Legislation:

Arbitration Act 1996

Cases:

Symbion Power LLC v Venco Imtiaz Construction Co [2017] EWHC 348 (TCC); [2017] B.L.R. 297 (QBD (TCC))

Teekay Tankers Ltd v STX Offshore and Shipbuilding Co Ltd [2017] EWHC 253 (Comm); [2017] 1 Lloyd's Rep. 387 (QBD (Comm))

P v Q [2017] EWHC 148 (Comm)

*Arbitrations conducted under English law are private and typically confidential. It makes arbitrations seated in England attractive for parties concerned about the disclosure of commercially-sensitive information and potential reputational damage. However, two recent English court cases, Symbion Power LLC v Venco Imitiaz Construction Co  and Teekay Tankers Ltd v STX Offshore & Shipbuilding Co Ltd.  remind us that parties often risk losing that confidentiality in any related English court proceedings. Judgments or documents on the court file which contain references to arbitrations do not automatically remain confidential. Further, courts may not agree to anonymise judgments about arbitral proceedings or to restrict their publication. So, parties are well-advised to raise any concerns about preserving confidentiality with the court early on and to seek an appropriate order to protect it.

Privacy and confidentiality — source of the rule

It is a long-held principle of English law that arbitral proceedings in England are confidential. Typically, no party to the arbitration can reveal details of the case to third parties nor can parties use any documents disclosed or produced for the arbitration for any other purpose.

The reasoning behind the principle is set out in Hassneh Insurance Co of Israel v Mew,¹ in which the court held that:

"[i]f the parties to an English law contract refer their disputes to arbitration they are entitled to assume at the least that the hearing will be conducted in private. That assumption arises from a practice which has been universal in London for hundreds of years and, I believe, undisputed. It is a practice which represents an important advantage of arbitration over the courts as a means of dispute resolution. The informality attaching to a hearing held in private and the candour to which it may give rise is an essential ingredient of arbitration, so essential that if privacy were denied by an officious bystander, I have no doubt that, in the case of practically every arbitration agreement, both the parties would object."

Here, the court focused on preserving the parties’ autonomy to choose London as the arbitral seat, and for arbitrations to therefore be private and confidential.²

In practice, however, the confidentiality of arbitrations under English law is not watertight. The Arbitration Act 1996 contains no express rules provision on privacy and confidentiality of arbitrations seated in England. The omission was deliberate: the Departmental Advisory Committee, when drafting the Arbitration Bill (which later passed into statute as the Arbitration Act 1996) considered issues of privacy and confidentiality were best "resolved by the English Courts on a pragmatic case-by-case basis".³ So the privacy and confidentiality of arbitrations in England come principally from the English Civil Procedure Rules and English case law.

Institutional rules and English common law

Some institutional arbitration rules contain limited express confidentiality provisions. The London Court of International Arbitration (LCIA) Rules state that parties must keep all awards and materials created for an arbitration confidential, unless all parties agree to publish the award.⁴ The LCIA Rules also require tribunals to hold all hearings in private.⁵ The International Chamber of Commerce (ICC) Arbitration Rules also contain similar rules, ensuring privacy⁶ and that information is kept confidential. However, confidentiality does not apply automatically in ICC arbitrations. Instead, a tribunal under the ICC Rules has the discretion to make orders to protect confidentiality upon the request of a party to the arbitration.⁷ In reality, most parties will ask for the arbitration to be kept confidential.

The LCIA and ICC have policies of publishing decisions and awards to provide a level of insight into the arbitral process and tribunals’ decision-making. The LCIA publishes some decisions on challenges to the appointment of arbitrators with names redacted. Similarly, the ICC often publishes extracts of awards and procedural orders, redacting names and any facts that may indicate identities.

So, institutional rules and English common law may protect the confidentiality of: (i) arbitral proceedings; (ii) material created for the purpose of arbitral proceedings; and (iii) arbitral awards. However, the protection does not extend to English court proceedings relating to an arbitration or documents on the court file on arbitration claims. There are no express rules in the Civil Procedure Rules (CPR) or Arbitration Act 1996 governing the confidentiality of arbitrations in related court proceedings. It will be at the court’s discretion whether or not details of an underlying arbitration are made publicly available. This arguably represents an exception to the often assumed confidentiality of arbitrations. The lack of a clear legal principle has often resulted in parties struggling to predict court decisions in this area, as seen in the two recent cases of Symbion Power LLC and Teekay Tankers.

