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54 THE ISSUE WE CONSIDER HERE is as follows: When it isnecessary for parties to an arbitral proceeding to have recourse to courts of general jurisdiction, should the (otherwise) confidential nature of the arbitral process yield to principles of open justice applicable in courts of general jurisdiction?
55 The open justice issue was considered, but expressly left open, in the Commission’s 1991 report. After referring to provisions set out in legislation passed in Hong Kong the Commission said:
We are sympathetic to the underlying argument that parties may in part choose to arbitrate rather than litigate because of the confidentiality it affords. We are also mindful of the traditional reasons for open courts and public decisions; and we are of the view that this issue is one which extends to much commercial litigation. We have concluded that the issue should be resolved in that wider context and, accordingly, have not recommended provisions similar to ss 2D and 2E of the Hong Kong Ordinance. We recommend that examination of the wider question take place at an early date. 76
56 The provisions of sections 2D and 2E of the Hong Kong legislation are also reflected in sections 22 and 23 of the International Arbitration Act of Singapore. Both sets of provisions are set out in appendices A and B. But, in general terms the scheme of the legislation is:
57 Different approaches to this issue can be discerned in judgments given in various parts of the common law world. Illustrations taken from three jurisdictions are set out below by way of example.
58 First, as noted in paragraph 7, the open justice issue was considered, in New Zealand, in an arbitral context in Television New Zealand v Langley Productions Ltd.77 The case was remarkable because, when a full arbitration agreement was negotiated (after the dispute arose) one party desired confidentiality while the other did not. By the time an award had been made and an application for leave to appeal to the High Court filed, the parties had reversed their positions. The successful party in the High Court (who had wanted the procedure to be open throughout) now sought confidentiality while the losing party (which had pressed for confidentiality) wanted the appeal to be aired publicly. Robertson J held that the open justice principle prevailed and details of the award were made publicly available.78
59 In Canada, in 887574 Ontario Inc v Pizza Pizza Ltd,79 Farley J, in the Ontario Court of Justice (General Division), declined to make an order for confidentiality in respect of documents arising out of an arbitral process because of the open justice principle. Farley J said:
Section 137(2) of the Courts of Justice Act, RSO 1990 c C43 (CJA) provides:
A court may order that any document filed in a civil proceeding before it be treated as confidential, sealed and not form part of the public record. However when a matter comes to court the philosophy of the court system is openness: see MDS Health Group Ltd v Canada (Attorney-General) (1993) 15 OR (3d) 630 (Gen Div) at 633. The present sealing application would not fit within any of the exceptions to the general rule of public justice as discussed in AJ v Canada Life Assurance Co (1989) 70 OR (2d) 27 (HC) at 34:
... Actions involving infants, or mentally disturbed people and actions involving matters of secrecy ... Secret processes, inventions, documents or the like ... The broader principle of confidentiality possibly being “warranted where confidentiality is precisely what is at stake” was also discussed at the same page but would not appear applicable.80
60 In the United States, in order to preserve the confidentiality of the arbitral process, courts in some States will seal court files relating to arbitral proceedings.81 In one New York case, a judge, in upholding an application to seal, said:
... Litigants ought not be required to wash their dirty linen in public and subjected to public revelation of embarrassing material where no substantial public interest is shown ...82 [our emphasis]
61 An analogous issue, that has been the subject of litigation in the United States, concerns the situation when confidential settlement agreements, arising out of mediations or other private dispute resolution processes, are filed in courts. The issue has been whether they should properly be sealed. In an article on the issue, the author summarised over 70 cases from State and Federal appellate courts, commenting:
If a settlement agreement were submitted to the court for either approval or enforcement, then the agreement would likely be considered a ‘court record’ subject to disclosure.83
Cases where the court granted the application to seal involved situations where the applicant’s privacy interest outweighed any public interest in disclosure; and situations where the court considered that the desirability in encouraging parties to settle disputes out of court indicated that sealing should be permitted.
