45

(1) the communication was prepared by the party seeking disclosure;

(2) all parties to the dispute resolution proceeding consent in writing; [Page33:]

(3) the dispute resolution communication has already been made public;

(4) the dispute resolution communication is required by statute to be made public;

(5) a court determines that such testimony or disclosure is necessary to-

(A) prevent a manifest injustice;

(B) help establish a violation of law; or

(C) prevent harm to the public health and safety, of sufficient magnitude in the particular case to outweigh the integrity of dispute resolution proceedings in general by reducing the confidence of parties in future cases that their communications will remain confidential;

The ADRA provides that arbitration-related documents may be disclosed where a court determines that such disclosure would be necessary to 'prevent harm to the public health and safety'. 46 This exception appears to be applied more narrowly by US courts than by Australian courts in similar instances. For example, while the ADRA provides for disclosure only where this is necessary to protect public health and safety, Australian cases indicate a more general willingness to allow disclosure in order to further the public's interest in holding the government accountable. 47

Investment disputes often involve issues of public policy. Arbitral decisions rendered in such disputes may affect the welfare of citizens in the State involved in the dispute. It is widely accepted (even by the strongest proponents of an implied duty of confidentiality in international commercial arbitration) that arbitral proceedings undertaken to resolve investment disputes should be subject to little, if any, confidentiality. This is due to the fact that arbitrations based on bilateral and multilateral investment treaties lie within the scope of public international law and involve matters of a political nature or with political ramifications. Hence the revision of the ICSID Arbitration Rules to allow for the submission of amicus briefs by third parties. 48 The ICSID Convention provides that an award issued in ICSID arbitration may only be published with the consent of the parties. 49 This said, orders, awards and case details are routinely posted on the ICSID website. However, much investment treaty arbitration happens outside the ICSID system, often in ad hoc UNCITRAL proceedings, and is consequently subject to the same supervisory and enforcement regime as applies in international commercial arbitration. There is therefore some inconsistency in the treatment of confidentiality in treaty-based arbitration. [Page34:]

2. Disclosure requirements under market regulatory rules

Disclosure of information and materials otherwise covered by a duty of confidentiality may be required as a result of a supervening obligation such as a company's obligation to inform its shareholders, auditors or insurers of current claims or awards made against it:

Disclosure to the public of timely, reliable and complete information is often a prerequisite for a company's participation in financial markets. Legal and regulatory provisions, as well as guidelines of a market's regulatory bodies, are intended principally to guarantee the effective disclosure of such information and thus the transparency of the market. 50

The disclosure obligations imposed on listed companies by market regulations are far-reaching. They require disclosure of contingent liabilities such as claims made against the company in arbitration, the description of facts that are likely to have a material effect on the company's accounts, 51 and may require listed companies to inform the public (i.e. prospective shareholders) of anything that could have a serious impact on the price of the company's shares. Such obligations are not intended to be covered by a duty of confidentiality applicable to arbitration, and it is unlikely that a claim to the contrary made to a market regulator or national court would succeed.

For example, companies registered on the New York Stock Exchange ('NYSE') are required to disclose pending or ongoing litigation and arbitration in their audit reports as part of their corporate filings. 52 The reporting requirements listed in NYSE Rule 351 impose disclosure on members in certain circumstances. NYSE Rule 351(a) provides that companies listed on the NYSE must report when they are 'a defendant or respondent in any securities or commodities-related civil litigation or arbitration which has been disposed of by judgment, award or settlement for an amount exceeding $15,000'. 53 However, when a member organisation is the defendant or respondent, then 'the reporting to the Exchange shall be required only when such judgement, award or settlement is for an amount exceeding $25,000'. 54 Companies listed on the NYSE and member companies are also required to disclose instances where they are 'the subject of any claim for damages by a customer, broker or dealer' which is settled at the same relative thresholds (over $15,000 for listed companies and $25,000 for member companies). 55

The revelation of an award can be a cause for concern for the non-disclosing party, especially if it did not prevail in the arbitration. For example, where a State party has lost in an arbitration with a private investor, the State may not want it publicly known that an [Page35:] investor has brought a claim against it and prevailed. 56 Public disclosure could have the effect of deterring potential investors from investing in that country in the future. Knowledge of the mere existence of arbitral proceedings can be equally destructive for a company. For example, in an arbitration relating to a patent for technology to be used by a factory, party A may disclose to the factory owner the fact that an arbitration relating to the patent for that technology is pending and ownership of the patent may not be granted to party B. As a result of this knowledge, the factory owner may decide not to offer party B the contract to supply the factory with the technology.

