Confidentiality in International IP Arbitration
A common misunderstanding persists among many arbitration users that selecting arbitration as a dispute resolution mechanism automatically means that the proceedings will remain confidential. However, that is not the case. Although some legal systems provide that arbitration proceedings are confidential, this is not a universal rule. Even in those legal systems that provide for confidentiality as a general rule, there are many exceptions. In addition, there are practical limits on enforcement mechanisms even when confidentiality applies.
As with the various approaches among legal systems, not all institutional arbitration rules provide that the proceedings shall remain confidential. Even when rules stipulate that the proceedings shall be confidential, most rules fail to provide adequate assurance that all materials exchanged during the course of the arbitration shall remain confidential after the conclusion of the case. By themselves, arbitration rules also fail to provide for an effective enforcement mechanism after the arbitral tribunal’s mandate ends.
For all of these reasons, parties and counsel involved in IP-related arbitrations need to be proactive in cases where maintaining confidentiality is particularly important. This chapter explains how different jurisdictions and institutional rules address the question of confidentiality, and also suggests how users might supplement these provisions to create more robust and effective confidentiality protections in IP arbitrations.
At the outset, it is necessary to be clear about terminology, particularly the difference between privacy and confidentiality in the context of international arbitration. By definition, arbitration is a private dispute resolution regime. Hearings are not open to the public in the same way that court proceedings are often open to the public. In principle, only the parties to the proceedings have the right to be present at the hearing or to receive copies of the communications and submissions. Yet the private nature of arbitration does not necessarily mean that parties have an obligation to maintain confidentiality of the existence of the arbitration itself, the submissions in the arbitration, the materials submitted into evidence or other documents that the parties exchange during document production. Privacy does not necessarily imply that parties are precluded from disclosing facts about the arbitration or using materials exchanged during the arbitration for other purposes. Rather, the privacy of the proceedings limits who is entitled to be present and to participate in the proceedings while the arbitration is pending, but it does not regulate activities outside of the proceedings.
In contrast, the question of confidentiality generally concerns whether and under what circumstances a party or participant in an arbitration may be bound by an affirmative duty not to disclose information related to the arbitration. Broadly speaking, there are two categories of circumstances where the issue may arise. The first is where a party wishes to make a disclosure or actually makes a disclosure, whether voluntarily or inadvertently. Here, the question is whether the disclosure gives rise to a cause of action. Where disclosure has not yet been made, but only threatened, the party wishing to maintain confidentiality may wish to seek injunctive relief. In the case where the disclosure has already been made, a party may wish to seek damages.
A second category arises where a party or participant does not wish to disclose certain information, but might nevertheless be bound by a competing legal obligation to do so. For example, a party to an arbitration may have an obligation to make disclosures to its regulator. Or a third party in an unrelated litigation proceeding might request discovery of confidential materials that a party came to possess because of an arbitration. Or a governmental entity might request documents or other information as part of an investigation. In these circumstances, the question is whether a duty of confidentiality overrides a competing duty to disclose, and whether it is possible to invoke confidentiality to resist or limit the scope of disclosure.
Sometimes the confidentiality provisions in the underlying contract will be drafted broadly enough to include the confidentiality of the arbitration proceedings. Sometimes parties separately address confidentiality in the arbitration agreement. Many times commercial parties are prepared to agree, at the time when they make their contract, that they will maintain confidentiality in the event of a future dispute. But far more often than not, they fail to draft the arbitration agreement with this level of particularity.
In ICC arbitration proceedings, arbitral tribunals will sometimes invite parties to consider inserting a confidentiality clause in the terms of reference. Signing terms of reference with a confidentiality clause might be regarded as creating a new and independent contractual obligation if there was no such undertaking in the underlying contract. But parties are under no obligation to agree on confidentiality after a dispute arises, and in many cases, after the dispute arises, one of the parties might perceive that a stringent confidentiality undertaking is not in its best interests and therefore might be reluctant to agree to include a confidentiality clause in the terms of reference.
Sometimes the parties’ interests are aligned on this matter, but not always. There are many reasons why one of the parties might prefer more flexibility or might even suggest that there should be no confidentiality obligation at all. For example, one party might perceive that publicity about a dispute would increase pressure on the other party to reach a quick settlement, and may wish to disclose the existence of a dispute and at least some information about the claims and defences. Or a party may conclude that in some circumstances there may be a strong public interest for disclosure, even of a dispute between private parties.
Another situation that sometimes arises is a multi-contract, multi-party dispute with back-to-back contracts, such as a licence and sublicence. If the entire dispute cannot be resolved in a single proceeding, the party in the middle position may wish to use documents and evidence that it obtains in the first arbitration in a separate proceeding against a different party. In other multi-party disputes, parties whose interests are aligned may wish to coordinate and share material, but this might not be possible when the parties have agreed on strict confidentiality obligations. In all of these circumstances, an argument can be made that there is nothing unique about arbitration that should impede a party from making disclosures that it would otherwise be entitled to make if the dispute was resolved in the national courts.
