Maintaining Confidentiality in Arbitration

We often hear that arbitration affords a level of confidentiality that courtroom proceedings do not. While that is true to an extent, it requires some qualification: It is the parties who must, by agreement or request to the tribunal, take responsibility for avoiding disclosure.

The AAA’s Commercial Rules, for example, require that the arbitrator and the AAA, not the parties themselves, maintain the privacy of arbitration (R-25). Under the UNCITRAL Arbitration Rules (Article 28.3) frequently chosen for international arbitration, the tribunal is required to conduct the arbitration hearing in camera; the rules do not speak to party disclosures. And under the ICC’s Arbitration Rules (Article 22), confidentiality is not mandatory and is determined by the parties: the tribunal “may make orders concerning the confidentiality of the arbitration proceedings or of any other matters in connection with the arbitration.”

The actual language in these rules sets does not track prevailing assumptions. Therefore, if the underlying agreement and arbitration clause does not provide for the confidentiality of proceedings, the parties should either (a) stipulate to a confidentiality provision, to be entered as an order, or (b) absent agreement, request that the arbitrator enter such an order.

Confidentiality procedures should extend not only to any documents exchanged prior to the hearing and to hearing exhibits and testimony, but as necessary, to the confirmation process as well.

Confidentiality procedures should extend not only to any documents exchanged prior to the hearing and to hearing exhibits and testimony, but to the confirmation process as well. Often overlooked by even sophisticated commercial parties is that if confirmation of an award is necessary, the prevailing party will need to initiate a public filing. Often necessarily, that requires appending the award itself to a petition to confirm. Or, if a party wishing to bypass understood or assumed confidentiality, may intentionally use filings in the confirmation process to seed the public record with unfavorable facts about the opponent. To avoid this result, a stipulation and corresponding order can require that any filing of the award, to the extent it contains confidential information, be made under seal.

I would add here that the trend in many courts, and certainly in federal district court, is to disfavor routine requests for blanket sealing. Those requests need to be particularized, and receive more scrutiny by courts than in the past. That means considering, in structuring a confidentiality agreement, alternatives like redaction, as well a scenario in which a request to seal is not accepted at all.

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