Sanitizing Arbitral Awards – Transparency v. Confidentiality

By: Zeeshan Ahmed


INTRODUCTION

Feasibility is always seen as an important aspect of Modern Judiciary. With a motto of “making convenient” for the public, judiciary always changes or moulds the law in every possible way. The high number of pending cases has over-burdened the judiciary. The only choice that the judiciary is left with is to open the Alternate Dispute Resolution Centres (e.g. National Green Tribunal, Arbitration Tribunal etc.) to prevent the constraint in the process of justice; and thereby, making it possible for the public to skip the long procedural part adopted for adjudicating the suits. Arbitration is one of such procedures, which specifically deals with the matters of civil law as well as domestic relations. In Arbitration, the decision is taken by the arbitrator instead of the Adjudicating Courts. The process of arbitration is maintained on record and to ensure corruption-free adjudication, eminent jurists adopted the publication on yearly basis; this means that all the institutions of arbitration are directed to publish the reports containing the information related to arbitral proceeding as well as arbitral awards. On one hand, disclosure to third party increases the awareness among public but on the other, it also infringes the legal rights of the parties, as because of the publication the public reputation of the aggrieved party might get affected. Therefore, confidentiality limits the amount of information being published so, that the reputation of the parties cannot be questioned.

In the case of arbitral awards, only after the prior permission of the parties, it is allowed to publish the confidential information. Arbitral Award is a determination on the merits by an arbitration tribunal in an arbitration procedure. And after taking transparency as well as confidentiality into concern, the tribunal comes with an idea of sanitizing arbitral awards. In sanitization, only the limited amount of information is published by the institutions, cleaning up all the confidential information that can be used by third party to hamper the legal rights of the aggrieved party. Therefore publication is made after the consent of both the parties is received and only on their agreement can the report can be fully published. According to arbitration tribunals, sanitization is a best resort to fulfil both the basic amenities i.e. Transparency and Confidentiality at the same time also making it convenient for all.

This essay discusses both the aspects (i.e. Transparency as well as Confidentiality) in detail by studying the guidelines adopted for the same by different arbitration institutions. It also aims to analyse the sanitization of arbitral awards by discussing the amount of information allowed to be published in the official gazette.

CONFIDENTIALITY IN ARBITRAL AWARD

As the scope of Arbitration is expanding in the modern commercial world, the number of players opting for Arbitration to resolve their disputes has also increased. These players opt for any of the institutions through their contractual agreement and then the dispute is governed by the enacted rules and regulations of the arbitration institution of their choice. And it also becomes compulsory for the parties to follow the particular set of confidentiality norms.

When we talk about confidentiality there is no doubt that, it is one of the essential reasons among the parties to opt the law of arbitration to figure out the solutions. Confidentiality in its purest form means that the existence of the arbitration, the subject-matter, the documents prepared for and exchanged in the process of arbitration, the evidence and the arbitrators’ awards cannot be divulged to any third parties.[1] In literal terms, it is a clause interpreted by different institutions which allows the parties in dispute to keep certain confidential information from the public and third-party domain. Confidentiality is recognized by different writers and institutions as an important part of arbitration because if the information related to proceedings and arbitral award are made public then it ultimately defeats the very nature of arbitration[2], also it protects the public reputation of the company

With the change through amendments, now confidentiality not only includes the arena of proceedings but also exists in relation of arbitral award. As the parties also need to allow the institution for the publication of the arbitral award, especially the losing side because no party wants the disclosure of their confidential information. So, this makes it obligatory under the clause to take prior permission of the parties to further proceed.

The idea of confidentiality differs from one institution to other. While some of them favour transparency over the confidentiality, in others, the confidentiality clause prevails, but it is obligatory for every institution to protect the confidentiality rights of parties if inserted in the dispute resolution clause. The clause of confidentiality becomes so important because the arbitration cases are different from criminal cases. In the latter, where only the identity of two persons is involved, in the former, their brand name is also involved and most importantly, it involves the faith which the people have on that brand. Therefore, confidentiality prevails as it protects the disclosure of information to third party. That is the reason which makes the arbitration so important in cases of commercial disputes. The approach of institutions differ, the latest institution following the idea of confidentiality is International Chamber of Commerce. Through an amendment, they inserted the clause of confidentiality limiting their own liability as now it is on the parties to add a clause for the same in their dispute resolution agreement.[3] This shows that ICC favours the idea of transparency, as they would publish the whole award if parties do not insert the clause of confidentiality. Whereas the London Court of International Arbitration favours the idea of confidentiality, as by inserting the clause in article 30 of their respective rules and guidelines they say that  LCIA does not publish any award or any part of an award without the prior written consent of all parties and the Arbitral Tribunal.[4] It is also obligatory to make the proceedings and award confidential and it is not required for the parties to insert any clause in their dispute resolution agreement in relation to confidentiality. Instead of a good and well-balanced clause, there is a kind of lacuna here as the article only covers confidentiality in relation to the parties and is silent about the arbitrator and the witnesses. But the case of Swiss Chamber’s Arbitration Institution[5] is entirely different, after concerning all the aspects they framed the rules which not only cover the obligation of the parties but also include the kind of cooperation from the side of arbitrators and staff present during the Arbitration Proceedings.[6]

