REUTERS | Ognen Teofilvovski

Exceptions to confidentiality: interests of justice or public interest?

The recent decision in Chartered Institute of Arbitrators v BCD raises again the question of the proper scope of the public interest/interests of justice exception to confidentiality in arbitration.

The exception was originally founded on banking law principles, where courts had found that a defence to a claim for breach of confidence might arise if there was a duty to the public to disclose (for example, where “danger to the State or public duty” superseded the duty of the agent to his principal: Tournier v Provincial and Union Bank of England). This principle had, in turn, developed from the old defence of “iniquity”, the idea that there can be no confidentiality in crime or fraud. The modern formulation of the defence in the non-arbitral context is still very narrow and limited to cases where disclosure is required to serve some important public interest such as public safety, health, the exposure of serious wrongdoing or the proper conduct of public affairs.

In the arbitral context, the exception developed in a slightly different direction. It was first raised and recognised in cases where disclosure was necessary in order to prevent a court from being misled about what had happened in an arbitration. As such, the exception was naturally discussed and developed in terms of the “interests of justice” rather than by reference to wider concepts of “public interest”. More recently, though, courts have considered developments in other jurisdictions (particuarly Australia, where a broader “public interest” exception is recognised) and have tentatively recognised that the exception may be broader. They have also authorised disclosure in increasingly varied situations; for example, where the disclosing party had a bona fide belief that disclosure was necessary to support an unlawful means conspiracy claim and to “bring wrongdoing to light” (Westwood Shipping Lines Inc v Universal Schiffahrtsgesellschaft).

Unfortunately, these decisions do not address the precise scope or basis of the exception in a great deal of detail. Further, each case turns on its particular facts, so it can be difficult to elicit any firm principles from the judgments. However, it is perhaps fair to say that the scope of the exception is expanding rather than narrowing.

In the Chartered Institute of Arbitrators case, the court was asked to authorise the release to the Chartered Institute of Arbitrators of certain documents, for use in disciplinary proceedings pending against B, a fellow of the institute. B had resigned as arbitrator following an application to remove him on grounds of impartiality, in which Hamblen J held that grounds for removal under section 24 of the Arbitration Act 1996 were established.

The Chartered Institute of Arbitrators now sought, pursuant to CPR 5.4C(2), copies of documents generated in the arbitration and relied on in the section 24 application, together with declarations that it was entitled to refer to those documents, and that use of the documents was in the public interest. One of the issues that the judge had to consider was whether there was a legitimate public interest in doing so. She held that there was such an interest, which was to be balanced against the reasons for maintaining confidentiality. In carrying out that exercise, the judge effectively considered whether or not any of the exceptions to arbitral confidentiality were established. She held that there was a “general public interest in maintaining the quality of and standards of arbitrators” that extends beyond the interests of the parties in a particular case. In her view, the general public was entitled to expect that arbitrators belonging to a recognised body meet certain minimum standards as laid down by that body. She concluded that arbitration is a “quasi-judicial” process and that the interests of justice lie in supporting the integrity of this alternative dispute resolution mechanism. She further held that it was in the public interest to make a declaration.

She did not, however, expressly address the potential difference between the “interests of justice” on the one hand and the “public interest” on the other. The terms are used interchangeably in the judgment. More generally, the judgment suggests that arbitration is to be characterised not merely as a private and consensual dispute resolution mechanism, but as part of a civil justice “system” which the public has an interest in protecting. This echoes, in some respects, comments made by Gross LJ in his recent LCLCBA annual lecture, to the effect that the court system is but one part of a “wider whole, which also encompasses arbitration. The two are mutually supportive, enjoying a symbiotic relationship”

Key to the judgment was the existence of the Chartered Institute of Arbitrators disciplinary proceedings, and the existence of an underlying set of institutional rules governing arbitrators’ conduct. It will be interesting to see whether a similarly broad approach might be taken outside this context: does a similar public interest exist where an arbitrator is not a member of an institution with published rules? Is it necessary for disciplinary or other proceedings to be in existence before disclosure can be justified? For now, though, the precise scope of the exception remains unclear, and continues to develop on a case by case basis.

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