Confidentiality in arbitration is a topic which lends itself to academic analysis and discussion because there are conflicting opinions, and the law is still evolving, nationally as well as internationally. However, interest in the topic is not merely academic. Civil engineers have very practical interests in whether confidentiality in arbitration should be regarded as an achievable goal or, as proposed here, a barrier to be overcome.
Confidentiality in arbitration is a topic which has attracted analysis and discussion in a number of excellent papers in recent years.1 The topic lends itself to academic analysis and discussion because there are conflicting views and considerations, and the law is still in a state of evolution, nationally and internationally. However, it is not merely of academic interest. Civil engineers have very practical interests in the outcome of the debate as to whether confidentiality in arbitration should be regarded as a goal to be achieved, as argued by Ben Beaumont2 elsewhere in this issue, or, as argued in this briefing note, a barrier to be overcome in appropriate cases.
There are two areas of confidentiality in arbitration: one concerns confidentiality of the arbitration proceedings and of any documents generated or divulged in the course of the arbitration; the other concerns confidentiality of the award and its contents. Under English law prior to 1979, it was accepted that there was a general duty of privacy and confidentiality on participants with regard to the arbitral process, but the old case stated procedure meant that parties could not rely on the contents of an award remaining confidential. Either party was entitled to apply to the High Court to require the arbitrator to ‘state a case’ for the decision of the High Court. The High Court would readily accede to such applications and details of the case would then emerge in open court and, possibly, in the law reports. Details of arbitrations also became public in cases where a party applied to the High Court to set aside an award or have an arbitrator removed on the grounds of misconduct.
The abolition of the case stated procedure by the Arbitration Act 1979 was principally directed towards the removal of uncertainty, the prevention of abuse and the avoidance of delay and costs, but a secondary effect was the reduction in public access to awards. Proponents of the desirability of confidentiality would argue that this was a good thing, but when the House of Lords then delivered its very restrictive interpretation of the grounds on which leave would be granted to appeal to the High Courts on a question of law (the ‘Nema Guidelines’3), the common law system lost a rich source of cases which had previously made a substantial contribution to the development of commercial law and arbitration practice.
Arguments were put forward at that time for making awards themselves available in the public domain if they contained points of general interest to a significant sector of the public, such as the proper interpretation of a contentious point in a standard form of contract,4,5 pointing out that this was common practice in some arbitration centres. John Uff QC not only argued the point in his General Introduction to the Construction Law Yearbook 1994,6 but demonstrated the benefits by publishing five arbitral awards without the names of the parties, but with the arbitrator identified.
Another ground for public interest disclosure of relevant arbitral awards or of expert reports prepared for arbitration has been identified by the Standing Committee on Structural Safety, to make available details of factual and expert evidence relating to structural failures so that lessons might be learnt for the improvement of public safety.7 There have even been arguments that awards should be made public more generally so that arbitration users might be able to gauge the quality of the arbitrator.
Certainly if all awards are hidden from the public, the process of arbitration is quite sterile and wasteful in comparison with the traditional common law system, which extracts long-term public benefit from the resources expended by the parties in investigating matters and arguing points of law or contract interpretation.
The 1996 Arbitration Act8 accepted and codified the Nema guidelines in section 69 as a requirement for leave to appeal that the question of law ‘is one of general public importance and the decision of the tribunal is at least open to serious question’. (It is an argument for another day that questions of interpretation of standard forms of contract should more readily be accepted as satisfying this criterion.) However, the Act contained no provision relating to confidentiality or privacy. The Departmental Advisory Committee (DAC) on arbitration report, which led up to the Act, accepted the existence of general principles of confidentiality and privacy in arbitration but recognised that there were exceptions, the breadth and existence of which was disputed. It concluded that statutory intervention was premature and that it was better that the existence and scope of the exceptions should be left to be ‘resolved by the English courts on a pragmatic case by case basis’. The background has been described by Lawrence Collins LJ.9
Since the Act was passed, the UNCITRAL Rules and the arbitration rules of international arbitration centres have increasingly stipulated confidentiality. Notwithstanding the restraint of the DAC a trend towards supporting confidentiality was implemented in England by Civil Procedure Rules (CPR). The relevant rule is CPR 62(10), which starts with paragraph (1) that ‘The Court may order that an arbitration claim be heard either in public or in private’. (The term ‘arbitration claim’ is defined widely in CPR 62(2) to include any reference to the court concerning an arbitration.) CPR 62(10)(3) then provides that ‘subject to any order under paragraph (1)’ any determination of an appeal or preliminary determination of a question of law will be heard in public, but ‘all other arbitration claims will be heard in private’. There is no express reference to judgments reached at the end of hearings.
In City of Moscow v. Bankers Trust,10 Mance LJ asserted a high degree of judicial discretion under CPR 62(10), while the Privy Council in AEGIS v. European Reinsurance11 did not consider itself unduly fettered by institutional arbitration rules. The judgments in both cases acknowledge a trend towards confidentiality, but reveal a judicial resolve to move the pendulum in the opposite direction.