62 Robertson J observed, in Television New Zealand Ltd v Langley Productions Ltd that a clear and unambiguous determination of Parliament should be required for the cloak of confidentiality attaching to the arbitral process to apply to subsequent proceedings in the High Court.84 We agree. The question for our consideration is whether Parliament should act or whether the status quo should remain.
63 In order to address this issue we:
64 In very broad terms, the open justice principle can be summarised as follows: courts should conduct their processes openly unless to do so would frustrate the administration of justice.85 The open justice principle reflects an underlying philosophy that justice should be done in open. It is therefore better to refer to the desirability of open justice as a principle rather than a rule.
65 The principle manifests itself in a variety of different forms. For example, at civil trials it typically takes the form of a judge-made rule of procedure; in criminal cases the principle is given effect by section 138(1) of the Criminal Justice Act 1985. It is also a factor relied upon by courts in determining how to exercise statutory discretions.86
66 In Canada and the United States the principle has been held to have constitutional status under their respective freedom of expression provisions.87 Similarly in New Zealand, section 14 of the New Zealand Bill of Rights Act 1990 has been held to have affirmed the principle.88 Section 25(a) of the New Zealand Bill of Rights Act 1990 also states that criminal defendants are entitled to a public trial. However, we note that this is a right of the accused, which is somewhat different from the open justice principle, which is essentially a right of the public to open justice, not a right of the parties.
67 Most authorities which address the open justice issue use as their starting point the seminal opinions delivered in the House of Lords in Scott v Scott.89 The leading judgment of the Privy Council, McPherson v McPherson90 is to much the same effect. The case initially involved a petition by a wife (Mrs Scott) against her husband for a declaration that their marriage was void due to his impotence. On Mrs Scott’s application an order was made that the petition be heard in private. Subsequently, Mrs Scott sent copies of the shorthand notes of the proceedings to her father in law, her sister in law and a third party. Mr Scott then moved to commit Mrs Scott for contempt of court for breaching the privacy order for hearing in camera.
68 The relevant issue for the House of Lords to determine was whether there was jurisdiction for the Divorce Court (which was part of the High Court of Judicature) to hear nullity proceedings in camera and, if so, whether that jurisdiction empowered the judge to make an order which not only excluded the public from the hearing but also restrained the parties from afterwards making public the details of what took place.
69 It is of some importance to recognise that the five Law Lords who heard Scott v Scott gave different reasons for allowing the appeal.91 But, all of their Lordships were influenced by the terms of section 46 of the Divorce Act by which, subject to such rules and regulations as might be established, witnesses in all proceedings before the Court were, where their attendance could be had, to be sworn and examined orally in open court. A proviso to this section allowed the parties to verify their cases by affidavit, but subject to cross examination on such affidavits in open court, if the opposite party so desired. It was explicitly on that basis that, for example, Viscount Haldane LC held that the old procedure used by the Ecclesiastical Courts in dealing with nullity cases had been brought to an end. Lord Haldane LC said:
...The new Court was to conduct its business on the general principles as regards publicity which regulated the other Courts of justice in this country. These general principles are of much public importance, and I think that the power to make rules, conferred by ss 46 and 53, must be treated as given subject to their observance. They lay down that the administration of justice must so far as the trial of the case is concerned, with certain narrowly defined exceptions to which I will refer later on, be conducted in open Court. I think that section 46 lays down this principle generally, and that section 22 is, so far as publicity of hearing is concerned, to be read as making no exception in any class of suit or proceedings save in so far as ordinary courts of justice might have power to make it.92
