The Author, Saloni Saini, is 4th year student of University School of Law and Legal Studies, GGSIPU. She is currently interning with LatestLaws.com.
INTRODUCTION
In the early days, arbitration would have been a simple and relatively informal process to resolve disputes between the parties. Both the parties would agree to abide by his decision and they would do this not because of any legal sanction, but because this was what was expected of them in the community within which they carried on their business.
National regulation of arbitration came first but international commercial arbitration does not stay within national borders of the state; on the contrary, it crosses them again and again. A corporation based in the United States might contract with another corporation based in France, for the construction of a power plant in Indonesia, with an agreement that any disputes should be resolved by arbitration in London.
One of the important advantages of arbitration is the confidentiality of arbitral proceedings. An international arbitration is not a public proceeding. Unlike the proceedings in a court of law, where the press and public are generally entitled to be present. It is essentially a private process therefore has the potential for remaining confidential. Increasingly, however, confidentiality cannot generally be relied upon as a cear duty of parties to arbitral proceedings.
Parties concerned to ensure the confidentiality provisions in their agreement to arbitrate, or in a separate confidentiality agreement concluded at the outset of arbitration. Primarily there are distinction between privacy and confidentiality, and the classical position and current trend as far as confidentiality and transparency is concerned.
PRIVACY AND CONFIDENTIALITY
As far as the hearing is concerned, the major institutional rules are in agreement: the hearing is private. Article 26(3) of the ICC Rules states:
The Arbitral Tribunal shall be in full charge of the hearings, at which all the parties shall be entitled to be present. Save with the approval of the Arbitral Tribunal and the parties, persons not involved in the proceedings shall not be admitted.
The rules of the ICDR, LCIA, International Centre for the Settlement of Investment Disputes
(ICSID) and World Intellectual Property Organization (WIPO) contains similar provisions, as do the rules of such commercial arbitration organisations as the Austria Federal Economic Chamber, the Swiss Chambers’ Arbitration Institution, the China International Economic and Trade Arbitration Commission (CIETAC), and the Japanese Commercial Arbitration Association (JCAA).[1]
Article 28(3) of the UNCITRAL Rules spells out the position in similar terms:
Hearing shall be held in camera unless the parties agree otherwise. The arbitral tribunal may require the retirement of any witness or witnesses, including expert witnesses, during the testimony of other witnesses, except that a witness, including an expert witness, who is a party to the arbitration shall not, in principle, be asked to retire.
The privacy of arbitration hearings is therefore uncontroversial. And if the hearing is to be held in private, it would seem to follow that the documents disclosed and the evidence given at that hearing should also be- and should remain- private. In principle , there would seem no point in excluding non-participants from an arbitration hearing if they can later read all about it in printed articles or on an authorised website. However, a broader duty of confidentiality in international arbitration is now far from clear.
CONFIDENTIALITY- THE CURRENT TREND
Notwithstanding the foregoing, the current trend in international arbitration is to diminish- or atleast to question-the confidentiality of arbitrations in which there was a genuine public interest-in the sense that the decision of the arbitral tribunal would in some way affect the general public. For example in Esso Australia Resources Ltd v The Honourable Sidney James Plowman and Ors [2],the High Court of Australia concluded that whilst the privacy of the hearing should be respected, confidentiality was not an essential attribute of a private arbitration. Specifically, the court found that a requirement to conduct proceedings in camera did not translate into an obligation prohibiting disclosure of documents and information provided in, and for the purpose of, the arbitration. The court then concluded that although a certain degree of confidentiality might arise in certain situations, it was not absolute. In the particular case before the court ,’ the public’s legitimate interest in obtaining information about the affairs of public authorities’ prevailed.
In respect of this final point, one of the judges discussed the standards for disclosure in respect of information that is of legitimate interest to the public and held that:
The courts have consistently viewed governmental secrets differently from personal and commercial secrets. As I stated in The Commonwealth of Australia v John Fairfax and Sons Ltd, the judiciary must view the disclosures of governmental information 'through different spectacles.’ this involves a reversal of the onus of proof: the government must prove the public interest demands non- disclosure.[3]
In another Australia case[4] the appellate decided that an arbitrator had no power to make a procedural direction imposing an obligation of confidentiality that would have had the effect of preventing the government from disclosing to a state agency, or to the public, information and documents generated in the course of the arbitration that ought to be made known to that authority or to the public. It was said that public health and environmental issues were involved:
Whilst private arbitration will often have the advantage of securing for the parties a high level of confidentiality for their dealing, where one of those parties is a government, or an organ of government, neither the arbitral agreement nor the the general procedural powers of the arbitrator will extend so far as to stamp on the governmental litigants a regime of confidentiality duty to pursue the public interest.[5]
In the United States, neither the Federal Arbitration Act nor the Uniform Arbitration Act contain a provision requiring the parties or the arbitrators to keep secret arbitration proceedings in which they are involved. As a consequence, unless the parties’ agreement or applicable arbitration rules provide otherwise, the parties are not required by US law to treat as confidential the arbitration proceedings and what transpires in them[6].