Such obligations are not limited to the need to disclose information to the regulatory bodies of capital markets. State-owned companies and agencies may have disclosure obligations under domestic freedom of information legislation, 57 and most companies will have an obligation to disclose information on arbitration claims to shareholders. 58 Although the need for transparency and accountability may be obvious, it is equally obvious that such obligations may conflict with any confidentiality in the arbitral process and undermine the commercial advantage such confidentiality would bring.

Furthermore, corporate acquisitions and financing operations are usually preceded by an extensive process of due diligence, as a part of which the would-be seller will be required to disclose to the would-be buyer information and documentation relating to pending arbitration claims. Failure to do so would entitle the buyer to make a claim against the seller for breach of warranty or similar. The due diligence process will be accompanied by its own confidentiality obligations, and these may be sufficient to protect a would-be seller's desire to preserve confidentiality in the arbitration process, but it should nonetheless be noted that the requirement to disclose information relating to the arbitral proceedings during a due diligence process cuts across arbitral confidentiality. 59

For the purposes of arbitral proceedings (or related enforcement or challenge proceedings), a party will naturally wish to be able to discuss matters and share documents with its officers, senior employees, major shareholders and lawyers, but also with witnesses, experts, litigation funding companies, insurers and possibly with advisers of various kinds (in such fields as public relations, lobbying, tax matters and accountancy). It may wish to do so without causing confidential information to leak into the public domain, but the consultation of a wide circle of third parties will inevitably threaten the confidentiality of that information. There can be little doubt that any duty of confidentiality affecting the parties themselves will extend to lawyers conducting arbitration on their behalf, witnesses (both factual and expert) and employees and officers. But the position with respect to other interested third parties will be more ambiguous, even if disclosure to them rarely becomes a contentious point, and is in fact an accepted feature of international commercial arbitration. [Page36:]

The WIPO Rules allow for arbitration-related documents to be disclosed for the purpose of complying with a duty which, while not binding, would ordinarily be observed under customary law. The relevant text is Article 73(b), which provides that disclosure is permitted 'for the purpose of satisfying any obligation of good faith or candor' owed to a third party. However, such disclosure is limited to 'the names of the parties to the arbitration and the relief requested'. This exception may come into play where the third party is the parent company of the disclosing party.

As can be seen, there are many ways in which a party, even before stepping into court, may find itself required to disclose information or materials arising from arbitral proceedings, notwithstanding a duty of confidentiality.

3. Disclosure of proprietary information

The protection of confidential information in arbitration derives not only from institutional rules but also-in countries such as Australia and the United States-from the law of proprietary information. One of the most pressing concerns of parties to an arbitration involving commercial entities is that of the protection of trade secrets. The WIPO Arbitration Rules contain an entire article devoted to the subject, 60 which reads as follows:

(a) For the purposes of this Article, confidential information shall mean any information, regardless of the medium in which it is expressed, which is

(i) in the possession of a party,

(ii) not accessible to the public,

(iii) of commercial, financial or industrial significance, and

(iv) treated as confidential by the party possessing it.

(b) A party invoking the confidentiality of any information it wishes or is required to submit in the arbitration, including to an expert appointed by the Tribunal, shall make an application to have the information classified as confidential by notice to the Tribunal, with a copy to the other party. Without disclosing the substance of the information, the party shall give in the notice the reasons for which it considers the information confidential.

(c) The Tribunal shall determine whether the information is to be classified as confidential and of such a nature that the absence of special measures of protection in the proceedings would be likely to cause serious harm to the party invoking its confidentiality. If the Tribunal so determines, it shall decide under which conditions and to whom the confidential information may in part or in whole be disclosed and shall require any person to whom the confidential information is to be disclosed to sign an appropriate confidentiality undertaking.

