CONFIDENTIALITY ISSUES IN ARBITRATION

Steven C. Bennett*
Arbitration proceedings are, paradoxically, both typically private
and not necessarily confidential.1 The privacy of an arbitration setting
may offer significant advantages to participants, such as its more
business-like, efficient and low-key setting for dispute resolution.2
Yet, the privacy of the process does not guarantee that information
revealed in the course of arbitration proceedings is automatically
confidential.3 Indeed, while arbitrators themselves may be bound to
a general obligation of confidentiality,4 the parties (and their counsel)
are generally not so restricted, absent agreement or arbitral order.5

* Steven C. Bennett is a Partner in the New York City offices of Jones Day. The views
expressed are solely those of the author, and should not be attributed to the authors firm
or its clients.
1
See Amy J. Schmitz, Assuming Silence in Arbitration, N.J. Lawyer 13 (Apr. 2011)
(Arbitration is private, but arbitration proceedings are not necessarily secret, or
confidential.).
2
Id. at 14 (noting that privacy may help minimize judicialization of arbitration
proceedings) (citing Stolt-Nielsen, S.A. v. Animalfeeds Intl Corp., 130 S. Ct. 1758, 1769
(2010)); see also Christopher R. Drahozal & Stephen J. Ware, Why Do Businesses Use
(Or Not Use) Arbitration Clauses?, 25 Ohio St. J. Disp. Resol. 433, 451-52 (2010)
(noting that arbitration may better protect confidential information from disclosure and
may enable the parties to better preserve their relationship); Anjanette H. Raymond,
Confidentiality in a Forum of Last Resort: Is the Use of Confidential Arbitration a Good
Idea for Business and Society?, 16 Am. Rev. Intl Arb. 479, 480 (2005) (merchants and
businessmen enter arbitration with the expectation that their dispute will be resolved in a
private arbitral process with their business secrets protected).
3
Kyriaki Noussia, Confidentiality in International Commercial Arbitration 4.1 at 37
(2010); see id. at 38 (necessary to rely on an express provision or relevant statutory rules
or to enter into a specific confidentiality agreement to avoid parties expectations about
the privacy and confidentiality of their arbitral proceedings from becoming often
disappointed or negated by the courts); Chang-fa Lo, On a Balanced Mechanism of
Publishing Arbitral Awards, 1 Contemp. Asia Arb. J. 235, 236 (2008) (noting very few
arbitration laws imposing obligations to maintain the confidentiality of the arbitration
proceedings by the parties). By contrast, statutory provisions enforcing confidentiality
in mediation are much more common. See Thomas H. Oehmke, Commercial Arbitration
6.6 (1987).
4
See, e.g., American Arbitration Association Code of Ethics for Arbitrators in
Commercial Disputes, Canon 6 (The arbitrator shall keep confidential all matters
relating to the arbitration proceedings and decision.); American Arbitration Association,
Statement of Ethical Principles for the AAA, an ADR Provider Organization (although
AAA staff and neutrals have an ethical obligation to keep information confidential, the
AAA takes no position on whether parties should or should not agree to keep the
proceeding and award confidential between themselves).
5
See Bert K. Robinson, Arbitration: The Quest for Confidentiality, 58 La. B.J. 180 (2010)
(Confidentiality may be bargained for in the contract to be confected, or the parties may
contract for confidentiality at the inception of an arbitration proceeding.); Hans Smit,

1
2 DISPUTE RESOLUTION JOURNAL VOL. 68 NO. 2

In the international arena,6 courts in some important countries

have rejected the notion that confidentiality is an implicit element of
agreements to arbitrate.7 In the United States, in particular,8 courts

