One of the primary focuses of any arbitration proceeding is ensuring that there is complete confidentiality maintained regarding the divulged information during the proceedings. The Arbitration & Conciliation Act of 1996 also made confidentiality provisions. However, this was only iterated in/for conciliation proceedings and did not apply to arbitral proceedings. The 2019 amendment to the act inserted Section 42A to implement a sense of responsibility on the arbitral tribunal/arbitrator and the parties to avoid or prevent any disclosure of information outside the setting of an arbitral proceeding.
Scope of Applicability of Section 42A
The purpose of the section is to protect the subject matter that has been discussed during any of the sessions of an arbitral proceeding, the language of the provision is evident in its indication as it transparently puts responsibilities on not only the parties and the arbitrators but also the arbitral institution, to protect the confidentiality of all proceedings and sessions.
The consequence of disregarding the confidentiality clause in an arbitration proceeding leads to unethical behaviour on whoever commits such action. Regardless of who is the wrongdoer, the arbitration is often directed to be scrapped and started from scratch for a fair trial.
The provision's language clearly states that confidentiality can only be floated under the circumstance where the arbitral proceedings must be divulged before the court of law. These circumstances could arise out of a need to perform one’s legal duty or a duty to protect a legal right or perhaps to challenge an award that has already been passed before a court of law if it is found unfair by either of the parties involved.
Problems Surrounding Section 42 A
As stated by the B. N. Srikrishna J. Committee Report, which was in charge of recommending amendment clauses to the 2019 Act, the provision stated under 42A is a non-obstante clause, simply meaning that it is a law that holds more power over any other law which may contain a contrary rule, further making it mandatory to be followed under all conditions (except the ones mentioned in the provision itself).
The problem arises when Section 42A is looked at in a failed fast track arbitration proceeding, which requires written statements to be submitted before the court, further implying the divulging of information is inevitable, thus defying the rule of confidentiality. Various precedents are available, the judgements of which indicate what the judiciary of India feels about the existing clash between Section 42A and section 29B. However, there is no defined procedure to be followed in the occurrence of such a clash.
While the confidentiality clause mentioned in the acting post the 2019 amendment was a necessary addition, the existing lacuna in law is something that is yet to be formally addressed and dealt with as it creates a space for not only clashing provisions but also clashing judgements owing to the lack of a set procedure in place.
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