70 The Lord Chancellor admitted of exceptions to the open justice principle: in particular, the case of wards of Court and lunatics who were the subject of an administrative/paternal jurisdiction, and cases, such as trade secrets, where disclosure of information would undermine the very purpose for which proceedings were brought: that is to protect the secret formula.93 The exceptions to which the Lord Chancellor referred were based on what His Lordship described as “a yet more fundamental principle”. Viscount Haldane LC said:
While the broad principle is that the Courts of this country must, as between parties, administer justice in public, this principle is subject to apparent exceptions, such as those to which I have referred. But the exceptions are themselves the outcome of a yet more fundamental principle that the chief object of Courts of justice must be to secure that justice is done ... as the paramount object must always be to do justice, the general rule as to publicity, after all only the means to an end, must accordingly yield. But the burden lies on those seeking to displace its application in the particular case to make out that the ordinary rule must as of necessity be superseded by this paramount consideration.94
71 It is of interest that both Viscount Haldane LC and the Earl of Halsbury refer to an exception whereby a judge could exclude the public if he sat as an arbitrator rather than as a judge.95 The Lord Chancellor said:
In cases in other Courts, where all that is at stake is the individual rights of the parties, which they are free to waive, a judge can exclude the public if he demits his capacity as a judge and sits as an arbitrator. The right to invoke the assistance of a Court of Appeal may be thereby affected, but the parties are at liberty to do what they please with their private rights. In proceedings, however, which, like those in the Matrimonial Court, affect status, the public has a general interest which the parties cannot exclude, and I am unable to see how their consent can justify the taking of an exceptional course.96
The Earl of Halsbury said:
There are three different exceptions commonly so called, though in my judgment two of them are no exceptions at all. The first is wardship and the relation between guardian and ward, and the second is the care and treatment of lunatics.
My Lords, neither of these, for a reason that hardly requires to be stated, forms part of the public administration of justice at all.
Again, the acceptance of the aid of a judge as arbitrator to deal with that private family disputes has, by the express nature of it, no relation to the public administration of justice, and it will be observed how careful Lord Eldon was when intervening in such a case (in the matter of Lord Portsmouth97) to point out that it was only by consent of the parties on both sides that he consented so to hear it, and in the Sherborne School case, Malan v Young98 it was clearly recognised that it was only heard in private when a regular agreement of the parties that it should be so heard was entered into.99
72 Research into the cases to which the Earl of Halsbury refers throws no light on the process apparently used to enable a judge to sit as an arbitrator rather than as a judge.100 But, leaving that to one side, it is of some importance that both Viscount Haldane LC and the Earl of Halsbury acknowledged, notwithstanding other strong statements in their judgments about the open justice principle, that parties resolving private rights before a judge sitting as an arbitrator could properly exclude the operation of the open justice principle.
73 In many respects it might be easier to justify non application of the open justice principle in the context of an arbitration over which a private citizen presides; it seems unacceptable in principle that a judge could remove application of the open justice principle, and therefore scrutiny of his or her actions as a judge, simply by deciding to sit as an arbitrator rather than a judge.
74 Viscount Haldane LC put in strong terms the need for issues militating against operation of the open justice principle being considered by Parliament rather than the courts. His Lordship said: 101
A mere desire to consider feelings of delicacy or to exclude from publicity details which it would be desirable not to publish is not, I repeat, enough as the law now stands. I think that to justify an order for hearing in camera it must be shown that the paramount object of securing that justice is done would really be rendered doubtful of attainment if the order were not made. Whether this state of the law is satisfactory is a question not for a Court of justice but for the Legislature.