(d) In exceptional circumstances, in lieu of itself determining whether the information is to be classified as confidential and of such nature that the absence of special measures of protection in the proceedings would be likely to cause serious harm to the party invoking its confidentiality, the Tribunal may, at the request of a party or on its own motion and after consultation with the parties, designate a confidentiality advisor who will determine whether the information is to be so classified, and, if so, decide under which conditions and to whom it may in part or in whole be disclosed. Any such confidentiality advisor shall be required to sign an appropriate confidentiality undertaking.

(e) The Tribunal may also, at the request of a party or on its own motion, appoint the confidentiality advisor as an expert in accordance with Article 55 in order to report to it, on [Page37:] the basis of the confidential information, on specific issues designated by the Tribunal without disclosing the confidential information either to the party from whom the confidential information does not originate or to the Tribunal.

Similarly, though more succinctly, the IBA Rules on the Taking of Evidence in International Commercial Arbitration include, as one of the bases on which the production of evidence may be excluded or refused, 'grounds of commercial or technical confidentiality that the Arbitral Tribunal determines to be compelling'. 61

In a commercial arbitration, proprietary information or business secrets may need to be disclosed for the purpose of calculating damages. For example, in developing an oil and gas field jointly with a State-owned enterprise, a private investor may contribute what it considers to be intellectual property in the form of technology and know-how on the understanding that it will be kept confidential. The value of the oil field may be directly related to the specific type of technology used to develop the field. During the course of an arbitration, however, the production of such information may be ordered for the purpose of calculating damages. Although the information should only be used within the arbitration, the disclosing party will have significant concerns as to whether that is a realistic expectation, since the information could subsequently be used for commercial ends by the other party. In cases such as this, where orders are issued for the production of documents that a party considers to include 'business secrets' or 'intellectual property', the party may request the tribunal to view the documents in camera and ask for no reference to be made to these documents in the final decision (so that they are not included if the decision is subsequently published).

In an arbitration involving a State-party (whether an investment treaty case or otherwise), business secrets or other proprietary information statutorily required by the State party in order to fulfil its public functions may be disclosed if the arbitral tribunal finds that the public interest in having the information disclosed outweighs the interest of the private party in keeping that information confidential. 62 For example, in Esso v. Plowman, the Australian Ministry of Energy sought the disclosure of documents relating to the cost of delivering minerals to the other party (a utility company), as required by law. These documents contained information which, if made public, could affect the price the utility could charge its customers in the future. The disclosing party requested the arbitral tribunal to order that the proceedings, and any documents produced therein, should remain confidential. The tribunal ultimately held that the public interest in knowing how much the utility was paying for the minerals used in the production of electricity outweighed the private interest of the utility in keeping that information secret.

Conclusions

The scope of confidentiality in arbitration is not uniform. Before beginning arbitration, it is important to determine the law applicable to the duty of confidentiality, to define the scope of such duty and to identify what exceptions may apply. As a general remark, [Page38:] case law in France and England contains fewer legal exceptions to confidentiality than in Australia and the US. However, as is clear from the above discussion, there are numerous exceptions, caveats and qualifications applying to any duty of confidentiality and, while one or two States have tried, it is probably unreasonable to expect a comprehensive and effective codification of those exceptions. In the words of the English Departmental Advisory Committee (which assisted the UK Government in the preparation of what became the Arbitration Act 1996), 'the exceptions to confidentiality are manifestly legion and unsettled in part'. 63 In this context, a degree of uncertainty in the law is inevitable, and care needs to be taken.

Legal exceptions to the duty of confidentiality are seen where both parties consent to disclosure, where disclosure to a third party is necessary to establish or defend a right, where disclosure is necessary to enforce the award, where ordered by a court in a related proceeding, where required by law or regulation, where justified by the public interest or where needed for various third parties.

As a result, the scope of what is often considered confidential is not as broad as many assume. When drafting a confidentiality clause or advising a client prior to the commencement of arbitral proceedings, it is important to gain a sense of what information the client will expect to be held as confidential, from whom and for how long. If confidentiality matters, steps may need to be taken to minimize the risk that it will be undermined by one of the many exceptions.