Although it is not always possible for the parties to agree on the scope of confidentiality, most legal systems and institutional rules confer powers on tribunals to resolve these disputes as a matter of procedure and to issue orders to maintain confidentiality and to protect confidential information. Sometimes these orders are temporal in nature, and sometimes they are incorporated into the award to ensure that the obligations will continue to bind the parties even after the conclusion of the arbitration.
We now turn to a brief overview of selected legal systems and arbitration rules to consider common features and differences across the arbitration landscape. After completing this survey, we offer suggestions for how parties might utilise and supplement the tools that are available to fashion the degree of confidentiality that is appropriate in a particular case.
Confidentiality under national arbitration laws
While more than 80 countries have adopted the United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration of 1985, whether in whole or in part, with or without the 2006 amendments, the Model Law does not contain any provisions on confidentiality. The UNCITRAL Arbitral Rules appear to recognise an implied duty of privacy of the arbitral proceedings and an implied duty of confidentiality regarding the arbitral award, but do not provide for a duty of confidentiality in relation to arbitral proceedings and documents produced therein. The UNCITRAL Notes on Organizing Arbitral Proceedings states that the question of confidentiality is subject to national legislation and that, absent an express agreement on confidentiality, parties ‘cannot assume that all jurisdictions would recognise an implied commitment to confidentiality’.
While a few jurisdictions address the issue of arbitral confidentiality in statutory law, most jurisdictions defer this issue to case law. We briefly survey the national arbitration laws in a sampling of six major jurisdictions – England, Germany, the United States, France, Singapore and Hong Kong.
In England, the Arbitration Act 1996 is silent on the issue of arbitral confidentiality. Nevertheless, English courts have consistently held that there is an implied duty of confidentiality in arbitration.
Dolling-Baker v. Merret is one of the first cases in which the concept of an implied duty of confidentiality was propounded by English courts. In this case, the English Court of Appeal rejected a party’s request for discovery of arbitral documents from a previous arbitration. The court reasoned that there is an implied obligation of confidentiality arising out of ‘the nature of arbitration itself,’ which would impose an implied obligation on both parties ‘not to disclose or use for any other purpose any documents prepared for and used in the arbitration’.
In Hassneh Insurance Co of Israel and Others v. Steuart J Mew, the plaintiffs requested the court to issue an injunction against the defendant, where the defendant tried to use documents it procured from a previous arbitration between the plaintiffs and the defendant in a separate proceeding. The plaintiffs argued that this would constitute a breach of confidentiality in arbitration. In its decision, the English High Court recognised a duty of confidentiality in arbitration as an implied term in the parties’ agreement to arbitrate. The court derived confidentiality from privacy of the arbitration, reasoning that ‘disclosure to a third party [a note or transcript of the evidence] would be almost equivalent to opening the door of the arbitration room to that third party’.
Similarly in Ali Shipping Corp v. Shipyard Trogir, the English Court of Appeal held that an implied duty of confidentiality arises as an essential corollary of the privacy of arbitral proceedings, and that the duty is implied as matter of the law. At the same time, the court indicated that general exceptions to the broad rule of confidentiality recognised by English law will also apply to the duty of confidentiality, namely, consent, order of the court, leave of the court, disclosure being reasonably necessary for the protection of the legitimate interests of an arbitrating party and public interest.
It is important to note that arbitral privacy or confidentiality does not always override the principle of open justice. In City of Moscow v. Bankers Trust, the English Court of Appeal clarified that while arbitration-related hearings are often held in private, the same rule of privacy does not apply to judgments rendered in relation to those hearings. Judgments should be published if they can be made public without disclosing significantly sensitive or confidential information.
In Germany, the arbitration act as codified under the German Code of Civil Procedure does not contain any express provision on confidentiality. Germany defers this issue of confidentiality to the parties’ agreement, to be executed separately or to be incorporated through the institutional rules the parties adopt. In this regard, the Arbitration Rules of the German Arbitration Institute expressly provides for a strict arbitral confidentiality: Article 44 of the Rules provides that unless the parties agree otherwise, the parties and their outside counsel, the arbitrators, the DIS employees, and any other persons associated with the DIS who are involved in the arbitration shall not disclose to anyone any information concerning the arbitration, including in particular the existence of the arbitration, the names of the parties, the nature of the claims, the names of any witnesses or experts, any procedural orders or awards, and any evidence that is not publicly available.
There are diverging scholarly views in Germany as to whether parties to an arbitral proceeding have an implied duty of confidentiality. The academic debate is still unresolved and there is little case law on the issue. However, it appears to be widely accepted that the arbitrators (not the parties) are under an implied duty of confidentiality.
