CONFIDENTIALITY IN COMMERCIAL ARBITRATION

ABSTRACT
Arbitration is an alternative dispute resolution method used for the settlement of commercial
disputes or domestic disputes, and one of the important characteristics of this commercial
arbitration is confidentiality. This article analyzes the concept of confidentiality in commercial
arbitration along with related aspects like privacy and other differing views in this regard.
Article not only discusses the grounds of confidentiality but other aspects like legal backing in
different countries and universal laws relating to this, the concept of privacy vs. confidentiality,
etc. The analysis and suggestion were also derived from the study

INTRODUCTION
The concept of commercial arbitration was developed as an alternative method to resolve
disputes between parties that aroused commercial transactions conducted across national
boundaries, with development in acceptability of commercial arbitration has helped the private
parties avoid lengthy litigation in respective national courts. The key aspects for successful
commercial arbitration are to maintain privacy and confidentiality, and this reason makes keep it
distinct from other forms of dispute resolutions

The concept of privacy and confidentiality was used in commercial arbitration interchangeably
until the latter half of the 20th-century privacy mean that no third party would attend the arbitral
proceedings and hearing without the parties' consent. Confidentiality refers to restrictions on
parties to keep the information of arbitration proceedings restricted. Confidentiality is one of the
hallmarks of arbitration. One of the arbitration's most prominent features1 .these is one of the
main reasons commercial arbitration is private and confidential stands corrected in the 21st
century.

THE CONCEPT OF CONFIDENTIALITY IN COMMERCIAL

ARBITRATION
The confidentiality inherent to arbitration is attractive to disputants,2resulting in which
arbitration evolved as a first-choice alternative to litigation for solving civil and commercial
disputes. Even though there have been opinions from jurists and legal experts that confidentiality

1
Rodrigo Garcia Da Fonseca & Andr6 De Luizi Correia, The Limits of Confidentiality in arbitration: A Brazilian
perspective, 3 Y.B. ON INT'L ARB. 119, 123 (2013).
2
See BLACKABY ET AL., REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION, ¶ 1.105 (6th ed.
2015).
in commercial arbitration has eroded in recent year's confidentiality is still perceived as a vital
acolyte of arbitration. There are numerous advantages conferred by privacy in arbitration.3For
example, confidentiality reduces the possibility of damaging continuing business relations and
avoids setting adverse judicial precedents."4

The private nature of arbitral proceedings helps the parties keep their disputes away from the
general public and media; This process also allows the freedom to parties to make arguments and
contentions that sometimes they would be reluctant to make in a general litigant forum. There is
a constant conflict of interest between the confidentiality nature and public interest and other
factors like mandatory disclosure to insurers or shareholders or when the arbitral award is
challenged in a court of law. in such instance, it becomes compulsory that certain information's
which the party may consider confidential has to be disclosed

In general, the arbitrators do not have a direct obligation to observe confidentiality, and the
parties' commitment is limited and only depends on the confidential agreement that the parties
entered. This also varies according to the jurisdiction, and each country may have a different
aspect in this regard. Confidentiality in arbitration is not uniform throughout the world. Each
country has its methods to keep matters in arbitration confidential. On the one hand, countries
like the United Kingdom and France have an implied duty of confidentiality. On the other hand,
countries like The United kingdom, Australia, Newzealand do not have any confidentiality terms
unless and until the parties give their mutual consent or general legal provisions say so. In
jurisdictions that do imply a general duty of confidentiality, its protection is not absolute,' 5 but
rather is subject to various limitations or exceptions.' 6

CONFIDENTIALITY RELATING TO SUBJECT

The arbitration proceedings include several persons: arbitrators, parties, employees and office
staffs, administration personals involved in the arbitration, and third parties involved in the
proceedings, including the witness, the arbitrator has to maintain confidentiality in its
proceeding's he is expected not to disclose or discuss a case with a third party who is not in the
proceeding's until the identity of the party is sufficiently obscured to eliminate any realistic
probability of identification.

