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Gopal Subramanium
3 Verulam Buildings, London
gs@3vb.com

 

Confidentiality has often been highlighted as one of the key advantages of alternate dispute resolution mechanisms over adjudication by courts. Yet, until the recent amendments to the Indian Arbitration & Conciliation Act of 1996 (ACA), the ACA did not contain an express provision on confidentiality in relation to arbitration proceedings. The amendments, effective from 9 August 2019 (2019 Amendment), introduce an express provision extending the concept of confidentiality to arbitration proceedings, This was hitherto applicable only to conciliation proceedings under section 75 of the ACA.

Until then, the broad obligation on advocates to not disclose attorney-client communications, advice, documents etc. under Section 126 of the Indian Evidence Act 1872 did not offer sufficient comfort to parties to commercial disputes keen on maintaining confidentiality, inhibiting thereby the growth of arbitration as a preferred mode of dispute resolution in India. Indeed, the High Level Committee to review the institutionalisation of arbitration mechanisms in India, chaired by a retired judge of the Supreme Court of India, Justice B N Srikrishna (Srikrishna Committee), in its report to the government of India recommended that:

‘A new provision may be inserted in Part I of the ACA providing for confidentiality of arbitral proceedings unless disclosure is required by legal duty, to protect or enforce a legal right, or to enforce or challenge an award before a court or judicial authority.’^[1]

The Srikrishna Committee was conscious that the avowed objective of confidentiality of arbitral proceedings must acquiesce to the legal duty to disclose, for protection or enforcement of a legal right, or to enforce or challenge an award. In doing so, the Srikrishna Committee left two foundational questions to be answered by the legislature. First, who should the discipline on confidentiality constrain? Second, what should be kept confidential? While the Srikrishna Committee specified when the details of arbitral proceedings could be disclosed, it left these two questions to be answered by the legislature.

The Indian Parliament by way of the 2019 Amendment to the ACA, introduced a new provision, section 42-A, on confidentiality. It reads:

‘Notwithstanding anything contained in any other law for the time being in force, the arbitrator, the arbitral institution and the parties to the arbitration agreement shall maintain confidentiality of all arbitral proceedings except award where its disclosure is necessary for the purpose of implementation and enforcement of award.’^[2]

By introducing the above definition, the Indian Parliament has stopped short of implementing the Srikrishna Committee’s recommendation in its entirety. In its attempt to answer the two foundational questions on the scope of confidentiality, the above definition raises even more questions. 

The limited carve-out from the duty to maintain confidentiality that section 42-A envisages is to facilitate the disclosure of arbitral awards alone, and only when it is necessary for implementation or enforcement. Section 42-A starts with a non obstante clause. It uses the term ‘shall’ to bind the arbitral institution and the parties to the arbitration agreement to maintain confidentiality of all arbitral proceedings, except the award where its disclosure is necessary for the purpose of implementation and enforcement of the award.

On a strict reading of the text of section 42-A, it appears that, besides the award, no other aspect of the arbitral proceedings – such as pleadings, evidence, and arguments – can be disclosed. Such a reading could constrain parties’ autonomy to agree to broader covenants on confidentiality. While crafting its recommendation on confidentiality, recognising the importance of party autonomy, the Srikrishna Committee had suggested that disclosure of arbitral proceedings shall flow from a ‘legal duty, to protect or enforce a legal right, or to enforce or challenge an award’. The ‘legal duty’ could very well emanate from mutually negotiated contractual terms. Section 42-A, however, does not recognise the need for disclosure when parties voluntarily commit to do so to protect or enforce a legal right except when they seek to implement or enforce an award.

There are several other instances where disclosure of details of the arbitration may be required, such as:

• to make an application seeking interim measures from a court during the pendency of the arbitration;

• for termination of an arbitrator,

• for challenging the validity of the award itself under section 34 of the ACA;

• for engaging experts; and

• for consolidation of parallel arbitrations.

The text of section 42-A does not recognise the need for disclosure in any of these and other such occasions.

Section 42-A also fails to exhaustively identify and define the various actors in an arbitration proceeding that must be subject to the discipline on confidentiality. The parties to an arbitration, the arbitrator(s) and the arbitral institution(s) who are expressly constrained by section 42-A are the most immediate and the most obvious set of actors that must be bound by duty to maintain confidentiality. Yet, there are various others who should be similarly constrained. For example, witnesses, and experts appear not be constrained by the confidentiality discipline under section 42-A. The legislature’s attempt to answer the first question – who should the discipline on confidentiality constrain? – thus appears halfhearted.

On the second question of what should be kept confidential, section 42-A again appears to adopt the most simplistic position by extending the confidentiality norm to the entirety of arbitral proceedings except the award, which can be disclosed only for seeking its implementation or enforcement.

In doing so, the legislature appears to have failed to appreciate that different considerations may apply to different classes or types of documents. For example, certain documents required to be produced during the course of an arbitration proceeding could contain proprietary information, be inherently confidential and comprise a distinct class of documents as opposed to documents that are disclosed by parties for the purposes of the arbitration, either voluntarily or upon tribunal’s direction.^[3] In Emmott, Lord Justice Lawrence Collins noted that:

‘Documents in arbitration may, as I have said, be inherently confidential, as where they contain trade secrets. But it is clear that what has emerged from the recent authorities in England is that there is, separate from confidentiality in that sense, an implied obligation (arising out of the nature of arbitration itself) on both parties not to disclose or use for any other purpose any documents prepared for and used in the arbitration, or disclosed or produced in the course of the arbitration, or transcripts or notes of the evidence in the arbitration or the award, and not to disclose in any other way what evidence has been given by any witness in the arbitration, save with the consent of the other party, or pursuant to an order or leave of the court.’^[4]

Inherently confidential documents or information, such as those containing trade secrets or business proprietary information, must benefit from strictest norms on confidentiality and the same level of protection within the arbitration proceedings as outside. Hence, they must not be susceptible to any doctrine of arbitral confidentiality.^[5]  Documents that are disclosed by parties for the purposes of the arbitration, either voluntarily or upon a tribunal’s direction, would benefit from protection that is afforded to similar documents in litigation and may be disclosed with the consent of parties or pursuant to an order or leave of the court, as noted by  Lord Justice Lawrence Collins in Emmott. The text of section 42-A again appears to ignore the idea that parties to an arbitration may voluntarily consent to disclose documents that could otherwise be protected by the express or implied disciplines on confidentiality.

While the legislature’s attempt to keep pace with developments in arbitration laws across the globe and promote the use of arbitration as a preferred mode of dispute resolution is laudable, the fine print of section 42-A leaves many questions unanswered. The when, who and what of an effective provision on confidentiality provision are at best answered only halfway. The courts will again have to step in and fill in the blanks, perhaps by deferring to the confidentiality norms contained in institutional arbitration rules.

 

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