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• Background
• Who Should Be Bound By Any Provision As To Confidentiality?
• Should Express Recognition Be Given To Private Hearings?
• To What Extent Should Information Relating To Arbitrations Remain Confidential
• Introduction
• The Esso Decision
• Developments And Comment Following Esso
• Submissions On This Issue
• Policy Considerations And Recommendations For Reform
• Policy Considerations
• Analysis
• Summary Of Recommendations

2 The default rule issue

BACKGROUND

9 SECTION 14 OF THE ARBITRATION ACT 1996 PROVIDES:

14 Disclosure of information relating to arbitral proceedings and awards prohibited
(1) Subject to subsection (2), an arbitration agreement, unless otherwise agreed by the parties, is deemed to provide that the parties shall not publish, disclose, or communicate any information relating to arbitral proceedings under the agreement or to an award made in those proceedings.
(2) Nothing in subsection (1) prevents the publication, disclosure, or communication of information referred to in that subsection—
(a) If the publication, disclosure, or communication is contemplated by this Act; or
(b) To a professional or other adviser of any of the parties.

10 The drafting technique used to prohibit disclosure is, subject to the two exceptions, to deem that the parties have agreed not to publish, disclose or communicate any information relating to arbitral proceedings under the agreement or to an award made in those proceedings. Thus, if there is a breach of the rule it is actionable, as between the parties, on the basis of breach of contract. If a party has prior knowledge of an intended breach of such a term an injunction could be sought (usually from the court²²) to restrain the intended breach. For damages to be recovered, loss would need to be proved. If no loss was proved only nominal damages could be awarded.²³ This contrasts with the situation which prevails when a confidentiality order is made by a court as, in that situation, breach of the order may also amount to a contempt of court and be actionable accordingly.²⁴

11 With only two stated exceptions, section 14 of the Act contains an absolute prohibition on disclosure of information relating to arbitral proceedings and awards. The first exception is where the parties otherwise agree.²⁵ That exception is premised on the party autonomy principle. The second exception permits disclosure of such information to a professional or other advisor of any party or, otherwise, if the publication, disclosure or communication is contemplated by the Act.²⁶ The second exception is based on both pragmatic (disclosure to advisors) and public interest (if contemplated by the Act) considerations.

12 The most significant exception is under section 14(2)(a) which applies “if the publication, disclosure, or communication is contemplated by this Act”. This exception, however, appears narrow. It does not permit:

• disclosures to interested parties (for example, insurers, lenders, or regulatory bodies);
• disclosures required by law, but not contemplated by the Act; and
• disclosures for other legitimate reasons (for example, those needed to defend a court action).

In addition, the exception is unduly vague. In our view, it fails to convey, in any precise sense, the circumstances in which disclosure is permitted. The inability for someone reading section 14(2)(a) to identify readily the publications, disclosures or communications contemplated is undesirable.

13 An additional problem arising from section 14 concerns the extent of the persons who may be bound by the confidentiality requirements. The term “arbitration agreement” is defined by the Act as:

An agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship.²⁷

14 We propose to address the problems raised by the default rule issue in the following sequence:

• First, we consider who should be bound by any confidentiality imposed on the parties to an arbitration agreement.
• Second, we consider whether express recognition ought to be given, in the Act, to whether the hearing should be held in private.
• Third, we consider whether, and if so to what extent, information and documents relating to an arbitration ought to remain confidential to the parties; in addressing this issue we consider developments in the law since our Act was enacted in 1996 and also analyse, in some detail, the Esso case.
• Fourth, we outline the policy considerations which we believe should guide our deliberations on this issue and make recommendations for reform.

We address the submissions made to us on these problems in the context of our discussion of particular issues.

WHO SHOULD BE BOUND BY ANY PROVISION AS TO CONFIDENTIALITY?

