The “required by law” exclusion to confidentiality

It is common knowledge that confidentiality agreements must contain some provision that fetters the obligation to keep information confidential in certain circumstances (i.e. the “required by law” carve out). However, disclosing confidential information to a Government authority may not necessarily mean that you fall under the “required by law” exception.

For example, in a recent case in the NSW Supreme Court*, two mining companies entered into a confidentiality agreement in January 2009 that covered, among other things, “discussions or negotiations” in relation to the possibility of conducting a joint survey using certain proprietary technology on one of the mining company’s tenements.

While the companies decided not to proceed any further at the time, the possibility was included in a renewal application made to the NSW Department of Primary Industries at a later date. By doing so, the mining company disclosing such information in the renewal application was held to have breached the confidentiality agreement as this disclosure was not, strictly speaking, “required by law”.

This decision is a timely reminder that confidentiality agreements should be given careful consideration as they are intended to create long lasting obligations that often impact upon the way a party can do business going forward.

Be very sure what is “required by law”.