Front.

Law China 2011, 6(3): 403417

DOI 10.1007/s11463-011-0136-2

RESEARCH ARTICLE

Donggen Xu, Huiyuan Shi

Dilemma of Confidentiality in International

Commercial Arbitration

Higher Education Press and Springer-Verlag 2011

Abstract Arbitration is universally used in the settlement of international

commercial disputes largely due to its inherent confidentiality. However, the
expedient element of the confidentiality is encountering challenges mostly owing
to public interest or other reasons. This article not only discusses the grounds of
confidentiality in arbitration, but also the effective way of its helping those
people who wish to respect the confidentiality in international commercial
arbitration.

Keywords confidentiality, international commercial arbitration, international

commercial disputes, public interest

In the field of international business, arbitration is an alternative dispute

resolution procedure by which the parties agree to submit their dispute to a
private forum, where an arbitrator, or a panel of arbitrators, decides claims after
hearing testimony and evaluating evidence. 1 Arbitration is a means for
settlement of business disputes. With its efficiency and facility, it allows the
parties to avoid the litigation procedure. It is universally used in the settlement of
international commercial disputes largely due to confidentiality. Confidentiality
is widely recognized as one of the major benefits of arbitration. Recently,
however, the expedient element is encountering challenges mostly due to public

1
Darren K. Sharp & Laurence R. Tucker, Traversing Legal Labyrinths in Arbitration, 66 J.
Missouri Bar 24 (2010).
Received July 6, 2010
Donggen Xu ( )
KoGuan Law School, Shanghai Jiao Tong University, Shanghai 200240, China
E-mail: [email protected]

Huiyuan Shi
Shanghai Volkswagen Automotive Co., Ltd, Shanghai 201805, China
E-mail: [email protected]
404 Donggen Xu, Huiyuan Shi

interest or other reasons. Is there really a general obligation of confidentiality in

arbitration proceedings? Whilst there is little controversy about the privacy of
arbitrations, it is less clear regarding confidentiality. This article will discuss
whether confidentiality shall be respected by discussing several cases and the
arbitration rules; the grounds of confidentiality in arbitration will also be
discussed. The authors desire this essay to be not only a base for academic study,
but also a helpful reminder to businessmen and women in their common
transactions, as well as jurists, judges and lawyers, in connection with
international commercial arbitration.

1 Arbitration Widely Used in Solving International

Commercial Disputes
One of the fundamental principles of contract litigation is the judicial
presumption in favor of arbitrating disputes. Arbitration, courts tell us, is more
expedient and economical than litigation in the courts.2 For years now, more
legal disputes in international business are being resolved in arbitration. 3
International commercial arbitration has gained worldwide acceptance as one of
the preferred means of international dispute resolution. With the globalization of
the economy, most multinational corporations prefer arbitration as the effective
way to settle their disputes; the reasons are encapsulated in the following
statement made by J. Meason and A. Smith who believed that advocates within
the business community believe that arbitration is preferable over litigation
because arbitration is thought to be informal, faster, less costly, equitable, a way
to avoid unfavorable publicity, relatively conciliatory and absorbs less
management time.4 Another primary reason for the prevalence of arbitration is
the expectation that the awards issued by an international arbitral tribunal will
receive worldwide recognition by countries that are members of international
conventions on the enforcement of arbitral awards,5 especially by members of
the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New
York Convention), adopted by diplomatic conference on June 10, 1958. The
various reasons of advantages caused the arbitration to be accepted and used

2
E.g., KFC Nat. Management Co. v. Beauregard, 739 So. 2d 630, 631 (Fla. 5th D.C.A. 1999).
Public policy favors arbitration as an efficient means of settling disputes because it avoids the
delays and expenses of litigation.
3
Deborah Karakowsky, Resolving the Conflict: The Federal Arbitration Act versus the
Bankruptcy Code, Houston Lawyer 34 (January/February, 2010).
4
James E. Meason & Alison G. Smith, Non-Lawyers in Intl Commercial Arbitration:
Gathering Splinters on the Bench, 12 Northwestern J. Intl L. & Bus. 2728 (1991).
5
Daniel E. Gonzlez & Mara E. Ramrez, Intl Commercial Arbitration: Hurdles When
Confirming a Foreign Arbitral Award in the US, Florida Bar J. 59 (2009).
Dilemma of Confidentiality in International Commercial Arbitration 405

widely in the settlement of international commercial disputes.