The legal regime for arbitration in the United States is complicated because of the overlap between federal and state law. The Federal Arbitration Act does not address the question of arbitral confidentiality. State laws supplementing the Federal Arbitration Act are not uniform, and generally remain silent on the question of confidentiality. The Revised Uniform Arbitration Act 2000 has only been adopted by a handful of states. This act merely authorises the arbitral tribunal to issue a protective order to prevent the disclosure of privileged and confidential information in arbitration, but only to the extent that a court could if the controversy were the subject of a civil action in the state. As in England, the question of a general duty of confidentiality is deferred to courts.
In contrast to the approach adopted by English courts, US courts have been reluctant to recognise the existence of a broad implied duty of confidentiality in arbitration. While US courts consider confidentiality agreements in arbitration as common and enforceable, absent such a confidentiality agreement, parties cannot expect the arbitration proceedings and the documents and information exchanged in arbitration to receive any special confidentiality protection.
The issue of confidentiality most frequently arises in the US courts in connection with requests for discovery of arbitral documents in subsequent proceedings. The 1988 decision in United States v. Panhandle Eastern Corp. is a leading case on this issue. In that case, the plaintiff sought discovery of the defendant’s documents from a previous ICC arbitration to which the defendant’s subsidiary was a party. The defendant filed a motion for a protective order to preserve confidentiality of the arbitration documents, relying on the ICC Rules and the parties’ ‘general understanding . . . that the pleadings and related documents in the arbitration would be kept confidential’. The US District Court in Delaware rejected the defendant’s request for a protective order and ordered disclosure of the documents, finding that the ICC Rules in effect at the time only governed the internal functioning of the ICC Court and did not apply to the parties and the arbitral tribunal. The decision further stated that the defendant failed to ‘point to any actual agreement of confidentiality, documented or otherwise’, effectively refusing to recognise an implied confidentiality obligation.
Other US courts have reached similar conclusions, denying an implied duty of confidentiality in absence of an express agreement. In Industrotech Constructors, Inc. v. Duke University, the defendant was ordered to produce transcripts from a previous arbitration that involved the defendant and a third party. The defendant appealed, arguing that the parties to the arbitration stipulated that the arbitral proceedings would remain confidential. The defendant further contended that, even without a stipulation of confidentiality, the public policy required confidentiality of arbitration. The North Carolina Court of Appeals dismissed the defendant’s appeal, concluding that nothing in the relevant arbitration rules or the state’s arbitration statutes required ‘strict confidentiality’. It must be noted that US courts generally acknowledge the common law right of access to judicial records, and may allow the arbitral award and other arbitral information to become public in court proceedings seeking confirmation or challenge of an arbitral award. The parties’ confidentiality agreement alone may not be sufficient for the court to order all arbitration information to be sealed in the court proceedings.
In 2011, France updated both its domestic and international arbitration laws in the French Code of Civil Procedure. Under the new arbitration regime, domestic arbitrations are now confidential unless the parties agree otherwise. But for international arbitrations, there is no equivalent confidentiality provision, save the requirement that the arbitral tribunal’s deliberations are to be kept secret.
Nevertheless, French courts have historically taken an approach similar to their English counterparts in recognising an implied confidentiality obligation in arbitration. In Aïta v. Ojjeh, where the petitioner sought to annul an arbitral award issued in London, the Paris Court of Appeal rejected the petition, decided that the annulment proceedings violated the duty of arbitral confidentiality and subjected the petitioner to penalties. The court concluded that the annulment petition was merely an attempt to disclose confidential arbitral information and found that attempt to be against ‘the very nature of arbitral proceedings to ensure the highest degree of discretion in the resolution of private disputes in accordance with the parties’ agreement’. Similarly in Bleustein et al v. Société True North et Société FCB International, the Commercial Court of Paris found that the defendant breached its duty of confidentiality when it issued a press release involving the disclosure of the existence of an arbitral proceeding without a legal obligation to report.
A more recent decision in Nafimco v. Foster Wheeler Trading Company in 2004, however, indicates that French courts are now taking a more reserved position on arbitral confidentiality. In this case, the Paris Court of Appeal stated that the party claiming breach of the duty of arbitral confidentiality had the burden of proving the existence of such duty.
In Singapore, the International Arbitration Act allows a party to apply for arbitration-related proceedings to be heard otherwise than in open court. If the arbitration-related proceedings are held otherwise than in open court, the court shall not give directions for the publication of information without the parties’ consent or the court’s own judgment that the information will not reveal any confidential matter. In this regard, the Singapore High Court confirmed in the decision of BBW v. BBX that Singapore courts have the inherent power to grant orders to seal court files in the interest of preserving the confidentiality of related arbitration proceedings.
