Introduction

Arbitration is a consensual process where both the parties mutually agree to submit their disputes before a tribunal. Often, a compelling factor in favour of this submission is the ‘confidentiality’ which accompanies the dispute resolution mechanism, guaranteeing a centralised and unhindered dispute resolution process. While in investor-state disputes, publicity of the arbitration proceedings is preferred due to the involvement of matters of public interest and policy,[1] since an international commercial arbitration is limited to private entities, factors such as maintenance of goodwill and market confidence take prime importance. The leakage of confidential information may pose a risk of threatening business opportunities and jeopardising the party’s public image before crucial stakeholders. Therefore, the confidentiality of the proceeding becomes an essential prerequisite.

However, confidentiality provisions are often ambiguous in the international commercial arbitration sphere. For instance, while it is understood that documents in the ‘public domain’ are barred from attaining a status of confidentiality,[2] the scope of ‘public domain’ is questionable. Moreover, whether an obligation of confidentiality extends to entities such as witnesses is also uncertain. Therefore, an attempt has been made to elucidate the extent of operability of the term ‘public domain’. Further, the article examines the conflicting perspectives with respect to witnesses and their confidentiality obligations.  Additionally, an exercise has been undertaken to reconcile the two segments and, simultaneously, highlight the accompanying issues and provide suggestions.

‘Public Domain’— Scope of Operations

Confidentiality in arbitration ends where the public domain begins. The case Observer v. Guardian held that once information has entered the public domain, it is unreasonable to talk of confidentiality.[3] Similarly, the dictum in Bible v. United Student Aid Funds stipulates that information, once available to the ‘public eye’, no longer faces the issue of ‘disclosure’.[4] Rules of various arbitral institutions, such as SIAC, also explicitly stipulate for confidentiality to stand nullified by the ‘public domain’.[5]

However, the scope of ‘public domain’ is often uncertain. Essentially, the stage at which a confidential document enters the public domain is ambiguous. While most disputes brought before the national courts are in public domain,[6] some are also subject to exceptions. In the matter of Esso Australia Resources v. Plowman (hereinafter, “Esso Resources”), it was held that once evidence is adduced in court proceedings by either of the parties, it becomes a part of the public domain, “unless the court restrains publication of the same”.[7] Similarly, in City of Moscow v. Bankers Trust Company, certain confidential evidence was produced before the Court which was consequently uploaded on the internet, however, the Court immediately removed the document upon being made cognisant of the concerning confidentiality.[8] It was held that the evidence retained its confidentiality since the Court restricted its publication before it could be accessed by any third party.

Similarly, information listed about companies, in annual reports, publicly listed on stock exchanges,[9] or that available in land registries, falls within the ambit of public domain, given their unrestricted access.[10] On the other hand, filings before administrative bodies such as tax authorities do not qualify as public domain since such information is inaccessible to the general public.[11] In fact, in Xerox Canada Ltd. v. MPI Technologies, filings before the US Copyright Office were held to retain their confidentiality since access to the same was limited only to the concerned company and its employees.[12]

Further, it would be pertinent to note that, generally, “information within public domain” is considered to have a very broad ambit that encompasses information accessible by ‘any’ person. It also includes information which the parties themselves gather from ‘external sources’, devoid of restrictions.[13]

Therefore, a common rationale, that runs throughout judicial decisions, is that unless explicitly restricted, information available beyond the four walls of the arbitration proceeding qualifies as public domain, thereby escaping the confidentiality obligations.

Witness Confidentiality Obligations

In all arbitrations, multiple actors take part. These include witnesses who have access to both information about the proceedings as well as the critical documents of the respective parties. However, the confidentiality obligations associated with such entities are uncertain, with inconsistent perspectives prevailing in the international domain.