15 Although the definition of the term “arbitration agreement” seems, on its face, to be confined to the parties in dispute it is likely that a New Zealand court would also regard the arbitrator (or members of the arbitral tribunal, if more than one) as parties to the arbitration agreement. In K/S Norjarl A/S v Hyundai Heavy Industries Co Ltd, Sir Nicolas Browne-Wilkinson VC analysed the contractual relationship as follows:

The arbitration agreement is a bi-lateral contract between the parties to the main contract. On appointment, the arbitrator becomes a third party to that arbitration agreement, which becomes a tri-lateral contract: see Cie Europeene de Cereals SA v Tradax Export SA [1986] 2 Lloyd’s Rep 301. Under that tri-lateral contract, the arbitrator undertakes his quasi-judicial functions in consideration of the parties agreeing to pay him remuneration. By accepting appointment, the arbitrator assumes the status of a quasi judicial adjudicator, together with all the duties and disabilities inherent in that status. Amongst those disabilities is an inability to deal unilaterally with only one of the parties to the arbitration, let alone to bargain with one party alone for a personal benefit.²⁸

The Norjarl case concerned claims by arbitrators for a commitment fee which had not been negotiated prior to their appointment.

16 We believe it is undesirable that any statutory exposition of the nature and extent of confidentiality obligations in an arbitration should omit express mention of the arbitral tribunal as a contractual party owing such obligations. What is currently implicit could easily be made explicit. Accordingly, we recommend that if either section 14 is retained in its current form or is replaced by a provision which is more specific in nature, it should expressly provide that the obligations of confidentiality are owed also by the arbitral tribunal.

SHOULD EXPRESS RECOGNITION BE GIVEN TO PRIVATE HEARINGS?

17 The issue of confidentiality raises two different questions. The first is whether the hearing of an arbitration should take place in private. The second is whether, and if so to what extent, information and documents disclosed in the course of the arbitral process should be capable of further disclosure beyond the parties to the dispute and the arbitral tribunal. We discuss the first of those questions in this part of the chapter.

18 We are unable to discern any serious challenge, as a matter of law or policy, to the proposition that parties to an arbitration agreement are entitled and, indeed, should expect (unless they agree otherwise) to have their private disputes heard in private by an arbitral tribunal.

19 We are of the view that the position on this particular point is best summarised in the judgment of Mason CJ in Esso Australia Resources Ltd v Plowman.²⁹ We set out below a summary of the propositions which emerge from Mason CJ’s judgment:

• In the absence of some manifestation of a contrary intention, parties, when submitting disputes to an arbitral tribunal, confer upon the tribunal a discretion as to the procedures to be adopted in reaching its decision.³⁰
• In the exercise of its power with regard to procedural matters, an arbitral tribunal can decide who is entitled to be present at the hearing of the arbitration.³¹ But, that power must be exercised having regard to the provisions of the relevant contract.
• Unless the parties manifest a contrary intention, the arbitration will usually be held in private, in the sense that it is not open to the public. Those who are allowed, by the arbitral tribunal, to attend the hearing must have some connection with it, or the parties should agree that attendance is appropriate. For example, persons whose presence is necessary for the proper conduct of the arbitration (such as a stenographer, witnesses and advisors) should be entitled to attend.

Those observations are consistent with traditional practice in New Zealand.³² Indeed, it was because of that traditional practice that this Commission, in 1991, declined to recommend enactment of a provision within Article 24 of the First Schedule to the Act, requiring hearings to be in camera.³³

20 Views expressed by Mason CJ on the issue of private hearings were endorsed by other members of the High Court of Australia in Esso.³⁴

21 The observations made by members of the High Court of Australia accord with English practice. In Hassneh Insurance Co of Israel v Mew, Colman J had said:

If the parties to an English law contract refer their disputes to arbitration they are entitled to assume at the least that the hearing will be conducted in private. That assumption arises from a practice which has been universal in London for hundreds of years and [is], I believe, undisputed. It is a practice which represents an important advantage of arbitration over the courts as a means of dispute resolution. The informality attaching to a hearing held in private and the candour to which it may give rise is an essential ingredient of arbitration.³⁵

22 Internationally, the expectation of confidentiality as an essential characteristic of an arbitration may not be so high.³⁶ For example, it was reported to a meeting of Committee D of the International Bar Association at Cancun, Mexico in October 2001 that, internationally, privacy and confidentiality were not regarded as being of great importance.³⁷ However, this difference in approach does not alter our view, because there are significant differences between international and domestic arbitrations. In particular:

• In international commercial arbitration the parties will often adopt rules of an international body.³⁸ In some cases those international bodies contain rules relating to confidentiality while others do not.³⁹
• Often in international arbitration, the parties will not know, at the time of the arbitration, the country in which the award will be enforced; thus, applicable law on enforcement may be different from the lex arbitri (the law of the place of arbitration).
• In international arbitration it can be expected that specific confidentiality provisions will be adopted if the parties require confidentiality and if the applicable law allows absolute confidentiality.