Singapore statutory law does not codify a general duty of confidentiality in arbitration. Nevertheless, Singapore courts have followed the English position and recognise a common law duty of confidentiality. In Myanma Yaung Chi Oo Co Limited v. Win Win Nu, a party made references to the proceedings and documents from a previous arbitration, alleging that the disclosure was required for its case before the court. The High Court of Singapore recognised an implied obligation of confidentiality, quoting a number of English court cases on this issue. The court reasoned that as arbitrations are private hearings, the parties’ expectation is that ‘the proceedings are confidential’. The court, however, noted that if the disclosure is reasonably necessary to protect a party’s legitimate interest, one may be excused from the duty of confidentiality, and leave of the court is not required for disclosure.
The decision of International Coal Pte Ltd v. Kristle Trading Ltd and Another and Another Suit provides further guidance on the duty of confidentiality in arbitration. In that case, the High Court of Singapore held that there should be no generalisation on what the duty of confidentiality encompasses and concluded that the question of the duty of confidentiality should be evaluated in each case in the context of circumstances. The court also drew a distinction between different types of confidentiality attaching to different types of documents, such as arbitral awards, which would be treated differently from the materials used or disclosed in the course of arbitration proceedings. According to the court, once an arbitral award is registered as a judgment, it enters the realm of the public domain and cannot be protected by the rule of privacy.
Hong Kong is one of the very few jurisdictions that has an express statutory duty of confidentiality provided under its arbitration law, the Hong Kong Arbitration Ordinance, Chapter 609. Under the Ordinance, no party may publish, disclose or communicate any information relating to the arbitral proceedings or an award (Section 18(1) of the Ordinance). This duty is imposed on the parties by virtue of law, although the duty can be limited or lifted if the parties ‘otherwise agree’ (Section 18(1) of the Ordinance).
There are certain statutory exceptions, which are listed under Section 18(2) of the Ordinance. These exceptions include disclosure in legal proceedings to protect a party’s legal right or interest or to enforce or challenge the arbitral award, and disclosure to a party’s professional or other advisers. Disclosure is also permitted if there is a legal obligation to disclose.
In general, court hearings related to arbitral proceedings are not to be heard in open court, unless the court decides otherwise based upon a party application or the court’s own discretion (Section 16 of the Ordinance). If arbitration-related proceedings are held in closed court proceedings, a party can request the court’s direction as to what arbitration information (if any) may be published (Section 17(2) of the Ordinance). The court must not make a direction permitting information to be published unless all parties agree or the court is satisfied that publication of the information would not reveal any matter (including the identity of any party) that any party reasonably wishes to remain confidential (Section 17(3) of the Ordinance).
Confidentiality under institutional arbitration rules
Most major arbitral institutions at least mention confidentiality in their rules, but without going into significant detail. One common approach is to affirm the general principle that the proceedings should remain confidential, but without trying to determine the boundaries of any legally enforceable obligations, or when any exceptions might apply. Another common approach is to confirm that the arbitral tribunal has the authority to order measures to protect confidential information – and then leave it to the arbitral tribunal to deal with the issue. These approaches are not mutually exclusive.
Some institutions expressly provide for more confidentiality protections than others. Some only impose confidentiality duties on members of the administrative body, while others may bind the tribunal and parties as well. Similarly, some institutions make it a default rule to allow publications of awards in some form (full, partial or redacted) unless a party objects, while the norm under other institutional rules is to require the parties to opt in to publication.
Even where an institution provides for express confidentiality protections under its rules, the protections and corresponding duties imposed are presumably subject to exceptions. In addition, confidentiality is difficult to enforce owing to the lack of any meaningful remedy. These are issues that institutions have been trying to tackle as they continue to revise and update their rules. A summary of the confidentiality protections that are currently offered under the rules of some of the major arbitral institutions is provided below.
International Chamber of Commerce
The International Chamber of Commerce (ICC) only expressly imposes confidentiality duties on members of the court and does not extend similar duties to the arbitral tribunal or parties. Instead, the most recently revised 2021 version of the ICC Rules, as with previous versions of the rules, defers to the arbitral tribunal to order confidentiality and other similar measures to protect trade secrets and confidential information pursuant to a party’s request, under Article 22.
In effect, the measures that may be ordered by the arbitral tribunal under Article 22 are up to the tribunal’s discretion, limited in part by the confines of the procedural or other applicable law of the arbitration. Whether parties will actually comply with such tribunal-ordered measures is an entirely different issue, as parties only undertake to comply with any tribunal order and no sanctions or potential remedies are prescribed under the rules for a breach of such an order.
With respect to the publication of awards, the ICC has confirmed that all awards made as from 1 January 2019 may be subject to publication in full at the ICC Secretariat’s discretion, unless a party objects to publication or only agrees to publication subject to the removal of identifying information. Such an approach reflects the ICC’s ongoing efforts to introduce greater transparency in arbitrations administered by the court. Therefore, should parties to an ICC proceeding wish to keep their award confidential, they must be mindful to proactively oppose publication of their award.