Confidentiality v public interest

The recent case of Symbion Power LLC relates to a challenge to an ICC award granted by an English-seated tribunal. English procedural law therefore applied to the enforceability of the award and the English court’s powers to support the arbitration. Symbion, having lost the arbitration, challenged the award in the English court under s.68(2) of the English Arbitration Act 1996 alleging serious irregularity.

Despite Symbion’s submissions that the judgment be anonymised, the court decided against it. The court, in its judgment, drew a distinction between a private hearing and the publication of a judgment. For hearings on arbitration claims, the CPR sets out the position. CPR 62.10 applies a default position that arbitration claims be heard in private.⁸

However, CPR 62.10 does not apply to the confidentiality of judgments. The court took the opportunity to set out the factors it will consider when deciding whether to maintain the confidentiality of arbitration claims and related judgments.

"There is a strong public interest in the publication of judgments, including those concerned with arbitrations, because of the public interest in ensuring appropriate standards in the conduct of arbitrations. That has to be weighed against the parties’ legitimate expectation that arbitral proceedings and awards will be confidential to the parties"(at [90]).

Referring to the judgment of Mance J in the case of Economic Department of City of Moscow v Bankers Trust Co.,⁹ the court then went on to consider the principles regarding the confidentiality of judgments in further detail:

"When weighing the factors, a judge has to consider primarily the interest of the parties in the litigation before him or in other pending or imminent proceedings. … The concerns or fears of other parties cannot be a dominant consideration. Nor can there be any serious risk of their being deterred from arbitrating in England, if the court weighs the relevant factors appropriately …There can be no question of withholding publication of reasoned judgments on a blanket basis of a generalised, and in my view unfounded, concern that their publication would upset the confidence of the business community in English arbitration."

Applying these principles, the court declined to anonymise the judgment. In making this decision, it pointed to the fact that the original ICC award had already been made public in US proceedings, and that a representative of Symbion had reportedly commented on them publicly. This behaviour was not considered consistent with Symbion’s wish to safeguard confidentiality. Symbion nonetheless argued that the judgment should be anonymised to avoid the general prejudicial effect it would have on its negotiating position. The court rejected this argument and gave greater weight to the public interest in having access to judgments on arbitration matters. Accordingly, the court concluded that anonymising the judgment was not justified.¹⁰

The court’s decision arguably echoes the views of many prominent figures in the legal field, who advocate for increased transparency of arbitral proceedings and decisions, arguably putting the development of the law above the parties’ commercial interests.¹¹ One suspects that if a party is able to clearly articulate real commercial sensitivity the outcome may well be different.

A compromise?

The recent case of Teekay Tankers in the English Commercial Court also considered the issue of confidentiality. Here, the defendant complained in its Defence and Counterclaim that the claimant’s Particulars of Claim made reference to arbitral awards and arbitrators’ reasons which, it argued, should have remained confidential. It is important to note that, under English law, non-parties may obtain copies of statements of case (see CPR 5.4C) from the court file upon request.

The court considered the issue of confidentiality (and the related issue of the award and arbitrators’ reasons being made public in proceedings in South Korea). It made the following comments:

"… under the normal operation of CPR 5.4C a non-party exercising the right to obtain copies of the amended particulars of claim and the amended reply would gain sight of the contentious confidential matters [relating to the arbitral award and arbitrators’ reasons]. If their confidentiality were to be safeguarded it was necessary, prior to filing with the court, to seek from the court an order modifying the operation of CPR 5.4C in the present case…

… proceedings in this court are, in the absence of good reason to the contrary, conducted in public. … The appropriate course was not to propose a default provision that the trial would be in private. The course that should have been taken was for the parties to work together on two tasks well in advance of the trial… to identify evidence and argument which could be heard in public in the normal way without there being any real risk of breach of confidentiality. … to assess, as regards the remaining evidence and argument, the scope for steps to enable as much as possible of that evidence and argument to take place in public without breaching confidentiality."¹²

The court ultimately allowed closing submissions to be heard in private and modified the application of CPR 5.4C in this instance to allow non-parties only to obtain edited versions of the statements of case, skeleton arguments and written submissions.