2 The Confidentiality of International Commercial Arbitration

It is often said that confidentiality is one of the benefits of international
commercial arbitration and one of the principal reasons why business people
have made arbitration the forum of choice for the resolution of international
commercial disputes. A potentially important consideration in designing dispute
resolution provisions is the extent to which proceedings will be confidential, and
confidentiality of the arbitration process is regularly mentioned as one major
advantage of arbitration. Asking any lawyer about the advantages of arbitration
compared to litigation and one of the answers would undoubtedly be that
arbitration is confidential. Confidentiality encourages candor, a full exploration
of the issues, and enhanced acceptability to an arbitrator. Also, confidentiality
allows the parties to reach agreements during the arbitrational proceedings as
well as the possibility of continuing commercial relations between them. 6
Confidentiality in arbitration is seen as providing the best chance to save the
underlying business relationship.7 Arbitration has become synonymous with
confidential proceedings such that the confidentiality of arbitral proceedings has
been said to be taken for granted.8 Others have gone further and suggested that
the parties place the highest value upon confidentiality as a fundamental
characteristic of international commercial arbitration. No authority is generally
cited for such a proposition but it is seen as implicit or as a corollary to an
agreement to resolve a dispute by way of arbitration.9
Confidentiality in international commercial arbitration means that hearings in
international commercial arbitration are held in camera and that the arbitration
award cannot be published without consent of the parties. 10 In practice,
arbitration hearings are virtually always closed to the press and public, and both
submissions and awards often remain confidential.
There are two aspects to confidentiality: (1) confidentiality between the parties

6
Ramon Mullerat OBE, Ethical Rules for Intl Arbitrators-8, at http://www.cidra.org/articles/
ethics/ethicalrules-08.htm (last visited March 5, 2010).
7
Meason & Smith, fn. 4.
8
Hans Bagner, Confidentiality: A Fundamental Principle in Intl Commercial Arbitration? 18
J. Intl Arb. 24349 (2001). H. Bagner also stated that according to a statistical survey of
US/European users of intl commercial arbitration conducted in 1992 for LCIA by the London
Business School, confidentiality was listed as the most important perceived benefit.
9
See Ronald Bernstein, The Right Hon, Sir John Donaldson et al., Handbook of Arbitration
Practice (3rd edition), Sweet & Maxwell (London), at 193 (1998).
10
See Pieter Sanders, Quo Vadis Arbitration? Sixty Years of Arbitration Practice, A
Comparative Study, Kluwer L. Intl (The Hague), at 4 (1999).
406 Donggen Xu, Huiyuan Shi

who must rely on the obligation imposed or implied by law; (2) the extent to
which the substance of the proceedings and any documents, information, or other
evidence is protected against disclosure in subsequent or concurrent
proceedings.11

2.1 The Confidentiality Relating to Subjects

Several persons are engaged in the process of arbitration: the arbitrators, the
parties employees and offices, the administrative personnel of the arbitration
institution, and third parties who will be somehow involved with the
proceedings, including witnesses.
In principle, unless otherwise agreed by the parties or required by applicable
rules or law, an arbitrator should keep confidential all matters with respect to the
arbitration proceedings and decisions. An arbitrator should not discuss a case
with persons not in the arbitration unless the identity of the parties and details of
the case are sufficiently obscured to eliminate any realistic probability of
identification.
Of course, witnesses who testify before an arbitral tribunal are not necessarily
bound to secrecy, but some rules, as those of the Zurich and Geneva Chambers
of Commerce, might be construed in such a way that witnesses are bound to
respect the confidentiality of arbitral proceedings, at least when duly warned by
the arbitral tribunal. Under some arbitration regulations, the arbitral tribunal has
power to exclude from the proceedings any person who is not privy to it.12

2.2 The Confidentiality Relating to Objects

The extent to which documents, pleadings, witness statements, etc., are protected
depends upon both the substantive law of privilege and procedural laws concern
with the duty or obligation of disclosure and of admissibility of evidence. In
practice, arbitration is widely used in that the parties may decide to keep the
award confidential, and the proceedings are conducted in a private arena free
from the intrusive inquisitiveness of the press and other outsiders. The issues
involved in a commercial dispute may be of such a sensitive nature that it would
not be in the interest of the parties (or one of them) to litigate it in open court.
Issues involving trade secrets, poor quality, or defective products are better
settled outside the view of the public, a number of aspects of an arbitration

