On 20 December 2018, the International Court of Arbitration of the International Chamber of Commerce (ICC) released a revised Note to parties and arbitral tribunals on the conduct of the arbitration under the ICC Rules of Arbitration (the note to parties). The revised text, which came into effect from 1 January 2019, adopts a new and very different default position that, barring party opt out, ICC arbitral awards will be published two years after they have been notified to the parties.
Are users behind this shift and is it essential to the future of arbitration?
In part 1 of this blog, we considered the ICC’s approach to the publication of awards and what it means in practice, as well as the move towards transparency. In part 2, we consider what users want from the transparency conundrum and whether there should be a pause.
The transparency conundrum: what do users want?
There are certainly some benefits that could result from greater transparency and access to more data in arbitration. It is arguable that publishing arbitral awards gives practitioners access to procedural decisions that may be useful for identifying “standard practice” and new approaches. Data about challenges to arbitrators helps to identify whether a challenge may have grounds and limits the potential for unmeritorious challenges. Publication of awards may potentially also help to eliminate inconsistencies in the interpretation of disputes with similar facts or legal issues, particularly in sectors like construction and energy where disputes are mostly resolved by arbitration. Even if arbitral awards would not have the same significance as case law in common law countries, they might still have a persuasive value in both common and civil law jurisdictions.
Having access to a greater number of previous ICC awards (which might include rulings on the application of the ICC Rules, other procedural points or even substantive legal issues) could be of value to practitioners and tribunals, and could provide parties with more certainty about particular questions of law and procedure. In turn, wider publication of awards, with appropriate anonymisation where required, might go some way to address the concerns some have raised as to the potential of private arbitration to affect detrimentally the development of the rule of law and international commerce.
But here we come to the conundrum in commercial arbitration. Just because data may be helpful or useful for practitioners or other users in future does not automatically mean it should be available to them or that they want awards to be published by default. Pushing for greater transparency and access to information assumes that an award has a function other than as the final outcome of a private method of commercial dispute resolution between consenting parties. It suggests that by participating in a commercial arbitration, the parties are also consenting to somehow improve the arbitral process and the law for the greater good; or, as the ICC’s note to parties maintains, in “facilitating the development of world trade”. The system of commercial arbitration as it currently stands is an inherently private and autonomous process. Arbitrators and institutions are chosen by parties and are paid for by those parties. Arbitral awards are the outcome of this inherently private process. They are not written with the aim of developing the common law or to enable anyone other than the parties themselves to garner information.
And because arbitration is a consensual contractual mechanism chosen (and indeed shaped) by its individual users, it is critical to know what those users value in the system. Here, the QMUL 2018 Survey is particularly illuminating on the question of confidentiality. Chart 3, on the “most valuable characteristics” of arbitration, places “confidentiality and privacy” in fifth place, with 35% of users highlighting this as a central pillar of the system. But there was a notable difference in how the in-house counsel subgroup responded on this question. Confidentiality and privacy was the third most selected option, demonstrating that for commercial parties, the ability to keep arbitrations away from the public eye and from competitors was a highly valued feature. This was further underlined by responses to two other questions. At Chart 30, respondents were asked to rate the importance of confidentiality in arbitration. Again, there was a difference in how the practitioners responded compared to in-house counsel, with 57% of in-house counsel rating it as “very important” and 26% as “quite important”. In other words, only 17% of respondents did not think confidentiality had some degree of importance.
A further telling response in the QMUL 2018 Survey is shown at Chart 31, where respondents were asked “should confidentiality be opt in or opt out?” 74% said that it should be opt out and only 28% opt in. There was little difference here between practitioners and in house counsel. These responses, coupled with the fact that it is vanishingly rare to see parties expressly provide in their arbitration clause that they want their award to be published, indicate that confidentiality remains critical for many parties and that most parties want confidentiality “as standard” with the ability to “opt out” of that confidentiality.
The difficulty, of course, with interpreting these responses, is that many of the same users valuing confidentiality may also have said, if asked, that they would find it useful to see previous awards. In fact, the QMUL 2018 Survey asked an open question in relation to what further information users would find useful to assist them in selecting arbitrators. “Hundreds” of answers were received and there were “a few recurrent themes” among which was that “previous decisions and awards rendered by arbitrators appear to be the pieces of information respondents would like to have”. The report notes: “not many suggestions were made as to how this kind of data could realistically be made available”. This section of the report refers to “access to (redacted) reports”, suggesting that there was certainly no significant call for the publication of unredacted awards. Respondents also acknowledged that, in relation to specialist sectors, publication may be “virtually impossible”.
Perhaps what many users really want is access to others’ data, without being obliged to share their own. Users may like the idea of access to decision-making information and track record for their future arbitrator candidates, but may nonetheless baulk at the prospect of an award issued in an arbitration in which they were a party forming the basis for that track record.
Taking a pause
Striking the balance between user confidentiality and the use of data to develop and improve arbitration is not simple. There is now broad recognition that sharing certain procedural decisions of arbitral institutions is acceptable, as it may also be acceptable to publicise certain limited categories of data about an institution’s current caseload. It is also broadly acceptable for institutions to publish excerpts of awards that may offer guidance on key issues like costs or consolidation. The ICC has gone one step further in having a default position of publishing full arbitral awards unless parties themselves seek to limit that publication. Although the new approach does provide some protections for those who do not want their awards to be published, the presumption in favour of publication is likely to be of concern to some ICC users. And that assumes that those users are aware of such changes. Adopting an opt out for publication of full ICC awards is a daring step, but doing so as part of a practice note, rather than as part of the ICC Rules, and in a way that applies for awards published in proceedings instituted before the practice note change, is perhaps even more daring.
It will be very interesting to see whether users make opting out of publication their default approach by including a confidentiality provision in their arbitration clauses. It will also be interesting to see what the ICC ends up doing in practice with its arbitral awards in two years’ time. The majority of parties may choose to opt out of publication and no great changes may follow in the amount of data available. The ICC may also continue to only publish anonymised extracts, but in a larger number of matters. Or we may find that within those two years expectations shift and parties discover that it is the privacy of the proceedings and the immediate, but not indefinite, confidentiality of their award that is in fact critical.
In 1995, the then Secretary General of the ICC International Court of Arbitration, Stephen R. Bond, stated that “it became quickly apparent to [him] that should the ICC adopt a publication policy or any other policy, which would mitigate or diminish the strict insistence on confidentiality by the ICC this would constitute a significant deterrent to the use of ICC arbitration.” The fact that a publication policy does exist in 2019 only goes to show that nothing stands still in arbitration for long. It is currently unclear whether most arbitral institutions will eventually follow where the ICC has led. Other arbitral institutions considering following suit may decide that in the short term it is advisable to take a pause to watch, wait and consider. In seeking to deliver transparency and drive forward the quest for data to protect arbitration for the future, it is important not to run ahead of user sentiment and ultimately risk undermining arbitration’s future value for its users.