M Jagannath of Singapore-based claims correspondent/consultant NAU has written on the nature of confidentiality in arbitration and whether it is a “boon or a bane”.
Jagannath argues that it is best for parties to expressly decide as to whether they wish this “implied confidentiality” to be retained.
Given the duty of confidentiality, issues can arise when a party seeks to pursue or defend a third party relying on either the documents submitted during the arbitration by the other party, or the level of award.
Should the other party object to the release of the information and documents provided during the arbitration, it may be necessary to seek an order of the relevant Court allowing for use of the material received during the arbitration.
If the arbitration clauses between the first and second parties and between the second and the third party are not similar, third parties may prefer to arbitrate or litigate as provided in their own contract. As Jagannath observes this would mean that the proceedings for recovery would not be simultaneous, leading to delays which can impact recovery. “In these circumstances, confidentiality may be a barrier in pursuing the third party who may be at fault”, said Jagannath.
Although most relevant countries have incorporated the UNCITRAL Model Law on International Commercial Arbitration and its subsequent amendments into their domestic legislation, the most salient feature of which is that there is no right of appeal on a point of law (Article 34 allows an application for setting aside), the UK has not. S69 of the English Arbitration Act allows a party to make an appeal on a point of law.
Sir Bernard Rix in his keynote address at the 2017 Annual SCMA Conference argued that arbitration might not be beneficial in the development of law, when there is no right to appeal on a point of law, as is the case in Singapore and other Model Law Jurisdictions. Rix suggested that the explicit rule of Confidentiality in the SCMA Rules be done away with, so as to allow for the awards to be published after a suitable delay. This would then allow development of the law in that the arbitral awards would act as a basis for future decisions.
Jagannath concluded that the duty of confidentiality, while useful in certain circumstances, can deter recovery against third parties. “If required, parties should consider negotiating the exclusion of this duty”, he said, adding that “publishing of Arbitral Awards would not only lead to the development of arbitral law but also lead to greater scrutiny on the arbitral process and awards thus creating greater confidence in arbitration”. http://nau.com.sg/articles_detail.php?id=132