Ercüment Erdem Att. Melissa Balikci

A Recent Decision from the High Court of England and Wales: Confidentiality of Arbitration v Public Interest

April 2019

Introduction

The essentiality of all arbitrators being and remaining independent and impartial in the course of arbitral proceedings was previously highlighted in the context of the LCIA challenge decisions[1]. Another important feature of arbitration is also the confidentiality of the proceedings. These two issues became the subject of two different disputes which are analyzed below.

In a recent case[2], the High Court of England and Wales allowed the Chartered Institute of Arbitrators (“CIArb”) to access certain documents to be used in disciplinary proceedings initiated against B (the first Respondent), an arbitrator, and for declarations concerning the use of those documents.

Background

Following the initiation of arbitral proceedings that arose out of a contract between C and D, D applied to the CIArb for the appointment of an arbitrator. Although C’s counsel objected and proposed an alternative person, the appointment of B, a fellow of the CIArb, was confirmed.

Later on, C’s counsel requested further information concerning the nature and extent of the professional relationship between B and D. There were further correspondence between the parties and eventually B called an arbitral hearing to determine whether the arbitral tribunal was “properly constituted”. B, in his decision, confirmed that the tribunal was properly constituted, and that he had no conflict of interest. Yet, C’s counsel requested B to recuse himself, and then applied to the court pursuant section 24(1)(a) of the Arbitration Act 1996 for the removal of B.

Section 24 Application

The application for the removal of B was based on the grounds that there were circumstances that gave rise to justifiable doubt as to B’s impartiality.

On 17 February 2016, Hamblen J., in his judgment[3], concluded that the grounds for removal were made out in that they raised the real possibility of apparent bias. Upon this judgment, B resigned.

After B’s resignation, and following a complaint from a third party, CIArb determined that disciplinary charges should be laid against B that included six charges against B, and he was referred to a disciplinary tribunal. CIArb then made two applications to the court:

The first application relates to an order under CPR 5.4 C (2)[4] to obtain copies of the statements of case, witness statements, including exhibits and written submissions and skeleton arguments (together the “Documents”), from the court records in the proceedings of the Section 24 Application.

In its second application, CIArb sought a declaration that (i) CIArb and B are entitled in the context of the disciplinary proceedings, to refer to and/or rely on the Documents and the circumstances of B’s nomination and appointment as arbitrator in matters concerning D, and that the (ii) use of such documents is in the public interest.

Summary of the Court’s Decision

In relation to the first application, Justice Moulder, in his judgment, reviewed the rules set out and Dring[5] (although the court noted that this decision was under appeal to the Supreme Court), in order to determine which categories of documents should be granted, and how the court should exercise its discretion and grant permission. The court applied the test set out in Dring.

The court considered (i) the interest of the applicant and particularly considered the fact that the CIArb supervises and monitors the performance of the members and exercises disciplinary control, (ii) the confidentiality of the arbitration, and (iii) the harm which may be caused by access to the documents, which it found to be minimal.

The court emphasized that: “As is clear from Dring the essential purpose of granting access to such documents is to provide open justice, that is to say to facilitate maintenance of the quality of the judicial process in all its dimensions, so that the public may be satisfied that the courts are acting justly and fairly and the judges in accordance with their judicial oath. In this case the open justice principle is engaged but the documents are not being sought in the interests of open justice. Whilst on the principles cited above, the court should lean in favour of granting permission, the court has to consider the non-party's reasons for seeking copies of the documents and assuming the applicant has a legitimate purpose, balance that against the party to the proceedings' private interest in preserving their confidentiality.[6]

The court considered that the CIArb had a legitimate interest in seeking access to the Documents[7] and stated that it had to weight the interest of the CIArb against preserving confidentiality. The court also acknowledged that the documents prepared throughout the arbitration were confidential, and that there was an implied obligation (which arose out of the arbitration itself) not to disclose or use these documents.

In this case, the court decided that it was in the interests of justice to give access to the statement of case[8], the transcript[9] which was already largely in the public domain, correspondences[10] that merely provided background information related to the appointment of B, witness statements[11], but not the documents filed with, or attached to, the statement of case[12] or the skeleton arguments[13].

In relation to the second application, the court stated that it had power to grant final declarations and considered the relevant criteria and law.

The court made a limited declaration that the CIArb and B were entitled, in the context of the disciplinary proceedings, to refer to, and/or rely on, the documents which the court ordered to be disclosed pursuant to CPR 5.4, notwithstanding the obligation of confidentiality which would otherwise apply, by reason of the public interest[14].

However, it is notable that the court refused the application for a declaration in relation to the circumstances of B’s nomination and appointment as arbitrator in matters concerning D. Therefore, the court refused the extension of the said declaration to other arbitration proceedings other than as between C and D.

Conclusion

This case is interesting as it demonstrates the importance placed on the quality and standards of arbitrators by the English court and the support given to the integrity of arbitration.

It is also important in the context of the confidentiality of arbitrations and when there are matters concerning the public interest, the court may allow third parties to gain access to certain documents.

[1] Melissa Balikci, Challenging Arbitrators and LCIA Challenge Decisions, Erdem & Erdem Newsletter, March, 2018, http://www.erdem-erdem.av.tr/publications/newsletter/challenging-arbitrators-and-lcia-challenge-decisions/ (Access date: April, 2019).

[2][2019] EWHC 460 (Comm) can be accessed at: https://www.bailii.org/ew/cases/EWHC/Comm/2019/460.html (Access date: April, 2019)

[3][2016] EWHC 240 (Comm) can be accessed at: https://www.bailii.org/ew/cases/EWHC/Comm/2016/240.html (Access date: April ,2019)

[4] CPR 5.4 C (2) reads as follows: “A non-party may, if the court gives permission, obtain from the records of the court a copy of any other document filed by a party, or communication between the court and a party or another person.”

[5] [2018] EWCA Civ 1795 can be accessed at: https://www.bailii.org/ew/cases/EWCA/Civ/2018/1795.html (Access date: April, 2019)

[6] Para 37 of [2019] EWHC 460 (Comm).

[7] Para 42 of [2019] EWHC 460 (Comm).

[8] Para 24 of [2019] EWHC 460 (Comm).

[9] Para 53 of [2019] EWHC 460 (Comm).

[10] Para 54 of [2019] EWHC 460 (Comm).

[11] Para 55 of [2019] EWHC 460 (Comm).

[12] Para 24 of [2019] EWHC 460 (Comm).

[13] Para 56 of [2019] EWHC 460 (Comm).

[14] Para 72 of [2019] EWHC 460 (Comm).