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Confidentiality in Arbitration: A Fresh Perspective for India in Light of Global Developments

Dalima Pushkarna[1]


Introduction

The Singapore International Commercial Court (hereinafter “SICC”) in CZT v CZU, dated 28 June 2023, clarified that an Arbitral Tribunal’s discussions/deliberations were confidential in nature, and the principle of confidentiality allows for the disclosure of these documents solely under highly exceptional circumstances. The exception to this rule of confidentiality is that only in extremely exceptional circumstances can these documents be produced.


This landmark decision highlights Singapore’s pro-arbitration approach by marking the inaugural instance in which a Singaporean Court has addressed ordering the disclosure of deliberation records. The judgement strongly upholds the principle of confidentiality concerning tribunal deliberations and establishes that any departure from this confidentiality should only occur if the “interests of justice” substantially outweigh the policy considerations supporting confidentiality. Such an exception would necessitate (a) the presence of very serious allegations that attack the integrity of arbitration at its core and (b) a reasonable prospect of these allegations achieving success.


This decision of SICC also aligns with the view adopted by the National Courts of other jurisdictions like the USA, UK, and Australia, where an exception to confidentiality is allowed depending on the circumstances of the case and the nature of the allegations made.


With the help of this article, the author tries to analyse the confidentiality regime present in India and how India can follow the approach taken by the arbitration hubs of the world and derive certain exceptions to the confidentiality clauses in India.


International Legal Framework on the Issue

While it can be said that statutes on arbitration are silent on the issue of limitations to the rule of confidentiality, the courts across various jurisdictions have highlighted and developed exceptions to the confidentiality rule through case law jurisprudence. These exceptions are of limited nature, depend on a case-to-case basis and are made when there are serious or grave allegations and not upholding the principle of confidentiality is in the interest of justice.


In the case of Vantage Deepwater Co. v Petrobras Am., Inc., the client, represented by Tai-Heng Cheng, was awarded US$622 million along with 15.2% compound interest. However, a dissenting arbitrator raised allegations of unfairness during the proceedings. Subsequently, the party that lost the arbitration attempted to challenge the majority award and requested access to discovery from the dissenting arbitrator and the American Arbitration Association (the entity that conducted the arbitration). The Fifth Circuit, after reviewing the case, upheld the Lower Court’s decision to dismiss the motions for discovery. The Court emphasised that before granting such discovery, it is crucial to assess the asserted need for previously undisclosed information and its potential impact on the arbitral process. Hence, USA Court focused that depending upon the need and the interest of justice, an exception to the confidentiality regime can be made.


Similarly, in the English case of P v Q & Ors., a party made an application to remove two arbitrators on the grounds of misconduct. In support of this application, the party sought access to communications exchanged between the arbitrators and the tribunal secretary. Similar to the approach taken by the SICC, the English Commercial Court determined that disclosure would only be ordered if the allegation of misconduct had a reasonable likelihood of success. Moreover, the court considered whether the requested documents were strictly necessary for the fair adjudication of the application and whether it was appropriate, considering all circumstances, to exercise its discretion and grant the disclosure order.


Further, in the case of Ali Shipping Corp v Shipyard Trogir, the UK Court laid down exceptions to confidentiality and cases where disclosure can be made:


1. Where the party who originally produced the material expressly or impliedly consents;

2. Disclosure pursuant to an order of the court or with leave of court;

3. Disclosure to the extent reasonably necessary for the protection of a party’s legitimate interests, in particular in establishing or defending a claim against or from a third party; and

4. Disclosure where the interests of justice require it.


Furthermore, Part III of the International Arbitration Act (IAA) also outlines the limitations and exceptions to the confidentiality regime in Australia. Section 23C of the IAA provides that parties to arbitral proceedings commenced in reliance on an arbitration agreement must not disclose confidential information unless:

  • the disclosure falls within one of the circumstances outlined in Sec. 23D of the IAA, including that all parties to the proceedings consent to the disclosure; the disclosure is to a professional or other adviser to any of the parties; or if the disclosure is necessary for the purpose of enforcing an arbitral award, and the disclosure is no more than reasonable for that purpose (Sec. 23D);


  • the arbitral tribunal makes an order allowing the disclosure in certain circumstances (Sec. 23E), and no court has made an order prohibiting a party from disclosing confidential information (Sec. 23F); or


  • a court makes an order allowing disclosure in certain circumstances (sect. 23G).