11
Hakeem Seriki, Confidentiality in Arbitration Proceedings: Recent Trends and
Developments, J. Bus. L. 300 (2006).
12
See art. 53(c) of the WIPO Rules.
Dilemma of Confidentiality in International Commercial Arbitration 407

proceeding as to which there may be confidentiality concerns. These include:

briefs or other materials prepared and submitted during the proceedings,
documents used as evidence in the proceedings, testimony or other oral evidence
presented in the proceedings, the deliberations and thought-processes of the
tribunal, and the award. In such cases the parties may opt for a private dispute
resolution system. The parties could also, as part of their agreement, decide to
keep any ensuing award confidential between themselves.13 Arbitration thus
provides participants the opportunity to resolve their disputes without unneeded
publicity that might poison the dispute resolution process.
Confidentiality differs from privacy. The two terms are often used together
and sometimes even used interchangeably. However, the two terms should not be
confused. The Chief Justice Mason, delivering the judgment of the majority of
the High Court in Esso, drew a distinction between privacy and confidentiality.
He held that whilst arbitration proceedings were private, it did not follow that a
duty of confidentiality was applicable.14 It appears undisputed that arbitration is
private in nature. Privacy has been defined as the interest in controlling the
gathering and disclosure of personal information about oneself.15 In the context
of arbitration proceedings, privacy means the absence from the arbitral process of
strangers to the arbitration.16 The concept of privacy in arbitration prevents the
tribunal or any of the parties from insisting that the dispute be heard together
with another dispute even in situations where the two disputes are so closely
related that considerable practical advantages would be obtained from hearing
them together. On the other hand, confidentiality is a much broader concept than
privacy. It relates to the rights and obligations of the parties to arbitration with
respect to documents and other materials produced during the arbitral process.17
Although, confidentiality is very much a corollary of privacy, it does not follow
that the fact of privacy will accord protection from subsequent disclosure.
Clearing the meaning of confidentiality from privacy is necessary for the further
research of the characteristics of confidentiality in international commercial
arbitration.
13
Okezie Chukwumerije, Choice of Law in Intl Commercial Arbitration, Quorum Books
(New York), at 8 (1994).
14
Meef Moh, Confidentiality of ArbitrationsSingapores Position Following the Recent
Case of Myanma Yaung Chi Oo Co. Ltd. v. Win Win Nu Gordon Smith, 37 Vindobona J. Intl
Comm. L. & Arb. 38 (2004).
15
See Raymond Wacks, Privacy and Press Freedom, Blackstone Press (London), at 1021
(1995).
16
Strangers have been defined by Brooking J. in Esso Australian Resources v. Plowman
[1994] 1 VR 1 as persons whose presence is not necessary or expedient for the proper
conduct of the proceedings.
17
See Moh, fn. 14 at 3839.
408 Donggen Xu, Huiyuan Shi

3 Legal Basis for the Principle of Confidentiality

What is the legal basis for the principle of confidentiality? The confidentiality
comes from the character of arbitration as a private form of jurisdiction, from the
contract when parties entering into an arbitration agreement, and from the
customary arbitration law.
The Anglo-Americans ground the duty of confidentiality on the relationship
existing between the parties. Three doctrines are alternatively applied:18 (1) The
duty of confidentiality is implied in fact, e.g., where the parties are bound by a
contract; (2) the duty of confidentiality derives from a fiduciary relationship, it is
then implied in law; (3) the owner of the confidential information has a property
interest or property right in the trade secrecy.
Some institutions have provided in their rules for the confidentiality of the
proceedings held under their authority. For example, the London Court of
International Arbitration (LCIA) has tried to tackle the issue of confidentiality in
its arbitration rules, and does so in article 30 (as below):

30.1 Unless the parties expressly agree in writing to the contrary, the parties
undertake as a general principle to keep confidential all awards in their
arbitration, together with all materials in the proceedings created for the
purpose of the arbitration and all other documents produced by another party
in the proceedings not otherwise in the public domainsave and to the extent
that disclosure may be required of a party by legal duty, to protect or pursue a
legal right or to enforce or challenge an award in bona fide legal proceedings
before a state court or other judicial authority.
30.2 The deliberations of the arbitral tribunal are likewise confidential to its
members, save and to the extent that disclosure of an arbitrators refusal to
participate in the arbitration is required of the other members of the Arbitral
Tribunal under articles 10, 12 and 26.
30.3 The LCIA Court does not publish any award or any part of an award
without the prior written consent of all parties and the arbitral tribunal.