Confidentiality: Articles 73 to 76, 9 Am. Rev. Intl Arb. 233 (1998) (Although there is a
widely-held view that arbitration is confidential, in the absence of a specific provision in
the arbitration agreement or the institutional rules, the legal basis for a requirement of
confidentiality is unclear.).
6
The problem of arbitration confidentiality when one party is a government can be
particularly controversial. Amanda L. Norris & Katina E. Metzidakis, Public Protests,
Private Contracts: Confidentiality in ICSID Arbitration and the Cochamba Water War,
15 Harv. Negot. L. Rev. 31 (2010); see also Cindy G. Buys, The Tensions between
Confidentiality and Transparency in International Arbitration, 14 Am. Rev. Intl Arb.
121 (2003); Llewellyn J. Gibbons, Private Law, Public Justice: Another Look at
Privacy, Arbitration, and Global E-Commerce, 15 Ohio St. J. Disp. Resol. 769 (2000).
That unique problem is not addressed here. Nor does this article address the question of
whether more transparency in international arbitration may be desirable. See Catherine
A. Rogers, Transparency in International Commercial Arbitration, 54 U. Kan. L. Rev.
1301 (2006) (Commentators and scholars have long been making the case for expanding
transparency in the international commercial arbitration system.); see id. at 1303 (noting
that transparency involves public access, information about the decisional process, and
disclosure of matters involving the public interest); Dora Marta Gruner, Accounting for
the Public Interest in International Arbitration: The Need for Procedural and Structural
Reform, 41 Colum. J. Transnatl L. 923, 960 (2003) (proposing system for publication of
arbitration awards, except in cases involving issues of a private, consensual nature).
7
John R. Crook, Joint Study Panel on Transparency in International Commercial
Arbitration, 15 ILSA J. Intl & Compar. L. 361, 364 (2009) (noting that [o]ther courts,
notably in the U.K. and France, continue to see confidentiality as inherent in the
arbitration process); see Catherine A. Rogers, Transparency in International Commercial
Arbitration, 54 U. Kan. L. Rev. 1301, 1330 (2006) (English limitations on disclosure are
more deferential to arbitration parties than those of other countries, such as the United
States, Sweden, Australia and Singapore.); see also Remy Gerbay, Confidentiality vs.
Transparency in International Arbitration: The English Perspective at 2, www.ssrn.com
(2011) (In practice, the degree of confidentiality that may be achieved in any given
arbitration will depend on the legal framework applicable to the procedure of the
arbitration, that is, principally, the arbitration rules agreed upon by the parties and the lex
arbitri.); Emem Uduak Udobong, Confidentiality in International Arbitration: How
Valid is This Assumption?, www.dundee.ac.uk at 19 (2010) (The issue of
confidentiality is procedural and therefore determined by the lex arbitri. Depending on
the seat, the court of that state may or may not recognize an obligation of confidentiality.
Parties who choose arbitration should be advised to give attention to the question of
confidentiality. If parties wish for the arbitration to be confidential, then they should
draft a confidentiality clause into their agreement, or adopt arbitration rules that require
confidentiality.); Steven Kouris, Confidentiality: Is International Arbitration Losing
One of Its Major Benefits?, 22 J. Intl Arb. 127, 134 (2005) (noting that U.S. law, in
particular, does not protect confidentiality in arbitration absent a specific agreement).
8
See Amy J. Schmitz, Untangling the Privacy Paradox in Arbitration, 54 U. Kan. L.
Rev. 1211 (2006) (United States law does not guarantee such secrecy of arbitration
information, and institutional rules [that] parties incorporate in their arbitration
agreements generally do not provide broad confidentiality protections).
 CONFIDENTIALITY ISSUES IN ARBITRATION 3

generally will not enforce confidentiality terms that do not derive

from a specific agreement between the arbitration parties.9 Where a
party seeks to confirm or vacate an award, moreover, an arbitration
confidentiality agreement may not compel the court to seal the award
as part of the review proceedings.10
Under U.S. law,11 although parties in arbitration may agree that
they (themselves) will not voluntarily reveal information developed
during the arbitration, private confidentiality agreements generally do
not bind third parties.12 Thus, in Gotham Holdings, LP v. Health

