Arbitration is a form of alternative dispute resolution in which the parties agree to have their case considered outside of court by a qualified arbitrator. It is a private process where disputing parties agree on one or several arbitrators. An arbitrator, usually a retired judge or attorney, renders a decision at the end of an arbitration hearing, and that decision is final and binding, subject only to a very limited court review.

Arbitration is consensual, meaning it can only take place if both parties have agreed to it.  In the event of future contract problems, the parties insert an arbitration clause in the relevant contract. A submission agreement between the parties can be used to send an existing dispute to arbitration. The parties appoint the arbitrators, who can be chosen based on their substantive knowledge.

Confidentiality in Arbitration Proceedings

Confidentiality is an essential aspect of arbitration and is often viewed as a cornerstone of English arbitration. Confidentiality allows parties to keep their disputes private, safeguards sensitive information, and emphasizes party sovereignty. Confidentiality is the ethical and legal obligation to protect personal information and responsibly share entrusted information.

Confidentiality is a legal term that relates to an individual’s obligation to keep from disclosing confidential information to others without the express consent of the other party. It consists of a set of regulations or a pledge that is usually carried out through a confidentiality agreement that limits access and restricts certain types of information.

Information covered by confidentiality

It is critical to understand that privacy does not imply confidentiality. Arbitration confidentiality encompasses a wide variety of information, including the arbitration proceedings, the arbitral ruling and its reasons, and materials disclosed, found, and created during the processes. Confidentiality, however, is not total and is susceptible to several restrictions. Parties should use caution to avoid violating the general duty of confidentiality and should not presume that arbitration proceedings will remain confidential merely because they signed a confidentiality agreement.

Here are some reasons why confidentiality is important in arbitration:

Privacy: Confidentiality in arbitration means that third parties and strangers will be excluded and have no access to the arbitration proceedings without the consent of the parties. This is important for parties who desire to keep certain information away from public scrutiny, be they allegations arising from disputes or commercially sensitive information.

Protection of sensitive information: The principle of confidentiality in arbitration proceedings implies that the information, documents, and evidence adduced during the proceedings and the award rendered, cannot be made available in the public domain. This is important for parties who want to protect their sensitive information from being disclosed to the public.

Encourages parties to be more open: Confidentiality in arbitration can encourage parties to be more open and candid in their discussions and submissions, which can lead to a more effective and efficient resolution of disputes.

Preserves relationships: Confidentiality in arbitration can help preserve relationships between parties, as it allows them to resolve their disputes without the risk of damaging their reputation or business interests.

The obligation to uphold confidentiality and legal basis

Many arbitration institutions regulate confidentiality; however, this is primarily the responsibility of the arbitrators and personnel at each centre. Some standards are more specific, and there are Codes of Ethics for arbitrators, but they do not always establish a duty of confidentiality for the parties.  Confidentiality, however, is not absolute, and there are exceptions. The parties shall maintain confidentiality of all arbitral proceedings except for the award.  When the arbitration process begins, the tribunal should obtain the parties’ consent on the scope of confidentiality. Parties need to understand the legal foundation for confidentiality, its scope, and the consequences if a party violates it.

However, many countries have attempted to legislate or judicially accept the concept of confidentiality in arbitration. But, there are still loopholes and anomalies in the arbitration legislative framework for the adoption of confidentiality in various jurisdictions. There are a few exceptions to the rule of confidentiality.

While confidentiality is considered a key reason why parties choose to go for arbitration, it is not absolute and may not be practically possible in some cases. The legal basis of confidentiality is not clear, and it is at the court’s discretion whether to maintain confidentiality.

How to mitigate the risks associated with a breach of confidentiality?

Clearly define confidentiality obligations: Parties should include clear and specific confidentiality provisions in their arbitration agreements or incorporate institutional rules that address confidentiality. This can help ensure that all parties understand their obligations and the consequences of breaching confidentiality.

Take proactive measures to protect confidential information: Parties should implement appropriate safeguards to protect their confidential information during the arbitration process. This may include using secure communication channels, limiting access to confidential documents, and seeking protective orders from the arbitral tribunal if necessary.

Seek legal advice: If a party suspects a breach of confidentiality or is unsure about its obligations, it should seek legal advice. An experienced arbitration lawyer can guide how to protect confidential information and navigate any issues that arise during the proceedings.

How we can help?

• Our experts can Educate your clients about the importance of confidentiality in arbitration proceedings. Explain the potential consequences of breaching confidentiality, such as the loss of trust and reputation, legal sanctions, or damage to the arbitration process.
• Our firm can help clients establish secure document management systems for arbitration cases.
• Our team can offer training sessions or seminars to clients and their employees on the importance of confidentiality and best practices for maintaining it during arbitration.