Arbitration – Is Confidentiality A Reality?

Confidentiality is considered one of the major benefits of arbitration and is, in some cases, the sole reason why parties opt for arbitration instead of normal court proceedings. The outcome in the recent case of Transnet Ltd v MV "Alina II" [2013] ZAWCHC 124(5 September 2013),however, might come as a surprise to those who consider the general principle of confidentiality in arbitration to be sacrosanct.

The context and relevant facts of the case are as follows. London arbitration proceedings were instituted against the owners of the Alina II by cargo interests pursuant to damages suffered as a result of the unseaworthy vessel occupying one of two iron-ore berths at the Port of Saldanha for approximately five months. Transnet (the port operator) instituted action against owners for damages relating to loss of income arising out of the same incident.

Transnet, in the Western Cape High Court of the Republic of South Africa, brought an interlocutory application seeking an order requiring owners to tender pleadings and other documents exchanged in the course of the said arbitration proceedings. This application was granted by Goliath J on the basis of the interests of justice. In deciding so the Court drew from the following statement by Lord Denning in Riddick v Thames Board Mills Ltd [1977] 3 All ER 677 (CA) at 687: "[t]he reason for compelling discovery of documents in this way lies in the public interest in discovering the truth so that justice may be done between the parties. That public interest is to be put into the scales against the public interest in preserving privacy and protecting confidential information. The balance comes down in the ordinary way in favour of the public interest of discovering the truth, i.e. in making full disclosure".

The Court compared the position in England and Singapore, where confidentiality is considered to be implied by arbitral parties, to that of Australia, the United States and Sweden who have all rejected the approach of a general implied duty of confidentiality. After considering these foreign jurisdictions, Goliath J comments that there is no legislative basis for privacy and confidentiality of arbitration proceedings in South Africa and states: "The principle [of confidentiality] is not sacrosanct and should be viewed from the circumstances of each individual...