The same is the case with the Hong Kong International Arbitration Centre.[7] The guidelines cover not only the parties but also the Arbitrators as well as the staff, witnesses, and the secretary present at the time of proceedings, making it convenient for the aggrieved party. Even the Arbitration Institute of the Stockholm Chamber of Commerce follows the same trail.[8]

The guidelines provided by the Singapore International Arbitration Centre[9] prevail over the other institutions, which somewhere results in shifting of the International Arbitration towards East. In their guidelines, they not only cover the confidentiality part but also the publication part, making it convenient for both the parties in dispute and other parties. By clear bifurcation between confidentiality and transparency, the institution covers each member present during the proceedings as well as issuing of the arbitral award. Publication is only limited to the nationality of the Parties, the identity and nationality of the members of the Tribunal, the treaty, statute or other instrument under which the arbitration has been commenced, if any, the date of the commencement of the arbitration and whether the proceedings are ongoing or have been terminated. For the publication of any other confidential information, the prior permission is required from the parties in dispute.[10]

TRANSPARENCY IN ARBITRAL AWARD

Transparency has emerged as one of the prominent tool to deal with the corruption practices. It says that all the decision taken by the government as well as the judiciary for the welfare of the people should be disclosed for the public access. In case of arbitration, it helps in promoting the concept in the commercial community so that it can result in the enhancement of the number of cases adjudicated in accordance with Arbitration Law. In addition, there is no issue in transparency if it is promoted correctly, and only after the misuse of the given information by third parties, the need for amending the current manner is required. The access to arbitral awards may also contribute to the education and training of future and less experienced arbitrators. The non-publication of arbitral awards leaves parties, arbitrators, and judges without guidelines in legally and factually similar cases. Again, the efficiency of the proceedings would benefit from the public availability of arbitral awards.[11]

Moreover, transparency may help users to control and evaluate the quality of service provided by individual arbitrators and arbitral institutions. Reading arbitral awards, future arbitrating parties will be able to assess how a particular arbitrator has handled similar proceedings in the past, whether that individual is appropriate to be appointed in a similar future arbitration, his/her level of specific technical skills, or how an arbitral centre has fulfilled its duties etc.[12]

In case the parties do not want to publish a certain set of information then they can add the clause related to the non-disclosure in their respective dispute resolution agreement. And after this, the institution is bound not to publish that particular set of information.

On analysing the institutional law on publication, it can be clearly seen that the amount of information to be published depends upon the consent of parties and every institution prefers the welfare of the party by allowing the publication of only limited part of the arbitral award. Institutions also do not want to take the burden of any kind of future breach.

From the previous discussion, there is no doubt that both transparency, as well as confidentiality, is an important aspect of the Arbitration. In addition, it is very difficult to follow both of them at the same instance, the need of the hour is to partially follow both of them so, that it becomes feasible for public and the law-makers. Sanitization helps to achieve this goal by cleaning up all the confidential documents and making it public friendly. In the case of an arbitral award, it becomes necessary to sanitize the documents because of the confidential content. As discussed previously it is mandatory for many of the institutions to publish the award, but publishing without sanitizing it could result in leaking of some important information related to the parties in dispute which would ultimately harm the reputation of the parties somewhere, and could also decrease their margin of profit. Therefore, the sanitization of the award is important. By doing so, we are making it feasible for both- the parties in dispute and the third party. Now we can publish it, which will enhance the transparency level and by removing the confidential document we are giving some sort of relief to the parties also, which enhances the confidentiality level. The sanitized form of publication satisfies both the needs of confidentiality of parties and the general interests for growing of the arbitration community. According to Singapore International Arbitration Centre[13] the publication is only limited to the nationality of the Parties, the identity and nationality of the members of the Tribunal, the treaty, statute or other instrument under which the arbitration has been commenced, if any, the date of the commencement of the arbitration and whether the proceedings are ongoing or have been terminated. For any further publication, the consent of the parties is mandatory and if it does not fulfil this condition, it is counted as a breach of authorised duty. International Chamber of Commerce publishes a sanitized form of an arbitral award by removing the parties’ name, industrial and geographical facts that would render the case and its participants identifiable.