In United States v Panhandle Eastern Corporation,[7] Panhandle brought a motion before a US federal district court for a protective order, preventing the disclosure of documents relating to arbitration proceedings between it and Sonatrach, the Algerian national oil and gas company. In support of its motion, Panhandle argued that disclosure to third parties of documents related to the arbitration would severely prejudice Panhandle’s ongoing business relationship with both Sonatrach and the Algerian government.
The court denied the motion on the grounds that Panhandle has failed to satisfy the ‘good cause’ requirements of rule 26(c) of the Federal Rules of Civil Procedure and that the filling was untimely, but it proceeded to address the question of confidentiality and, having rejected the existence of an express confidentiality agreement between the parties, gave no credence to the existence of an implied obligation.[8]
This decision has been followed in subsequent US cases in which the courts have refused to find a duty of confidentiality in the absence of an express contractual provision or the adoption of a set of arbitration rules containing such a provision[9].
The Supreme Court of Sweden has also rejected the idea of a general implied duty of confidentiality in arbitration proceedings.[10] the same position prevails in Norway: absent an agreement to the contrary, arbitration proceedings and decisions by the tribunal are not subject to any duty of confidentiality.[11]
TRANSPARENCY
Transparency is not clearly defined in international law.[12] Synonymous to openness or accountbility, transparency is often invoked but seldom defined.[13] It is an information-centric concept that relies on openness and access to information, viewed as a more accountable, more democratic, and more legitimate system of global governance. In the arbitral realm, it involves the disclosure of documents or other materials, open hearings, the participation of third parties in the arbitration process, and public access
In recent years, there have been incessant calls for increased transparency in the international commercial arbitration system. While some advocate for a presumption of the publication of arbitral awards unless parties object,[14] others propose the formation of an international supervisory entity to supervise and oversee the publication of awards.[15]While the mandatory publication of arbitral awards is often put forward as a solution to the transparency deficit, such an approach may raise more questions than it answers.[16]
In order to understand why the appeal for increased transparency has emerged, it is important to understand how arbitration has operated in the past. The complexity of international commercial arbitration stems from the fact that arbitration proceedings have historically occurred in a virtual black box. Such a qualification is justified because parties submitted their disputes to arbitration in a bid to avoid resorting to a normal court of law and to keep their disputes away from the limelight of the press. In its infancy, the practice of international commercial arbitration was seen as a forum where strictly legal considerations could be set aside in the interest of achieving unanimity among the arbitrators and giving something to both parties.[17] Traditionally, arbitrators fashioned arbitral proceedings according to their culturally defined professional experiences and ruled based on their expert sense of what was equitable and just instead of adopting prescribed and transparent rules. The current secrecy that reigns in international commercial arbitration and the importance accorded to privacy and confidentiality is likely in part the result of such practices. Any attempt to define transparency in the context of arbitration brings together two different but interconnected concepts: public access and disclosure.
PUBLIC ACCESS AND TRANSPARENCY
Public access refers to a citizen’s individual right of access to a hearing. It enables open scrutiny of public officials and guards against misuse of power. Differentiating transparency from public access is essential in order to understand the motivation behind the appeals for enhanced transparency in international commercial arbitration.
Public access and transparency come together by facilitating the public’s right of attending proceedings as well as enabling the scrutiny of the adjudicator’s performance.While it is tempting to make an amalgam of these two concepts, they are nevertheless distinct from each
other in the arbitral context: public access is an individual right whereas transparency relates to the system as a whole.There is a notable discrepancy in the treatment of transparency and public access in international commercial arbitration given that the former is often seen as an imperative while the latter is seen as expendable. This difference in treatment stems from the objectives each concept seeks to achieve. Public access is an individual right that finds its roots in domestic considerations of fairness and justice. As one commentator notes, it would be nonsensical to insist that a Brazilian citizen has a right to attend an Austrian hearing governed by German law involving Chinese and Russian parties.On the other hand, several international tribunals espouse public access in a bid to ensure transparency. Consequently, although public access is an instrument for stimulating transparency, it is not an essential characteristic of transparency.The fundamental difference between the domestic and international approach to public access lies in the fact that domestic legislators refrain from overstepping on a fundamental right in a bid to avoid a backlash of the local population and human rights activists, while in international disputes, such domestic considerations are non-existent.