London Court of International Arbitration
In contrast to the ICC, the London Court of International Arbitration (LCIA) offers some of the strongest confidentiality protections of all the various institutions, expressly providing for a broad scope of confidentiality duties under the most recent version of the LCIA Arbitration Rules, which were adopted in 2020.
Under Article 30, the arbitral tribunal and the parties are bound to keep confidential all materials created for purposes of an arbitration, and any documents produced during an arbitration that is not in the public domain, as well as any award. The 2020 version of the rules extends that obligation to all persons involved in the arbitration, including the parties’ authorised representatives, fact and expert witnesses, and service providers, by imposing a positive duty on parties to obtain confidentiality undertakings from them – presumably when their involvement in the arbitration has been fixed.
The high level of confidentiality imposed on the persons involved in a LCIA arbitration is mirrored by the LCIA’s own confidentiality undertakings. The LCIA has confirmed that it will not provide any information to any third party about a pending or completed LCIA arbitration. The LCIA will also not publish arbitral awards in any form, partial or even redacted, without the consent of the tribunal and the parties.
The LCIA Rules also recognise exceptions to confidentiality. For instance, parties may be excused from their confidentiality obligations where disclosure is required by ‘legal duty, to protect or pursue a legal right, or to enforce or challenge an award in legal proceedings’. Given the broad nature of these exceptions, particularly the broad exception ‘to protect or pursue a legal right,’ we will need to await further case law to see whether the LCIA Rules provide any protection greater than the English common law duty of confidentiality.
American Arbitration Association – International Center for Dispute Resolution
The American Arbitration Association – International Center for Dispute Resolution (ICDR) strikes a balance between the American tradition of favouring disclosure in adversarial proceedings and an acknowledgement that there may be a need to protect the confidentiality of certain information in international arbitration.
Under Article 37(1) of the ICDR Rules, the ICDR and the tribunal are prohibited from disclosing confidential information provided by parties and their witnesses during the course of an arbitration, as well as all matters relating to the arbitration and the award, subject to certain exceptions. The same general confidentiality duties do not apply, however, to parties or other participants.
Like the ICC, the ICDR defers to the arbitral tribunal to manage confidentiality issues that may arise with respect to parties and other participants. Article 37(2) permits the tribunal to make orders regarding the ‘confidentiality of the arbitration or any matters in connection with the arbitration’ and to take measures to protect trade secrets and confidentiality at its discretion, and without the need for a party’s request to that effect. The tribunal’s power to order confidentiality measures is again confirmed in Articles 21(5) and 22 in connection with the exchange of information subject to commercial or technical confidentiality and documents subject to privilege.
In effect, the ICDR Rules take a similar approach to the ICC Rules, and raise similar questions on the discretionary nature of the measures that the arbitral tribunal may order to ensure confidentiality and the effectiveness of such measures where there are no prescribed sanctions or remedies for a breach.
With respect to awards, Article 30(3) makes it clear that parties must opt in to the publication of an award by requiring the consent of all parties for publication. The award may also be made public as required by law. Article 30(3) also permits the ICDR to publish or otherwise disclose awards and other decisions, subject to the parties’ consent and the removal of identifying information about the parties and the case.
World Intellectual Property Organization
Among the major institutional rules,World Intellectual Property Organization (WIPO) arguably provides the most detailed confidentiality protections, in line with WIPO’s focus on IP-related disputes. Despite these detailed protections, however, the WIPO Rules also carve out a number of exceptions similar to those adopted by the institutions discussed above.
Specifically, parties must keep confidential all information concerning the existence of an arbitration under Article 75, which includes, among others, the cause of action, remedies sought, IP rights at issue and the members constituting the arbitral tribunal. Disclosure of information may be permitted to ‘the extent necessary in connection with a court challenge to the arbitration or an action for enforcement of an award’, and where a party is required to disclose ‘by law or by a competent regulatory authority’. In the latter case, however, disclosure is only permitted in limited form, as parties may only disclose information to the extent that such disclosure is legally required, and must inform the other party (if the arbitration has concluded) or the other party and the tribunal (if the arbitration is still ongoing) of the details of the disclosure and the reasons why disclosure was necessary.
Parties may also disclose party names and the relief requested ‘for the purpose of satisfying any obligation of good faith or candor owed’ to the third party, although it is unclear what circumstances would constitute permissible disclosure in such cases.
In addition, all documents or other evidence given by a party, including its witnesses, are to be kept confidential under Article 76. However, evidence may be disclosed by the other party if: information in the evidence is in the public domain; the other party knew the information prior to or otherwise apart from the arbitration; and either the evidence-giving party agrees to disclosure or disclosure is ordered by a court. Likewise, the award must be kept confidential under Article 77. Disclosure, however, is again permitted under specified circumstances including, among others, where disclosure is required to comply with a legal requirement imposed on a party or to establish or protect a party’s legal right against a third party.