In the Esso Resources case, the Australian High Court held that no obligation of confidentiality is attached to the witnesses who take part in an arbitration, and they possess unfettered discretion to disclose any information to external entities.[14] Similarly, despite the confidentiality provision of Article 30 of the LCIA Rules, the LCIA held that if a witness provides a copy of his or her own testimony, then there shall be no breach of any confidentiality provision.[15] In fact, the HKIAC rules explicitly stipulate that confidentiality obligations are not imposed on witnesses.[16] The rationale behind these stipulations indicates that arbitration agreements bind the ‘parties’ inter–se. Consequently, witnesses are ‘third-parties’ to an arbitration and are not necessarily bound by secrecy. Such entities, thus, may only be dictated by either the ethical duties of their profession or the specific contractual relationship shared with the parties.

However, certain institutional rules, as well as case laws, indicate a contrary position. Article 74 of the WIPO rules impose a duty on the parties to ensure confidentiality on behalf of witnesses.[17] Further, while case laws and commentators fail to identify an explicit duty of confidentiality, they often recognise an ‘implied’ duty on the part of witnesses. In Ali Shipping Corp. v. Shipyard Trogir, a departure from the Esso Resources case, it was recognised that witnesses are bound by an implied duty of confidentiality since it is a “necessary incident” of the “essentially private nature of arbitration”.[18] Similarly, in Dolling Baker v. Merrett, an implied duty of confidentiality was recognised to ensure that no documents used in the arbitration were disclosed to third parties, except either by the consent of the concerned parties or by obtaining the leave of the court.[19] Therefore, while it is widely recognised that a confidentiality obligation cannot arise from the general principles of contract law due to lack of privity, maintaining confidentiality is a fundamental attribute of arbitration.

It is, thus, noted that there prevails a hard-line stance in favour of witnesses being completely devoid of any confidentiality obligations. However, an equally rational, albeit contrary, discourse highlights the need to protect the private nature of an arbitration and recognises an implied duty of confidentiality on the part of witnesses. These contradictory perspectives highlight an ambiguous stance, the shortcomings of which shall be elucidated in the next segment.

‘Public Domain’ and Lacking Witness Confidentiality— The Overlap

It has been elucidated that the scope of ‘public domain’ is very broad. Consequently, any unrestricted access, beyond the parties to the arbitration and the tribunal, would necessarily fall within the concerned ambit of public domain, thereby depriving the information of its confidentiality. Thus, if the scope of public domain is analysed against the uncertain stance of witness confidentiality, a glaring gap in the law is observed.

First, instances of blanket non-recognition of witness confidentiality pose a threat to the very fundamental nature of arbitration. Such witnesses, devoid of any restrictions, would stand exposed to critical elements of the concerned proceedings. Consequently, a broad interpretation indicates that merely with exposure to a witness, the concerned information would fall within the ambit of ‘public domain’ and, thus, violate the confidentiality of the proceedings. Alternatively, if we proceed with a narrow interpretation, since witnesses would not be restricted from sharing this information with external elements, it stands at the immediate risk of entering the public domain, with no legal consequences.

Second, even if an ‘implied’ duty towards protecting confidentiality is recognised, the extent to which it applies, and the mechanisms of its operation are riddled with uncertainties. There is a lack of international consensus on this ‘general duty’. It is not provided in documents that govern international arbitration such as the New York Convention on Recognition and Enforcement of Awards or even the UNCITRAL Model Law.[20] In fact, certain practitioners consider the implied duty of confidentiality to be ineffective, with witnesses frequently violating the same.[21] Therefore, the lack of strict restrictions erodes this fundamental aspect of international commercial arbitration, rendering any confidentiality obligation ineffective.

