Privy Council Curtails Obligation of Confidentiality in International Arbitration

Confidentiality has always been referred to as one of the advantages of choosing arbitration over litigation. However, the extent of this right and its enforcement can be problematic. In a recent appeal to the Privy Council the scope of the principle of privacy in international commercial arbitration had to be considered1.

Facts

The case involved two insurance companies, Associated Electric & Gas Insurance Services Limited (AEGIS) and European Reinsurance Company of Zurich (European Re) who had entered into a reinsurance agreement dated 31 March 1980. The agreement provided for arbitration in Bermuda. Two separate disputes regarding the obligation of European Re to indemnify AEGIS were referred to separate arbitration tribunals.

A partial award was issued by the first tribunal on 19 January 2000 which essentially determined the critical dispute between the parties. European Re wanted to rely on this award in the second arbitration but AEGIS argued that they were not entitled to do so. AEGIS alleged that this would be in breach of the confidentiality obligation and that issue estoppel was not a remedy available to European Re as it was essentially an evidentiary principle. All procedural matters fall within the powers of the arbitration tribunal. On this basis AEGIS obtained an ex parte injunction to restrain European Re from disclosing the contents of the award. European Re applied to have the injunction...