Privacy and Confidentiality in Arbitration

Privacy and confidentiality are some of the attributes that distinguishes arbitration over other dispute resolution methods. Privacy means third parties are not included in the hearings and arbitration hearings, while confidentiality relates to an obligation not to disclose information to third parties.

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Introduction

Privacy and confidentiality are some of the attributes that distinguishes arbitration over other dispute resolution methods. Privacy means third parties are not included in the hearings and arbitration hearings, while confidentiality relates to an obligation not to disclose information to third parties. These attributes have evaded the arbitration proceedings and are no longer viewed as central to arbitration in recent years. The argument is on the nature of confidentiality; is it only materials and evidences used in arbitration or the whole scope of arbitration. In light of the 2010 constitution, how does privacy and confidentiality in matter arbitration look like? The laws of Kenya are interestingly silent on this subject as it relates to the legislation on arbitration. This silence means that parties have the autonomy to define privacy and confidentiality in their arbitral proceedings. The silence by the constitution on this issue has eroded the contours of privacy and confidentiality.

Privacy and Confidentiality

The Arbitration Act No. 4 of 1995 outlines the rules and procedures that govern arbitration in Kenya. However, the Act is silent on matters of privacy and confidentiality. The Civil Procedure Act is also an annexe to the Arbitration Act by provision of Court intervention. It provides the provision for parties before a court to seek resolution through arbitration before judgement. The Act is also silent on privacy and confidentiality. The Constitution of Kenya in Article 10 outlines the values and principles that all ‘Persons’ not ‘Citizens’ are bound to, implying that even foreigners are bound by the provisions prior, during and post-arbitration. The principles and values stated are: The rule of law, democracy, participation of the people, good governance, integrity, transparency and accountability.2. In light of these provisions, we ask whether privacy and confidentiality can stand in light of such values and principles and if yes. How are such attributes of arbitration modified?

Illusion or Reality

One of arbitration’s most attractive features is confidentiality because arbitration is taken to be private, and the substance is considered confidential, offering protection against unwelcome scrutiny.3. The assumption of privacy and confidentiality arises from the fact that parties choose arbitration over public hearings to escape the public eye and avoid public participation, which might injure the parties and the litigation. This fact, however, is not entrenched in the constitution and therefore lacks a statutory foundation, and therefore the courts are left to interpret the matter.

The High Court’s recent pronouncements in Hon Senator Johnstone Muthama v Tanathi Water Services board and 2 others raises the alarm among arbitrators. It stated the following:

It is therefore clear that unlike in mediation, arbitral proceedings are, just like in litigation, open to the public and follows a similar procedure to that of litigations but with a more relaxed approach.4.

The approach raises the alarm over the assumed privacy and confidentiality of arbitration. The 2010 constitution brought a new era of transparency with regards to government transactions. This therefore affects the question of arbitration involving government or state entities. There is a feeling that the state is interested in the openness of arbitration proceedings, citing the need for public involvement to foster accountability and integrity.

A more significant look at the constitution, Article 31 asserts the right to privacy which includes the right not to have information relating to private affairs unnecessarily required or revealed.5. Article 33 guarantees the freedom of expression to mean freedom to seek, receive or impart information or ideas.6. Article 35 provides a right to access state-held information or any other person for any right exercise or protection. Article 50 emphasises the right to a free and fair hearing before a court or any other tribunal.7. The Articles mentioned does not defend privacy and confidentiality in arbitration, although the constitution seeks to promote alternative means to solve disputes.

What is the Verdict?

The Touted virtues of privacy and confidentiality in arbitration are at odds with the constitutional requirements of transparency and freedom of information.8. This collision presents an avenue for litigation in courts and may cause a delay in the arbitral proceedings. The rationale behind the push for public hearing of arbitration proceedings is the corrupt practices that have existed. The concerns for private justice are not only confined to Kenya.9. Most of the arbitration institutions have provisions dealing with the privacy of hearings but not the confidentiality of awards, evidence, and submissions circulated within parties.10. The silence of the constitution over the privacy and confidentiality of arbitral proceedings has forced the practitioners to determine whether the law imposes an implied duty of confidentiality when parties agree on arbitration.11. If the assumption is valid, the following conundrum is the determination of the scope of confidentiality. Proponents of the presumption of confidentiality argue that arbitration is private, and thus with every private dealings, confidentiality and privacy are preserved. It is the very foundation to which parties opt for arbitration rather than public litigation.

The new constitution in Kenya may render confidentiality obsolete in the near future. The provisions of the constitution do not defend privacy and confidentiality in arbitration proceedings. A party feeling aggrieved by the award may ask for courts intervention based on the right to a free and fair hearing before the court. What is the way forward in the prevailing circumstances for arbitrators?

Before an arbitral hearing, parties must ascend to confidentiality agreements drafted by the arbitrators.

  1. A juridical seat governed by a law that imposes sanctions for confidentiality agreement breach should be elected. This is supported by the Arbitration Act 1995 21(1).
  2. Making use of Arbitration Act, 1995, 32(3) by an agreement to have an award that is not reasoned, thus preventing the publication of documents and trade secrets.
  3. Have a protective order that places restrictions on sharing or disclosing information that is not in agreement with both parties.
  4. Chartered Institute of Arbitrators (CIArb) arbitration Rules allows for publicising the awards upon consent by both parties. However, if parties desire to maintain confidentiality may opt not to enter such consent
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