Cal. Litig. 2017, Volume 30, Number 2

Confidentiality In Arbitration

By Marc Alexander

How confidential is arbitration? Discussing the expectations of parties in bilateral arbitration (as opposed to class arbitration), Justice Alito noted that under the Class Rules of the American Arbitration Association (AAA), "the presumption of privacy and confidentiality" that applies in many bilateral arbitrations "shall not apply in class arbitrations," potentially frustrating the assumptions of parties who agreed to arbitrate, but did not explicitly agree to class arbitration. (Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp. (2010) 559 U.S. 662, 686.) But does a presumption of privacy and confidentiality really apply to most bilateral arbitrations?

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Preliminarily, commentators distinguish between the privacy and confidentiality of arbitration. In Louis Brandeis’ classic formulation, privacy is "the right to be let alone." Confidentiality, etymologically related to fidelity, implies a full duty of trust, and is broader than the ability to avoid unwanted intrusion, for it implies a duty not to spill secrets. While it is true that arbitration is generally private because the public is excluded from the arbitration hearing, it does not follow that the arbitration proceedings remain confidential. Rather, confidentiality depends on the degree to which the proceedings are kept secret from third parties, and that in turn depends on the rules of the arbitral forum, the presumptions of the law of the country about whether arbitration is confidential, and any agreement of the parties to keep information confidential. In short, without additional information, it is unsafe to presume that the existence of the arbitration, communications during arbitration, documents exchanged in an arbitration, and the arbitral award are "confidential."

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