Meanwhile, Article 78 extends the same confidentiality duties stipulated for parties to members of WIPO and the tribunal, subject to similar exceptions. In addition, under Article 78(b), WIPO has carved out the right to publish information concerning any arbitration, subject to the removal of identifying information about the parties and the circumstances of the dispute.
Singapore International Arbitration Centre
The Singapore International Arbitration Centre (SIAC), much like the LCIA, is another arbitral institution that expressly provides for confidentiality protections under its rules.
For instance, under Rule 24.4, all materials and other documents used in relation to a SIAC arbitration must be kept confidential. In addition, under Rule 39, the arbitral tribunal and parties must keep confidential ‘all matters relating to the proceedings and the Award’, which includes the existence of the arbitration itself, the award, and all materials submitted, used or produced during the course of the arbitration that are not in the public domain. Those confidentiality duties also extend to any administrative secretary and any other person the arbitral tribunal appoints, but currently do not apply to other participants such as party representatives or witnesses. Meanwhile, under Rule 32, a SIAC award may only be published with the consent of the tribunal and the parties. Even where there is consent, the award may only be published in redacted form, without any identifying information about the parties.
Like the LCIA Rules, the SIAC Rules also recognise exceptions. Disclosure of matters relating to the proceeding or the award may be permitted if the parties agree, or if it is required by a court or under other circumstances prescribed in Rule 39.
Unique to the SIAC Rules is the express grant of power to the arbitral tribunal to impose sanctions, including costs, or take other measures following a breach of the confidentiality provisions under Rule 39.4. It remains unclear how frequently this rule has been invoked, and whether the rule has been effective in curbing confidentiality breaches. In any case, SIAC will be releasing a new version of its rules in late 2021, which is expected to include revisions to the tribunal’s power to impose sanctions under Rule 39. Any present concerns regarding the effectiveness of the arbitral tribunal’s power to impose sanctions against confidentiality breaches may be addressed in these revisions.
Hong Kong International Arbitration Centre
In line with the express statutory provision for confidentiality in arbitration under the Hong Kong Arbitration Ordinance, the Hong Kong International Arbitration Centre (HKIAC) also expressly mandates that the arbitral process as a whole be kept confidential in its rules.
Under Article 45.1 of the HKIAC Rules, the parties are obliged to keep confidential all information relating to the arbitration itself and any award or emergency decision rendered in the proceeding, which presumably includes any information or documents submitted or used during the arbitration. The same confidentiality obligations are extended to the arbitral tribunal, HKIAC, as well as experts and witnesses under Article 45.2. As a general exception, however, disclosure is permitted for parties and party representatives where such disclosure is made, among others, to a governmental or regulatory body, court or tribunal as required by law, to professional or other advisers (including actual and potential witnesses and experts), or even to any person ‘for the purposes of having, or seeking, third party funding’ in an arbitration.
Meanwhile, Article 45.5 expressly provides that HKIAC may publish any award, in full or in part or even as a summary, so long as the parties’ identifying information are removed and no party objects to such publication. In effect, HKIAC requires that parties proactively oppose the publication of any award, much like the ICC.
Conclusions and recommendations
Against this background, it should be clear that the legal and institutional framework around an international arbitration will often not be sufficient, by itself, to protect all of the information that a party to an IP arbitration may wish to protect from disclosure. Although some common law jurisdictions (most notably, England) have recognised a common law duty of confidentiality, those same jurisdictions have also recognised exceptions that may weaken the degree of effective protection. The difficulty of identifying the boundaries of the exceptions makes it difficult to conclude that these protections are adequate to protect the parties’ interests. They also fail to address the practical difficulty of proving damages in the case of a breach.
Although institutional rules sometimes affirm the principle that the arbitration shall remain confidential, these rules are often phrased in general terms, are not exhaustive and sometimes do not take into account the circumstances under which any exceptions might apply. Moreover, it is unclear how much effective protection these rules can provide after the conclusion of the arbitration, particularly under circumstances where the award is silent regarding any ongoing confidentiality obligations.
In an IP arbitration, one or both of the parties is more likely to have a keen interest in limiting the disclosure of confidential information and carefully regulating how recipients use that confidential information. There are more likely to be specific concerns about maintaining confidentiality of particularly sensitive confidential information, as distinguished from a desire to maintain confidentiality of the proceedings generally, which may or may not be a concern to the parties. Rather than frame the issue of confidentiality in general terms, parties should focus on particular information they wish to protect and how to protect that information not only during the arbitration, but also after the proceedings end.
Adequate mechanisms are normally available to protect confidentiality, but parties and their counsel need to be proactive. Absent an agreement between the parties, it may become necessary to seek assistance from the arbitral tribunal and to ask the arbitral tribunal to incorporate certain provisions about confidentiality into the final award.