23 These considerations do not apply with equal weight in a domestic arbitration. We say that for these reasons:

• There are no institutions in New Zealand which offer the type of service for arbitrations which are offered by the international bodies to which we refer. Thus, while there is a protocol in existence which has been formulated by the Arbitrators’ and Mediators’ Institute of New Zealand Inc (AMINZ) and which, in practice, we are aware assists advisors in drafting arbitration agreements, there are no standard form rules to apply.⁴⁰
• No questions of conflict of laws arise in a New Zealand domestic arbitration.
• Many parties in New Zealand do not have access to advice that is sufficiently expert on the nature of the terms to be adopted. Many parties use the default rules set out in the First and Second Schedules to the Act. Alternatively, difficulties may arise in agreeing confidentiality terms after an arbitration has commenced. This is because, in many cases, the arbitration agreement is a simple statement that any disputes will be resolved by arbitration. Once the arbitration commences there can be disputes as to whether confidentiality should or should not exist and, if so, to what extent. Parties are often driven by tactical considerations.

To meet these differences it is our view that a default rule is required for domestic arbitrations. This rule should not apply to international arbitrations unless the parties expressly adopt it.

24 No submissions have been made to us which suggest that the traditional practice of private arbitral hearings in New Zealand should be changed. However, consistent with the principle of party autonomy, it seems entirely appropriate for the parties to an arbitration to decide for themselves that the hearing (in part or in whole) will be open to the public. Accordingly, our recommendation is that a revised version of section 14 of the Act should expressly state that the hearing of an arbitration shall be in private unless the parties agree otherwise.⁴¹

TO WHAT EXTENT SHOULD INFORMATION RELATING TO ARBITRATIONS REMAIN CONFIDENTIAL

Introduction

25 In this part of the chapter we:

• consider the Esso decision;
• consider subsequent developments, including criticism of the Esso decision;
• outline the submissions made on this issue.

The Esso decision

26 As set out above, in Dolling-Baker v Merrett⁴² the English Court of Appeal held that a duty of confidentiality between the parties to an arbitration was to be implied as a matter of law. In Esso, that issue was considered by the High Court of Australia; Mason CJ put it as follows:

This appeal raises the important question whether an arbitrating party is under an obligation of confidence in relation to documents and information disclosed in, and for the purposes of, a private arbitration.⁴³

27 The issue arose in the context of two arbitrations to which enterprises owned and operated on behalf of the Victorian Government were party. One of the issues of concern was the extent to which the Gas and Fuel Corporation of Victoria could make disclosure of information arising out of the arbitration to its responsible minister.

28 Mason CJ took the view that duties of confidentiality were not imposed upon the parties as an implied term of the arbitration agreement. His Honour said:

... the case for an implied term must be rejected for the very reasons I have given for rejecting the view that confidentiality is an essential characteristic of a private arbitration. In the context of such an arbitration, once it is accepted that confidentiality is not such a characteristic, there can be no basis for implication as a matter of necessity.⁴⁴

29 As a basis for his view that confidentiality was not an “essential characteristic” of a private arbitration, Mason CJ placed weight on the following factors:

• Before Dolling-Baker no decision had suggested that an arbitration hearing was confidential as distinct from private. In addition, in neither Australia nor the United States could any support be found in decided cases for the existence of an obligation of confidence.⁴⁵ Mason CJ noted that if such an obligation had formed part of the law one would have expected it to be recognised and enforced by judicial decision long before Dolling-Baker.⁴⁶
• Members of the profession with experience in arbitration had expressed different views on the question of confidentiality before the court.⁴⁷
• There were too many exceptions to the rule to be able to regard complete confidentiality of arbitral proceedings as an essential characteristic. Problems identified by Mason CJ were:

– No obligation of confidence attaches to witnesses who, therefore, are at liberty to disclose to third parties what they know of the proceedings.⁴⁸
– There are varied circumstances in which an award made in an arbitration, or the proceedings in an arbitration, could come before a court which would involve disclosure of information to the court and, in some cases, wider publication.
– Other circumstances exist in which an arbitrating party must be entitled to disclose to a third party the existence and details of the proceedings and the award: for example, a party may be bound under a policy of insurance to disclose relevant information, it may be necessary to refer to the proceeding if any contingency arose which would need to be noted in accounts of an arbitrating party, or it would be necessary to disclose information to comply with statutory or other regulatory requirements (for example, stock exchange requirements for listed companies).

30 Having regard to those considerations, Mason CJ said:

Despite the view taken in Dolling-Baker and subsequently by Colman J in Hassneh Insurance, I do not consider that, in Australia, having regard to the various matters to which I have referred, we are justified in concluding that confidentiality is an essential attribute of a private arbitration imposing an obligation on each party not to disclose the proceedings or documents and information provided in and for the purposes of the arbitration.⁴⁹

31 Later in his judgment, Mason CJ referred to a submission based on an implied undertaking not to disclose documents made available in an arbitration in a manner akin to the implied undertaking which arises in respect of discovered documents in court proceedings.⁵⁰ Mason CJ agreed that where parties are compelled to discover documents in an arbitration, then the opposing party must accord them the same confidentiality that they would if they were litigating the dispute in court; but he did not consider that this principle dictated that all information disclosed during an arbitration should remain confidential:

... consistently with the principle as it applies in court proceedings, the obligation of confidentiality attaches only in relation to documents which are produced by a party compulsorily pursuant to a direction by the arbitrator. And the obligation is necessarily subject to the public’s legitimate interest in obtaining information about the affairs of public authority. The existence of this obligation does not provide a basis for the wide ranging obligation of confidentiality which the appellants seek to apply to all documents and information provided in and for the purposes of an arbitration ...⁵¹

32 Both Dawson and McHugh JJ agreed with Mason CJ on these points.

33 Brennan J was prepared to imply a term of confidentiality “as a matter of business efficacy” but qualified it in a similar manner to the obligation of confidentiality imposed upon a banker.⁵² The qualifications were:

• Where disclosure is under compulsion of law.
• Where there is a duty, albeit not a legal duty, to the public to disclose.
• Where disclosure is fairly required for the protection of the party’s legitimate interests.
• Where disclosure is made by the express or implied consent of the party producing the material.

34 The fifth judge, Toohey J, took the view that if there was to be no restraint on a party to an arbitration making public what was said or done at an arbitration, including the contents of documents tended to the arbitrator, there was little point in excluding strangers from the arbitration.⁵³ His Honour noted:

While clearly it is not possible to say that every aspect of an arbitration is confidential in every circumstance, no sharp distinction can be drawn between privacy and confidentiality in this context. They are, to a considerable extent, two sides of the same coin. The privacy of an arbitration hearing is not an end in itself; surely it exists only in order to maintain the confidentiality of the dispute which the parties have agreed to submit to arbitration.⁵⁴

Developments and comment following Esso

35 Section 14 of the Act was inserted following Select Committee hearings in an express endeavour to circumvent the effect of the decision in Esso. In reporting back to Parliament on the Bill the Government Administration Committee said, linking the concepts of privacy of hearings and confidentiality of information, that:

...the privacy of the proceedings in an arbitration is a key advantage compared with litigation that is conducted in public. In selecting arbitration as their way of resolving disputes, parties would not contemplate that one of them might publicise or pass on information given in the course of the arbitration because such conduct would negate some of the advantages derived from arbitrating.⁵⁵

36 In their seminar booklet, Arbitration for the 21st Century – A Practical Guide,⁵⁶ David Williams QC and Fred Thorp said:

Confidentiality is often said to be one of the main attractions of arbitration. Until recently, it had generally been regarded as self-evident that an arbitrating party was under an obligation of confidence in relation to documents and information disclosed in, and for the purposes of, the arbitration. However recent cases, most notably in Australia – Esso Australia v Plowman (1995) 128 ALR 391, Sweden – Bulbank v A.I.T. Mealey’s International Arbitration Report (2000) Volume 15, Issue 12, Partnership Agreement-1, and the United States – United States v Panhandle Eastern Corp. et al (1988) 118 FRD 346, have demonstrated that, in the absence of express agreement, confidentiality cannot be taken for granted in all places and in all circumstances. In short, these cases hold that the parties do not necessarily have an absolute obligation to respect the confidentiality of the arbitration.

37 In the United Kingdom, when its Arbitration Act 1996 was passed, a deliberate decision was made not to insert a provision dealing with confidentiality having regard to the implied duty of confidentiality not to disclose or use for any other purpose any material generated in the course of an arbitration⁵⁷ established in Dolling-Baker v Merrett.⁵⁸ That decision proved to be justified when, in Ali Shipping Corp v Shipyard Togir⁵⁹ the English Court of Appeal agreed that the duty arose as an essential corollary to the privacy of arbitral proceedings. Nevertheless, the Court of Appeal also recognised a number of exceptions to this duty: including cases where disclosure of documents received in the arbitration is made under compulsion of law, or where disclosure of an arbitral award and its reasons are necessary to safeguard the legitimate interests of one of the parties.⁶⁰

38 A good deal of support can be found in the literature for the English approach; particularly in its endeavour to embrace the principle established in Dolling-Baker rather than the Esso decision. Lord Neill QC put the point particularly strongly:

If some Machiavelli were to ask me to advise on the best method of driving international arbitration away from England I think that I would say that the best way would be to reintroduce ... all the court interference that was swept away ... The second best method but the two boats are only separated by a canvas would be for the House of Lords to overthrow Dolling-Baker and to embrace the majority judgment of the High Court of Australia in Esso/BHP. This would be to announce that English law no longer regarded the privacy and confidentiality of arbitration proceedings (using that term in the broadest sense) as a fundamental characteristic of the agreement to arbitrate. Lawyers and businessmen in France, Germany, Switzerland and in the countries of the Commonwealth and elsewhere would take note and there would be a flight of arbitrations from this country to more hospitable climes.⁶¹

39 Despite the strongly expressed concerns (with regard to the English market) of Lord Neill QC, no legislative amendments have been made in Australia to overturn the effect of the Esso decision. But, the view has been expressed that Australia may be regarded as a less favourable venue for international commercial arbitration as a result of the Esso decision. Hon Andrew Rogers QC and Duncan Miller wrote:

It must be questioned whether the recent Australian decisions will now result in Australia being less favoured as a venue for international commercial arbitration. Surely it is at least arguable that parties may in future be less likely to specify Australia as the forum for the resolution of their disputes when the Superior Courts in Australia have left it open to a party to disclose information obtained during the resolution of the dispute simply if they can assert that do to so was in some way in the public’s interest.⁶²

Submissions on this issue

40 Submitters agreed generally with the observations made in paragraph 12 of our preliminary paper.⁶³ The effect of that general agreement is as follows:

• Section 14 is regarded, in its present form, as creating undesirable difficulties because the exceptions to the general rule of confidentiality are insufficiently wide.
• Nevertheless, it is also agreed that it would be difficult, if not impossible, to draft an implied term which would deal exhaustively with all situations likely to arise.

41 All submitters agreed that section 14 of the Act should not remain unamended. Only one submitter suggested complete repeal. Other submitters preferred an approach which would amend section 14 to make it more workable.