THE NEED FOR TRANSPARENCY
Transparency can lead to a higher degree of trust and acceptance of the arbitral process. Transparency increases accountability as the arbitrator, counsel, and parties to an arbitration are mindful that their behavior is likely to be scrutinized by the public.[18] Transparency also renders the decision-making process in arbitration more accurate, as arbitrators who know that their awards will be rendered public are more inclined to thoroughly research and investigate before reaching a conclusion. It helps to guarantee democratic principles such as the right of access to information and also promotes fairness, the rule of law, equity, and due process.Furthermore, companies can fulfill their corporate social responsibility by adopting transparent dispute resolution mechanisms.[19]The benefits of arbitral transparency include the consistency of arbitral awards, development of arbitral law, prevention of prospective disputes, better openings to develop the arbitral system, and increased efficacy in determining the expertise of an arbitrator.
COMMERCIAL LAW IS GOING UNDERGROUND
The absence of transparency and the difficulty involved in obtaining precedence in arbitration means that there is a lack of information on the development of commercial law and the performance of the arbitrator within arbitral tribunals. The impossibility of or difficulty in obtaining these jurisprudential deliberations means that commercial law is effectively going underground[20].International commercial disputants are increasingly opting for arbitration instead of litigation and as a result, legal practitioners are unable to track jurisprudential developments in the commercial law sector.This secrecy surrounding the development of commercial law inevitably damage public interests. Legal practitioners are unaware of developments in crucial areas of the law, and parties disputing similar issues are required to reinvent the wheel.
The present situation also means that only the big international law firms with a large practice in international commercial arbitration are able to review the latest developments in commercial law within the arbitral system, while other practitioners are left to operate relatively in the dark. The certainty and predictability which the law strives for is essentially restricted to a number of privileged insiders, with relevant information effectively being monopolized by a small elite.The result of the perpetuation of such practices is that the development of commercial law within the courts has been hampered and ultimately privatized within the arbitral system.
THE UNCITRAL RULES ON TRANSPARENCY AS A ROADMAP FOR REFORM
In 2014, the arrival of the UNCITRAL Rules on Transparency signaled a new era of international cooperation in the promotion of transparency in investor-state arbitrations, and was viewed as a symbolic step forward on the path to transparency in international arbitration. The scope of the UNCITRAL Rules on Transparency is restricted to investor-state arbitration, but its impact has led to appeals for greater transparency in international commercial arbitration.
An overhaul of the approach to confidentiality in international commercial arbitration requires re-examining deep-rooted practices in the area of privacy and confidentiality. The UNCITRAL Rules on Transparency represent an important starting point for such an overhaul. Investor-state arbitrations may create pressure or at least inspiration for greater transparency in international commercial arbitration.
THE INTERNATIONAL COURT OF ARBITRATION
The 2019 Notes takes this general objective further and provides clarity on the arbitration process under the updated ICC Rules of 1 March 2017. In the words of Mr Alexis Mourre[21] "these amendments reflect the Court's continuous efforts to provide more transparency in its practices, increase the efficiency of our arbitrations and offer an ever wider range of services to our users." Building on the 2016 Note foundation, the 2019 Notes aims to:
The updated ICC Court policies will apply to all ICC arbitrations regardless of the version of the ICC Rules pursuant to which they are conducted.
The Court has issued further guidance on the circumstances and relationships prospective arbitrators should pay particular attention to when assessing their impartiality and independence.
ARBITRAL AWARDS
Usually, transparency in commercial arbitration is mostly focused on the publication of sanitized arbitral awards. For instance, the ICC Secretariat publicizes synthesis of awards in the ICC International Court of Arbitration Bulletin for educational purposes. In this publication reference is made only to the docket number and the award is sanitized by removing the names of the parties, geographical and industrial facts that would risk to render the case and its participants identifiable.