75 Other members of the House of Lords gave opinions which reinforced those of Viscount Haldane LC and the Earl of Halsbury. However, in one respect, Lord Shaw of Dunfermline went further by stating that the order to hear the nullity suit in camera and thereafter to suppress reports of what happened at the trial appeared:
... to me to constitute a violation of that publicity in the administration of justice which is one of the surest guarantees of our liberties, and an attack upon the very foundations of public and private security.102
76 In Scott v Scott Lord Shaw of Dunfermline referred to a passage by Jeremy Bentham as explaining the reason for the rule:103
Publicity is the very soul of justice. It is the keenest spur to exertion, and the surest of all guards against improbity. It keeps the judge himself, while trying, under trial.104
77 Thus, this rationale can be seen, in modern terms, as promoting the public policy goals of accountability and transparency. This formulation was approved by Lord Diplock in Home Office v Harman105 and has also been approved in two recent judgments of the Court of Appeal in England: Lilly Icos Ltd v Pfizer Ltd106 and Allan v Clibbery.107
78 In Lilly Icos Ltd v Pfizer Ltd108 the Court of Appeal was required to consider the confidentiality of material disclosed by a patent holder during the course of revocation proceedings which had been treated as confidential in the hands of the opponent during the course of the proceedings and which the patent holder wished to remain confidential even after those proceedings had been terminated. The legal framework against which the Court of Appeal considered the issue is set out in CPR 31.22 and CPR 39.2 of the new English Civil Procedure Rules 1998 (the CPR).
79 Under CPR 31.22 a party to whom a document has been disclosed is entitled to use the document only for the purpose of the proceedings in which it is disclosed except where:
80 Under CPR 39.2, a hearing in court is required, as a general rule, to be in public; a hearing, or any part of it, may be in private if:
(a) Publicity would defeat the object of the hearing.
(b) It involves matters relating to national security.
(c) It involves confidential information (including information relating to personal financial matters) and publicity would damage that confidentiality.
(d) A private hearing is necessary to protect the interests of any child or patient.
(e) It is a hearing of an application made without notice and it would be unjust to any respondent for there to be a public hearing.
(f) It involves uncontentious matters arising in the administration of trusts or in the administration of a deceased person’s estate.
(g) The court considers a private hearing to be necessary, in the interests of justice.
81 In Lilly Icos Ltd Buxton LJ, delivering the judgment of the Court of Appeal, said:110
The central theme of these rules is the importance of the principle that justice is to be done in public, and within that principle the importance of those attending a public court understanding the case. They cannot do that if the contents of documents used in that process are concealed from them: hence the release of confidence once the document has been read or used in court. [our emphasis]
82 Those observations demonstrate an additional ground for the open justice principle. Not only is the open justice principle designed to ensure that judges carry out their functions in a transparent way but also, on the rationale articulated by Buxton LJ, openness is required to enable those attending a public court to understand the case.
83 In Allan v Clibbery Dame Elizabeth Butler-Sloss P identified three categories of case which ought to be considered separately: viz111
(a) Those heard in open court.
(b) Those heard in private where information disclosed in court is not required to remain confidential.
(c) Those heard in secret where the information disclosed to the court and the proceedings remain confidential.
84 Her Ladyship then proceeded to analyse separately the ramifications, with regard to the open justice principle, of civil proceedings held in private112 with particular regard to procedures used in family proceedings.113
85 Interestingly, the Court of Appeal in New Zealand has taken a slightly different view of the need to disclose documents used in court in the context of interpreting the Criminal Proceedings (Search of Court Records) Rules 1974.114 In R v Mahanga,115 McGrath J, delivering the judgment of the Court, held that open justice did not require that a television broadcaster be permitted to obtain and replay a videotape of a police interview, which had already been played in open court. The Court of Appeal took particular account of the privacy interest of the interviewee. As a matter of policy the approach of the Court of Appeal in R v Mahanga should be contrasted with the terms of CPR 31.22 and the observations made in Lilly Icos Ltd v Pfizer Ltd.
