Academic journal article Chicago Journal of International Law

Confidentiality and NAFTA Chapter 11 Arbitrations

Academic journal article Chicago Journal of International Law

Confidentiality and NAFTA Chapter 11 Arbitrations

Article excerpt


It is often said that confidentiality is one of the benefits of international commercial arbitration and one of the principal reasons why business people have made arbitration the forum of choice for the resolution of international commercial disputes. Others have gone further and suggested that parties "place the highest value upon confidentiality as a fundamental characteristic of international commercial arbitration."'1 No authority is generally cited for such a proposition but it is seen as implicit or a corollary to an agreement to resolve a dispute by way of arbitration! Claimants in the North American Free Trade Agreement ("NAFTA") Chapter 11 arbitrations have generally relied on this notion that the private nature of arbitrations gives rise to a duty of confidentiality, with some success, to support their contention that materials generated and produced in Chapter 11 proceedings cannot be made publicly available. This has led to criticisms from nongovernmental organizations ("NGOs") and others that the NAFTA Chapter 11 dispute settlement mechanism is secretive and not open to public scrutiny. This paper argues that the existence of a general principle of confidentiality applicable to commercial arbitrations is far from a settled issue, and more importantly, if it does exist, it should have no application in the context of NAFTA Chapter 11 arbitral proceedings.


The question of whether the private nature of commercial arbitrations gives rise to a general principle of confidentiality that applies to arbitrations and the materials generated and produced therein has been the subject of much debate and discussion over the last few years. This lack of consensus is amply demonstrated by case law and commentaries on this subject. As L. Yves Fortier, President of the London Court of International Arbitration, notes in his recent article on confidentiality in arbitrations:

These questions [of privacy and its corollary confidentiality] have, in fact been the subject of much heated debate recently, in various jurisdictions and institutions. The conclusions reached in those instances demonstrate what might be called a definite lack of consensus.

A brief analysis of some of the more well-known decisions is appropriate for purposes of this discussion. The recent decision of the Swedish Supreme Court in Bulgarian Foreign Trade Bank Ltd v AI Trade Finance Inc is of particular note.4 The parties in this case were involved in an arbitration in which the defendant had an award affirming the tribunal's jurisdiction published in an arbitration journal. Upon learning of the publication, the Bulgarian Foreign Trade Bank applied to the arbitral panel to have the arbitration agreement declared null and void for alleged breach of the confidentiality obligation. The panel refused to do so and ultimately issued a final award. The issue was appealed to the domestic courts and made its way to the Swedish Supreme Court. The court found that the existence of a privacy rule in an arbitration agreement does not give rise under Swedish law to a separate duty of confidentiality. More specifically, the court found that the private nature of commercial arbitrations and the existence of an in camera rule in an agreement to arbitrate simply means that the public does not have a right to attend hearings. There is no contradiction, the court notes, with parties to the dispute being simultaneously entitled to disclose information to outsiders concerning the arbitration proceedings. The court concludes by holding

the Supreme Court considers that a party in arbitration proceedings cannot be deemed to be bound by a duty of confidentiality, unless the parties have concluded an agreement concerning this.

A similar approach was taken by the High Court of Australia in the case of Esso/BHP v Plowman,6 one of the more noted cases on the issue of confidentiality of arbitral proceedings. …

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