A recent case, Symbion Power LLC v. Venco Imtiaz Construction Co [2017] EWHC 348 (TCC), highlighted two issues which touch on confidentiality in arbitrations: (1) the confidentiality of communications from an arbitrator to a party; and (2) the extent to which parties can expect judgments about arbitration awards to be confidential.

Both of these issues were procedural and as neither related to the substance of the parties' dispute we will not go into the facts. Suffice to say that the claimant applied to have the arbitration award (Award) set aside or varied under section 68(2)(d) of the Arbitration Act 1996 on the grounds of serious irregularity. The court dismissed this application, finding that the tribunal had dealt with all the issues put to it one way or another, and went on to deal with the two issues relating to confidentiality.

Arbitrator communications with the parties should be open

The first point related to an email from one of the three arbitrators in the arbitral tribunal to the claimant.

The arbitration had been conducted by a three-person tribunal, two of whom were nominated as arbitrators by the parties. The third arbitrator  the chairman  was nominated by the two party-appointed arbitrators. During the arbitration, the claimant's party-appointed arbitrator (Arbitrator A) sent an email to the claimant's counsel marked "highly confidential: not to be used in the arbitration". It was not copied to other members of the tribunal or to the defendant. At the time, Arbitrator A explained he could send such an email to arbitration counsel because it was about the "selection" of the chairman but said that it was sent on the explicit condition that it could not be referred to in the arbitration or afterwards.

In the email, Arbitrator A had expressed negative views about the chairman and confirmed he would ask him to resign. There was no such resignation. The email only came to light during the section 68 application process when the claimant relied on it to support its argument that the Award should be set aside rather than remitted to the same tribunal. Arbitrator A then complained that the email had been sent in confidence and should not have been disclosed.

In the event, the judge did not have to deal with the issue of whether to remit or set aside the Award because he had concluded there was no serious irregularity and the Award stood. However, he did say that, on the facts, he would have been very reluctant to set the Award aside rather than remit it to the tribunal. He did not think the email would cause discord in the tribunal: they had continued to work together effectively for two years after the email was sent. They were experienced practitioners and could be expected to deal professionally with the issues even in the light of Arbitrator A's email.

What "astonished" the judge was that such an email had been sent in the first place. He acknowledged that some communication is necessary before the appointment of arbitrators relating to the appointment that need not be copied to all parties. But, once an appointment is made, "it [is] wholly inappropriate for one arbitrator to communicate with the party that appointed him without notice to the other members of the tribunal and the other party".

Party-appointed arbitrators are intended to give confidence to the parties in the balance and fairness of a three-person tribunal. They patently do not represent the party that appointed them and have a duty to act with fairness and impartiality. Arbitrators who communicate with one party about the arbitration – especially where they request such communications to be kept confidential – risk creating the impression of a close relationship with that party and raise "the spectre of other such communications". The judge was in no doubt that such communications should be avoided.

Ensuring confidentiality if an arbitrated dispute is appealed in court

The second issue in Symbion related to whether the judgment should be anonymised to keep the parties and their dispute confidential.

Many parties choose to resolve their commercial disputes in arbitration precisely because the process offers a measure of confidentiality that is not available in court. Arbitration, however, does not come with a guarantee of confidentiality from start to finish: disclosures about the dispute or publication of the arbitration award can result in confidentiality being lost. For example, confidentiality might be lost if a party appeals the arbitration award in court and the consequent judgment is made public. In cases where confidentiality remains important for the parties, judges can protect the parties' confidentiality by anonymising their judgment or refusing to allow it to be published. However, such orders can only be made if parties can show that confidentiality is necessary to avoid parties being prejudiced by disclosure.

In Symbion, the court rejected the claimant's arguments that the judgment should be anonymised. The claimant had relied on Economic Department of City of Moscow v. Bankers Trust Co. [2004] EWCA Civ 314, in which the issue was whether or not a judgment on a section 68 application should be published (rather than anonymised): the judge agreed the principles were similar but distinguished between the hearing of the application and the judgment itself. By default, the hearing is held in private, which means the parties' arguments remain private. However, there is strong public interest in the consequent arbitral judgments not least to ensure appropriate standards in the conduct of arbitrations.

In weighing up this public interest against the parties' legitimate expectation that arbitral proceedings and awards are confidential to the parties, judgments on section 68 applications "will in likelihood disclose very much less about the subject matter of the arbitration than will have been covered during the section 68 hearing itself. Moreover, Judges framing judgments are accustomed to concentrate on essentials, to avoid where possible unnecessary disclosure of sensitive material and in some cases to anonymise."

The judge quoted from the Economic Department of City of Moscow decision: "The concerns or fears of other parties cannot be a dominant consideration. Nor can there be any serious risk of their being deterred from arbitrating in England, if the court weighs the relevant factors appropriately. If the court withholds publication where a party before it would suffer some real prejudice from publication or where the publication would disclose matters by the confidentiality of which one or both parties have set significant store, but publishes its judgments in other cases, businessmen can be confident that their privacy and confidentiality in arbitration will, where appropriate, be preserved."

In Symbion, the claimant had not submitted evidence to justify anonymisation and the judge found nothing in the judgment that might disclose confidential information to others negotiating with the claimant. The judge ordered publication of the judgment and refused to anonymise it. In any case, in Symbion, the Award was already in the public domain because the defendant had started proceedings in the US due to the claimant's failure to pay the Award and these proceedings had already been reported by a legal website. The claimant had also commented on those proceedings publicly. It was therefore unrealistic for the claimant to have any expectation of confidentiality in the Award.

The key points

Parties who find themselves in court after using arbitration proceedings to maintain commercial privacy and confidentiality should put forward strong, coherent evidence in support of maintaining that confidentiality. While judges can be relied on to understand the sensitivities of commercial activities and relationships, parties can assist judicial understanding of the issues at the outset by making clear why disclosure of certain information could cause them prejudice. Once the award or judgment is in the public domain, parties cannot continue to expect the issues to remain confidential.