86 In reaching its decision in R v Mahanga the Court of Appeal balanced three considerations: open justice and freedom of expression,116 privacy117 and administration of justice.118 The use of notions of privacy as an appropriate balance is something which may be said to go beyond the question of administration of justice: it recognises that New Zealand courts consider factors relevant to the interests of justice generally. See also Director of Proceedings v Nursing Council of New Zealand where Baragwanath J said:
The court will normally sit in public ... But the high importance of the complainant’s privacy interest is not ... to be imperiled by an implication that Parliament has over-ridden the courts inherent power to conduct its business in such a manner as the interests of justice may require.119
87 There are now many areas involving family law and mental health matters, questions of public morality, the reputation of a victim of an alleged sexual offence, or an offence of extortion, or where the security or defence of the nation may be in jeopardy, where private hearings can take place. As Cooke J said in Broadcasting Corp of New Zealand v Attorney-General:
Ironically the two most famous cases decided in England on the fundamental importance of public hearings, Scott v Scott and McPherson v McPherson are examples of the very type of case for which the legislature, reflecting contemporary opinion, now enjoins privacy.120
88 Even in the area of access to court documents, the law has some inconsistencies. Documents will not, generally, be available for search until a proceeding has been determined by the court.121 And, where access to pending proceedings is concerned or where there is an endeavour to restrict access to determined proceedings the court, or in some circumstances a registrar, has a discretion to allow or to restrict disclosure.
89 In those circumstances, it is impracticable for us, in the context of a review of the open justice principle in so far as it refers to arbitration, to expand any rule which might address all similar concerns which arise from time to time. Accordingly, what we propose to do is to review the circumstances in which Parliament, by statute, has modified the open justice principle and then to determine, as a policy and law reform question, whether it is appropriate to retain privacy and confidentiality in respect of court proceedings arising out of an arbitration.
90 There are numerous statutes in force in New Zealand which modify the open justice principle. The position is set out in The Laws of New Zealand,122 which we summarise below:
91 As can be seen, exceptions are most prevalent in hearings involving family law issues, or mental health. As noted above, even in Scott v Scott, their Lordships recognised that a court’s jurisdiction over wardship matters, and lunatics, was to be exercised in private. Apart from the court’s general discretion, there are relatively few specific exceptions applicable to civil hearings. In practical terms, the most important is the practice of the court to hear chambers matters privately. We note also that a number of statutes place restrictions upon the ability for the press to report proceedings in a court.142
92 In our view, a sharp distinction must be drawn between the ability of a court to sit in private (which might include the ability to exclude members of the media) and the ability of a court to sit in public, with members of the media having the ability to be in attendance, but with restrictions upon what might properly be reported.143
93 In considering section 375 of the Crimes Act 1961, the Court of Appeal, in Broadcasting Corp of New Zealand v Attorney-General144 emphasised the desirability of hearing all submissions orally while recognising that in exceptional cases it may be appropriate for the judge to receive private information. The concern which arose from directions made by the sentencing judge in that particular case were expressed pithily by Woodhouse P in Broadcasting Corp of New Zealand v Attorney-General as follows:
The case has provoked public discussion of the powers of a judge to sit in camera in a criminal case or otherwise; and there has been criticism of the breadth of the order made by Moller J which effectively has withdrawn from public scrutiny every aspect of what took place.145
The issue of public scrutiny mentioned by Woodhouse P is linked to concepts of accountability and transparency.
94 In the specific context of arbitration it is also necessary to consider what contemporary legislation is in place to deal with appeals from courts and tribunals which are empowered or enjoined to sit in private. In this regard we note that most statutes that allow private hearings in fact also provide for private appeals. We have listed the provisions, and relevant case law, in appendix C.
95 The issue of whether appellate bodies should follow the same rules as to privacy as do the bodies appealed from, was considered by the Law Commission of England and Wales under the chairmanship of Lord Scarman.146 It recommended that a discretion be given to appellate courts to sit in private, when hearing appeals from bodies which had the power to sit in private. In making this recommendation it reasoned that what was important was the subject matter of the hearing, not the type of court:
It is the nature of the proceedings, not the elevation of the court, which should be decisive.147
96 We do note that the statutes referred to above, and the Law Commission report, are not directly analogous to appeals from arbitrations; with regard to the statutes listed, Parliament has already decided that the subject matter of the hearing makes it appropriate that the matter be heard privately; by contrast, arbitrations are held in private because of a decision by the parties.