Party autonomy triumphs

The cases of Symbion Power LLC and Teekay Tankers, demonstrate that English courts are not readily willing to compromise public access to court documents and/or judgments on arbitration-related proceedings without good reason. Robust arguments will have to be presented to the court before it considers tipping the balance away from public interest in the proceedings, towards the parties’ autonomy to preserve confidentiality.

In the recent case of P v Q,¹³ the preservation of confidentiality won favour with the court. This case related to the claimant’s application to remove two arbitrators (and the second and third defendants), from an arbitral tribunal for misconduct under s.24 of the Arbitration Act 1996. The judgment was anonymised, but discloses the court’s application of key principles of law which may be of public interest.¹⁴ To obtain anonymised judgments of this nature, any concerns regarding the confidentiality of the underlying arbitration should be raised with the court sooner rather than later.

Where to next?

These recent cases show there is no guarantee that details of an underlying arbitration in related English court proceedings will remain confidential. The court appears to be routinely balancing arguments for party autonomy and the confidentiality of arbitrations against the importance of public access to court proceedings. Arguably, we should expect to see the courts paying increasing attention to the latter, particularly in light of the widely-reported comments of Lord Thomas, Lord Chief Justice of England and Wales, in the Bailii Lecture of 2016 that:

"… the resolution of disputes firmly behind closed doors [is] retarding public understanding of the law, and public debate over its application … [s]uch a lack of openness equally denudes the ability of individuals, and lawyers apart from the few who are instructed on arbitrations, to access the law, to understand how it has been interpreted and applied. Some have suggested that the courts could anonymise judgments or details within judgments. This would not be a course I would favour, for as is clear from what I have said elsewhere, open justice is a hallmark of democratic society." ¹⁵

The lecture unsurprisingly caused concern within the arbitration community, particularly in London where a significant number of arbitrations are conducted under English law. In comparison to other legal jurisdictions, English law arguably represents one of the last bastions of the implied duty of confidentiality over arbitrations. Similarly, the LCIA Rules are some of the only institutional rules on arbitration which maintain high levels of automatic confidentiality. These factors are likely to have contributed to London’s popularity as a forum for arbitration. If the English court’s approach to confidentiality is perceived to be undermining this, London may lose out as a favoured forum.

Lord Thomas’ lecture has also arguably revived the debate amongst practitioners on the need for greater transparency of arbitral proceedings on a proactive, voluntary basis as opposed to a court-ordered basis. For instance, it has been queried whether institutional rules such as the ICC and LCIA should require more frequent publication of tribunals’ key decisions relating to the application of the law. Some feel public scrutiny would improve the quality of decisions made in arbitrations and thus benefit the process.

Conclusion

It remains to be seen whether any arbitral institutions will take the first step towards increased transparency, and changes in this area are likely to be incremental to avoid any unease amongst potential parties to arbitrations. In the meantime, however, parties should proceed carefully if they wish to avoid inadvertently jeopardising the confidentiality of the arbitration in related English court proceedings. As the cases of Symbion Power LLC and Teekay Tankers demonstrate, the English court typically avoids imposing blanket confidentiality, subject to the following few exceptions:

(i) under the CPR, which states that challenges under s.67 and 68 of the Arbitration Act 1996 ¹⁶ will typically be heard in private;
(ii) where a party persuades a court it will suffer actual detriment if a judgment is published or provides some other justification for anonymising or not publishing a judgment; or
(iii) where a court order is obtained to restrict non-parties’ right to access the court records under CPR 5.4C.

Parties with confidentiality concerns therefore need to be proactive and should:

• ensure they preserve the confidentiality of the arbitral proceedings and any related proceedings, awards or judgments and do not make any public comments about the matter;
• raise the issue of confidentiality of arbitral proceedings and awards promptly with the court at the outset of court proceedings;
• seek appropriate orders on the conduct of the hearing including:

(i) how documents on the court record may be amended, adjusted or redacted to preserve the confidentiality of the arbitral proceedings or awards;
(ii) redacting references to particularly commercially-sensitive matters in the arbitration; and
(iii) anonymising the judgment; and

• ensure they clearly articulate the damage any public access will cause them.

