Confidentiality May Seem A Self-Evident Feature Of International Arbitration – In Which Case, You May Be Surprised.
At the 41st Annual IP Conference held in Santa Barbara, I was asked an excellent question yesterday about dealing with confidentiality in international arbitrations. Unfortunately, this is not a subject about which I had devoted enough thought. However, Camilla Mickelson Lous, an attorney with the Norwegian law firm Steenstrup Stordrange, has obviously thought long and hard about this. It is the subject of her excellent April 14, 2014 on-line article entitled: “Hush! Let’s Arbitrate – Discourse And Practice On The Question Of Confidentiality In International Commercial Arbitration.” While I recommend reading the article in its entirety to anyone interested in the subject, I will give you a few of the highlights.
Ms. Lous points out that there is “a notable presumption that confidentiality is a self-evident feature of international arbitration.” However, as important as confidentiality may be to the parties, it shouldn’t be taken for granted.
Preliminarily, there is a difference between confidentiality and privacy. While arbitral hearings may generally be “private”, i.e., they are not open to the public, it cannot be said that confidentiality, as a state of secrecy, necessarily permeates the arbitral process. Participants could be free to communicate outside the arbitration about the existence of the arbitration, communications in the arbitration, and the arbitration award, absent well-defined confidentiality safeguards.
Looking for examples of confidentiality protection in England, Australia, the US and Sweden, Ms. Lous identifies different approaches
- England: Arbitral matters are presumed to be confidential.
- Australia: Confidentiality is not an essential attribute of arbitration, especially where matters of public interest are concerned, though the parties may contract for confidentiality.
- US: Neither the Federal Arbitration Act nor the Uniform Arbitration Act contain confidentiality provisions. The parties may contract for confidentiality.
- Sweden: No obligation of confidentiality exists, though a “duty of loyalty” may exist between the parties to an arbitration. If the parties want confidentiality, they must contract.
Though the rules of international arbitral institutions may regulate confidentiality, there is no uniform approach. WIPO Arbitration Rules 75 to 77, address confidentiality of the existence of the arbitration, disclosures made during the arbitration, and maintenance of confidentiality by the arbitration center and the arbitrator. It makes perfect sense that WIPO would have rules addressing confidentiality, because the “World Intellectual Property Organization” exists to protect the “IP” in “WIPO”, and intellectual property is often valuable because it is confidential.
The UNCITRAL Model Law on International Commercial Arbitration leaves the question of confidentiality to the parties and the arbitration rules they choose.
While confidentiality cannot be taken for granted in international arbitration, there are some things a party can do: (1) include a confidentiality clause in the original contract; (2) get individual confidentiality agreements from third parties; (3) if confidentiality is a concern, pay attention to the choice of law and seat of arbitration; (4) request protective orders from the arbitrator; (6) go to national courts to enforce protective orders (sometimes a self-defeating option).
Bottom line: do not take the obligation to maintain confidentiality for granted in international commercial arbitration.
While I found Ms. Lous’ article to be genuinely illuminating, I can’t help but remember Laurel and Hardy’s immortal words: “Well, here’s another nice mess you’ve gotten me into.”
HAT TIP to the attorney in the audience who asked me about confidentiality in international arbitration yesterday!
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