More recently, the Milan Chamber of Arbitration has adopted a set of guidelines for the anonymous publication of arbitral awards. Their purpose is clearly embodied in paragraph (1) of the Preamble, which reads: “The Guidelines aim to provide a set of common and uniformly applicable standards in order to publish arbitral awards and provisions anonymously and confidentially…”, especially when the parties have not expressly and directly agreed on confidentiality issues”.
Generally speaking, as we said a higher transparency – and, consequently, wider predictability – would also represent a crucial step forward in the promotion of arbitration in the business community. Arbitration, although having a contractual nature, is a system for rendering justice. Arbitration plays a sort of “social” role, having a social impact. For this reason, we must render commercial arbitration – starting from the awards – more accessible, more transparent. We cannot see arbitration as a purely private phenomenon. But how can we reach all these advantages, combining the general interest to transparency with the parties’ interest to confidentiality.
First of all, a good “sanitization” of the arbitral award (an intervention to make it entirely anonymous, being impossible for anyone to understand the identity of the parties involved in the case) would render such interest (if any) real.
The “sanitization” of arbitral awards can be better guaranteed in an administered arbitration, where the Institution – thanks to its Rules – can take into equal consideration, on the one hand, parties’ interest to confidentiality and, on the other hand, the wider interest of potential users to access information about arbitration practice and arbitral decisions.
In order to ensure that parties would not be easily recognizable, an efficient treatment – that the Institution has the duty to guarantee – is essential.
For this purpose, many Arbitral Institutions specifically provide for a discipline of such treatment in their Rules. It must be pointed out that those provisions are extremely useful: they give the parties the certainty that during all the proceedings, their needs would be protected. The Institution is the first actor in arbitration to have the obligation to insure the maximum privacy of the whole proceedings and its integrity.
As regards to the Milan Arbitration Rules, they provide also the publicity of awards for purposes of research and of course, any additional publicity the parties may wish.
Among all the information related to an arbitral proceedings, awards are surely the most important ones. But the general interest for transparency is definitely not to show the whole world which parties were involved in the arbitration and why. The goal of transparency is not to disclose everything but mostly to promote research and at the same time to improve the quality of arbitrations in general.
In institutional arbitration, the center has a general duty of constantly building case law, and in so doing, it also provides information on performances of arbitrators.
But, of course, such case law has to be carefully built. If publicity is made properly – that is to say, without any evidence for recognizing what has to be hidden – there would not be any problem with transparency. Transparency is not criticized per definition, as a principle, but for what it could lead to if publicity has been made incorrectly.
Therefore, quality has to be met not only by the arbitrators in the award but also by the arbitral institution in publishing such awards. Publication that has not to harm parties’ rights.
The solution to prevent such risks is a good “sanitization” of the arbitral award. This technique consists of cleaning the entire text by selecting only the elements which have a general interest for arbitration users and scholars, avoiding the disclosure of any aspects irrelevant for those purposes and able to identify the identity of the parties. CAM’s Guidelines are very detailed on these techniques.
CONCLUSION
Confidentiality and transparency have a strenuous relationship within the arbitration realm. There is a need to develop a balance between the guarantees that attract commercial parties to arbitration and the concurrent need for equity and justice.[22] Although confidentiality and transparency have been described as competing values, they can coexist in practice.Confidentiality encourages a comprehensive investigation of the issues without the invasion of privacy but it also provides the parties with their best chance to save the underlying business relationship.The disparity in the jurisdictional treatment of confidentiality should be managed in order to increase predictability. As discussed, while some jurisdictions recognize an implied duty of confidentiality, other jurisdictions reject such an approach and advocate for express confidentiality agreements. This kind of practice results in inconsistency and unpredictability. Considering the legal and jurisprudential variances between jurisdictions, moving toward a more uniform treatment of confidentiality in international commercial arbitration would require an unprecedented level of interjurisdictional cooperation as well as elaborate amendments to international arbitration rules.
The foregoing discussion brought to light that the issue of corruption is marred by complexity as it raises tensions between public policy matters in respect to which it is difficult to strike a balance.Even though corruption is subject to significant condemnation and abhorrence, it should be within an arbitrator’s authority to adjudicate upon such allegations. Indeed, cross-border business transactions would suffer a setback if such issues are kept out of the scope of arbitration.The problems that arise with respect to both burden of proof and standard of proof, as it is difficult to uncover and establish corruption because of the systematic manner in which it is carried out in most cases. It it is within the power of an arbitrator to initiate a sua sponte investigation to unravel corruption when circumstances so warrant, for an arbitrator cannot be expected to remain a silent spectator to unscrupulous dealings. Further, the consequences that a finding of corruption would bring, by making a distinction between contracts aimed at corruption and ones obtained by corruption, and arguing that in the latter case, since one of the parties is innocent, restitution may be granted if it is reasonable under the circumstances.
