A Corp V Firm B: The Abc Of Arbitral Confidentiality

BACKGROUND

This case arose from two arbitrations. Much of the factual background of this case was not spelled out in the published judgment because the underlying arbitrations were confidential. The key background facts available in the public judgment are that:

1. The claimant, Corporation A, was previously involved in an arbitration with Corporation B in relation to a vessel (“Vessel 1”). This arbitration had settled.
2. Corporation C was involved in a separate ongoing arbitration with Corporation D involving another vessel (“Vessel 2”). Corporation D was under the same ultimate ownership as Corporation A.
3. Firm A had acted as legal representatives for Corporation A in the Vessel 1 arbitration, and was acting for Corporation D in the Vessel 2 arbitration.
4. Firm B’s London office had acted for Corporation B in the Vessel 1 arbitration; Firm B’s Asia office was acting for Corporation C in the Vessel 2 arbitration.

Firm B’s London office (which had acted for Corporation B) passed certain pieces of information from the Vessel 1 arbitration to its Asia office (which was acting for Corporation C in the Vessel 2 arbitration).   Corporation A alleged that in so doing Firm B had misused confidential information. Specifically, Corporation A alleged that Firm B’s London office:

1. disclosed to its Asia office the identity of Corporation B’s counsel, experts, and party-appointed arbitrator, and had recommended that Corporation C appoint that arbitrator;
2. discussed with its Asia office the issues and allegations in the Vessel 1 arbitration;
3. disclosed to its Asia office (for transmission to Corporation C) comments made by a partner in Firm A about Corporation C’s claim;
4. disclosed to its Asia office Corporation A’s settlement offer in the Vessel 1 arbitration, and the later facts that the Vessel 1 arbitration had settled and that Corporation B were pleased that it had settled;
5. provided confidential information from the Vessel 1 arbitration to its Asia office, which in turn influenced disclosure requests made by Corporation C in the Vessel 2 arbitration; and
6. advised its Asia office to seek to tie off any issue as to security for costs when agreeing security for Corporation C’s claim.

On the basis of those alleged breaches of confidentiality, Corporation A sought an injunction preventing Firm B from continuing to act for, or providing any confidential information to, Corporation C.

THE COURT’S DECISION

The Court dismissed the claims for an injunction.  It so held on the basis that Corporation A did not have an arguable complaint in respect of certain of the alleged breaches as: (1) some of the reaches arguably fell within exceptions to arbitral confidentiality; and (2) the significance of the information disclosed where there was no exception was very limited, as was any prejudice to Corporation D.  The Court also held that Corporation A had failed to establish that there was a real risk of further confidential information being disclosed by Firm B’s London office to its Asia office.

In reaching that result, the Court clarified what information is subject to arbitral confidentiality obligations under English law, and when exceptions to those obligations would arise.

What information is subject to arbitral confidentiality?

The Court outlined the relevant key authorities and noted that the obligation of arbitral confidentiality will normally apply to:

• hearings in an arbitration, including notes or transcripts of the hearings;
• documents disclosed by an arbitrating party to another party, where the documents are in the hands of those receiving parties;
• documents that have been prepared for and then used or produced in the arbitration, such as pleadings, witness statements, expert reports, written submissions, and correspondence relating to the arbitration;
• the arbitral award; and
• confidential information derived from the above types of documents, and (perhaps) information obtained with the use of confidential information.

The Court clarified that arbitral confidentiality does not apply to:

• documents that have been disclosed or relied upon in an arbitration, where those documents came into existence independently of the arbitral process;
• the fact of the existence of a dispute (and the events giving rise to the dispute) that leads to the commencement of an arbitration; and
• experience acquired by lawyers from conducting arbitrations.

Where arbitral confidentiality arises, what are its exceptions?

The Court also outlined that, where documents or information are subject to arbitral confidentiality obligations, exceptions to those obligations arise where:

• there is express or implied consent to disclosure;
• disclosure is required or permitted by order or leave of the court;
• disclosure is reasonably necessary to protect an arbitrating party’s legitimate interests. This can extend to (i) founding an issue estoppel against another arbitrating party; (ii) deploying (or permitting the deployment of) statements, reports or transcripts of evidence given by a witness, where that witness gives contrary evidence in a subsequent arbitration; and (iii) making or defending claims against a third party;
• dissemination is made to advance a party’s case in the subject arbitration, for example to lawyers, factual witnesses, experts to prepare a party’s case, or to interview a non-party who is alleged by another arbitrating party to have said or done something; and
• disclosure is required in the interests of justice or in the public interest.

The Court also noted that it was “very strongly arguable” that the use of confidential material would be permissible for the purpose of eliciting similar factual evidence from a third party who is believed to have similar complaints against an opposing party in an arbitration.

In this particular matter, the Court found that whilst there had been an arguable disclosure of confidential information, that disclosure arguably fell within an exception to arbitral confidentiality given the common interests and ongoing co-operation between Corporations B and C (in that Corporations B and C were seeking to establish similar events and complaints relating to both Vessels 1 and 2).

KEY TAKEAWAYS

Clients in the Cayman Islands, as well as Cayman Islands dispute resolution attorneys, will be no strangers to arbitral processes and the confidentiality attaching to those processes.  This High Court judgment will therefore serve as welcome guidance in relation to the following key points:

1. Scope of arbitral confidentiality: Clients and their legal advisors would do well to familiarise themselves with the bounds of and exceptions to the obligation of arbitral confidentiality noted in this judgment. This will be especially pertinent for (i) clients who are involved in separate arbitrations arising from similar facts; and (ii) firms advising clients (whether or not the clients are associated or related to one another) in separate arbitrations arising from similar claims, and particularly where those separate arbitrations are against the same counterparty (or counterparties that are associated with each other).
2. Information barriers for firms acting in similar or related arbitrations: Despite the helpful guidance this judgment provides as to the scope of arbitral confidentiality, the Court did not conclusively decide whether there had been any breach (as it did not need to do so to determine an application for interim injunctive relief). A key consideration that the Court took into account in refusing that relief was the steps that had been taken by Firm B to segregate the teams working on the two arbitrations.  This highlights the importance of implementing and maintaining information barriers between teams, offices or departments acting on related arbitral claims so as to remain compliant with confidentiality obligations.