This decision represents another interesting twist in the perpetually difficult

question in international arbitration of how confidential arbitration really is.19
Also, the most complete regulation can be found in articles 7376 of the WIPO
Arbitration Rules. 20 However, other institutional rule systems are silent

18
Franois Dessemontet, Arbitration and Confidentiality, Am. R. Intl Arb. 314 (1996).
19
Jonas Benedictsson & Anders Isgren, Confidentiality in Arbitration in Sweden, at http://
www.bakernet.com/NR/rdonlyres/EF0F8244-4C8D-4977-9F3C-1AD5A659F527/29684/Confi
dentialityinArbitrationinSweden.PDF (last visited March 5, 2010).
20
See Dessemontet, fn. 18 at 306 (1996).
Dilemma of Confidentiality in International Commercial Arbitration 409

regarding confidentiality. While both the International Chamber of Commerce

and United Nations Commission on International Trade Law Arbitration Rules
state that arbitration hearings are to be private; neither makes any reference to
the confidentiality of materials or awards produced in the course of proceedings.
The Rules of the Arbitration Institute of the Stockholm Chamber of Commerce
provide that both the SCC Institution and the arbitration panel should maintain
the confidentiality of the arbitration. There is no express obligation on the
parties to do so. Also, the SCC apparently has no immediate plans to make
amendments to its present rules.21
In China, although the Arbitration Law of the PRC provides a clear mandatory
duty of confidentiality, and its article 40 specifies that arbitration shall be
conducted in camera unless the parties agree otherwise, there is no express
obligation on the parties to do so. Confidentiality orders issued by the arbitral
tribunal cannot bind a person who is not a party to the arbitration, such as clerks,
interpreters, and witnesses. However, in terms of Chinese Civil Procedure Law,
violating the duty of confidentiality is regarded as a substantial matter, which is
governed by the civil law.22 Breaching an obligation of confidentiality does not
affect the proceedings and the outcome of the final award under the Chinese
Arbitration Law.

4 Is There an Obligation of Confidentiality?

Confidentiality of the arbitral process is regularly mentioned as one of the
advantages of arbitration, because the dispute in arbitration is not disclosed to the
outside world. Until recently, it was also widely assumed that confidentiality was
an essential characteristic of international commercial arbitration, and, still today,
it is submitted that parties, when resorting to arbitration, regard the privacy of
arbitration as one of the factors in favor of their choice.
A number of national courts around the world have considered the issue of
confidentiality in arbitration. Unfortunately, the jurisprudence is sporadic and
inconsistent. A number of English cases have recognized an implied obligation
of confidentiality but deal with particular claims of confidentiality on a

21
See Benedictsson & Isgren, fn. 19.
22
As such, the party would bring a lawsuit to the court if he deemed that the other party had
violated the duty of confidentiality. Article 120 of the Civil Procedure Law of China provides
that a case involving trade secrets may not be heard in public if a party so requests. However,
article 134 further provides that the court shall publicly pronounce its judgment in all cases,
whether publicly tried or not. Therefore, the order for confidentiality is not supported by the
current Chinese law. See Stephen Zheng, Arbitral Interim Measures in the Mainland of China,
at http://www.chinalegalaid.org/english/law/list.asp?newsid=132 (last visited March 5, 2010).
410 Donggen Xu, Huiyuan Shi

case-by-case basis. For instance, in Dolling-Baker v. Merrett case,23 the English

Court of Appeal found that an implied obligation of confidentiality existed in the
arbitration process. Following the rationale of Dolling-Baker, the court affirmed
that confidentiality was an essential characteristic of arbitration. Another English
case also proved that the duty of confidence exists. In Ali Shipping Corporation v.
Shipyard Trogir,24 the English court re-asserted the Dolling-Baker principle, and
held that there is a duty of confidentiality created by the law as part of every
arbitration agreement. The court recognized the following exceptions to the
confidentiality principle: the consent of the parties, the presence of a court order
requiring disclosure, the reasonable necessity of disclosure to the protection or
the enforcement of a parties legal rights, and finally, where disclosure is
necessary in the interests of justice, even though the obligation of confidentiality
generally extended to documents prepared in contemplation of arbitration or used
in the process, transcripts, notes of evidence, testimonial evidence, and the award.
However, the court stated that the obligation of confidentiality would not be
allowed to impinge on the fair disposition of the action. The courts in France25
have recognized a similar implied duty.
However, a recent Australian case threw a stone in the so far undisturbed pond
of confidentiality. In 1995, the High Court of Australia, in Esso v. Plowman,26
made considerable inroads onto the accepted view that the private nature of
arbitration necessarily gave rise to an implied confidentiality obligation.
Confidentiality of the arbitral procedure, therefore, requires more comment than
before.27 In the famous Esso Australia Resources Ltd. et al. v. Plowman case,
which concerned a dispute between Esso and the Australian Minister for Energy
and Minerals over public utilities and information related to the prices charged to
the public, the High Court of Australia found that the obligation to maintain
confidentiality was not intrinsic to arbitration. 28 This case arose out of
agreements for the sale of Bass Strait gas by Esso/BHP to two Victorian public
utilities, the Gas & Fuel Corporation and the State Electricity Corporation.
Esso/BHP sought an increase in the price of the gas supplied pursuant to the