42 In its submission, AMINZ proposed repeal of the existing section 14 and enactment of a replacement provision which would enable publication disclosure or communication of information relating to arbitral proceedings, or to an award made in those proceedings in the following circumstances:

(a) If made to a professional or other advisor of any of the parties.
(b) If publication disclosure or communication was necessarily involved in the filing and prosecution of any application to the District Court or the High Court under the Act, provided that such publication disclosure or communication is no more than what is reasonably required for those purposes.
(c) If publication disclosure or communication is required or authorised by law or required by a competent regulatory body (for example, the New Zealand Stock Exchange) provided that disclosure provides no more than what is legally required or authorised and provided disclosure is made to the other party to the arbitration and the arbitral tribunal of what has been disclosed and the reasons for disclosure.
(d) Where, on application to the High Court, publication, disclosure or communication is authorised in the public interest: AMINZ propose that the test for the High Court be whether the public interest in preserving the confidentiality of arbitral proceedings is outweighed, in the particular case, by other public interest factors. It is suggested that the court permit no greater degree of publication, disclosure or communication than is necessary to serve the identified public interest.

43 We will address the basic policy matters raised in the submissions in the next section, dealing with policy issues and our recommendations.

POLICY CONSIDERATIONS AND RECOMMENDATIONS FOR REFORM

Policy considerations

44 It is clear from an analysis of the judgments in Esso that the judges were influenced, in reaching their respective views, not only by considerations strictly relevant to the application of the law (for example, whether it could be said that the alleged implied term met the criteria for implication of a term) but also by wider policy considerations. The fact that different choices have been made in other countries (notably in the United Kingdom) indicates that, pre-eminently, the question is one of policy.

45 It is unproductive for us to consider whether the policy choice made by the High Court of Australia to meet the needs of Australian society is right or wrong. It is equally unproductive for us to consider whether the choice made in the United Kingdom, in the circumstances facing that country, is right or wrong. We propose to start afresh. In what follows we identify policy considerations which we believe should weigh with our Parliament in determining how to address the problem to best meet the needs of New Zealanders.

46 We have considered, by reference to the English and Australian decisions and domestic concerns reflected in previous Commission papers and Parliamentary material, the policy goals relevant for New Zealand in the context of this issue. We are of the view that the following considerations should guide our deliberations on this issue:

• If the parties decide expressly how to deal with questions of confidentiality of information and documentation arising out of an arbitration that agreement should, generally, prevail. The principle of party autonomy plainly supports that view.
• However, the considerations which we set out below are relevant to the question of how the issue should be addressed if either of the parties fail to turn their minds to the question,⁶⁴ or a countervailing public interest exists.
• The Act, when passed, was intended to encourage the use of arbitration as an agreed method of resolving commercial and other disputes.⁶⁵
• It was acknowledged by this Commission when recommending the Act that the hearing of arbitral proceedings in private was traditional in New Zealand.⁶⁶
• Parliament acted swiftly to insert section 14 of the Act when the possibility of a challenge to the confidentiality principle (based on Esso) was identified.⁶⁷
• Confidentiality has been seen, by business, to be a major attraction of arbitration.⁶⁸ In addition, where issues involving Mäori are concerned, problems can arise over matters as important as disclosure of one’s whakapapa. Confidential arbitration may be an attractive option to deal with such matters.
• There are circumstances in which disclosure of information derived from arbitral proceedings will be justified. Generally speaking, justification will arise if there are statutory or contractual requirements for disclosure or if disclosure is in the public interest. But, for reasons similar to those given by Mason CJ in Esso⁶⁹ we are of the view that it is almost impossible to formulate an implied term of the arbitration agreement which could encapsulate all intended exceptions without being too vague in nature. The policy goal of predictability in legislation is important in this context.
• Public policy concerns about transparency (achieved through disclosure of information) with regard to business enterprises operated in both the public and private sector must be recognised in formulating any recommendations which we make. For example, we suggest that it would be wrong for state-owned enterprises not to be required to make available relevant information arising out of an arbitration if that arbitration raised issues of public concern. Similarly, we believe that information derived from an arbitration which is relevant to the regulatory functions of the New Zealand Stock Exchange should also be disclosed. Those examples are not intended to be exhaustive.
• It is necessary to ensure that administration of justice considerations are not undermined by making the obligation of confidence too rigid. Where information, which has emerged from an arbitration, is required to enable justice to be done between other parties, confidentiality must yield in favour of the public interest concerning the administration of justice.⁷⁰

