At present, commercial arbitrations taking place in London are automatically concealed behind a curtain of secrecy. Now that arbitration has emerged successfully into the mainstream of international dispute resolution – and in age in which the absence of information is often replaced by an abundance of misinformation – is it acceptable, or even wise, for that to remain the case? And can we imagine such automatic confidentiality remaining acceptable in 10, 20 or 30 years time? If the answer to either of those questions might be ‘no’, here is a third question: why wait to make a change grudgingly in 20 or 30 years that will by then be considered to be long overdue?
the ‘implied’ duty of confidentiality…draws the curtain of confidentiality down over every arbitration
One answer to all of those questions is: “Yes”, confidentiality does make sense and will endure because “many users want it so, and this is – above all – their process”. But such a well-motivated response is not a defence to automatic confidentiality. If particular parties in particular cases want their arbitration to be confidential, then they of course should be able to make their arbitration so.
But the ‘implied’ duty of confidentiality in England and Wales goes further. It draws the curtain of confidentiality down over every arbitration that takes place in our jurisdiction as a matter of course, whether parties have selected it or not. In doing so, English law goes further in pursuit of confidentiality than the law of many other major jurisdictions.
Australia has not recognised an implied duty of confidentiality since its High Court’s famous 1995 ruling in Esso v Plowman, in which the High Court held over twenty years ago that confidentiality, unlike privacy, was not “an essential attribute” of commercial arbitration.
A similar position has long existed in the United States, where the US Federal Arbitration Act is silent on confidentiality, and US courts have been reluctant to recognise any implied duty to fill the legislative gap, most famously in the classic case of United States v. Panhandle E. Corp.
And this trend has certainly not been limited to the common law world. In the well-publicised Bulbank case, the Swedish Supreme Court held that there is no implied duty of confidentiality in private arbitrations. Notably, the Supreme Court asked itself whether there was any international consensus regarding confidentiality and, upon determining that there was none, concluded that it was free to come to its own negative decision on the existence of such an implied duty.
It is against the backdrop of decisions such as these – none of them recent – that we should consider the implied duty of confidentiality that still survives in England, which has been affirmed by the Court of Appeal as recently as 2008 in the case of Emmott v Michael Wilson Partnership.
In Emmott, the Court of Appeal granted permission to disclose pleadings generated in a London-seated arbitration to parties in overseas court proceedings, in order to prevent the overseas courts from being misled. Delivering the leading judgment, Lawrence Collins LJ (as he then was) described the implied duty of confidentiality as:
an implied obligation (arising out of the nature of arbitration itself) on both parties not to disclose or use for any other purpose any documents prepared for and used in the arbitration, or disclosed or produced in the course of the arbitration, or transcripts or notes of the evidence in the arbitration or the award, and not to disclose in any other way what evidence has been given by any witness in the arbitration, save with the consent of the other party, or pursuant to an order or leave of the court.
The Court therefore confirmed the implied duty of confidentiality in terms that are as definitive as they are broad.
The arguments in favour of confidentiality in arbitration are well known, and we must acknowledge that some – perhaps many – of our clients prize it. For them arbitration is, above all, a means of resolving their particular commercial disputes in the context of particular commercial relationships that rarely will be helped by unnecessary publicity. The resolution of those disputes, efficiently, and ideally in a way that furthers rather than undermines the relationship, must always be prioritised, and that is why the potential for confidentiality is such a virtue of our process.
The paucity of information about what takes place in arbitrations undoubtedly makes the process less predictable for all participants.
But let us also recognise the costs of confidentiality: because they may be less obvious, but are no less real, for those same users of our process. The paucity of information about what takes place in arbitrations undoubtedly makes the process less predictable for all participants. That paucity of information also allows misinformation to flourish, which undermines the legitimacy of a process that those same users depend upon. Already we have seen the outcry against investment arbitration that finds its loudest voice in complaints about a lack of transparency. It would be naïve to presume that such complaints are not affecting the world of commercial arbitration: accusations denigrating shadowy ‘secretive, private courts’ will not get any easier to rebut or explain over time. And mixed in with all of this is the absence of the behavioural advantages that will come with the scrutiny that public information will provide on the performance of the participants in this process (arbitrators and counsel alike!).
In short, while many things are gained from confidentiality, other things are lost. Reversing the default setting, so that confidentiality remains a possibility rather than a presumption, could preserve the former, while addressing the latter. If confidentiality is important to the parties to an arbitration agreement, those parties can agree expressly on confidentiality at the time of drafting the agreement, or agreeing the applicable rules. If they do not do so, then why should an unexpressed intention be presumed?
For this reason, I have argued that there is now a case to legislate to reverse the presumption of confidentiality, so that arbitral proceedings seated in England and Wales would only be treated as confidential when the parties have expressly provided as such.
The adoption of such a rule would not place England outside the bounds of existing arbitral practice. To take just one example, in its 2004 statute, Norway adopted such an ‘opt-in’ system, by providing that “[t]he arbitral proceedings and the arbitral award shall not be subject to a duty of confidentiality, unless otherwise agreed by the parties in respect of each arbitration”.
Moreover, such a change would be of only minor significance for those parties still interested in agreeing a duty of confidentiality expressly for their arbitration, but would nevertheless make a significant contribution to reinforcing the public legitimacy of our process. Over time, it would provide users with a growing accumulation of publicly-available information about a process that many still find far too unpredictable. In doing all of this, such an amendment would make a bold statement about what arbitration can now be in the twenty-first century, in a jurisdiction that hopes to remain one of its most important homes.
 Id., at 1379-80 (emphasis added).