<sup>1. Hassneh Insurance Co of Israel v Mew [1993] 2 Lloyd‘s Rep 243 at 246-247.↩
2. The principle of party autonomy in English-seated arbitrations is enshrined in s.34 (1) of the Arbitration Act 1996: "It shall be for the tribunal to decide all procedural and evidential matters, subject to the right of the parties to agree any matter".↩
3. The Right Honorable Lord Saville LJ, "Departmental Advisory Committee on Arbitration Law: 1996 Report on the Arbitration Bill" (1997) 13(3) Arbitration International 275, para.17.↩
4. Article 30 of the LCIA Rules (updated on 1 October 2014).↩
5. Article 19 of the LCIA Rules (updated on 1 October 2014).↩
6. Article 26(3) of the ICC Rules (updated on 1 March 2017).↩
7. Article 22(3) of the ICC Rules (updated on 1 March 2017).↩
8. CPR r.62.10 makes an exception for hearings on challenges under s.69 of the Arbitration Act 1996 relating to appeals of awards on a question of law. These will be heard in public unless the court orders otherwise. One assumes this is because there is an overriding public policy interest in judgments on questions of law being public.↩
9. Economic Department of City of Moscow v Bankers Trust Co. [2004] EWCA Civ 314; [2005] Q.B. 207.↩
10. Symbion Power LLC v Venco Imitiaz Construction Co [2017] EWHC 348 (TCC); [2017] B.L.R. 297 at [90].↩
11. See The Bailii Lecture 2016 of the Right Hon The Lord Thomas, Lord Chief Justice of England and Wales, "Developing commercial law through the courts: rebalancing the relationship between the courts and arbitration": "The principle of party autonomy is expressed in s.34 (1) of the [Arbitration Act 1996] — the right of the parties ultimately to decide on all procedural and evidential matters. […] As to confidentiality, this is often cited as one of the most valued components of international commercial arbitration. The strength of this perceived benefit is not, however, as clear cut as it might seem. Arbitral confidentiality is, as the Lord Mayor had it, 'overrated'. Why? Because the market tends to know which parties are involved in which arbitrations and what the arbitration is about. […] And then even when confidentiality and privacy are maintained during the arbitration, it does not stay so for long, as information leaks and private markets in the trade of arbitral decisions develop. If the arbitral award requires recognition and enforcement, the inevitable entry into the public arena occurs. Even if confidentiality can be maintained …the perceived advantage is more apparent than real, for most commercial disputes, although of interest to lawyers, are not newsworthy." at [38]↩
12. Teekay Tankers Ltd v STX Offshore & Shipbuilding Co Ltd [2017] EWHC 253 (Comm); [2017] 1 Lloyd’s Rep. 387 at [37] and [38].↩
13. P v Q [2017] EWHC 148 (Comm).↩
14. In the judgment, the court also addressed the claimant's application for disclosure by the second and third defendants (the Co-Arbitrators) of various documents in relation to their decisions. These documents included instructions from the Co-Arbitrators to the Secretary, all responses from the Secretary to these instructions, and all communications sent or received by the Co-Arbitrators which related to the role of the Secretary and/or the tasks delegated to the Secretary. The court rejected the application for disclosure, stating that "[w]here the parties have agreed that documents should remain confidential to the arbitrators, the Court should normally give effect to that agreement. This accords with the principle of party autonomy and minimum court intervention enshrined in the Act" (at [67]).↩
15. The Bailii Lecture 2016 of the Right Hon The Lord Thomas, Lord Chief Justice of England and Wales, "Developing commercial law through the courts: rebalancing the relationship between the courts and arbitration", para.23.↩
16. Challenges under s.67 are brought on the grounds of the tribunal's lack of substantive jurisdiction, and those under s.68 on the grounds of serious irregularity affecting the tribunal, proceedings or the award.↩</sup>