Case Alert ‐ [2017] EWHC 2473 (Comm)

Court rules on confidentiality of an arbitral award

The defendants' section 68 challenge to an arbitration award was (pursuant to the court's order) heard in public. The award was referred to during the hearing and in the judgment. The challenge failed and the claimants argued that the award was a public document and so they are free to make such use of it as they wish. The defendants countered that the claimants were bound by Article 30 of the LCIA Rules, which requires the parties "to keep confidential all awards in the arbitration, together with all materials in the arbitration created for the purpose of the arbitration and all other documents produced by another party in the proceedings not otherwise in the public domain, save to the extent that disclosure may be required ..by legal duty….or to enforce or challenge an award in legal proceedings…."

Teare J had no doubt that the award had entered the public domain. On a strict reading of Article 30, (because of the position of the commas in the sentence), the exemption for documents "not otherwise in the public domain" did not apply to the award, but the judge could not see why that should have been intended, and so he concluded that since the award is in the public domain, the express contractual obligation imposed by Article 30 to keep it confidential no longer existed.

However, he went on to say that "I am however troubled by the suggested conclusion that the Claimants should therefore be able to do with the Award as they wish; especially in circumstances where the court does not know what the Claimants intend to do with the Award. The Award was a confidential document and has only entered the public domain because the court considered, having regard to the principle of open justice, that the section 68 challenge should be heard in public".

Accordingly, the judge held that the claimants could not use the award as they wished. Instead, if the claimants have a particular use in mind (other than those expressly permitted in Article 30) they should apply to the court for an appropriate order: "I recognise that this leads to increased costs but that seems to be me to be inevitable if the court's order that the section 68 application be heard in public is not to be abused".

COMMENT: English law generally recognises the confidentiality of arbitration (there is nothing in the Arbitration Act 1996 to this effect, but it is implied for business efficacy). Furthermore, although this case concerned the LCIA rules, many arbitral institutions have similar confidentiality provisions in their rules. However, the limits of, and exceptions to, the principle of confidentiality in English law are not entirely clear. Various exceptions were referred to in the case of Ali Shipping v Shipyard Trogir [1997] ie the parties give consent (express or implied), or a court orders or gives leave, or disclosure is reasonably necessary for the protection of the legitimate interests of an arbitrating party, or disclosure is necessary in the interests of justice.

Accordingly, this decision will give some comfort to parties who choose to arbitrate precisely because of the confidential nature of arbitration, because the judge held that the mere fact that the award has entered the public domain (and so fell within an exception to confidentiality) did not entitle a party to make any use at all of the award. However, the case does not provide any more detail on exactly what the award (and other arbitration documents) can (and cannot) be used for.