One of the primary advantages of arbitration over litigation is that arbitration proceedings are confidential and conducted in private. This makes arbitration popular with parties who wish to keep the terms of their dispute outside of the public domain. However, under English law, there are a limited number of exceptions to this general rule of confidentiality. The recent case of Westwood16 provided an interesting insight into these exceptions and the circumstances in which the English courts will waive the confidentiality of arbitration proceedings.
In this case, Westwood time chartered a vessel from Universal who had in turn chartered the vessel from its owners. Westwood later sub-chartered the vessel back to Universal. Following a drop in the market, Westwood brought claims against Universal for breaches of the main charter and of the subcharter.The case went to arbitration in London, following which Universal went into liquidation in Germany.
On 5 September 2012, Westwood and Weyerhaeuser (the Claimants) issued a claim in the English Commercial Court in which they alleged that a number of companies and individuals were parties to an unlawful means conspiracy, the aim of which was to damage the claimants. In particular, the claimants alleged that a number of these parties were aware of an unlawful backdated agreement which sought to waive any rights Universal had against the head owner of the vessel in the future, thus barring any potential claim under the head charter.
As such, the claimants brought an application in which they sought permission to rely on documents which were referred to in the initial arbitration between Westwood and Universal. The claimants sought to make three principal arguments that the confidentiality of these documents had been waived, namely that: (1) the documents were referred to at a creditor’s meeting; (2) the documents were referred to in a judgment of the court regarding the enforcement of the award; and (3) that one of the exceptions to confidentiality recognised in the case of Emmett v Michael Wilson  Bus LR 1361 applied.
In considering this application, Mr Justice Flaux considered that neither of the first two grounds suggested by the claimants were sufficient to waive confidentiality. However, he considered Emmett and found that disclosure of the documents was appropriate under two of the exceptions set out in that case.
In Emmett, the Court of Appeal stated that there could be four principal exceptions to the general rule of confidentiality: (1) where there is consent to the waiver; (2) where there is an order of the court; (3) where it is reasonably necessary for the protection of the legitimate interests of an arbitrating party; and (4) where the interests of justice require disclosure, including on the grounds of public interest.
Mr Justice Flaux found that neither of the first two Emmett exceptions applied, but ruled that both of the second two exceptions did; in short, the disclosure of the document was found to be reasonably necessary in order to protect the claimants’ legitimate interests and/or to protect the interests of justice. It was found that the claimants had an arguable claim which could not be properly pursued in court unless they had access to the arbitration documents and, consequently, there was a legitimate interest in permitting reference to the material. Further, Mr Justice Flaux ruled that the interests of justice required disclosure because, where there is an arguable case of unlawful actions before the court, it should not permit the confidentiality of arbitration to stifle the ability to bring to light the defendants’ wrongdoing.
This case shows that the general rule of confidentiality in arbitral proceedings is not absolute. In most cases, the general rule will remain valid and the confidentiality of the parties’ dispute will be unaffected. However, parties should be aware that the English courts will not permit confidentiality to become an obstruction to the deliverance of justice.