23
Dolling-Baker v. Merrett, 2 All E.R. 890 (Eng. C.A. 1991), and Hassneh Insurance Co. of
Israel v. Mew, 2 Lloyds Rep. 243 (Q.B. 1993).
24
Ali Shipping Corp. v. Shipyard Trogir, 1 Lloyd's Rep. 643, 2 All E.R. 136 (Eng. C.A.
1998).
25
E.g., Bleustein et autres v. Socit True North & Socit FCB Intl, 1 Rev. Arb. 189 (2003),
Paris Commercial Court; as discussed in Handbook of ICC Arbitration, Commentary,
Precedents, Materials (1st ed.), Michael Buhler & Thomas Webster eds., 2005.
26
Esso Australia Resources Ltd. & Others v. Plowman, 183 C.L.R. 10, 128 A.L.R. 391
(1995).
27
See Sanders, fn. 10.
28
Claude R. Thomson & Annie M. K. Finn, Confidentiality in Arbitration: A Valid
Assumption? A Proposed Solution! Dispute Res. J. 76 (2007).
Dilemma of Confidentiality in International Commercial Arbitration 411

agreement. The utilities refused to pay. The agreements contained arbitration

clauses and the dispute was referred to arbitration pursuant to those clauses. The
utilities sought disclosure of information relating to the calculations justifying the
proposed price increases, but in the absence of confidentiality agreements
Esso/BHP was not willing to provide. The utilities refused to enter into
confidentiality agreements. Esso/BHP insisted, pointing to the commercially
sensitive nature of the information of which disclosure was being sought. During
the course of the arbitration, the Minister of Energy and Minerals of the State of
Victoria stated that he intended to publicly disclose all the information that
Esso/BHP had revealed over the course of the arbitration proceedings. This
information included commercially sensitive information such as estimated gas
reserves, profit margins, production costs.
Chief Justice Masons strong stand in rejecting the notion of confidentiality in
arbitration may be attributable to the fact that there was a clear public interest
element involved in the Esso decision. This was shown when Chief Justice
Mason pointed out that in Hassneh Insurance v. Mew, the exceptions to the
implied term forbidding disclosure of information disclosed in arbitration were
too narrow, as it did not recognize that there may be circumstances in which third
parties and the public have a legitimate interest in knowing what has transpired
in an arbitration which would give rise to the public interest exception.29 One
wonders whether the Esso decision would have been different if there had been
no public interest involved. It may well be that the Australian courts would have
followed Dolling-Baker and Hassneh and not have adopted the conflicting
approach.30
Over Esso/BHPs objections, the Australian High Court supported the
Ministers right to disclose such information, concluding that: (1) A duty of
confidentiality cannot be implied in an agreement to arbitrate since
confidentiality is neither an inherent attribute of arbitration nor part of the
inherent nature of the contractual relationship between the parties; (2) Even if
there were a duty of confidentiality, that duty is not absolute and may be

29
The public interest exception was tentatively recognized in the English decision of London
and Leeds Estates Ltd. v. Paribas Ltd. (no. 2) [1995] 1 EGLR 102. In that case, Mance J. held
that a party to court proceedings was entitled to call for the proof of an expert witness in a
previous arbitration in a situation where it appeared that the views expressed in that proof were
at odds with his views as expressed in the court proceedings. This was to ensure the interests
of individual litigants involved and the public interest were fulfilled. However, it should be
noted that Potter L.J. stated in his judgment in Ali Shipping Corp v. Shipyard Trogir that
Mance J. was actually referring to the public interest in the sense of the interests of justice,
namely the importance of a judicial decision being reached on the basis of the truthful or
accurate evidence of the witnesses concerned. This was to be distinguished from the wide
issues of public interest contested in the Esso decision.
30
See Moh, fn. 14 at 46.
412 Donggen Xu, Huiyuan Shi

curtailed where public interest demands.

