Australia: Confidentiality In Arbitration - An Update

Last Updated: 17 November 2004
Article by Steve O'Reilly

Key Point

  • The UK Court of Appeal appears to have struck a balance between a blanket rule of non-disclosure, and a rule in favour of public disclosure of judgments.

The adverse effect of publicity is often an important consideration for parties when they are deciding how to resolve a dispute. One of the traditional advantages of arbitration was that it was generally understood to offer a confidential forum for the resolution of commercially sensitive disputes. However, the confidentiality of arbitration proceedings is not absolute, and recent articles in this publication have examined some of the exceptions which can apply.

The confidentiality of arbitration proceedings was considered once again in a recent judgment of the English Court of Appeal in Department of Economic Policy and Development of the City of Moscow v Bankers Trust Company and Ors [2004] EWCA Civ 314. The question the court considered was not one to do with the arbitration itself but rather the confidentiality of any ancillary court proceedings in support of the arbitration - in particular, in a situation where the parties challenge an arbitral award, and the court delivers a judgment, whether this judgment could be made publicly available. The outcome, consistent with recent trends in some jurisdictions, is endorsement of a balancing exercise in relation to confidentiality (albeit on the basis of some specific aspects of English arbitration law).

The arbitration involved a number of parties: the Department of Economic Policy and Development of the City of Moscow and The Government of Moscow ("Moscow"); Bankers Trust Company ("Bankers Trust"); and International Industrial Bank ("IIB").

The arbitration concerned disputes about default of a credit agreement and the recovery of monies advanced under the agreement. The arbitration was conducted under the UNCITRAL Rules and, pursuant to these rules, the arbitration was conducted in private and the award published only to the parties.

Following receipt of the award, Bankers Trust and IIB applied to the court to have the award set aside on the grounds of "serious irregularity" under section 68 of the Arbitration Act 1996 (England). This application was dismissed in a judgment given by Justice Cooke in March 2003. The judgment of Justice Cooke was not marked "private" and Bankers Trust and IIB immediately argued that the judgment should remain private. The issue was stood over for further argument and in June 2003, Cooke J held that the March judgment should remain private and should not be made available for any publication (although the subscription service LawTel had briefly made the judgment available on its website). It was against this judgment that Moscow appealed.

In deciding the case, the Court of Appeal was asked to balance the desire for judgments to be made publicly available with the public interest of supporting arbitration as an alternative form of dispute resolution, particularly protecting the features of privacy and confidentiality for which arbitration has become known.

In coming to its conclusion, the court noted that party autonomy is fundamental to arbitration and that in choosing arbitration, the parties elected an alternative system of dispute resolution to that provided by the public courts. However, the court also held that the fact that the parties elected to arbitrate confidentially and privately could not dictate the position in respect of applications brought before the court. This is because the courts, when called upon to consider an appeal to an arbitral award, act as a branch of the State, and not a mere extension of the consensual arbitral process.

On this basis, the court indicated its preference for judgments to be made publicly available, as long as this could be done in a way that avoided revealing confidential information which may prejudice one or more of the parties. When preparing and giving judgments, it was stated that the court should keep in mind the desirability of a public judgment and hand down a judgment that does not disclose significant confidential information. The Court of Appeal suggested that judges mask sensitive facts and only reveal issues that are crucial to a decision.

In this case, despite the presumption in favour of disclosure, the court held that making the judgment publicly available would reveal "sensitive matters of greatest confidentiality". In upholding the decision of Justice Cooke, the Court of Appeal held that the primary factor was the interests of the parties in the litigation or in pending proceedings. The concerns or fears of other parties, should not be a dominant factor.

While this case potentially may have ramifications in other jurisdictions, it is important to note that much of the judgment turned on the UK Civil Procedure Rules, in particular Rule 62.10 which provides that an "arbitration claim" may be heard either in public or private, where an "arbitration claim" includes an appeal of an award.

On the one hand, this case reinforces notions of confidentiality by extending confidentiality to cover judgments relating to the appeal of an award. On the other hand, this case could be viewed as an exception in the face of a presumption in favour of public disclosure of judgments. The Court of Appeal appears to have struck a balance between a blanket rule of non-disclosure, and a rule in favour of public disclosure of judgments, by withholding publication of judgments in circumstances when a party or parties would suffer some real prejudice. This case further develops the notion that confidentiality in arbitration - while desirable and achievable - must always be weighed against wider public interests.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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