Confidentiality in Arbitration

Parties choose arbitration partly because it is private. Until 2019 Indian law said nothing about it: privacy followed from the nature of the process, and confidentiality depended on the contract or on the institutional rules. Section 42A, inserted by the Amendment Act of 2019, now imposes a statutory duty on the arbitrator, the institution and the parties to maintain confidentiality of all arbitral proceedings, with a single exception for the award where disclosure is necessary for implementation and enforcement. The section is short, and the questions it leaves open matter more than the words it contains.

The statutory duty, the exception, and the four situations the section does not cover

1. Privacy and Confidentiality

The two are commonly run together and are different. Privacy means that a stranger may not attend the hearing or inspect the file; it follows from the consensual nature of the process, since the tribunal's authority comes from the parties alone. Confidentiality means that what is said, produced or decided may not be repeated outside; it does not follow from anything and must be imposed, by contract, by rules or by statute. A tribunal that permitted a journalist to sit in would breach privacy; a party that gave the same journalist the pleadings would breach confidentiality.

2. The Statutory Duty

• Who is bound. The arbitrator, the institution and the parties. The list is exhaustive.
• What is protected. All arbitral proceedings, which covers the pleadings, the evidence, the orders, the hearing and the fact of the arbitration itself.
• The exception. The award, where disclosure is necessary for implementation and enforcement. In practice this extends to a challenge under Section 34, since an award cannot be attacked or defended without producing it.
• The non obstante clause. It gives the section priority over other laws, but it cannot displace a statutory obligation to disclose, such as a reporting requirement or an order of a court.

3. What the Section Leaves Open

1. Witnesses and experts are not bound. A witness who learns the case in the hearing owes no duty under the section. Only an undertaking, or an order of the tribunal made under Section 19, will bind him.
2. No remedy is provided. The section creates a duty and says nothing about the consequence of breach. The remedies are those of the general law: an injunction, damages for breach of contract where the obligation is also contractual, and an adverse inference or costs order from the tribunal.
3. Court proceedings are public. An application under Section 34 or Section 36 is heard in open court and the award is filed with it, so a contested award commonly becomes public notwithstanding the section. Parties who care about this must consider applying for the record to be sealed, which is not provided for and is granted sparingly.
4. Regulatory and audit disclosure. A listed company must disclose material litigation, an insurer must be notified of a claim, and auditors must be told of contingent liabilities. Section 42A does not excuse any of these.
5. Investor and lender obligations. Information rights in financing documents commonly require disclosure of disputes, and the section does not override a contract the party itself signed.

4. Comparison

5. Related Topics and Provisions