A DETAILED NOTE ON TRANSPARENCY AND CONFIDENTIALITY IN INTERNATIONAL ARBITRATIONS
Author: Divyanshi Gupta, Faculty Of Law, Lucknow University
Transparency and Confidentiality are two procedures in arbitration. Transparency provides for openness, clarity, disclosure, access to information while confidentiality refers to non-disclosure, it is one of the most fundamental reason why parties resort to arbitration. At times, transparency and confidentiality are at odds. Here we will talk about transparency and confidentiality in international arbitration, why is it needed and when should be one of these be resorted to.
Transparency and Confidentiality is a hot topic in international arbitration. The idea of transparency was not much familiar in international arbitration before, the new development and regulation have provided much popularity to it recently. While confidentiality is the fundamental feature of arbitration. Parties go for arbitration over other methods because of its confidentiality. Arbitration is based on confidentiality and is its inseparable part.
What is Transparency?
Transparency is a procedure of openness, clarity, and accessibility to information so that parties can rely upon the judicial process. It is essential for justice, rule of law, equity and good governance. Parties move forward with caution when they are that they are being scrutinized by the public. It acts as a guide for parties to arbitration by providing insight into the expertise of arbitrator. When the awards are open to criticism, arbitrators examine the case more carefully to save them from negative criticism.
Merits of Transparency:
It provides the scope for NGOs to provide their opinions enabling the tribunal to consider any major effect that the case will have outside the context of parties. It acts as precedent for future legislations to government. It helps building the case law for future arbitrations.
- Transparency is most sought in international investment arbitration for resolving the dispute between foreign investor and state over the issue of public interest.
- Transparency must be observed at each and every stage from informing the public of dispute, to hearing and third-party participation.
- Disclosure of documents is essential for effective observance of transparency.
- Open hearings are necessary to reach transparency, but if confidentiality outweighs public interest the tribunal may move forward with closed hearings in order to protect the integrity of the proceedings.
- Transparency allows increased third-party participation like NGOs (Non Governmental Organization), where they can contribute their opinions in public interest. In case of BiwaterGauff (Tanzania) v. United Republic of Tanzania, ICSID tribunal accepted opinions as amicus curiae from NGOs concerning the environment, human rights, and sustainable development.
What is Confidentiality?
Confidentiality is a part of arbitration and this makes transparency in arbitration controversial. Where on one hand confidentiality provides protection from scrutiny from public and inaccessibility of documents to competitors, transparency on the other hand resorts to openness, accessibility to information. Confidentiality provides for parties to present their claim without any scrutiny by media or public. Precedents are not every time welcomed in international arbitration due to its negative effects.The issue of confidentiality was recognized in Dolling-Baker v. Merrett which stated that the tribunal has an implied duty of not disclosing the documents to be used in arbitration unless it is necessary for the fair disposal of the case. It is thought that confidentiality and transparency are conflicting concepts but it is not true. It is argued that absolute confidentiality is not possible, because witnesses may disclose the information to third parties. The idea of confidentiality and disclosure is supported by French Court. It contended that confidentiality and transparency will support each other.
For the greater public interest, transparency is essential for international arbitration. But it is not always same for commercial arbitration where the parties wish resolve their disputes without resorting to state courts, they go for arbitration because of confidentiality.Making the name of parties, their documents, hearing, judgement may defame the parties. Confidentiality helps the parties in keeping their documents out of reach of their competitors. For these reasons parties cannot stake their confidentiality for the sake of transparency.In the commercial cases, where the public interest at large is involved, confidentiality remains in issue. These issues involve infrastructure services, environment, public health and safety, pharmaceuticals, and market competition,etc. Like if a company employs children such information must be disclosed.
Various regulations are provided for transparency. Parties may choose arbitration, or the state may include arbitration clause in the agreement and include arbitration provisions as provided in UNCITRAL Convention on Transparency Rules. Many states are cautious about its implementation but it is favoured as its looks for the interest of population at large, making the judicial system more reliable and efficient. It will be promoted more in international arbitration but this does not that confidentiality is to be disregarded. UNCITRAL Arbitration Rules require hearings to be confidential unless otherwise agreed to by the parties. This causes transparency and confidentiality to become at odds. When it is necessary for the public interest confidentiality should be resorted to.