When asked why they choose to resolve their disputes through international arbitration, parties often identify confidentiality as an important factor. While the parties may think their arbitration is confidential, in many cases, the proceeding is merely private. In the context of arbitration, privacy and confidentiality are not necessarily the same. Privacy means that arbitration proceedings are not open to the public, but privacy does not preclude the parties from disclosing the proceedings to third parties. Confidentiality, by contrast, means the parties (and the arbitrators) may not disclose the proceedings to third parties or the public, including evidence, written submissions, arbitral awards, and even the existence of the proceedings and the identities of the parties. Most arbitrations are private, but many arbitrations are not confidential. As the Australian High Court has held, privacy is an essential component of arbitration, but “absolute confidentiality” is not. Whether an arbitration is confidential can depend on the agreement of the parties, the applicable arbitration rules, and law of the forum country.
Agreement of the Parties
Unless one of the parties is a government or a publicly traded company with securities law mandated disclosure requirements, parties in commercial arbitration can usually agree to confidential arbitration proceedings. Indeed, the widely accepted preference for party autonomy allows parties substantial flexibility in structuring a mutually desirable confidentiality agreement. This can happen at the time the parties enter into a contract, or when a dispute is submitted to arbitration. While the range of possible agreements is broad, limited only by mandatory provisions of law, the basic concept is straightforward.
International Arbitration Rules
Different international arbitration rules take different approaches to confidentiality. For example, the Rules of Arbitration of the International Chamber of Commerce (ICC) do not by themselves obligate parties to keep proceedings confidential. The ICC Rules authorize the arbitral tribunal to make orders and take measures to protect trade secrets and confidential information, but the Rules do not guarantee confidentiality. As a practical matter, parties often agree to confidentiality in the underlying agreement to arbitrate, or in the Terms of Reference.
Other widely used international arbitration rules take a different approach to confidentiality. Unlike the ICC Rules, the International Arbitration Rules of the International Centre for Dispute Resolution (ICDR) provide that “confidential information disclosed during the arbitration shall not be divulged by an arbitrator or by the Administrator.” Furthermore, awards “may be made public only with the consent of all parties or as required by law,” and awards published by the ICDR must be “edited to conceal the names of the parties and other identifying details.” Similar provisions can be found in the international arbitration rules of the London Court of International Arbitration (LCIA) and the German Arbitration Institute (DIS), both of which provide for limited confidentiality, and both of which allow the parties to agree on broader confidentiality.
The variations among different sets of arbitration rules allow the parties to predetermine the degree of confidentiality by selecting a particular set of rules, and they require parties to be mindful that they may inadvertently establish the extent of confidentiality by virtue of their choice of arbitration rules.
Local Arbitration Law
Finally, parties may determine the level of confidentiality for their arbitration by selecting a particular venue, thereby establishing the local arbitration law of that jurisdiction as the lex arbitri, including that jurisdiction’s laws regarding confidentiality. For example, under California’s International Arbitration and Conciliation Act, arbitral hearings “shall be held in camera,” but the California Act does not require the parties to maintain confidentiality. Nor does the Federal Arbitration Act require confidentiality. The parties may agree to maintain confidentiality, but the law does not require it, so if parties cannot agree, they must proceed without a guarantee of confidentiality.
Other jurisdictions take different approaches. The Singapore Arbitration Act provides that parties and tribunals may not publish information about an arbitration, including the identities of parties involved, unless “all parties to the proceedings agree that such information may be published.” Even in Singapore, however, confidentiality is not absolute. Subsection 57(4) of the Singapore Arbitration Act clarifies that if an arbitration award is “of major legal interest,” a court may publish it, although in that event, the court can still conceal the identities of the parties in the published judgment, preserving some confidentiality.
Because national law regarding confidentiality in international arbitration varies substantially, parties should choose the seat of their arbitrations carefully. Parties should also consider the extent to which selection of particular arbitration rules may override statutory presumptions, and whether they can go even farther by providing for confidentiality in their arbitration agreement. Parties should also understand that confidentiality options may be limited for governments and some publicly traded companies with disclosure obligations.
*Kevin Costello is a summer associate in Sheppard Mullin’s San Francisco office.