The article by Ben Beaumont2 is based on the decisions in these two cases. He believes that parties place a high level of importance on confidentiality in arbitration and that the international business community will turn away from selecting England as a place to arbitrate if they perceive that confidentiality is under threat. He is strongly critical of the observation by Mance LJ in City of Moscow that confidentiality should not be regarded as of paramount importance and his rejection as ‘unfounded’ the concern that the publication of arbitral awards would upset the confidence of the business community in English arbitration.12 Such doubting of the asserted business interest in confidentiality is not new. Paulsson and Rawding in 1995 wrote, ‘It has long been standard practice to include the word ‘confidentiality’ in any list of supposed benefits of arbitration … [but] very little critical analysis has been brought to bear on this issue’.13
As the parties in international arbitration have a choice where to arbitrate, the interests that Mr Beaumont seeks to protect are those of a narrow sector, namely people involved in the business of arbitration as arbitrators, lawyers or providers of arbitration facilities in England.
Since the two cases considered by Mr Beaumont, there has been a further important decision by the Court of Appeal in Emmott v. Michael Wilson & Partners Ltd.14 It is not concerned with confidentiality of an award, but confidentiality of pleadings generated in an arbitration. The distinction is explained by Lawrence Collins LJ.15
In the last 20 years or so the English courts have had to consider the consequences of the privacy of the arbitral process and the scope of the obligations of confidentiality in several different contexts. It is apparent that the English jurisprudence on this subject (as distinct from the confidentiality of awards, which is much discussed in other countries) is much richer than that of any other important arbitration centre, and that it constitutes a major contribution to the development of the law of international arbitration.
However, the two main judgments explore the basis of exceptions to the principle of confidentiality in relation to both areas.
The leading judgment by Lawrence Collins LJ explains16 that ‘The English courts have been strongly influenced in their development of exceptions to the basic rules of confidentiality in arbitration by the principles of banking confidentiality in Tournier’. The relevant Tournier17 exception is ‘where there is a duty to the public to disclose’. He observes18 that ‘The second exception in Tournier, duty to the public requiring disclosure, has a counterpart in the public interest/interests of justice exception recognised in London and Leeds Estates Ltd v. Paribas Ltd (No 2) and Ali Shipping v. Shipyard Trogir’. The recognition of ‘public interest’ and ‘interests of justice’ as arguably distinct grounds is a reference to the decision of Mance J (as he then was) in London and Leeds Estates19 where he described an exception as ‘in the public interest’ and the subsequent assertion of Potter LJ in Ali Shipping20 that Mance J really meant by this the ‘interests of justice’.
Lawrence Collins next cites two Australian cases: Esso Australia Resources Ltd v. Plowman21 which recognised a public interest exception to allow disclosure to the Minister of Energy and Minerals of information disclosed in an arbitration, and Commonwealth of Australia v. Cockatoo Dockyard Pty Ltd22 which recognised a public interest exception ‘because public health and environmental issues were involved’.
He then quotes23 from Potter LJ in Ali Shipping where he stated the following.
It seems to me clear that, in that context, Mance J was referring to the ‘public interest’ in the sense of ‘the interests of justice’ … As a matter of terminology, I would prefer to recognise such an exception under the heading ‘the interests of justice’ rather than ‘the public interest’ in order to avoid the suggestion that use of that latter phrase is to be read as extending to the wider issues of public interest contested in Esso Australia Resources v. Plowman … While it may fall to the English Court at a future time to consider some further exception to the general rule of confidentiality based on wider considerations of public interest it is not necessary to do so in this case.
Lawrence Collins LJ appears sympathetic to the Australian decisions, particularly since he points out that the origin of the ‘interests of justice’ exception is ‘where there is a public duty to disclose’. However, he reaches no concluded view on whether the Australian decisions should be followed in England.
In the second judgment Thomas LJ is clear that he prefers the term ‘public interest’ and he appears open to a wide interpretation of the term.24 He recognises as a sample problem area, in need of consideration, the publication of awards relating to standard forms:25
If an insurer which uses a standard form of its own devising with an arbitration clause, arbitrates issues arising on that standard form and has a body of arbitral decisions on that standard form, can a broker who knows of them use them to advise a new client contemplating use of that insurer’s standard form? … If there are a large number of disputes in a market arising out of a common factual situation, to what extent should materials in the arbitration and awards remain private? … Absent institutional rules (which are however making a real headway in many markets), such issues will, no doubt, be determined as the law is developed on a case by case basis.
However, the wider question must be regarded as undecided. Carnwath LJ in a short third judgment reserves his position stating ‘I prefer to treat this case as falling under ‘interests of justice’ exception clearly recognised in Ali Shipping, and to leave for another occasion exploration of the boundaries of a possible ‘public interest’ criterion’.26
Within these judgments may be observed not merely a predictable judicial preference for judgments to be made public, but a willingness to entertain arguments and to accept institutional rules that would make arbitral awards more available in the public interest – for example, to assist in the interpretation of standard forms or to reveal details that could be relevant to improving public safety. As civil engineers we should get behind such a move, and resist calls for blanket confidentiality for arbitration.
Mr Beaumont’s second point is that judges should be keener to maintain confidentiality, so far as possible, by using the means identified by the vice-chancellor in the City of Moscow case: ‘judicial and judicious selection of what facts need to be recounted, the use of initials or pseudonyms to describe the parties or the relegation of the relevant information to a separate and confidential appendix to the judgment’. In recent times this might be described as ‘redaction’. While there is no dispute that details of arbitrations that might embarrass a party should not be put into the public domain without good reason, redaction can seriously reduce the value of what is published. Overzealous redaction would detract from the public benefit that could be obtained from greater access to arbitral awards.