Another confliting issues of confidentiality is with the aspect of witness; a person who testifies
against before the aspect of secrecy does not bind an arbitral tribunal, but some rules, as those of
the Zurich and Geneva Chambers of Commerce, might be construed in such a way that witnesses
are bound to respect the confidentiality of arbitral proceedings, at least when duly warned by the
3
Florentino P. Feiciano, The Ordre Public Dimensions of Confidentiality and Transparency in International
Arbitration: Examining Confidentiality in the Light of Governance Requirements in International Investment and
Trade Arbitration, 87 PHIL. L.J. 1, 2 (2012).
4
Christoph Henkel, The Work-Product Doctrine as a Means toward a Judicially Enforceable Duty of
Confidentiality in International Commercial Arbitration, 37 N.C. J. OF INT'L L. 1059, 1060 (2012).
5
Feiciano, supra note 3,
6
Id
arbitral tribunal. Under some arbitration regulations, the arbitral tribunal has the power to
exclude from the proceedings any person who is not privy to it.7

CONFIDENTIALITY RELATING TO OBJECT

Another important aspect of confidentiality in arbitration is with the documents that are
submitted like witness statements, pleadings, briefs or other materials prepared and submitted
during the proceedings, testimony or other oral evidence presented in the proceedings,
documents used as evidence in the proceedings, etc. and are protected concerning both the
substantive law of privilege and procedural law's concern with the duty or obligation of
disclosure and of admissibility of evidence. The disputes aroused in the arbitration and
information with respect to that may be sensitive in a particular situation when the disagreement
has aroused as a result of trade secret, poor quality, or defective products its always better that
such issues be settled outside the court to avoid controversies in such instances the documents
and evidence submitted in the court should be kept away from the eyes of the public. as a result,
arbitration provides a perfect platform to resolve the dispute without any unneeded publicity

CONFIDENTIALITY Vs. PRIVACY

Arbitration is a private process but necessarily doesn't mean a confidential one. Sometimes,
Parties to arbitration mistakenly believe that their disputes will remain confidential due to the
proceeding's secret nature.8 The minute differences between privacy and confidentiality have led
to confusion, thereby deviating parties to believe that their disputes are confidential and highly
secretive. Thus, before discussing the aspects of confidentiality in commercial arbitration, it is
essential to differentiate between them. Confidentiality is a right of non-disclosure, and it is like
the substantial law of privacy.

Privacy in arbitration refers to a third party's inability to attend and observe the arbitration
hearing if the parties or even the arbitrator have not given their consent.9 "The private nature of
the arbitral process limits its transparency which ensures that unauthorized third parties are not
allowed to participate in or observe the proceeding. On the other hand, confidentiality is more
focused on information pertaining to the content of the process, the evidence adduced and the
documents produced, the addresses to and of the tribunal, and the records of the hearings or the
arbitral award rendered".10 This opinion of Michael Fesler gives us a true meaning of what
confidentiality actually mean in an arbitration. Confidentiality restricts third parties, but this
feature of Commercial Arbitation allows the procedures as in a traditional judicial court to be
carried on without wasting time and effort and bringing injustice as soon as possible.
7
art. 53(c) of the WIPO Rules.
8
Alexis C. Brown, Presumption Meets Reality: An Exploration of the Confidentiality Obligation in International
Commercial Arbitration, 16 Am. U. INT'L L. REV. 969, 974-75 (2001).
9
Richard C. Reuben, Confidentiality in Arbitration: Beyond the Myth, 54 U. KAN. L. REV. 1255, 1256 (2006).
10
Christoph Henkel, The Work-Product Doctrine as a Means toward a Judicially Enforceable Duty of
Confidentiality in International Commercial Arbitration, 37 N.C. J. OF INT'L L. 1059, 1060 (2012).
There is no certainty that arbitration ensures the private nature of arbitration created a duty of
confidentiality among parties, but confidentiality is definitely an inherent characteristic of
commercial arbitration. These close characteristics in privacy and confidentiality make it
difficult to draw a line and differentiate between them; hence both these concepts should work
side by side to ensure smooth sailing to ensure absolute confidentiality. Thus we should link
privacy and confidentiality and treat them not as competing values but as complements.11one of
the tensions of the main reason aroused between these two concepts is due to absence create by
the domestic and international treatment of confidentiality as a result of which commercial
arbitration is turning out to be more opaque instead of transparent