Hence, National Courts all over the world have provided some exceptions to the general rule of confidentiality. When the case involves serious allegations, “is in the interest of justice”, and when the case has real prospects of succeeding, then limitations on confidentiality may be imposed.


Indian Legal Framework

In 2017, a distinguished High-Level Committee chaired by Justice B. N. Srikrishna was established with the purpose of conducting a comprehensive review of the institutionalisation of arbitration mechanisms in India. The Committee’s significant mandate involved proposing various reforms and amendments to enhance the Arbitration and Conciliation Act, 1996. One crucial recommendation by the Committee pertained to the incorporation of the principle of ‘confidentiality’ in arbitration proceedings. Subsequently, in alignment with these recommendations, the Arbitration and Conciliation (Amendment) Act of 2019 was enacted. This amendment introduced Section 42A, which effectively extended the application of the principle of ‘confidentiality’ to encompass arbitration proceedings. Section 42A of the Act herein follows:


Notwithstanding anything contained in any other law for the time being in force, the arbitrator, the arbitral institution, and the parties to the arbitration agreement shall maintain the confidentiality of all arbitral proceedings except award where its disclosure is necessary for the purpose of implementation and enforcement of award.”


It is important to note that this provision does not incorporate all the suggestions made by the B.N Srikrishna Committee. The Committee had suggested three exceptions to the issue of confidentiality, namely:

  • Disclosure required by a legal duty;

  • Disclosure to protect or enforce a legal right;

  • To enforce or challenge an award before a court or judicial authority.

The legislature, while making the amendments and incorporating the recommendations of the Committee, only included one exception to Section 42A that pertains to the disclosure of arbitral awards to facilitate their implementation. Therefore, it can be inferred without trouble that India’s stance on the exceptions and limitations to confidentiality does not align well with the practice of National Courts of other jurisdictions, according to which if the allegations are serious and there is a reasonable prospect of achieving success, then in those cases the exceptions to the confidentiality of the arbitration proceedings are applicable.


Apart from deviating from the approach of other jurisdictions, the Indian provision also fails to consider certain instances where the disclosure of arbitration proceedings may be in the interest of the general public, especially in cases where the state is a party to the arbitration. Hence, in these cases, an exception must be made from the generally followed practice, and imposing restrictions on this via Section 42A might amount to violating the Right to Information of the general public.


The High Court of Australia, in the case of Esso Australia Resource Ltd. v Plowman, dealt with an issue of violation of the Right to Information in an arbitration dispute where a state-owned entity was one of the parties. The Court recognized that the resolution of such a dispute has broader implications that affect the interests of the general public. Consequently, the Hon’ble High Court concluded that the public’s right to be informed about the affairs of public authorities was paramount in this context, and therefore, the public had a legitimate interest in knowing the intricacies and details of the arbitration proceedings.


Conclusion

Taking inspiration from its foreign counterparts, India should involve a comprehensive review and amendment of the current legal provisions to align with international practices and strike a balance between confidentiality and transparency. By incorporating exceptions to confidentiality like those recognized in other jurisdictions, India can ensure that in cases of serious allegations or when the public interest is involved, disclosure of arbitration proceedings can be permitted. This will enhance the transparency and accountability of the arbitral process, which is crucial for maintaining public trust in the legal system.


However, providing exceptions to confidentiality in arbitration also comes with potential drawbacks. Care must be taken to define these exceptions precisely to prevent misuse or unwarranted disclosure of sensitive information. The interests of justice should be the guiding principle, and disclosure orders should be granted sparingly and only when necessary to protect legal rights or public interests. Additionally, ensuring that any disclosure is limited to the specific information needed and does not compromise the overall confidentiality of the arbitral process is essential.


 

[1] B.A. LL.B. (Hons.) | Candidate of 2026 Dr. RML National Law University, Lucknow.

1 comentário


snrlawmarketing2
25 de ago. de 2023

This insightful blog offers a refreshing take on confidentiality in arbitration, contextualizing it within India's legal landscape while drawing from global advancements. A must-read for anyone navigating the intricacies of arbitration procedures. - https://snrlaw.in

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