Ensuring confidentiality of arbitral proceedings, including documents, as a statutory obligation was conceived to bring India at parity with other common law jurisdictions that either have implied or explicit confidentiality obligations. Prior to the amendment in 2019 to the Indian Arbitration and Conciliation Act, 1996 (Act), for insertion of Section 42A (Confidentiality of information), there was no provision on confidentiality of arbitral proceedings and the obligations relating to confidentiality of proceedings were confined to conciliation under Section 75 of the Act.
A High Level Committee (Committee) was constituted to review and reform the arbitration landscape in India. The Committee in 2017 recommended that a new provision be inserted in Part I of the Act for confidentiality of arbitral proceedings, with exceptions for disclosure: (i) by legal duty, (ii) to protect or enforce a legal right, or (iii) to enforce or challenge an award before a judicial forum. The legislature at the time of amending the Act in 2019 and introducing the obligation of confidentiality, in its wisdom, restricted the exception to only where it is necessary for the purpose of implementation and enforcement of award.
In practise though, boundaries to this rule are traversed very frequently by parties who routinely file arbitral records or parts thereof while seeking interim relief under Section 9 or while appealing against the orders of the arbitral tribunal under Section 17, while challenging arbitral awards under Section 34 and Section 37, in anti-arbitration injunctions or in Section 11 proceedings for appointment of arbitrator or consolidation of arbitral proceedings depending on involvement of connected third parties, or in proceedings for extension of the tribunal’s mandate under Section 29A or applications under Section 27 seeking courts assistance in obtaining evidence.
Even outside the Act, Section 42A is compromised, for instance in proceedings before the Competition Commission of India (CCI) in the matter of Amazon.com NV Investment Holdings LLC, a preliminary objection was raised by Amazon that the material adduced before the CCI by Future Coupons Private Limited were pleadings before the arbitral tribunal which was prohibited by Section 42A and was an attempt to stifle the ongoing arbitral proceedings between the parties. The CCI negatived the objection on the ground that while the factual foundations of the allegations in proceedings before the CCI and arbitration may be similar, but the purpose of both the proceedings was different, and the CCI was only concerned with compliance of competition law. However, the CCI observed that Amazon was free to pursue proceedings in the appropriate forum for violations of the Act.
Another interesting issue emerged in R.S. Sravan Kumar v. Central Public Information Officer, Department of Space, Bengaluru, where through an application under the Right to Information Act, 2005 information related to international commercial arbitration initiated by Devas Multimedia Pvt. Ltd. (Devas) against Antrix Corporation Ltd. (Antrix) was sought by an applicant. The nature of information requested included: “(i) details of the entire legal team that represented India in the international arbitration initiated by Devas; (ii) details of the fees paid to the legal team; (iii) details of the damages awarded to Devas and whether this amount was paid; and (iv) whether there was any limitation to the payment of the award.”
The applicant argued that since Antrix had challenged the arbitral award in various courts, the veil of confidentiality was already lifted. The department objected to the disclosure on the grounds that the arbitral proceedings were confidential under Section 42A, the award was not yet finalised, the disclosure would impede ongoing investigations into the Antrix-Devas contract, and that since damages have been awarded against a government company such disclosure would prejudicially affect India’s economic interest. The Central Information Commission held that if the arbitral award was not finalised, then the information sought on points (iii) and (iv) was exempted under Section 42A, however, the name of the legal counsel representing India and the total legal fees paid to counsel ought to be disclosed as it was an expenditure by a public authority.
The UK Arbitration Act, 1996 has no provision on confidentiality of arbitral proceedings. The English courts through case laws recognize an implied obligation of confidentiality arising from the nature of arbitration proceedings and not from a statutory obligation. The Court of Appeal in Emmott v. Michael Wilson & Partners Ltd., considered the issue of confidentiality in domestic and international arbitrations. The dispute between the parties spanned across several jurisdictions, i.e., London, New South Wales (NSW), British Virgin Islands (BVI), Bahamas, Jersey and in Colorado. Emmott had moved applications before the English courts for allowing documents relating to London arbitration to be produced in arbitral proceedings in NSW and BVI. The issue before the Court was whether documents generated in arbitration proceedings in London could be disclosed in proceedings in NSW and BVI.
The Court held that parties to an arbitration have an implied duty of confidentiality over the entire proceedings arising out of the nature of arbitration, not to disclose or use for any other purpose any documents prepared, disclosed, produced for, and used in the course of arbitration, or disclose evidence given by any witness in the arbitration including transcripts or notes of the evidence. The protection of confidential information disclosed in arbitrations is not limited to documents protected by privilege. That said, the Court also laid down some exceptions to confidentiality obligations, including: (i) where there is consent, express or implied; (ii) where there is an order, or leave of the court (but that does not mean that the court has a general discretion to lift the obligation of confidentiality); (iii) where it is reasonably necessary for the protection of the legitimate interests of an arbitrating party; (iv), where the interests of justice require disclosure, and also where the public interest requires disclosure. Based on these exceptions, and considering the matters in London, NSW and BVI were between the same parties and Courts in other jurisdictions are not mislead, the Court allowed the disclosure of documents in the interest of justice.
The exceptions provided by English courts is largely similar to the exceptions proposed by the Committee (in India). It can be argued that absence of any legislative text has given freedom to English courts to develop the limits of confidentiality on a cases-by-case basis, depending on the context in which it arises and on the nature of the information or documents at issue.
The necessity of ensuring confidentiality of arbitral proceedings, in addition to the protection of commercial or technical secrets, is one of the reasons behind parties opting for arbitration. While there is much to be said on the merits of each of the carve out to the confidentiality rule, what emerges clearly is the boundary of what constitutes permissible disclosure in English courts is much wider than the limited theoretical carve out in case of enforcement that is presently permissible under Indian law. The restricted exception, presently permitted under Section 42A, including the absence of any penalty for non-compliance, makes it vulnerable and practically difficult to enforce
Considering India’s aspiration to compete with leading arbitration jurisdictions like the UK and Singapore, Section 42A needs upgradation for aligning with these jurisdictions.
Dinesh Pardasani is a Partner and Shania Elias is an Associate at DSK Legal.