The following are some practical steps that parties can take to enhance the scope of effectiveness of confidentiality in IP arbitrations.
Perhaps the most effective protection is that which the parties have expressly agreed to in their contract. A well-drafted confidentiality agreement will clearly identify the scope of confidential information, the purposes for which the confidential information may be used, the medium in which confidential information may be stored or distributed, the security measures that parties are required to take to prevent unauthorised disclosure and the specific persons who are authorised to receive the confidential information. Parties can agree on measures to return or destroy confidential information once the contractual relationship ends or the purpose of the disclosure has been fulfilled. They can also define the scope of any permitted disclosure, including disclosures that may be required by law. They may require that a party that receives a third-party request for disclosure should notify the other party and provide the other party an opportunity to try to resist any order for disclosure. They may also stipulate the term of a party’s confidentiality obligations. They may provide for liquidated damages for a breach, as proving actual damages is one of the most difficult elements to establish in a breach of confidentiality claim. It is always better to rely on any contractual provision with negotiated exceptions, rather than to rely on a default rule implied by law with exceptions that are also implied by law, the boundaries and contours of which may be difficult to define.
Generally speaking, arbitrators, tribunal secretaries, counsel and experts will be bound by their professional obligations to maintain confidentiality, which are often regarded as stringent enough that no additional protection is necessary. As discussed above, institutions also often impose additional obligations on the arbitrators and employees of the institution. Notwithstanding these protections, in IP arbitrations involving particularly sensitive confidential information, parties may sometimes request separate confidentiality undertakings from the non-party participants in the arbitration.
Most IP contracts include confidentiality covenants. Lawyers often draft these provisions in contemplation of the parties’ obligations during the expected performance of the contract. They are usually not drafted to address confidentiality obligations after a dispute arises, or when one party claims the right to terminate or rescind the contract. However, there is no reason why parties cannot stipulate in the contract that the same degree of confidentiality shall continue to apply notwithstanding any dispute or conclusion of the contractual relationship.
After a dispute arises, it is usually more difficult to reach an agreement on such matters. Once a case commences, if one party raises concerns about protecting the confidentiality of particular information, the normal course is for the arbitral tribunal to invite the parties to try to reach an agreement. If they cannot reach an agreement, the arbitral tribunal may issue some form of protective order after hearing submissions and proposals from both parties.
When the parties cannot reach an agreement, the scope of the tribunal’s authority to order protection of confidential information will be determined by, among other things, the law of the place of arbitration, as well as the applicable rules of the arbitration. Both of these sources of authority typically confer broad authority on the arbitral tribunal. In addition to the types of confidentiality terms that might normally appear in in the underlying contract, an arbitral tribunal might also order specific protections taking into account that a dispute has arisen. These could include, for example, an order that certain documents may be produced with redactions, or on an ‘attorney eyes only’ basis, or that certain documents might be reviewed in camera. The tribunal may also order measures restricting how highly confidential information may be shared with experts, or how such information might be used at the evidentiary hearing.
Parties should consider not only the content of such an order, but whether and to what extent it should have any binding effect after the conclusion of the arbitration. Procedural orders normally lose their binding effect once the tribunal issues a final award and the tribunal’s mandate has concluded. If parties seek relief from the tribunal during the arbitration to protect the confidentiality of materials or information exchanged during the arbitration, parties may wish to consider whether it is advisable to make these protections permanent, as part of the relief requested in the final award. If the tribunal intends that the confidentiality provisions should have continued binding effect, this should be recorded in the award.
1 Robert Wachter is a partner, and Grace Yoon and Han Ah Lee are associates at Lee & Ko.
2 See Young Seok Lee & Robert Wachter, Confidentiality in International Arbitration: Including a Korean Law Perspective, Dong-A Journal of IBT Law Vol. I:2 (2010), pp. 65–66.
3 See Michael Hwang SC & Katie Chung, Defining the Indefinable: Practical Problems of Confidentiality in Arbitration, 26(5) Journal of International Arbitration (2009), Paras. 15–26.
4 See Nicholas Lingard & Smitha Menon, Confidentiality in International Arbitration: A Comparative Jurisdictional and Institutional Review, Singapore Arbitration Journal (May 2020), Paras. 42–43.
5 See Kyriaki Noussia, Confidentiality in International Commercial Arbitration: A Comparative Analysis of the Position under English, US, German and French Law (2010), pp. 22–23.
6 UNCITRAL Arbitration Rules, Art. 28(3) (‘Hearings shall be held in camera unless the parties agree otherwise . . . ’).
7 UNCITRAL Arbitration Rules, Art. 34(5) (‘An award may be made public with the consent of all parties or where and to the extent disclosure is required of a party by legal duty, to protect or pursue a legal right or in relation to legal proceedings before a court or other competent authority’).
