Probate and Will, Trust & Estate Disputes

Publish date

17 January 2022

Confidentiality in Arbitration Proceedings

One significant benefit of arbitration over traditional court based litigation is that the proceedings and award are confidential.

The Court of Appeal recently considered the parameters of this fundamental principle of arbitral confidentiality in the case of CDE v NOP [2021] EWCA Civ 1908.

Proceedings were brought against individual defendants for having orchestrated a fraud. Those same allegations had previously been the subject of an arbitration pursuant to an LCIA arbitration against companies who were connected with the defendants. In that arbitration, the Tribunal had found that the defendants’ evidence was false and that the claimant’s allegations were well founded.

In light of the findings of the Tribunal, the claimants in the Commercial Court proceedings wished to rely on the arbitrators’ award by arguing that it was binding on the later Court proceedings. The claimants thought that there was sufficient connection between each of the individual defendants and their associated companies such that they should be entitled to rely on that award.

However, as explained at the beginning of this article, one of the fundamental and attractive features of arbitration is the confidentiality of the arbitrators’ awards. The defendants argued that the award should therefore remain confidential. Notwithstanding this the claimants intended to amend their particulars of claim in order to draw reference to the arbitral award to support an application for summary judgment by the Court.

At the case management conference the judge decided that the confidentiality of the arbitral award should be upheld and that the case management conference should be heard in private. Additionally, the judge ordered that the arbitration award was not to become public until the Court proceedings had been concluded and it had determined that it should.

Dissatisfied with the decision of the first instance judge, the claimants appealed to the Court of Appeal on the basis that the judge had failed to apply the correct test from Part 39.2 of the Civil Procedure Rules (the CPR), which provides that the general rule is that a Court hearing is to be a public hearing.

The Court of Appeal dismissed the appeal. Whilst it acknowledged that the general rule, pursuant to CPR 39.2, is that a hearing must be held in public, any departure from this position must be founded on one of the exceptions contained in CPR 39.2(3)(a) – (g). These exceptions provide for limited circumstances where a hearing must be held in private.

Importantly, the Court of Appeal recognised that the confidentiality of an arbitration award is a significant principle in English law and that this should be preserved. The Court of Appeal was satisfied that the exception contained in CPR 39.2(3)(c) applied insofar as the hearing must be held in private because “it involves confidential information … and publicity would damage that confidentiality.”

However, this in itself was not decisive and the Court still had to consider whether holding the hearing in private would impact on the proper administration of justice. This required the Court to consider the stage of the proceedings and it was of the view that a case management conference, as a procedural hearing dealing with (amongst other things) directions of the case, would be less likely to involve matters which would require public scrutiny and transparency, which is at the very heart of the reasoning behind public Court proceedings. It therefore decided that this should take place in private.

Although it is not clear on what approach the Court would have taken if the matter was at a later stage in proceedings, such as, for instance, at a pre-trial review, it is still a useful decision in showing the attitude of the Courts towards the preservation of the confidentiality of arbitration.

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