The recent reforms of the rules governing public access to documents filed at court have caused a stir in recent weeks, particularly in light of the injunction obtained by the Law Society just before the rules came into effect. The new rules, and the reaction to them, raise interesting questions about the extent to which parties to court proceedings should be entitled to any privacy in what is essentially an open forum. This can be contrasted with the issue of confidentiality in arbitration proceedings and the extent of such confidentiality.
Looking first at court proceedings, the new rules published by the Department for Constitutional Affairs (DCA) allow parties with no involvement in proceedings (non-parties) to gain access to statements of case from the court file without needing to apply for the court’s permission.
Previously, non-parties were only entitled to obtain copies of served claim forms (including the particulars of claim if they were incorporated into the claim form) and those judgments or orders given or made in public. In an attempt to increase transparency in the interests of open justice, the new rules allow non-parties access to any statement of case that has been filed at court. The parties to the proceedings can only restrict access to the court file if they, or another person named in the statement of case, make a successful application for a restrictive order. Since the rules do not set out the grounds on which such an order will be made, it appears that the court will have a wide discretion in this regard.
As drafted, there is nothing in the new rules to prevent their retrospective application. It was this particular element of the reforms that led the Law Society to apply for a last-minute emergency injunction preventing Her Majesty’s Courts Service from permitting public access to statements of case filed before 2 October 2006. In seeking the injunction, the Law Society indicated that, while it generally supported greater public access to court documents, it opposed vehemently the retrospective application of the new rules.
Law Society chief executive Desmond Hudson, commentating after the High Court hearing, said: “This decision protects the privacy of many people in old disputes, including employment, blackmail and discrimination cases. Many of these cases were settled before reaching court, with people filing statements on the understanding that they would remain confidential. The DCA’s previous decision that the new rules applied retrospectively put these people’s privacy at risk. It also gave solicitors insufficient time to take instructions from their clients and, if necessary, take steps to protect their privacy.”
The injunction was granted to the Law Society and has since been extended to 2 November 2006. Pending a re-examination of the reforms by the DCA, the old rules will continue to apply to statements filed before 2 October 2006, such that permission of the court is required to inspect any document other than the claim form and judgments or orders given or made in public. Documents filed after that date will be available freely, unless an exemption has been granted. The DCA confirmed that it would reconsider the issue and indicated confidence in the matter being resolved without the need for further court hearings. If an agreement between the Law Society and the DCA cannot be reached, the court is due to make a ruling on the issue at the hearing on 2 November.
Traditionally, confidentiality is propounded as one of the major advantages of electing to resolve disputes through arbitration rather than court proceedings. However, is this confidentiality all that it seems? Its importance is recognised generally, yet the Arbitration Act 1996 itself makes no reference to any obligation of confidentiality.
Other jurisdictions, including the US, Australia and Sweden, have gone further and expressly rejected the existence of such confidentiality. Norway has recently enacted provisions in its Arbitration Act to the effect that neither the arbitration award nor the information disclosed during the proceedings is confidential, unless agreed specifically by the parties.
The English courts have taken a different view and confirmed the confidentiality of arbitral proceedings in Ali Shipping Corporation v Shipyard Trogir (1999). In that case the Court of Appeal held that every arbitration agreement should be deemed to have implied into it a term that the arbitral proceedings should be confidential. The courts have nevertheless identified exceptions to this duty, including situations where the parties have agreed that information can be divulged where it serves the interests of justice to disclose information, or where disclosure is reasonably necessary for the protection of the interests of one of the parties. This last exception was considered by Mr Justice Coleman in Insurance Co v Lloyd’s Syndicate (1995), where he concluded that it would only be necessary to disclose an arbitration award to enforce the legal rights of a party where those rights could not be enforced or protected without disclosing the award.
The Privy Council in Associated Electric and Gas Insurance Services Ltd v European Reinsurance (2003) subsequently questioned the Ali Shipping case, expressing reservations over the desirability of an implied duty of confidentiality coupled with the formulation of various exceptions. The judges’ concern was that such an approach may fail to distinguish between the different types of confidentiality that may attach to different documents. They instead focused on the nature of the document itself and recognised that it may be necessary to refer to the award itself, for example in injunction proceedings or to enforce the rights of the parties to the award, but the same considerations would not necessarily apply to information or documents that had been disclosed during the arbitration proceedings.
There remain practical steps that parties may take to try to maximise the confidentiality of their arbitrations. They may, for example, include an express confidentiality provision in their arbitration agreements or select institutional rules that provide appropriate protection. Even then, however, such provisions may not be construed as providing complete confidentiality. The Privy Council in Associated Electric considered an express confidentiality provision and found that it did not prevent one party from relying in subsequent proceedings on an arbitration award in order to enforce their rights against the other. The right in question in that case was the ability of one of the parties to plead issue estoppel on the basis of earlier findings.
Even if that hurdle is overcome, the implied confidentiality of the arbitration process will be overridden in circumstances where public court proceedings arise from the arbitration. The Civil Procedure Rules applying to arbitration envisage that appeals on points of law will be heard in public, but that any other hearings will not, although this is subject to any contrary order of the court. In City of Moscow v Bankers Trust & Ors (2004) the Court of Appeal rejected the idea of a blanket protection for cases that initially fall to be considered in private. It indicated that the court should, in each case, consider whether its decision contains information that is truly confidential or whether there is scope for publication of all or parts of the decision. The court must balance the desirability of preserving confidentiality with the need to maintain standards of fairness and public confidence in the courts through open justice.
It may be, then, that the new rules on public access to court documents will prompt more parties sensitive to the exposure of details of their affairs to consider resolving their disputes in arbitration. As can be seen, however, those parties will need to consider whether the terms of their arbitration agreement, and the procedure that they agree, is going to provide them with the degree of confidentiality that they require. -Rebecca Axe is a partner and Jane Fitzgerald is an assistant at Ince & Co