Although this rejection of confidentiality in arbitration led to strong reactions,
such as in the Journal of the London Court of International Arbitration, the
General Editors qualified the decision as a dramatic decision contrary to the
widespread understanding elsewhere (including England).31 The decision in
Esso Australia still has been applied in Commonwealth v. Cockatoo Island
Dockyard Pty Ltd. and Jennings Group Ltd. v. Glen Centre Pty Ltd. cases.
The Chief Judge Mason of the Australia Esso case, who delivered the majority
judgment, held that confidentiality is not an essential attribute of private
arbitration, whether on the ground of long arbitration custom and practice, or to
give efficacy to the private nature of the proceedings. This conflicts with the
decision in Dolling-Baker v. Merrett & Another case, in which the English Court
of Appeal found that the essentially private nature of an arbitration created an
implied obligation of confidentiality and granted an injunction restraining one
party to the arbitration from disclosing in a subsequent action documents relating
to the arbitration. Parke identified an implied obligation as the basis for the
confidentiality attaching to documents used in arbitration or engendered in its
courts. His Honor observed that it is a question of an implied obligation arising
out of the nature of arbitration itself. When a question arises as to the production
of documents or indeed discovery by list or affidavit, the court must, it appears to
me, have regard to the existence of the implied obligation, whatever its precise
limits may be.
The courts in Sweden and the United States have rejected a general implied
duty of confidentiality.32 In Sweden, the principle of implied confidentiality is
not recognized. This was confirmed in the decision of the Swedish Supreme
Court in Bulgarian Foreign Trade Bank Ltd. v. Al Trade Finance Inc.,33 where it
was held that there was no implied duty of confidentiality in private arbitrations.
A similar approach was adopted by the US courts in United States v. Panhandle
Corp,34 where the Federal Government sought to have Panhandle, an American
company, produce documents from an arbitration of International Chamber of
Commerce (ICC) between Panhandles subsidiary and the Algerian state oil
company. In this case, the US Federal government was seeking the production of
the documents relating to ICC proceedings in Geneva between a Panhandle
subsidiary and Sonatrach, the Algerian national oil and gas company. Panhandle
argued that the arbitration was confidential in nature and that disclosure would
frustrate the parties expectations. Panhandles only argument against production

31
See Sanders, fn. 10.
32
See Thomson & Finn, fn. 28.
33
Case T-1881-99 (Swedish Supreme Court, 2000).
34
118 F.R.D. 346 (D. Del. 1998).
Dilemma of Confidentiality in International Commercial Arbitration 413

of the documents was to the effect that the ICC Rules require documents
pertaining to an arbitration to be kept confidential. It based this argument on
Internal Rules of the ICC Court, such as article 2, which provides that the
confidential character of the work of the ICC Court must be respected by anyone
who participates in it in any capacity. However, the court found that these Rules
were meant to apply internally and to govern members of the ICC Court, not the
parties to arbitration proceedings or the independent arbitration tribunal that
conducts those proceedings. The court held that there was no inherent duty of
confidentiality unless the parties contracted for it, and that the ICC Rules placed
no obligation of confidentiality on arbitrating parties.35 This case found that the
duty of confidentiality does not exist.
Therefore, people cannot help arguing whether confidentiality is an implied
obligation or not during the arbitration process, and people are more confused
when they come to the Sweden case, Bulgarian Foreign Trade Bank Ltd. v. AI
Trade Finance Inc., because the appellant (the Bulgarian Bank) was successful in
the District Court, but lost in the Appeal Court and the Supreme Court. Early in
the arbitration proceedings, the respondent (AI Trade Finance Inc.) released
details of the dispute and an interim award to an international arbitration journal.
After the final award was rendered, the claimant (the Bulgarian Bank) then
applied to the Stockholm City Court to nullify the award. The court nullified the
award, stating that the respondent had committed a fundamental breach of
contract in revealing confidential information to the press, and stating that
confidentiality comprises a basic and fundamental rule in arbitration proceedings.
However, the Supreme Court made reversal remarks: The UN ECE arbitration
rules do not contain an obligation of secrecy which makes it a breach of the
arbitration clause to reveal the outcome of the proceedings to any journal or
newspaper. Furthermore, there is no fundamental principle of Swedish law that
arbitration proceedings are secret.36
When it comes to the issue, another field for arbitration award shall not be
neglected; that is the arbitration rules for sports. In terms of the Court of
Arbitration for Sports (CAS), the arbitration award is open to the public unless
under very exceptional circumstances and put forward by the involved parties.
With the current booming of worldwide sports, the number of disputes arising
from such fields is ascending, and, undoubtedly, such disputes and arbitration
awards are in the limelight of the public owing to the enthusiasm for just
solutions for sport-related issues. This new trend is attracting the attention not
only of the athletes, the sports management companies, but also the legal

35
Hakeem Seriki, Confidentiality in Arbitration Proceedings: Recent Trends and
Developments, J. Bus. L. 301 (2006).
36
See Benedictsson & Isgren, fn. 19.
414 Donggen Xu, Huiyuan Shi

scholars, and it will definitely affect the confidentiality of arbitration.