1
This is addressed by the WIPO Arbitration Rules, Article 73.

2
WIPO Arbitration Rules, Article 75.

3
WIPO Arbitration Rules, Article 76(b). The secretariat will not, however, publish the names of the parties or the particular circumstances of the dispute.

4
WIPO has separate provisions addressing confidentiality at different stages with different actors: Article 73-conditions under which the existence of an arbitration may be disclosed; Article 74-disclosures made during the arbitration; Article 75-disclosure of the arbitration award; Article 76-obligations of arbitrators and the WIPO secretariat to maintain confidentiality. The obligations of parties are addressed in Articles 73-75 and those of witnesses in Article 74(b).

5
France: Aïta v. Ojjeh, Paris Court of Appeal, 18 February 1986, Rev. arb. 1986.583, and Bleustein et autres v. Société True North and Société FCB International, Paris Commercial Court, 22 February 1999, Rev arb 2003.189. Switzerland: X v. Y, Federal Tribunal, 4P.74/2006/ast. England & Wales: Ali Shipping Corporation v. Shipyard Trogir, (1999) 1 WLR 314. Singapore: Myanma Yaung Chi Oo Co Ltd v. Win Win Nu, [2003] SGHC 124.

6
E.g. Article 30.1 of the LCIA Rules.

7
E. Gaillard & J. Savage, eds., Fouchard Gaillard Goldman on International Commercial Arbitration (Kluwer Law International, 1999) § 1412.

8
H.R. Dundas, 'Confidentiality Rules OK? Recent Developments affecting the Confidentiality of Arbitrations' Transnational Dispute Management, vol. 1, issue 2 (May 2004).

9
L.A. Mistelis, 'Confidentiality and Third Party Participation: UPS v Canada and Methanex Corporation v United States' (2005) 21 Arbitration International 211.

10
Department of Economics, Policy & Development of the City of Moscow v. Bankers' Trust Co and International Industrial Bank, [2004] EWCA Civ. 314.

11
See Longmore LJ in C v. D, [2007] EWCA Civ. 1282.

12
Glidepath BV and others v. John Thompson and others, [2005] EWHC 818 (Comm).

13
CPR Practice Direction-Arbitration, para. 5.1 states: 'An arbitration claim form may only be inspected with the permission of the court.'

14
Glidepath, at para. 27.

15
Ali Shipping at 327 E.

16
P.-Y. Tschanz, 'Confidentiality of Swiss Supreme Court Review of Arbitral Awards', International Law Office Newsletter (28 September 2006).

17
Paris Court of Appeal, 18 February 1986, Aïta v. Ojjeh, Rev. arb. 1986.583.

18
Société National for Fishing and Marketing 'Nafimco' v. Société Foster Wheeler Trading Company AG, Paris Court of Appeal, 22 January 2004, Rev. arb. 2004.657.

19
As reported in M.W. Bühler & T.H. Webster, Handbook of ICC Arbitration, 2d ed. (Sweet & Maxwell, 2008) at para. 20-87 and footnote 74.

20
Cf. the Swiss case X v. Y, discussed above.

21
[2008] EWCA Civ. 184 (C.A.).

22
High Court of Australia, 7 April 1995, No. 95/014, (1995) 128 ALR 391, (1995) 11 Arbitration International 235.

23
District Court of Delaware, 7 January 1988, 118 F.R.D. 346.

24
[1998] 1 Lloyd's Rep. 643.

25
[1990] 1 WLR 1205. The legal issue before the Court of Appeal was whether the disclosure of certain documents from a separate arbitration was 'necessary for disposing fairly of the [subsequent] proceedings'. The Court held that the party requesting disclosure failed to show that disclosure was necessary. The Court stated that, even in the absence of an express confidentiality clause between the parties, there is 'an implied obligation of a party who obtains documents on discovery not to use them for any purpose other than the dispute in which they were obtained'.

26
[1995] 1 Lloyd's Rep. 272. The legal issue before the Court was the degree of necessity required for confidential arbitration-related material to be disclosed where disclosure may be necessary for the protection of the rights of one party to the arbitration against a third party. The Court held that arbitration-related materials might be disclosed if required to sustain a cause of action but not where they merely provided added persuasive weight to a party's contentions.

