Confidentiality of arbitration proceedings in times of virtual hearings: the shaking of a cornerstone?

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The confidentiality of arbitration proceedings, intended as the obligation not to disclose certain aspects of arbitration, is one of the most important—if not the most important—cornerstones of international commercial arbitration, to the extent that several authors identify it as a main reason why parties decide to arbitrate their disputes in the first place.[1] To date, the so-called “duty of confidentiality” is regulated and derived either from the law of the seat of arbitration;[2] the provisions of the arbitral institutions assigned to resolve the dispute; or agreement of the parties.[3]

The spread of COVID-19 and the restrictions it triggered have led to an increase in the use of virtual hearings in arbitration proceedings. Immediately, arbitral institutions all over the world reacted by issuing protocols and guidelines and organizing webinars to regulate and discuss this particular type of hearings, highlighting the ways in which they are similar to and different from “ordinary” ones. The above scenario raised significant questions, such as whether and how the need for confidentiality in arbitration (with an emphasis on commercial arbitration) can be safeguarded when virtual hearings come into play.

First, the degree of confidentiality in arbitration will generally vary depending on several factors. Accordingly, the impact of virtual hearings on confidentiality shall be determined on a case-by-case basis, not in a general and approximate way. This is strictly related to the uncertainty surrounding the definition of “confidentiality” in arbitration in the first place: while it is commonly recognized that confidentiality, when applicable, should be imposed on the parties, the arbitral tribunal, and any arbitration institution present, whether the same applies to third parties who may participate in the proceedings (such as experts or witnesses) and to what extent is still up for debate. That said, there are some general observations that can be made.

The International Chamber of Commerce (“ICC”) recently issued its ICC Guidance Note on Possible Measures Aimed at Mitigating the Effects of the COVID-19 Pandemic (“Notes”), which include an entire section dedicated to Confidentiality, Privacy and Security.[4] Specifically, to ensure that the confidentiality of the virtual hearing is not affected, the Notes state that the parties shall first consult with the tribunal in order to establish whether the hearing will remain confidential and make confidentiality commitments binding. Under a more practical standpoint, the Notes also prescribe that the parties determine the confidentiality terms for recording the hearing.

Likewise, the Seoul Protocol on Videoconferencing in International Arbitration (“Protocol”) includes a section specifically aimed at providing guidance to safeguard the confidentiality of arbitration when hearings are held by means of videoconferencing. The Protocol even indicates the proper conduct in case of a security breach and sets forth rules for the parties to enhance the security of hearings, such as an express prohibition on recording without permission and limiting the number of people attending the hearings to those strictly necessary.

Although the above guidelines come from various contexts and different parts of the world, it is significant that all appear to be in agreement on one underlying point: clearly, in the context of virtual hearings, hypothetical breaches of the duty of confidentiality are easier and thus more likely to occur. To prevent this from happening, the solution envisaged by the above bodies of regulations is that the parties and the arbitral tribunal shall jointly regulate the confidentiality of arbitration proceedings before they commence. Such a vision is consistent with the general assumption that confidentiality in arbitration is subject to the parties’ self-regulation. Therefore, having some rules expressly covering the parties’ need to have a preparatory discussion on the issue of confidentiality, specifically addressing its existence and extent, rather than as a consequence of the increased use of virtual hearings, should be deemed a best practice to be adopted in any arbitration proceedings.

With that in mind, it is safe to assume that compliance with the guidelines provided by arbitral institutions will not only ensure the confidentiality of arbitration in virtual hearings but will also have a beneficial impact on arbitration proceedings in general. Accordingly, despite understandable initial uncertainty, the idea that virtual hearings may be detrimental to the confidentiality of arbitration proceedings should be discounted. On the contrary, virtual hearings represent a boost in innovation and modernization for commercial arbitration, which the parties should not fear.

[1] To let numbers talk, the “2018 International Arbitration Survey: The Evolution of International Arbitration of the Queen Mary University” showed that “87% of respondents believe that confidentiality in international commercial arbitration is of importance.

[2] Hong Kong Arbitration Ordinance, encompassing an express duty of confidentiality in arbitration proceedings. Notably and contrary to what can be witnessed with reference to other jurisdictions, this body of law dictates that, in order for the duty of confidentiality to apply, an agreement of the parties in this regard is not necessary. Likewise, the Arbitration Act of New Zealand prescribes an express duty of confidentiality, both in domestic and in international arbitrations. Conversely, the laws of the UK and of Singapore only provide for an implied notion of the duty of confidentiality: basically, in the absence of any statement to the contrary, the private nature of the arbitration agreement will be interpreted as requiring the confidentiality of the dispute.

[3] Notably, such an agreement can be express or implied and can be executed before or after the dispute.

[4] Notably, this is not the first set of guidelines issued by the ICC with the aim of helping parties and arbitrators conduct virtual hearings. See also the ICC’s “Information Technology in International Arbitration – Report of the ICC Commission on Arbitration and ADR” which promotes the use of video-conferencing for hearings, provided that it is not limited or prohibited by arbitration law.

Articolo inserito in: COVID-19, Contenzioso
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