LEGAL BACKING OF CONFIDENTIALITY IN INTERNATIONAL

COMMERCIAL ARBITRATION
The backing for confidentiality in arbitration comes from the private form of jurisdiction that it
maintains. From the agreement that the parties entered into

The Anglo-Americans ground the duty of confidentiality on the relationship existing between the
parties. Three doctrines are alternatively applied12

 The duty of confidentiality is implied, e.g., where a contract binds the parties;
 the duty of confidentiality derives from a fiduciary relationship. It is then implied in law;
 The confidential information owner has a "property interest" or "property right" in the
trade secrecy.

In some cases, institutions itself has provided frameworks and rules to maintain the
confidentiality under their respective authority, For example, the London Court of International
Arbitration (LCIA) has tried to tackle the issue of confidentiality in its arbitration rules, and does
so in article 30

 30.1 Unless the parties expressly agree in writing to the contrary, the parties undertake as
a general principle to keep confidential all awards in their arbitration, together with all
materials in the proceedings created for the arbitration and all other documents produced
by another party in the proceedings not otherwise in public protect or pursue a legal right
or to enforce or challenge an award in bona fide legal
 30.2 The deliberations of the arbitral tribunal are likewise confidential to its members,
save and to the extent that disclosure of an arbitrator's refusal to participate in the

11
Michael Fesler, The Extent of Confidentiality in International Commercial Arbitration, 78(1) ARB. 48, 49 (2012).
12
Jonas Benedictsson & Anders Isgren, Confidentiality in Arbitration in Sweden, at http://
www.bakernet.com/NR/rdonlyres/EFOF8244-4C8D-4977-9F3C-1AD5A659F527/29684/Confi
dentialityinArbitrationinSweden.PDF (last visited March 8, 2021).
 arbitration is required of the other members of the Arbitral Tribunal under articles 10, 12
and 26.
 30.3 The LCIA Court does not publish any award or any part of an award without the
prior written consent of all parties and the arbitral tribunal.

In China, the arbitration proceeding by-law provides a clear mandatory duty of confidentiality,
but the confidentiality order cannot be binding on a person who is not a party to arbitration this
includes the clerks, witness, and interpreters. . However, in terms of Chinese Civil Procedure
Law(As such, the party would bring a lawsuit to the court if he deemed that the other party had
violated the duty of confidentiality. Article 120 of China's Civil Procedure Law provides that a
case involving trade secrets may not be heard in public if a party so requests. However, article
134 further provides that the court shall publicly pronounce its judgment in all cases, whether
publicly tried or not. Therefore, the order for confidentiality is not supported by the current
Chinese law) violating the duty of confidentiality is regarded as a substantial matter governed by
civil law.13

Also, complete rules regarding confidentiality can be found in articles 73-76 of the WIPO
Arbitration Rules. But all other conventions and legislation with regards this are silent; both the
United Nations Commission on International Trade Law Arbitration Rules and the International
Chamber of Commerce make arbitration a private hearing agreement but does not mention
anything about confidentiality

OBLIGATION TO MAINTAIN CONFIDENTIALITY

The confidentiality factor in commercial arbitration is one of the main reasons for its success
around the globe. Whatever may be the jurisdiction, there is always a minimum amount of
confidentiality the parties have to follow. There are number of English law which points towards
this implied obligation on the parties

In Dolling-Baker v. Merret14, the English Court of Appeal found an implied obligation of

confidentiality existed in the arbitration process. Following the rationale of Dolling-Baker, the
court affirmed that confidentiality was an essential characteristic of arbitration. Another English
case also proved that the duty of confidence exists.