27
[2003] UKPC 11. The Privy Council was sitting as the final court of appeal in a case referred by the courts of Bermuda. Privy Council rulings on appeals from Commonwealth jurisdictions are usually taken to reflect the current state of English law.

28
[1993] 2 Lloyd's Rep. 243.

29
Ibid. at 250.

30
ICDR Rules, Article 27.4. Emphasis added.

31
New Zealand Arbitration Act 1996, section 14, the original text of which provided merely as follows: '14. Disclosure of information relating to arbitral proceedings and awards prohibited (1) Subject to subsection (2), an arbitration agreement, unless otherwise agreed by the parties, is deemed to provide that the parties shall not publish, disclose, or communicate any information relating to arbitral proceedings under the agreement or to an award made in those proceedings. (2) Nothing in subsection (1) prevents the publication, disclosure, or communication of information referred to in that subsection: (a) If the publication, disclosure, or communication is contemplated by this Act; or (b) To a professional or other adviser of any of the parties.'

32
New Zealand Arbitration Amendment Act 2007. For more details, see A. Kawharu, 'New Zealand's Arbitration Law Receives a Tune-Up' (2008) 24 Arbitration International 405.

33
Section 14C, Arbitration Act 1996, as inserted by the Arbitration Amendment Act 2007.

34
Ibid, section 14D.

35
Ibid, section 14E.

36
Norwegian Arbitration Law, 14 May 2004, s. 5.

37
Cited in L.A. Mistelis, supra note 9.

38
See D. Banisar, Freedom of Information Around the World, <http://www.freedominfo.org/documents/global_survey2006.pdf> (2006), where it is also indicated that another 50 were in progress in 2006. For a world map showing the status of freedom of information laws, see <http://www.privacyinternational.org/foi/foi-laws.jpg>.

39
For more discussion on freedom of information laws generally and in connection with production sharing contracts, see I. Ramikissoon, 'Are Production Sharing Contracts Subject to Disclosure under Freedom of Information Laws?', <http://www.aipn.org/documents/attachments/ 2007_SWC___Ramkissoon_9172007161755.pdf> (September 2007).

40
Supreme Court of New South Wales, 24 October 1995, [1995] NSWSC 9.

41
United States of America v. Panhandle Eastern Corp. et al., District Court of Delaware, 7 January 1988, 118 F.R.D. 346.

42
The US FOIA, at 522 b (3), provides that its provisions do not apply to matters that are 'specifically exempted from disclosure by statute (other than section 552b of this title), provided that such statute (A) requires that the matters be withheld from the public in such a manner as to leave no discretion on the issue, or (B) establishes particular criteria for withholding or refers to particular types of matters to be withheld'. The US FOIA provides that documents required to be disclosed may be redacted so long as the amount of information deleted from the record is indicated by the disclosing party 'unless including that indication would harm an interest protected' by the exceptions mentioned above.

43
See 5 USC § 572, available at <http://www4.law.cornell.edu/uscode/ html/uscode05/usc_sec_05_00000574----000-.html>.

44
'A dispute resolution communication which is between a neutral and a party and which may not be disclosed under this section shall also be exempt from disclosure under section 552 b (3).' (5 USC § 574 (j))

45
5 USC § 574 (a)-(j)

46
5 USC § 572(b)(5)(C)

47
Cf. Commonwealth of Australia v. Cockatoo Dockyard Pty Limited, Supreme Court of New South Wales, 24 October 1995, [1995] 36 NSWLR 662 (where the government is a party to arbitration, public interest concerns should not limit the government's duty to account to the public); see also Esso Australia Resources Ltd v. Plowman, Minister for Energy and Minerals et al., 183 C.L.R. 10, 128 A.L.R. 391 (1995); High Court of Australia, 7 April 1995, No. 95/014 (confidentiality not 'an essential attribute' of commercial arbitration and public policy concerns may outweigh the desire for confidentiality where, as here, the State is a litigant).

