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
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 thepublic
interest in discovering the truthso 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
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
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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