5 Public Interest Policy or Protection of Confidential

Information?
While confidentiality is often cited as a major advantage to dispute resolution
through international arbitration, the secrecy of arbitration proceedings and
awards is far from certain. That is there is no clear duty of confidentiality in most
international arbitration and arbitral awards are sometimes made public, either in
enforcement actions or otherwise. Both arbitration awards and submissions can
in principle be obtained by governmental regulators in many countries. 37
Therefore, parties should not assume that arbitration proceedings, including
evidence, arguments, and awards, are confidential merely because they are
private. There is no generally accepted rule that an agreement to arbitrate
imposes a duty of confidentiality on the parties to the resulting arbitration.
In the Department of Economics Policy & Development of the City of Moscow
v. Bankers Trust Company and International Industrial Bank,38 the appellant,
the Department of Economic Policy and Development of the City of Moscow
(Moscow), appealed against the first instance decision of Justice Cooke in which
he ruled that his judgment dismissing an application under Section 68 of the
Arbitration Act should remain confidential. The arbitration took place in private
and the award was published only to the parties.39 The Section 68 application
was itself heard in private. However, prior to and during the arbitration, Bankers
Trust Co. (Bankers Trust) had notified various financial institutions about the
matter. Furthermore, Justice Cookes judgment was not marked private, and a
legal research website obtained a copy of the judgment and published a summary.
Bankers Trust immediately objected. The judgment demonstrates that the English
courts will undertake a balancing exercise between the public interest in the
administration of justice being transparent on the one hand, and the protection of
genuinely confidential and sensitive information on the other. Such an approach
ought, in theory, to give appropriate protection to the interests of the particular
parties while permitting the law to develop through the publication of judgments
relating to arbitration matters whenever possible. There are some jurisdictions in
which publicity is difficult to avoid when challenging arbitral awards, since the

37
Gary B. Born, Intl Arbitration and Forum Selection Agreement, Kluwer L. Intl (London),
at 11 (2006).
38
Department of Economic Policy and Development of the City of Moscow v. Bankers Trust
Co. [2004] EWCA Civ 314; [2005] Q.B. 207 (CA (Civ Div)).
39
Section 68 of the English Arbitration Act 1996 enables a party to arbitral proceedings to
apply to the court to challenge an award on the ground of serious irregularity affecting the
tribunal, the proceedings or the award.
Dilemma of Confidentiality in International Commercial Arbitration 415

arbitral award will be physically annexed to the public court documents. But
parties selecting England as the seat of their arbitration can have some
confidence that the underlying details of their dispute will remain confidential,
even if the matter comes before the courts, where truly confidential or sensitive
information is involved.40
What is the better approach? Actually, there is no simple answer which could
be applied in all circumstances. As we can see, the main reason that most cases
precluded from confidentiality is the public interest policy, such as the Australia
Esso/BHP v. Plowman case, in which the High Court held that Even if there
were a duty of confidentiality, that duty is not absolute and may be curtailed
where public interest demands. As for the English Ali Shipping Corporation v.
Shipyard Trogir case, though it admits that the duty of confidence exists, it also
held that this duty is not absolute, and the exceptions had to be defined, including
the interest of justice demands disclosure of information.

6 Conclusion
Since national traditions are so different on this issue and the legal and
institutional rules are scant, such as under Esso v. Plowman, a statutory duty to
inform a State Agency may prevail on the intended confidentiality of the
information generated for, or during, the course of the arbitration proceedings.
The same view has been held in the United States for the confidentiality duty of
the arbitrator. Under Swiss law, administrative statutory requirements of
disclosure cannot be said to automatically overrule confidentiality duties that are
premised on private or criminal law. Thus, it is useless to quarrel whether there
exists a worldwide principle of confidentiality in the arbitration proceedings or
not, and it is ridiculous to place emphasis on the merits of confidentiality.
Therefore, the parties should be aware enough to include a comprehensive
provision as part of the dispute resolution clause in their contracts, if they wish to
protect confidential information from later disclosure.
For these reasons, arbitration clauses undoubtedly become not only
predominate but are nowadays almost universal in international commercial
contracts.41 This was the recommendation of the drafters of the UNCITRAL
Notes on Organizing Arbitral Proceedings (1996), such an agreement might
include: (1) types of information to be kept confidential, e.g., reserve, seismic
and other technical data, evidence, arguments, documents and information
obtained in discovery, the course of proceedings, content of award; (2) measures

