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How to Keep Your Arbitral Proceedings Confidential

Aside from the flexibility to tailor the process to the particular needs of the case, arbitration also enjoys another major advantage over litigation: The ability to keep the proceedings confidential. Although a party involved in litigation can move to seal the court proceedings, public access to court records is a central tenet of the American legal system that cannot easily be restricted.

By contrast, parties assume that arbitration, because it generally takes place under the auspices of a private arbitral institution, is a confidential proceeding and that the underlying case will be kept from the public eye. Such a presumption, however, is misguided. A brief survey of the rules of major arbitral institutions reveals that, although some of them do have some confidentiality provisions, many do not, leaving it up to the parties to place confidentiality restrictions on the proceedings. It is essential that companies and businesses, as they draft their arbitration clauses or agree to arbitration, take steps to ensure that the proceedings will remain confidential.

By means of example, the ICDR Rules, in Article 34, provide that confidential information and all matters relating to the arbitration or the award shall be kept confidential by the arbitrator or by the administrator. However, it imposes no such requirements on the parties. JAMS has a similar provision in Rule 26, although it also explicitly allows the arbitrator to issue orders that protect confidentiality. In other words, although these two respected arbitral institutions put initial confidentiality restrictions on the arbitrators and administrator, they impose no such requirements on the parties.

Other arbitral institutions provide even fewer default protections. Neither the ICC nor UNCITRAL impose any confidentiality restrictions in their rules, although the ICC does explicitly empower the arbitrators to issue protective orders. Even the AAA leaves questions of confidentiality out of its Commercial Rules. In other words, the AAA, the ICC, and UNCITRAL do not impose any sort of confidentiality restrictions on the parties or the arbitrators, leaving it to the parties themselves to sort out the confidentiality protections they would like to impose.

Ultimately, a company would be well-advised to include a confidentiality provision in the arbitration clause of any agreement. That way, it would build confidentiality into the foundation of any dispute resolution procedure. However, in cases where an arbitration agreement already exists or when those protections cannot be negotiated initially, the first step in any arbitration would be for the parties to negotiate and execute a confidentiality agreement, and then approach the tribunal about endorsing and signing a stipulated protective order. Only then can one be sure that the proceedings will be protected from the public eye.

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