Author: Gary Born*
Published: June 2021
Limits to Party Autonomy
Sources of Arbitration Law
New York Convention
The confidentiality of international commercial arbitration proceedings is a critically important, but unsettled subject, both in the United States and elsewhere. Many authorities, and most users of commercial arbitration, regard obligations of confidentiality as inherent and essential aspects of the arbitral process, which facilitate the effective resolution of cross-border commercial disputes. At the same time, a number of other authorities deny that confidentiality is a necessary or particularly beneficial feature of arbitral proceedings and reject the proposition that parties have any general right to confidential arbitral proceedings.
The confidentiality of both international and domestic arbitral proceedings in the United States is particularly unsettled. Virtually all commentators have concluded or assumed that, although express contractual undertakings to preserve the confidentiality of arbitral proceedings are presumptively valid, there is no implied obligation of confidentiality under U.S. law. That view is inaccurate as an historical matter and wrong as a matter of both law and policy.
In practice, U.S. courts have reached differing and widely divergent conclusions regarding both the effect of confidentiality provisions in arbitration agreements and the existence of implied obligations of confidentiality in arbitration. Moreover, in doing so, most U.S. courts, and many commentators, have devoted little attention to either the expectations of commercial users of international arbitration or the treatment of confidentiality in other developed legal systems. Consideration of these and other factors argues decisively for a more nuanced treatment of confidentiality in international, as well as domestic, arbitration than that previously taken by either U.S. courts or commentators.
This Article argues that both the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”) and the Federal Arbitration Act (“FAA”) require giving effect to contractual confidentiality provisions in international arbitration agreements, subject to specific and limited exceptions. The Article also argues that the same treatment is required under the Convention and the FAA for implied obligations of confidentiality, which presumptively arise from the basic character and purposes of both international and domestic arbitration agreements.
Importantly, however, these obligations are only binding on the parties to arbitration agreements, and do not shield all aspects of the arbitral process from disclosure requests by third parties. Nonetheless, these obligations generally prohibit parties to an arbitration agreement from disclosing arbitration-related information to the public or non-parties to the arbitration and, in some circumstances, they also provide grounds for denying third parties to the right to require disclosure of some categories of arbitration-related materials. These conclusions produce a much different, and more desirable, treatment of issues of confidentiality in arbitration in the United States than that of existing U.S. authorities on the subject.
Part I of this Article examines the importance of confidentiality to users of international commercial arbitration and introduces contemporary debates regarding the appropriate scope of confidentiality in the arbitral process. Part II of the Article describes the treatment of confidentiality in commercial arbitration in a number of leading jurisdictions, examining the treatment of both express confidentiality provisions and claims of implied obligations of confidentiality. Part III discusses the treatment of the confidentiality of arbitral proceedings in the United States, including the orthodox, but erroneous, assumption that U.S. courts do not recognize implied confidentiality obligations. Finally, Part IV of the Article addresses the proper treatment of confidentiality in both international and domestic arbitration in the United States, arguing that the New York Convention and the FAA require giving effect to both express and implied confidentiality undertakings regarding international commercial arbitration. These undertakings are subject to important exceptions and limitations, but they are essential in order to give effect to the expectations of commercial users and to facilitate the international arbitral process.
*Gary Born is the chair of the International Arbitration Practice Group at at Wilmer Cutler Pickering Hale and Dorr LLP in London. He is the author of Gary Born, International Commercial Arbitration (3d ed. 2020), Gary Born, International Arbitration: Law and Practice (2d ed. 2018), and Gary Born & Peter Rutledge, International Civil Litigation in United States Courts (6th ed. 2018).