Transparency is never criticised for its principle, if the publicity of the award is made in correct manner i.e. without any evidence for recognizing what has to be hidden, then there is no problem with the idea of transparency. Only because of the abysmal use of the information, the requirement of sanitization becomes prominent among the institutions. On the other hand, when we talk about confidentiality it is important to note that every person has a right to protect the information, which can lead to unfavourable conditions because public interference also has demerits. Therefore, it is important that before publishing the award, the institutions should take proper caution by sanitizing it in every aspect and promoting it in a healthy way so that in future, nobody can question the framing of Law of Arbitration.

CONCLUSION

From the above discussion, it is clear that both transparency, as well as confidentiality, is an important aspect of Arbitration, and it is unclouded that we cannot frame rules that follow both of these ideas at the same time. The only thing we can do is to partially-implement both the ideas in the guidelines. This is the sole reason behind the sanitizing of the arbitral award. Whenever the law is framed, the basic aim of lawmakers is to provide the rules which favour the public first, same is the case in arbitration. The primary concern is of the parties in dispute and the third party comes later. Although it is important to set a precedent for the future arbitration proceedings by implementing the idea of transparency we cannot deny the fact that the parties only approach the institutions because they have faith in them. Therefore it is important to be trustworthy towards the primary subject i.e. parties in dispute. When we analyse the sanitization process, it can be concluded that it favours the confidentiality over transparency because it either bars the publication of the full arbitral award or leaves it on the parties to decide whether they want the publication or not. For enhancing the level of transparency in arbitration, there is a requirement of adopting a different approach because law never favours the infringement of the rights of one party for the welfare of the other. There is an urgent requirement to enhance the idea of sanitization in the guidelines of different institutions because in many institutions like UNCITRAL,[14] ICDR etc. the scope is very less due to the improper framing of the sanitization clause. At last, we can conclude that the future of arbitration is bright and the process of sanitization helps a lot in achieving that, with this we can say that the sanitization is an excellent approach adopted by lawmakers.

[1] ‘Arbitration’ (International Chambers of Commerce) <https://iccwbo.org/> accessed 23 December 2017.

[2] Adam Robb, ‘Confidentiality in Arbitration’ (Essex Chambers, 5 May 2004) <www.39essex.co.uk/resources/publications.php> accessed 23 December 2017.

[3] ‘Arbitration and Mediation Rules’ (International Chamber of Commerce 2017) <https://iccwbo.org/dispute-resolution-services/arbitration/icc-international-court-arbitration/&gt; accessed 23 December 2017.

[4]  ‘LCIA Arbitration Rule 2014’ (London Court of International Arbitration 2014) <www.lcia.org//Dispute_Resolution_Services/lcia-arbitration-rules-2014.aspx#Article 30> accessed 23 December 2017.

[5] ‘Swiss Rule of International Arbitration’ (Swiss Chamber’s Arbitration Institution 2012) <www.swissarbitration.org/files/33/Swiss-Rules/SRIA_english_2012.pdf> accessed 23 December 2017.

[6] ibid.

[7]  ‘Arbitration Rules 2013’ (Hong Kong International Arbitration Centre 2013) <www.hkiac.org/arbitration/rules-practice-notes/administered-arbitration-rules/hkiac- administered-2013-2#42> accessed 23 December 2017.

[8] ‘Arbitration Rules 2017’ (Stockholm Chamber of Commerce 2017) <http://sccinstitute.com/media/169838/arbitration_rules_eng_17_web.pdf&gt; accessed 23 December 2017.

[9] ‘Investment Arbitration Rules of the Singapore International Arbitration Centre’ (Singapore International Arbitration Centre 2017) <www.siac.org.sg/images/stories/articles/rules/IA/SIAC%20Investment%20Arbitration%20Rules%20-%20Final.pdf > accessed 23 December 2017.

[10] ibid.

[11] Catherine A Rogers, ‘Transparency in International Commercial Arbitration’ (Penn State Law 2006) <http://elibrary.law.psu.edu/cgi/viewcontent.cgi?article=1233&context=fac_works&gt; accessed 23 December 2017.

[12] Stefano Azzali, ‘Confidentiality vs. Transparency in Commercial Arbitration: A False Contradiction to Overcome’ (NYU Law 2012) < http://blogs.law.nyu.edu/transnational/2012/12/confidentiality-vs-transparency-in-commercial-arbitration-a-false/&gt; accessed 23 December 2017.

[13] ‘Investment Arbitration Rules of the Singapore International Arbitration Centre’ (n 10).

[14] ‘UNCITRAL Arbitration Rules’ (United Nations 2010) <www.uncitral.org/pdf/english/texts/arbitration/arb-rules-revised/pre-arb-rules-revised.pdf> accessed 23 December 2017.


(Zeeshan is currently a student at National University of Study and Research in Law, Ranchi.)