Analysis

47 We commence by saying that we do not believe that section 14 of the Act should just be repealed, and the matter left to the courts, as initially raised in our preliminary paper.⁷¹ While this would give courts the flexibility to deal with confidentiality issues not dealt with in any statutory provision, difficulties could arise. The problem is that a court might misconstrue simple repeal of section 14 as evidence of a legislative intent to remove confidentiality rather than to circumscribe more precisely when confidentiality attaches to documents and information used in arbitral proceedings. In addition, persons considering referring a dispute to arbitration, particularly those from other countries, may well regard any repeal as an indication that New Zealand does not favour confidential dispute resolution. Finally, a New Zealand court may well follow Esso, which for reasons set out below we consider would be undesirable.

48 We believe that there should be a default provision providing that information and documentation relating to the arbitral process should be confidential. We say this because we consider that, firstly, such a provision would be beneficial for arbitrations (which as we pointed out, should be encouraged), and secondly because we believe that a position of confidentiality is more likely to reflect what the parties would choose had they put their minds to it. We are of the view that there should be exceptions to this general rule, which we deal with in the next paragraph.

49 With regard to exceptions, we consider that parties should obviously be permitted to disclose information to professional advisors, and if required to do so by court order. With regard to other exceptions, we do not think that it would be desirable or practical to attempt to set out a detailed code. Rather, we favour a general exception whereby the parties would apply to the arbitral tribunal for permission to disclose any information which the parties need to disclose because of any contractual, statutory, or regulatory requirement. The intention is that the arbitral tribunal will only grant permission where the information sought to be disclosed would have had to be disclosed even if the dispute had never arisen or if it had been mediated or resolved in any other private way.

50 Because of potential difficulties if an order was declined,⁷² we also recommend an automatic right of appeal to the High Court. In cases where the arbitral tribunal’s mandate has terminated, for any reason, we recommend that permission be sought directly from the High Court. In cases where an application is required to be made to the High Court we recommend no further right of appeal. We take this view because we believe it is appropriate for the High Court to be the final arbiter if a party is prevented from supplying information to another as a result of the confidentiality provision.

51 While this process could be seen to be time consuming, and possibly costly, we would expect that in plain cases the parties will be able to sort out these matters without the need for any application.

52 By basing the threshold test on the question whether the information would have been disclosable if the dispute had been resolved by other private means it is unnecessary to require the arbitral tribunal to inquire into wider public interest issues in determining whether such an order should be made. Wider public interest issues can be addressed by the exception based on disclosure under compulsion of law.

Summary of recommendations

53 To summarise the above, we recommend that section 14 of the Arbitration Act 1996 be repealed and replaced with a section which requires, subject to any agreement of the arbitrating parties to the contrary, that:

(a) The hearing take place in private.

(b) Subject to (c) to (f) below, the arbitral tribunal and the parties to the arbitration agreement not to disclose pleadings, evidence, discovered documents or the award arising from the arbitration.

(c) The requirement is subject to disclosure when compelled by court order⁷³ or subpoena,⁷⁴ or to a professional or other adviser of any of the parties.

(d) The arbitrating parties may apply to the arbitral tribunal for an order that they be permitted to disclose information otherwise protected by the implied term. Such an order:

(i) should only be made after the arbitral tribunal has heard from the arbitrating parties; and

(ii) if the arbitral tribunal is satisfied that:

• such an order is necessary to enable the party applying for disclosure to comply with any statutory, contractual or regulatory requirement; and
• disclosure of the information would have been required if no dispute had arisen or the dispute had been resolved by private⁷⁵ means (for example, negotiation or mediation) other than arbitration.

It is intended that this jurisdiction be conferred on the arbitral tribunal by statute rather that as an implied term of the arbitration agreement.

(e) If the mandate of the arbitral tribunal has expired, the application referred to in paragraph 53(d) would be made to the High Court (which would apply the same criteria as the arbitral tribunal).

(f) If the application is declined by an arbitral tribunal, then there would be an automatic right of appeal to the High Court. There is no appeal where the application is made at first instance to the High Court.