Confidentiality is considered one of the major benefits of arbitration and is, in some cases, the sole reason why parties opt for arbitration instead of normal court proceedings. The outcome in the recent case of Transnet Ltd v MV "Alina II"  ZAWCHC 124(5 September 2013),however, might come as a surprise to those who consider the general principle of confidentiality in arbitration to be sacrosanct.
The context and relevant facts of the case are as follows. London arbitration proceedings were instituted against the owners of the Alina II by cargo interests pursuant to damages suffered as a result of the unseaworthy vessel occupying one of two iron–ore berths at the Port of Saldanha for approximately five months. Transnet (the port operator) instituted action against owners for damages relating to loss of income arising out of the same incident.
Transnet, in the Western Cape High Court of the Republic of South Africa, brought an interlocutory application seeking an order requiring owners to tender pleadings and other documents exchanged in the course of the said arbitration proceedings. This application was granted by Goliath J on the basis of the interests of justice. In deciding so the Court drew from the following statement by Lord Denning in Riddick v Thames Board Mills Ltd  3 All ER 677 (CA) at 687: "[t]he reason for compelling discovery of documents in this way lies in the public interest in discovering the truth so that justice may be done between the parties. That public interest is to be put into the scales against the public interest in preserving privacy and protecting confidential information. The balance comes down in the ordinary way in favour of the public interest of discovering the truth, i.e. in making full disclosure".
The Court compared the position in England and Singapore, where confidentiality is considered to be implied by arbitral parties, to that of Australia, the United States and Sweden who have all rejected the approach of a general implied duty of confidentiality. After considering these foreign jurisdictions, Goliath J comments that there is no legislative basis for privacy and confidentiality of arbitration proceedings in South Africa and states: "The principle [of confidentiality] is not sacrosanct and should be viewed from the circumstances of each individual case".
In the circumstances of this case, it was firstly pointed out that there was no confidentiality agreement in respect of the arbitration proceedings. There was furthermore no suggestion that the documents sought were commercially sensitive. Also, no legitimate interest which justifies the protection of the principle of confidentiality could be established on the part of Owners, as they failed to show that any form prejudice would be suffered from the disclosure demanded. Owners had disclosed some information relating to the arbitration in raising tonnage limitation as a defence and the Court took issue with this on the basis that Owners should not be allowed to only disclose information when convenient to them. Finally, the Court found that the information was relevant to the issues and thus the disclosure thereof necessary for the fair disposal of the dispute.
It was not deemed necessary to determine whether English Law was applicable to this case. Goliath J states, however, that even if it were applicable the Court would have reached the same conclusion as, "The circumstances of the case are of such a nature that the public interest clearly overrides the private obligation of confidentiality."
In South Africa, therefore, confidentiality in arbitration proceedings is not guaranteed. It is thus advisable for those who seek to ensure confidentiality to insert an express term to that effect into the arbitration agreement. In the absence of such term, a party seeking to hide behind the shield of confidentiality will have to prove that a legitimate interest exists and is worthy of being protected from disclosure; i.e. that the prejudice suffered as result of the disclosure will outweigh the benefit of "discovering the truth so that justice may be done between parties." (Lord Denning as quoted above)
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