CONFIDENTIALITY IN ARBITRATION
With the increase in the scope of arbitration, more and more people are opting for arbitration to resolve their dispute. Thus, to resolve the dispute with utmost sincerity there is a need to maintain confidentiality. While dealing with confidentiality one of the common perceptions is that some think it is similar to privacy, while both concepts are two sides of the same coin but there is a need to distinguish between the two. When we look at privacy, it is somehow a narrower concept and is only limited to a certain thing, most importantly keeping the third party out of the entire transaction and disallowing them to participate in the arbitral proceedings.
It is the foremost duty of the parties to maintain confidentiality, this duty imposes an obligation on the parties not to disclose any material information to anyone who is not the party to the agreement. Confidentiality in its purest sense means that the process of arbitration, documentation involved in it, evidence, and the arbitral award, cannot be disclosed to any third party.
The concept of confidentiality has failed to show traces in the UNCITRAL MODEL LAW on International Commercial Arbitration on which many jurisdictions have made their domestic legislations do not include or have any provision related to confidentiality. However, they provide autonomy to parties whether or not they want to bound the other party with such confidentiality provision. The parties are free to decide whether they want to impose such an obligation at the time of the formation of the arbitration agreement. Also, the UNCITRAL Arbitration Rule does not provide any express provision concerning confidentiality, but the rules very much provide the provision related to the confidentiality of arbitral award i.e. the award can be made available to the general public only with the consent of both the parties.
Certain jurisdiction has recognized the need for a confidentiality clause in the arbitration agreement, the said approach has been recognized by the English, Singapore, and Swiss courts. The reason for such inclusion is unwanted public attention, this the basic reason why parties opt for the inclusion of such a clause. Whereas there is certain jurisdiction that has rejected the said concept, these include U.S, Australia, Swedish and French courts. However, these countries have not rejected the concept completely they have inculcated certain exceptions to the said concept. Like in Australian law, consent-based disclosure is allowed.
India has recognized the concept of confidentiality but the said concept has been included in Section 75 of the Arbitration and Conciliation Act, 1996 where the provision involves only Conciliation and not Arbitration. However, the 2019 Amendment for the first time contemplated the concept of confidentiality in Arbitration. As per the amendment Section, 42A puts an obligation of confidentiality on the parties to the arbitration agreement as well as on the arbitrator and the arbitral institution. The said amendment provides for an exception according to which the arbitral award can be disclosed for enforcement and setting aside proceedings