48
ICSID Arbitration Rules, Rule 37(2): 'After consulting both parties, the Tribunal may allow a person or entity that is not a party to the dispute (in this Rule called the "non-disputing party") to file a written submission with the Tribunal regarding a matter within the scope of the dispute. In determining whether to allow such a filing, the Tribunal shall consider, among other things, the extent to which: (a) the non-disputing party submission would assist the Tribunal in the determination of a factual or legal issue related to the proceeding by bringing a perspective, particular knowledge or insight that is different from that of the disputing parties; (b) the non-disputing party submission would address a matter within the scope of the dispute; (c) the non-disputing party has a significant interest in the proceeding. The Tribunal shall ensure that the non-disputing party submission does not disrupt the proceeding or unduly burden or unfairly prejudice either party, and that both parties are given an opportunity to present their observations on the non-disputing party submission.'

49
ICSID Convention 1965, Article 48(5).

50
V. Denoix de Saint Marc, 'Confidentiality of Arbitration and the Obligation to Disclose Information on Listed Companies or During Due Diligence Investigations' (2003) 20 Journal of International Arbitration 211.

51
Requirements applicable in the European Union are set out in Directives 2001/34/EC, 2004/109/EC and 2008/22/EC.

52
There is no explicit requirement to disclose the existence of any pending arbitration under US federal securities laws. There are two disclosure duties contained in SEC Regulation S-K, which lists items that a company subject to securities laws must disclose. First, pending litigation must be disclosed if such information is material; see SEC Regulation S-K, Item 103 (17 C.F.R. § 229.103) (2008). Second, a registrant must disclose 'any known trends or uncertainties that have had or that the registrant reasonably expects will have a material favorable or unfavorable impact on net sales or revenue or income from continuing operations'; SEC Regulation S-K, Item 303 (17 C.F.R. § 229.303) (2008) at (a)(3)(ii). On the application of this provision to information contained in prospectuses, see e.g., Oxford Asset Management, Ltd. v. Jaharis, 297 F.3d 1182, 1191 (11th Cir.2002); Kapps v. Torch Offshore, 379 F.3d 207 (D. La. 2004) (concerning erroneous gas price information contained in prospectus).

53
NYSE Rule 351(a), available at <http://rules.nyse.com>.

54
Ibid. at (7) (emphasis added).

55
Ibid. at (8).

56
See the City of Moscow case, supra note 10. During the proceedings, the City of Moscow strenuously objected to the disclosure of the final award, until it became apparent that it was going to win.

57
It is notable that the Australian case Esso arose from contracts made with two State-owned utilities in the State of Victoria. As is well known, the High Court of Australia ultimately ruled that there was no automatic or implied duty of confidentiality in respect of arbitration in Australian law. The fact that the decision arose in the context of a politicised case with strong public interest issues is less well known or at least acknowledged.

58
E.g. Magrete Stevens quoting from an unnamed ICSID case in 'Confidentiality Revisited', News from ICSID, No. 1 (2000) pp. 1 and 8: 'The tribunal also acknowledged, as had been pointed out by the claimant, that a public company traded on a public stock exchange could, under domestic law, be "under a positive duty to provide certain information about its activities to its shareholders, especially regarding its involvement in a process the outcome of which could perhaps significantly affect its share value".'

59
At least one set of institutional arbitration rules-those of the International Centre for Dispute Resolution-provide that an award may be made public without the consent of all the parties to the proceedings. See ICDR Rules, Article 27.

60
Article 52.

61
Article 9(2)(e).

62
In the United States, the statutory duty to inform a State agency has also been seen to prevail over the intended confidentiality of the information generated for and during an arbitration and the obligation this places on the arbitrator. See Canon VI.B of the Code of Ethics for Arbitrators in Commercial Disputes published by the American Bar Association and the American Arbitration Association (AAA) and Rule 25 of the Commercial Arbitration Rules of the AAA, cited in expert report of Stephen Bond in Esso/BHP v. Plowman, (1995) 11 Arbitration International 273.

63
Departmental Advisory Committee on Arbitration Law Report on the Arbitration Bill (chaired by the Rt Hon. Lord Justice Saville), February 1996, at para. 16.