When can the veil of confidentiality in arbitral proceedings be pierced?

[Editors Note: We are very pleased to guest-post an article by Olswang’s Hannah Brown on when the veil of confidentiality in arbitral proceedings be pierced.]

The Claimant in Westwood Shipping Lines Inc. and another company v Universal Schiffahrtsgesellschaft MBH and another [2012] EWHC 3837 (Comm) had been a party to arbitral proceedings in which certain documents had been disclosed to it. Subsequent to the arbitration, the Claimant commenced proceedings in the High Court against the Defendant (who was not a party to the arbitral proceedings) alleging unlawful means conspiracy. The allegations relied to a considerable extent on the detail of the documents in question. The Claimant applied to the Court to allow disclosure of the documents. In reaching its decision, the High Court considered the rule of confidentiality in arbitral proceedings and the exceptions.

What is the nature and effect of confidentiality in arbitral proceedings?

One of the perceived advantages of arbitration, as opposed to litigation, is confidentiality (along with privacy). Where the seat of the arbitration is in England, confidentiality is an implied term of the arbitration agreement. (Where the seat of arbitration is overseas, it may be that the obligation of confidentiality is enshrined in statute.) The effect under English law is that the parties to the arbitration and the tribunal are duty bound to maintain the confidentiality of the hearing, documents generated and disclosed during the proceedings (even if they do not contain inherently confidential material), and the award. There are however, exceptions to this rule.

What are the exceptions to the duty of confidentiality?

In 2008 the Court of Appeal in Emmott v Michael Wilson held that the four exceptions are as follows:

  1. compulsion of law: where disclosure is compelled by law, for example where disclosure is ordered or permitted by the Court;
  2. interest of justice/public interest: where disclosure is in the interests of justice, and possibly where disclosure is in the public interest;
  3. establishment or protection of a party’s legal rights: where disclosure is reasonably necessary for the establishment or protection of an arbitrating party’s legal rights vis-à-vis a third party in order to found a cause of action against that third party or to defend a claim or counterclaim brought by that third party;
  4. agreement or consent: where there is the express or implied consent of the party who produced the document in question.

The court’s decision in Westwood

In Westwood Shipping the Court ordered disclosure on the basis of exceptions 2 and 3 above. The Claimant, on the face of it, had an arguable claim which it had a legitimate interest in pursuing. It could not pursue that claim without access to the documents from the arbitration. Further, the interests of justice clearly required disclosure because, whilst the court was not concerned with the merits of the Claimant’s claim, on the face of it there was an arguable case of unlawful conduct before the court, and confidentiality should not stifle the ability to bring to light the possible wrongdoing.

About Shaun Lee

International Dispute Resolution and Arbitration lawyer. Fellow of the Chartered Institute of Arbitration. Panel of Arbitrators and Panelist for Domain Name Dispute Resolution at the KLRCA.
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