40
Richard Hill, Case Comment: Confidentiality of Arbitration in Court Proceedings, 7 Intl
Arb. L. Rev. 50 (2004).
41
Justice Kerr, Intl Arbitration v. Litigation, J. Bus. L. 165 (1980).
416 Donggen Xu, Huiyuan Shi

for maintaining confidentiality; (3) circumstances in which confidential

information may be disclosed.
Therefore, if parties want to be sure that their arbitration will be confidential,
they should now make it expressly so in their arbitration agreement (e.g., article
30 of the LCIA Rules). Suggested language would be as follows: The dispute
resolution proceedings contemplated by this provision shall be as confidential
and private as permitted by law. To that end, the parties shall not disclose the
existence, content, or results of any proceedings conducted in accordance with
this provision, and materials prepared and submitted in connection with such
proceedings shall not be admissible in any other proceeding, provided, however,
that this confidentiality provision shall prevent a petition to vacate or enforce an
arbitral award, and shall not bar disclosures required by law. The parties agree
that any decision or award resulting from proceedings in accordance with this
dispute resolution provision shall have no preclusive effect in any other matter
involving third parties.
Another step which a party could take to protect confidentiality in arbitration
would be to seek a confidentiality stipulation or protective order in the arbitration,
initiated by agreement of the parties, or at the request of one party and direction
of the arbitrator. As the stipulation is a contract between the parties, violation of
the stipulation renders the violator liable for breach of contract damages.
Additionally, the stipulation may be subject to an order for specific performance.
In fact, such provisions cannot ensure complete protection against disclosure
compelled by judicial or administrative order. Additionally, the extent of such
protection depends upon the law of the jurisdiction where disclosure is sought
and the nature of the information. Fortunately, the law of trade secrets has just
received its first universal acceptance with article 39 of the TRIPS, which the
arbitration community should take into account.
The burden of the proof is on the party claiming that the information desired to
be protected is actually secret, or was before the wrongful disclosure occurred.
Confidentiality may cover memorials by the parties, written depositions and
affidavits, expert reports, and all compilations of technical or commercial data,
except the ones that were already published online, or in trade journals or
technical reviews. On the contrary, the documents pre-existing to the arbitration
are not necessarily secret. They may be stamped as confidential, or they may
have been compiled in such circumstances where it is most likely that they were
considered as confidential. Otherwise, no automatic protection should attach to
them.42
In legal practice, it is hard to estimate which tendency is better, in order to
strengthen the power of confidentiality or to wash it out gradually. Why not look

42
See Dessemontet, fn. 18 at 308 (1996).
Dilemma of Confidentiality in International Commercial Arbitration 417

at the issue from another perspective on confidentiality in international

commercial arbitration? The main point we have to make clear is why
businessmen and women are choosing arbitration rather than litigation. Holding
such a perception in mind, most disputes or debates may very well be coped with
acceptably.

Acknowledgement Special thanks to the Research Foundation for Human and Social
Sciences Project Sponsored by the Ministry of Education of China (10YJA820115), Shanghai
Research Foundation for Social Sciences Project (2010BFX004), as well as the Research
Foundation for Innovation of Social Sciences Project Sponsored by Shanghai Jiao Tong
University (09TS10) for their financial supports.

Authors
Donggen Xu, Ph. D in law (Fribourg University, Switzerland), is a professor in
international law at KoGuan Law School, Shanghai Jiao Tong University. His
research is most focused on private international law and international financial
law. His major works include: Le Droit international priv de la responsabilit
dlictuelle: l'volution rcente international et le droit chinois (Fribourg Suisse,
1992), (Legal Environment Facing
Shanghai International Financial Center, Law Press, 2007) and (Private
International Law, Beijing University Press, 2009). His main papers include:
Chronique de jurisprudence Chinoise (Journal du Droit International, no. 1,
1994), Le droit international priv en Chine, une perspective comparative
(Recueil des cours, tome 277, Martinus Njhoff Publishers, 1998), Legal Aspects
for Sustainable Energy Development for Project Finance (Arian Bradbrook: The
Law of Energy for Sustainable Development, Cambridge University Press,
2005).

Huiyuan Shi, Ph. D in law (Shanghai Jiao Tong University), is a manager in

Shanghai Volkswagen Automotive Co., Ltd. Her main research is focused on
private international law, covering jurisdiction and settlement of dispute in
international business.
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