REUTERS | Mike Blake

Paths to the common good: reconciling transparency and confidentiality in international arbitration

It is a well-known social phenomenon when everyone in a community agrees that a particular development would benefit everyone, but no one wants to be (or can be) the person doing whatever is necessary to achieve it. It is sometimes referred to (somewhat pejoratively) as the “not in my backyard” approach. This challenge is particularly acute when everyone in the community must contribute to the achievement of the desired goal. So it appears to be, to some extent, in the international arbitration community. One example is the arbitrator selection process, where many in the arbitration community seem to agree that a greater and more diverse pool of arbitrators would be desirable, but when it comes to selecting an arbitrator, everybody quite understandably prefers to nominate top arbitrators with decades of experience and stellar reputations.

Another example, with which this post is concerned, is the general desire for greater availability of empirical information about all aspects of international arbitration. There are obvious and significant practical benefits that would flow from such greater transparency. At a macro level, greater availability of published awards, for example, could go a long way towards alleviating the perceived threat to the development of common law. It would present a preferred alternative to the increased supervisory powers of the courts, proposed recently by Lord Thomas of Cwmgiedd, the Lord Chief Justice of England and Wales. At a micro level, there is always a demand from clients and counsel for information about individual arbitrators, experts, length of proceedings, costs and so on.

Whilst the advantages of greater transparency appear obvious and numerous, the principle of confidentiality in arbitral proceedings means that it remains difficult to achieve in practice. It is true, of course, that confidentiality in arbitration is often more apparent than real as information about individual arbitrations seeps through into the public domain. As a matter of law, even in confidentiality-friendly jurisdictions like England, there are certain well recognised exceptions to the general obligation of confidentiality (see Emmott v Michael Wilson & Partners). Moreover, in a number of jurisdictions, notably Australia, Sweden and the USA, there is not a general obligation of confidentiality in arbitration at all. Institutional rules also diverge in their treatment of confidentiality, with the World Intellectual Property Organization (WIPO), London Court of International Arbitration (LCIA), Singapore International Arbitration Centre (SIAC) and Hong Kong International Arbitration Centre (HKIAC) rules containing greater confidentiality protections than, for example, the Stockholm Chamber of Commerce (SCC) or, arguably, the International Chamber of Commerce (ICC) rules.

Nevertheless, the parties continue to perceive confidentiality and privacy of arbitration as one of its main attractions (see, for example, the Queen Mary University of London International Arbitration Survey 2015 (QMUL Survey), which noted that it was the second most frequently listed valuable characteristic for the in-house counsel subgroup).

How to deal with this apparent paradox?

First, it should be recognised that both sets of priorities that operate in favour of confidentiality and transparency respectively are perfectly valid. This is therefore a structural challenge.

Secondly, the arbitration process ultimately belongs to the parties, and their commercial or other priorities, including the need to keep the arbitration as private and confidential as possible, necessarily take precedence over the broader desires and wishes of the arbitration community as a whole.

Thirdly, and nevertheless, there can be at least some room for compromise and progress. Publishing full, redacted or anonymised awards is a long-standing way of seeking to achieve a balance between preserving arbitral confidentiality and making awards available to the wider arbitration community. Indeed, in investment treaty arbitration, many awards and other arbitration materials are published and collected in publicly accessible databases. However, there is not a centralised bank of such awards in commercial arbitration, along the lines of the case law databases in many common law jurisdictions, for example.

There could be some scope for counsel to discuss with their clients whether in any given arbitration confidentiality is really required, or, if it is required, whether some form of redacted and anonymised award could nevertheless be made available for publication. However, in truth, it is difficult to imagine such a conversation taking place in practice. Certainly at present, this would seem like a rather odd thing for counsel to raise with their client, without having been prompted to do so.

Institutions can, and do, play an important role by publishing increasingly detailed statistics and, in some cases, awards (either in full, redacted or anonymised form), particularly in investment treaty arbitration. Institutions can also include a default opt-in provision in their rules allowing for publication of the award, unless a party objects specifically to that. A further interesting approach is the publishing mechanism contained in Article 42.5 of the HKIAC Rules.

Arbitrators are perhaps even better placed to raise the question of publication of awards with the parties in the course or at the end of the arbitration. This is particularly the case in ad hoc arbitrations, which often are quite invisible to the outside world.

The difficulty

There is a common difficulty for counsel, arbitrators, institutions and perhaps even clients in raising the question of making publicly available at least some information about the arbitration. As noted above, if unprompted, this question might seem misplaced, and the person raising it, rather eccentric. Few would want a reputation for that sort of eccentricity, particularly counsel and arbitrators.

Perhaps what is needed is a coordinated tectonic shift across the arbitration community as a whole. This is the question that is routinely raised and discussed. It needs to become “the thing to do”.

It might be that some form of a neutral joint reporting service could become the catalyst for this shift. In principle, one can imagine such a reporting service routinely sending requests for publication to all major arbitral institutions, arbitrators, counsel and parties. In any individual arbitration, such a request could become the cue for discussing whether the award or any information about the arbitration may be made public. The process of collecting this information should itself be transparent.

Of course, there are already many existing initiatives aimed at collecting and making publicly available empirical information about arbitration, such as the much-discussed QMUL Survey, or the Arbitrator Intelligence project aimed at gathering information about arbitrators. However, it seems that, in the end, the key to greater transparency in international arbitration lies in the hands of the parties themselves. Their commercial imperatives, which include questions of confidentiality, will ultimately determine the bounds of transparency.

King & Spalding Grigori Lazarev

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