97 There is a direct conflict between the public policy goal of confidentiality in arbitration (on the one hand) and the public policy goal of openness in court proceedings (on the other). One must yield to the other. The extent to which one goal should yield to the other must be determined after an appropriate balancing of relevant considerations.
98 Looking purely at the open justice principle in the context of arbitral proceedings, the following public policy factors should, we believe guide us in framing an appropriate rule to meet the competing needs for privacy (in arbitrations) and openness (in the court system):
99 In paragraph 15 of our preliminary paper we noted that a factor which might weigh in favour of open justice is the consideration that the volume of New Zealand litigation is not large, and much of New Zealand law is unique to this country. A difficulty arises if a good deal of case law, that is, the case law determined by arbitral tribunals, is not published for the use of the profession. On balance, however, we prefer the view expressed by Lord Cooke of Thorndon:
Far from undermining public policy, the parties to a commercial dispute could be seen to be further in the public interest by selecting and meeting the cost of their own dispute resolution machinery, rather than resorting to facilities provided and subsidised by the State. Certainly the arbitration might well not provide a publicly accessible contribution to jurisprudence; but there was no reason why parties freely contracting should be obliged by public policy to make a compulsory contribution to the worthy cause of the coherent evolution of commercial law.150
100 We are of the view that the presumption, in court proceedings, should be one of open process. When a party has resort to the coercive powers of the public justice system, the need and desirability for transparency of process and accountability of judges must prevail over private interests. The one exception to that rule, which we believe to be justified, is where a judge concludes that the private interests of the parties outweigh the interests in disclosure in a particular case. Accordingly, we take the view that the starting point is a presumption of application of the open justice principle; that presumption being able to be rebutted if an applicant can demonstrate to the court that, in the particular case, the public interest in confidentiality of arbitral proceedings outweighs other public interest factors which would favour disclosure.
101 We are of the view that the competing public policy goals can best be met by enacting a provision within the Act which will provide as follows:
(a) That all proceedings brought before the courts of general jurisdiction from arbitrations shall be heard in open court.
As Elias CJ said, delivering the judgment of the Court of Appeal in Lewis v Wilson & Horton Ltd:
The principle of open justice serves a wider purpose than the interests represented in the particular case. It is critical to the maintenance of public confidence in the system of justice ... The public is excluded from decision making in the Courts. Judicial accountability, which is maintained primarily through the requirement that justice be administered in public, is undermined.151
(b) No proceedings filed in the courts of general jurisdiction in respect of arbitral proceedings shall be capable of being searched or copied, whether before or after determination of the application before the court, in the absence of an order from a judge of that court. We envisage that this rule would also apply to all applications lodged in the High Court to enforce arbitral awards.152
In our view, the balance between the competing policy objectives is so acute as to require this decision to be made by a judge. An appropriate test is whether the public interest in confidentiality of arbitral proceedings outweighs other public interest factors favouring disclosure: the criteria mentioned in paragraph (c) are likely to inform a judge when undertaking this balancing exercise.
(c) If the default position as to confidentiality (recommended in paragraph 53 above) applied before the arbitral tribunal, or if an express confidentiality agreement had been reached between the parties, that position should continue for a period of 14 days from the date on which the relevant application is served so that, within that 14 day period, either party can apply to the court for an order seeking to retain confidentiality. If an application is made then the proceeding is to remain confidential until the application is determined. The party seeking an order for a private hearing or confidentiality with regard to documents should be required to set out specifically, in the application, the extent of and reasons for the order sought. In determining the application, the court should take into account:
We make it clear that we do not see the terms of the confidentiality agreement as being decisive; only a factor to be taken into account in the balance exercise.
(d) The decision as to confidentiality made by the court should be capable of being revisited from time to time on application to the court.
(e) Judgments of the courts which relate to arbitral proceedings should be reported in a manner that, so far as is possible, will preserve the intended confidentiality attaching to the arbitral proceedings. We envisage, in this context, the use of initials to identify parties but, where it is necessary to refer to an event to understand the decision, reference must be made to it.153
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