8 United Nations Commission on International Trade Law, UNCITRAL Notes on Organizing Arbitral Proceedings, p. 13.
9 Dolling-Baker v. Merrett  1 W.L.R. 1205.
10 id., at 1213.
12 Hassneh Insurance Co of Israel and Others v. Steuart J Mew  2 Lloyd’s Rep. 243.
13 id., at 247.
14 Ali Shipping Corp v. Shipyard Trogir  1 W.L.R. 314.
15 Department of Economic Policy and Development of the City of Moscow v. Bankers Trust  EWCA Civ. 314.
16 DIS Arbitration Rules, Art. 44.
17 Arbitration Guide, Germany, IBA Arbitration Committee (updated Feb 2018).
18 The Revised Uniform Arbitration Act of 2000, Sec. 17(e).
19 The courts noted confidentiality clauses to be so common in the arbitration context that an ‘attack on the confidentiality provision is, in part, an attack on the character of arbitration itself’. See Guyden v. Aetna, Inc., 544 F.3d 376, 385 (2d Cir. 2008), quoting Iberia Credit Bureau, Inc, v. Cingular Wireless LLC, 379 F.3d 159, 175 (5th Cir. 2004).
20 For example, see ITT Educational Services v. Arce, 533 F.3d 342 (5th Cir. 2008).
21 United States v. Panhandle Eastern Corp., 118 F.R.D. 346 (D. Del. 1988).
22 id., at 350.
23 id., at 349-350.
24 id., at 350.
25 Industrotech Constructors v. Duke University, 314 S.E.2d 272 (N.C. Ct. App. 1984).
26 id., at 274.
27 French Code of Civil Procedure, Art. 1464(4).
28 id., Art. 1469.
29 Aïta v. Ojjeh, Paris Court of Appeal, 18 February 1986, Rev. Arb. 1986.583.
30 id., at 283.
31 Bleustein et autres v. Société True North et Société FCB International, Commercial Court of Paris, 22 February 1999, Rev. Arb. 2003.189.
32 NAFIMCO v. Société Foster Wheeler Trading Company AG, Paris Court of Appeal, 22 January 2004, Rev. Arb. 2004.647.
33 Singapore International Arbitration Act, Sec. 22.
34 id., Sec. 23.
35 BBW v. BBX and Others  SGHC 190.
36 Myanma Yaung Chi Coo Ltd. v. Win Nu  2 S.L.R. 547.
37 id., at 17.
38 id., at 19.
39 International Coal Pte Ltd. v. Kristle. Trading Ltd and Another and Another Suit  SGHC 182.
40 id., at 84.
41 id., at 84-85.
42 Hong Kong Arbitration Ordinance (Cap 609), Section 18(1).
44 id., Section 18(2).
45 id., Section 16.
46 id., Section 17(2).
47 id., Section 17(3).
48 See Hwang, Paras. 75–77.
49 ICC Arbitration Rules, Appendix I, Art. 6 and Appendix II, Art. 1.
50 id., Art. 22(3).
51 id., Art. 22(5).
52 ICC Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration under the ICC Rules of Arbitration (1 January 2019), Paras. 41–46.
53 LCIA Arbitration Rules, Art. 30.
55 LCIA Notes for Parties (18 August 2017), Paras. 101–104. As at the date of this chapter, the LCIA has not yet published its updated guidance notes for the 2020 edition of the LCIA Rules.
56 id., Para. 103.
57 LCIA Arbitration Rules, Art. 30.
59 ICDR Arbitration Rules, Art. 37(1).
60 id., Art. 37(2).
61 id., Arts. 21(5) and 22.
62 id., Art. 30(3).
65 WIPO Arbitration Rules, Art. 75.
66 WIPO Arbitration and Mediation Center Commentary on WIPO Arbitration Rules (2017), p 100. As at the date of this chapter, there has been no updated commentary issued by WIPO.
67 WIPO Arbitration Rules, Art. 75.
70 id., Art. 76.
71 WIPO Arbitration and Mediation Center Commentary on WIPO Arbitration Rules (2017), p. 101.
72 WIPO Arbitration Rules, Art. 77.
73 WIPO Arbitration and Mediation Center Commentary on WIPO Arbitration Rules (2017), p. 102.
74 WIPO Arbitration Rules, Art. 78.
76 SIAC Arbitration Rules, Rule 24.4.
77 id., Rule 39.
78 id., Rule 32.12.
80 id., Rule 39.4.
81 SIAC, SIAC Announces Commencement of Revisions for SIAC Arbitration Rules, 7 July 2020, https://www.siac.org.sg/69-siac-news/669-siac-announces-commencement-of-revisions-for-siac-arbitration-rules (last accessed 27 October 2020).
82 HKIAC Administered Arbitration Rules, Art. 45.1.
83 id., Art. 45.2.
84 id., Art. 45.3.
85 id., Art. 45.5.