In Ali Shipping Corporation v. Shipyard Trogir, 15 the English court re-asserted the Dolling-
Baker principle and held that there is a duty of confidentiality created by the law as part of every
arbitration agreement. The court recognized the following exceptions to the confidentiality
principle: the consent of the parties, the presence of a court order requiring disclosure, the

13
Stephen Zheng, Arbitral Interim Measures in the Mainland of China, at
http://www.chinalegalaid.org/english/law/list.asp?newsid=132 (last visited March 8, 2021).
14
Dolling-Baker v. Merrett, 2 All E.R. 890 (Eng. C.A. 1991), and Hassneh Insurance Co. of Israel v. Mew, 2 Lloyd's
Rep. 243 (Q.B. 1993).
15
Ali Shipping Corp. v. Shipyard Trogir, 1 Lloyd's Rep. 643, 2 All E.R. 136 (Eng. C.A. 1998).
"reasonable necessity" of disclosure to the protection or the enforcement of a parties' legal rights,
and finally, where disclosure is necessary for the interests of justice, even though the obligation
of confidentiality generally extended to documents prepared in contemplation of arbitration or
used in the process, transcripts, notes of evidence, testimonial evidence, and the award.
However, the court stated that the obligation of confidentiality would not be allowed to impinge
on the action's fair disposition. The courts in France16 have recognized a similar implied duty.

However, a recent Australian case threw a stone in the so-far undisturbed pond of confidentiality.
In 1995, the High Court of Australia, in Esso v. Plowman, made considerable inroads onto the
accepted view that the private nature of arbitration necessarily gave rise to an implied
confidentiality obligation. Confidentiality of the arbitral procedure, therefore, requires more
comment than before.

IMPLEMENTATION WAYS AND SUGGESTIONS

 Confidentiality clause in the contract is a standard method used to enforce confidentiality

in commercial arbitration. This clause must be regarded as a default clause in all
commercial arbitration contracts irrespective of the parties' consent. If at all any part of
the arbitrational proceedings has to be made public for a valid reason, then the
confidentiality clause can have an exception sub-clause along with it .
 Confidentiality agreement or contract can be included as one of the essential document in
commercial arbitration setting out various terms and conditions of confidentiality before
and after the occurrence of the proceedings signed by the parties and the judicial officers
and witnesses. This gives legal enforcement against the person who violates the
agreement ad there is a legal backup in written form.
 Confidentiality is endangered with the increase in number of people attending the
arbitration proceedings People who are utmost necessary to carry on the proceedings
must only be present. Number of witnesses can be limited. Those special people who
want to understand the working of the procedure can take prior permission and they must
also adhere to the confidentiality agreement or clause, informed and warned about the
same in advance.
 The presiding judicial officer must communicate an introduction section regarding
confidentiality and the consequences therefore from violating them to the parties and
witnesses.

ANALYSIS

16
Bleustein et autres v. Socidtd True North & Socidtd FCB Int'l, 1 Rev. Arb. 189 (2003), Paris Commercial Court; as
discussed in Handbook of ICC Arbitration, Commentary, Precedents, Materials (1st ed.), Michael Buhler & Thomas
Webster eds., 2005
There is no universal key or an approach' to maintain confidentiality in commercial arbitration.
The parties to arbitration decide the degree to which the confidentiality which needs to be
maintained so the parties while agreeing should ensure that clause related to confidentiality are
included in the draft of the contract. The national and international rules also extensively support
confidentiality, but the absence of a unique international law to maintain confidentiality is a great
drawback. A suggestion that can be put forward is forming a uniform law to ensure uniform
confidentiality of commercial arbitration around the world. This will further help in expanding
the scope and nature of commercial arbitration.

CONCLUSION
The confidentiality aspect is the biggest strength of commercial arbitration in the 21st century.
The lengthy nature of litigation proceedings and other irregularities in domestic laws make
international commercial arbitration the best alternative, as a result of which the scope of
arbitration has expanded, resulting in the setting up of commercial arbitration centers around the
world.