Key Takeaways
- Confidentiality is not Guaranteed: The English Courts have provided welcome clarification on the parameters of the implied arbitral duty of confidentiality and have warned it is not guaranteed.
- A Sliding Scale: The implied duty is not rooted in any inherent confidentiality of the material and instead the decision introduces a “sliding scale of arbitral confidentiality.”
- Exceptions to the General Duty: The decision helpfully provides a non-exhaustive list of exceptions to the general duty.
In a recent decision,1 the English Court has clarified the scope of confidentiality in arbitral proceedings. While parties to an arbitration are bound by a duty of confidentiality, it is by no means a blanket rule.
The Facts
Firm B's London Office acted for B Corporation in an arbitration against A Corporation concerning the sale of a vessel (the “Vessel 1 Arbitration”). While the Vessel 1 Arbitration continued, Firm B's Asia Office acted for C Corporation in a separate arbitration against D Corporation concerning the sale of a different vessel.
A Corporation and D Corporation were under the same ultimate ownership.
Firm B's London Office had informed its Asia Office of certain information that it had acquired during the Vessel 1 Arbitration. A Corporation sought various categories of interim injunctive relief, including amongst other things that Firm B cease acting for C Corporation and otherwise stop providing it with confidential information obtained from the Vessel 1 Arbitration. A Corporation argued that the injunctions were required as there had been or may be a breach of the implied duty of confidentiality in arbitral proceedings.
The Decision
The Court rejected A Corporation's application, finding no realistic possibility that confidential information or materials from the Vessel 1 Arbitration would be passed on to C Corporation or Firm B's Asia Office. The Court provided the following helpful overview on the limits of confidentiality in arbitrations.
Material covered by the obligation of arbitral confidentiality
Under English law, the default rule is that parties to an arbitration agreement will be taken to have impliedly agreed to an obligation of confidentiality. This obligation extends to:
- the hearings in the arbitration;
- documents disclosed by a party to other parties in the arbitration;
- documents “generated” or “prepared for,” and then used or produced in, the arbitration;
- the arbitral award; and
- confidential information derived from the above documents.
However, the Court clarified that the obligation of confidentiality does not extend to:
- documents which came into existence outside of the arbitral process, notwithstanding that they are disclosed or relied upon in the arbitration; and
- the existence of the dispute and events which gave rise to the arbitration.
This obligation of confidentiality is not rooted in any inherent confidentiality of the material, but instead in the private nature of the arbitral process itself. The Court referred to the idea of a “sliding scale of arbitral confidentiality.” For example, a stronger duty of confidentiality applies to documents that are received from a disclosing party than to documents already belonging to the receiving party.
Finally, the judgment distinguished between information protected by arbitral confidentiality and the (disclosable) experience which lawyers acquire from conducting arbitrations, such as knowledge of expert witnesses, types of documents generally available for particular issues, and the litigation strategies of opponents.
Exceptions to arbitral confidentiality
The Court went further and outlined a list of non-exhaustive exceptions to the general duty of confidentiality, including where:
- consent has been given, whether express or implied;
- there is an order or leave of the Court;
- it is reasonably necessary for the protection of the legitimate interests of an arbitrating party, including for the purposes of making claims against or defending claims by a third party;
- the interests of justice require disclosure;
- there is a need for dissemination to lawyers, factual witnesses and experts for the purpose of preparing an arbitrating party's case and evidence in an arbitration; and
- albeit caveated by the Court as being “very strongly arguable,” it is required for the purpose of seeking to elicit similar fact evidence from a third party who is believed to have similar complaints against the opposing party.
Comment
One of the perceived advantages that attracts parties to arbitration is the confidentiality afforded to the dispute. While parties can agree to be bound by institutional rules to govern their arbitration which themselves may contain confidentiality provisions, the English Courts have now provided welcome clarification on the parameters of the duty of confidentiality and warned that it cannot be taken as guaranteed.
For certain documents and information, whether they are confidential will turn on the facts, and parties will need to carefully consider where the material places on the sliding scale of confidentiality, or whether one of the (non-exhaustive) exceptions apply.
Footnote
1. A Corporation v Firm B and Mr W [2025] EWHC 1092 (Comm)
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
