Is international arbitration always confidential?

There is a common misconception that international arbitration proceedings are always confidential.  Many commercial parties prefer arbitration to litigation because of arbitration’s perceived advantages for preserving confidentiality.  In a survey, over 80% of in-house counsel acknowledged choosing arbitration at least partly for confidentiality.  Meanwhile, 50% of respondents believed arbitration proceedings are confidential even when there is no specific confidentiality clause in the applicable arbitration rules or agreement. 

Arbitration proceedings, however, are not always confidential.  Confidentiality depends on the legal framework that applies to the arbitration.  That includes parties’ agreements, applicable arbitration rules, and any law applicable to the arbitration’s procedure.  Parties seeking confidentiality in arbitration are well advised to spell out confidentiality rules in their arbitration agreement. 

Sources of confidentiality obligations

Confidentiality obligations can arise from various sources.  The most common is the parties’ own arbitration agreement.  Most legal systems will recognize an agreement between commercial parties on the confidentiality of international arbitral proceedings. 

But there are important limitations.  For example, parties’ confidentiality agreements are not normally binding on third parties (including witnesses). 

Confidentiality obligations may also arise from institutional arbitration rules incorporated by reference into the parties’ arbitration clause.  But institutional confidentiality rules vary.  For example, the London Court of International Arbitration (LCIA) designates as confidential all arbitration awards and materials created for arbitration.  By contrast, the International Chamber of Commerce (ICC) merely authorizes an arbitrator to make orders concerning confidentiality. 

The ICC’s rules do not automatically obligate parties to keep proceedings confidential.  Similarly, the ICSID Convention and Arbitration rules do not contain a general presumption of confidentiality, instead allowing parties to tailor the level of confidentiality as desired.

If the parties’ agreement is silent on confidentiality, obligations can still arise from the law applicable to the arbitration’s procedure.  In international commercial arbitrations, that law will often be that of the “seat” of the arbitration.

Some jurisdictions have adopted statutory confidentiality provisions.  For example, in Hong Kong, parties to arbitrations are prohibited from—unless agreed—disclosing any information on arbitral proceedings or an award.

Some legal systems recognize an implied duty of confidentiality for arbitral proceedings.  English courts, for instance, consider confidentiality to be an “implied term” of every arbitration agreement.  By contrast, United States courts have refused to imply such a duty. 

Under French law, international arbitrations are not confidential unless otherwise agreed by the parties.  Importantly, the UNCITRAL Model Law, which is the law of some 83 different States, similarly does not contain any confidentiality provision.  

Best practices to ensure confidentiality

Even if the applicable legal framework does not provide for confidentiality, parties may agree to confidentiality rules for their arbitration after proceedings have commenced.  But if parties are at odds on this, it may be difficult to reach agreement at that stage.

Parties concerned about confidentiality are well advised to negotiate and specify confidentiality terms in their arbitration agreements.  That is especially true if the underlying contract contemplates sharing trade secrets or other proprietary information. 

Confidentiality agreements are not always airtight.  But they can mitigate some of the uncertainty created by variable institutional rules and legal regimes.

To learn more about international arbitration, follow us on LinkedIn.  “Brilliant lawyers with courtroom savvy” – Benchmark Litigation.  Copyright MoloLamken LLP 2021.


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