References:
[1] For research that points towards confidentiality as one of the reasons for choosing arbitration, see the reference in Pryles,’Confidentiality’ in Hille and Newman(eds) The Leading Arbitrators, Guide to International Arbitration(Juris,2004),p. 415.
[2] (1995) 193 CLR 10. The case is also set out in (1995) 11 Arb Intl,3,235.
[3] Ibid., at 247 per Mason CJ.
[4] Commonwealth of Australia v Cockatoo Dockyard Pty Ltd[1995] 36 NSWLR 662.
[5] Ibid., at 682 per Kirby P. See also Adesa Corporation v Bob Dickenson Auction Service Ltd 73 OR (3d) 787, [56] (2004), in which the Canadian courts acknowledged that the ‘confidentiality of the arbitration proceedings should be fostered to maintain the integrity of the arbitration process’, but stated that this should be balanced against any wider public interest in disclosure.
[6] See Industrotech Constructors Inc. v Duke University 67 NC App. 741,314 S.E.2d 272(1984); Giacobassi Grandi Vini SpA v Renfield Corporation US Dist. LEXIS 1783 (1987).
[7] 118 FRD 346(d.dEL.1988).
[8] It would seem that the decision of the court was obiter.confidentiality in arbitration (1996) 12 Arb Intl 303.
[9] Contship Containerines Ltd v PPG Industries Inc., 17 April 2003, 2003 US Dist. 6857.
[10] AI Trade Finance Inc. v Bulgarian Foreign Trade Bank Ltd, Supreme Court of Sweden,27October 2000,(2000) 15 Mealey’s Intl Arb Rep A1.
[11] Norwegian Arbitration Act 2004, s.5.
[12] See Pedro J. Martinez-Fraga, Juridical Convergence in International Dispute Resolution: Developing a Substantive Principle of Transparency and Transnational Evidence Gathering, 10 LOY.U.CHI.INT’LL. REV. 37, 71 (2012)..
[13] Julie A. Maupin, Transparency in International Investment Law: The Good, the Bad, and the Murky, in Transparency in International Law 142, 142 (Andrea Bianchi & Anne Peters eds., 2013).
[14] Cindy G. Buys, The Tensions between Confidentiality and Transparency in International Arbitration, 14 AM. REV. INT’L ARB. 121, 138 (2003).
[15] Dora Marta Gruner, Accounting for the Public Interest in International Arbitration: The Need for Procedural and Structural Reform, 41 COLUM. J. TRANSNAT’L L. 923, 960–63 (2003).
[16] Catherine A. Rogers, Transparency in International Commercial Arbitration, 54 U. KAN. L. REV. 1301, 1302 (2006).
[17] Francis A. Mann, The Aminoil Arbitration, 54 BRIT. Y.B. INT’L L. 213, 214 (1983).
[18] Claudia Reith, Enhancing Greater Transparency in the UNCITRAL Arbitration Rules - A Futile Attempt, 2 Y.B.on INT’L Arb. 297, 300 (2012).
[19] Christina Knahr & August Reinisch, Transparency versus Confidentiality in International Investment Arbitration - The Biwater Gauff Compromise, 6 THE L. and Prac. of INT’L Cts. AND Tribunals 97, 110 (2007).
[20] Sir Bernard Rix, Speech at Singapore Management University: Confidentiality in International Arbitration: Virtue or Vice? (Mar. 12, 2015), http:// law.smu.edu.sg/sites/default/ files/law/CEBCLA /Notes_Confidentiality _in_ International_Arbitration.pdf
[21] President of the Court(ICC).
[22] Nana Japaridze, Fair Enough - Reconciling the Pursuit of Fairness and Justice with Preserving the Nature of International Commercial Arbitration, 36 HOFSTRA L. REV. 1415, 1419 (2008).
Publish Your Article
Campus Ambassador
Media Partner
Campus Buzz
LatestLaws.com presents: Lexidem Offline Internship Program, 2026
LatestLaws.com presents 'Lexidem Online Internship, 2026', Apply Now!