It is, thus, suggested that arbitration rules across legislations and arbitral institutions must incorporate confidentiality obligations with respect to witnesses. Notably, this mandate must be dealt with caution. Procedural autonomy is an integral element of international commercial arbitration, where parties are given the flexibility to either incorporate their own procedural rules within the arbitration agreement, opt for institutional rules, etc. Accordingly, a procedural mandate such as this may impede the procedural autonomy of the parties since they may stand compelled to incorporate certain clauses, irrespective of their interests. Consequently, it is also suggested that the concerned provisions should be supplemented by an ‘opt-out’ clause, i.e., any provision of confidentiality may be made “subject to the parties’ agreement”, as the same is common arbitral practice.[22]

It is believed that the afore-suggested provisions would operate as a suitable balancing factor amongst the various concerns present in international commercial arbitrations. Witnesses would continue to remain subject to the general exceptions of confidentiality such as public interest, legitimate rights, etc., thereby not impeding other interests.[23] Further, not only would confidentiality of the proceedings stand comprehensively protected but it would also ensure that adequate heed would be paid to party autonomy, while simultaneously establishing uniform international practices.

Conclusion

Confidentiality is a crucial element of international commercial arbitration, given the nature of the parties involved. An erosion of confidentiality due to a lack of uniform practices may result in an adverse consequence for the parties involved in the arbitration. As indicated, any breach of confidentiality is often irreversible, thereby, inevitably risking market confidence and business opportunities, while also jeopardising the image of the company in front of crucial stakeholders.

Therefore, uniform international practices, such as similar / identical confidentiality obligations imposed upon witnesses, would aid in overcoming uncertainties and increase the efficiency of dispute resolution by eliminating ancillary disputes. Furthermore, such uniform practices would provide protection to the sanctity of confidentiality in arbitration proceedings, thereby, maintaining arbitration as a lucrative commercial dispute resolution mechanism.

References:

[1]     UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration, 2014, Art. 6.

[2]     LCIA Arbitration Rules, 2014, Art. 30.1; SIAC Arbitration Rules, 2016, Art. 39.

[3]     Observer v. Guardian, 1991, ECHR 51/1990/242/313.

[4]     Bible v. United Student Aid Funds, 2015, (7^th Cir.) 799 F.3d 633.

[5]     SIAC Arbitration Rules, 2016, Art. 39.

[6]     Partasides & Blackaby, Redfern and Hunter on International Arbitration, 2.30 (6th ed. 2015).

[7]     Esso Australia Resources v. Plowman, 1996, XXI Y.B. Comm. 137.

[8]     Department of Economics Policy and Development of City of Moscow v. Bankers Trust Company and International Industrial Bank, 2004, EWCA Civ. 314.

[9]     Ileana M. Smeureanu, Confidentiality in International Commercial Arbitration, Vol.22 111 (2011).

[10]   Reto Marghitola, Document Production in International Arbitration, Vol.33 69 (2015).

[11]    S. Rajaratnam, Tax Forum: How Confidential are Income Tax Returns?, April 24, 2011, available at https://www.thehindu.com/business/Economy/Tax-Forum-How-confidential-are-the-income-tax-returns/article14695574.ece (Last visited on May 13, 2020).

[12]   Xerox Canada Ltd., Xerox Corporation v. MPI Technologies Inc., 2006, O.J. No. 4895.

[13]   Smeureanu, supra note 9, at 77.

[14]   Supra note 7.

[15]   LCIA Reference No. 132551, 2015, LCIA Court Decisions on Challenges to Arbitrators.

[16]   HKIAC Administered Arbitration Rules, 2018, Art. 45.

[17]   WIPO Arbitration Rules, 2020, Art. 76(b).

[18]   Ali Shipping Corp. v. Shipyard Trogir, 1998, 1 Lloyd’s Rep. 643.

[19]   Dolling Baker v. Merrett, 1990, 1 W.L.R. 1205.

[20]   Kenneth Ajibo, Confidentiality in International Commercial Arbitration: Assumptions of Implied Duty and a Proposed Solution, 3 Latin American Journal of International Trade Law 2 (2015).

[21]   Hans Bagner, Confidentiality: A Fundamental Principle in International Commercial Arbitration, 18 Journal of International Arbitration 2 (2001).

[22]   Gary Born, International Commercial Arbitration, 2787 (2^nd ed., 2015).

[23]   London and Leeds Estates Ltd. v. Paribas Ltd., 1995, 1 EGLR 102.