9
See Contship Containerlines, Ltd. v. PPG Indus., Inc., 2003 WL 1948807 *1 (S.D.N.Y.
Apr. 23, 2003) (rejecting confidentiality purportedly implied in law under English
precedents); United States v. Panhandle Eastern Corp., 118 F.R.D. 346, 350 (D. Del.
1988) (rejecting confidentiality based on general understanding between parties, not
referenced in an actual agreement); A.T. v. State Farm Mut. Auto. Ins. Co., 989 P.2d
219, 220 (Colo. Ct. App. 1999) (no confidentiality protection where parties had not
entered express agreement, or sought protective order from arbitrator).
10
See Chartis Spec. Ins. Co. v. Lasalle Bank, 2011 WL 3276369 at *3 (Del. Ch. July 29,
2011) (because the arbitration award is at the heart of what the Court is asked to act
upon, the party seeking to maintain confidentiality must demonstrate why the
presumption of access [to court records] should be overcome); McAfee, Inc. v. Weiss,
335 S.W.2d 840 (Tex. Ct. App. 2011) (reviewing courts refusal to seal arbitration award,
on petition to confirm award, not an abuse of discretion); see also Bow Tile Corp. v.
Gangi Builders, Inc., 2008 WL 3906433 at *2 (Cal. Ct. App. Aug. 26, 2008) (rejecting
petition to vacate arbitration award, where petitioners insistence on confidentiality of
arbitration meant that court could not know[] what the arbitrator did and what his
reasoning was) (quotation omitted); see generally Laurie Kratky Dore, Public Courts
Versus Private Justice: Its Time to Let Some Sun Shine in on Alternative Dispute
Resolution, 81 Chi.-Kent L. Rev. 463 (2006) (As with other judicial records, the court
must assess whether the need for privacy outweighs any applicable public interest in
disclosure. And neither the arbitrators order nor the parties confidentiality agreement
will necessarily bind the court.).
11
There is relatively little U.S. law on the subject of the discovery and admissibility of
arbitration communications in subsequent proceedings. See Richard C. Reuben,
Confidentiality in Arbitration: Beyond the Myth, 54 Kan. L. Rev. 1255, 1265 (2006)
(few cases); see id. at 1273 (present law provides little reliable support for arbitration
confidentiality when arbitration communications are sought for purposes of discovery or
admission at trial).
12
See Amy J. Schmitz, Untangling the Privacy Paradox in Arbitration, 54 U. Kan. L.
Rev. 1211, 1221 (2006) ([C]onfidentiality agreements precluding disclosure of evidence
and testimony may not bar parties from publicly revealing underlying information. They
also will not bind witnesses and other third party attendees unless these parties agree to
the confidentiality requirements.); see id. at 1244, 1252 (suggesting need for default
rules that protect the confidentiality of individuals sensitive personal information
revealed in arbitration and reasonable enforcement mechanisms); id. n.220 (Perhaps
confidentiality rules should cover only personal information, such as individuals
financial, sexual, social, or familial information, in order to prevent improper use of
such confidentiality rules).
4 DISPUTE RESOLUTION JOURNAL VOL. 68 NO. 2

Grades, Inc.,13 the court noted that [n]o one can agree with
someone else that a strangers resort to discovery . . . will be cut off. .
. . That conclusion is equally applicable to confidentiality agreements
that accompany arbitration.14 Similarly, in Scott D. Boras Inc. v.
Sheffield,15 the court held that the mere existence of a confidentiality
agreement (adopted by an arbitrator) did not suffice to require filing
of all court papers concerning the arbitration under seal.16 In the
freedom of information law context, In re City of Newark, held that,
because the power of an arbitrator derives solely from an arbitration
agreement, an arbitration panel has no power to affect the rights of
those . . . who are strangers to that agreement.17
Further, under U.S. law, one-sided confidentiality provisions,
which may favor an institutional litigant over individuals, have in
some instances been invalidated as unconscionable.18 Yet,
[b]ecause confidentiality is a paradigmatic aspect of arbitration,
mere generalized attacks on arbitration, in the guise of challenges to

13
580 F.3d 664 (7th Cir. 2009).
14
Id. at 665 (affirming order enforcing subpoena for confidential documents related to
prior arbitration between third party and defendant in litigation). The court, moreover,
noted that the Federal Arbitration Act permits parties in arbitration to obtain discovery
from third parties, and that [i]t would be weird to treat this as a one-way street, so that
parties to arbitration may obtain, but need not divulge, information relevant to the
resolution of other disputes. Id. at 666; see generally Matthew Geise, You Promised
You Wouldnt Tell: Modifying Arbitration Confidentiality Agreements to Allow Third-
Party Access to Prior Arbitration Documents, 2010 U. Mo. J. Disp. Resol. 463
(commenting on Gotham opinion).
15
2009 WL 3444937 (S.D.N.Y. Oct. 26, 2009).
16
See id. at *1 (noting presumption in favor of public access to court records). The
court did, however, hold that proprietary business matters concerning the arbitration
were subject to redaction. Id.
17
760 N.Y.S.2d 431, 436 (1st Dept 2003).
18
See, e.g., Pokorny v. Quixtar, Inc., 601 F.3d 987, 1001 (9th Cir. 2010) (claimant
forever barred from disclosing claim, basis for claim, or evidence supporting claim);
see also Davis v. OMelveny & Myers, 485 F.3d 1066, 1071 (9th Cir. 2007) (although
confidentiality provision applied equally to employer and employee, clause as written
unconscionably favored employer because it would handicap if not stifle an employees
ability to investigate and engage in discovery); Ting v. AT & T, 319 F.3d 1126, 1151
(9th Cir. 2003) (facially neutral confidentiality provision favored company because
company would be a repeat player, accumulating knowledge of claims based on
experience, not shared with customers); Schnuerle v. Insight Comm. Co., 376 S.W.3d
561, 579 (Ky. Sup. Ct. 2012) (confidentiality provision may affect the outcomes of
individual arbitrations and clearly favor Defendants; no showing of any practical social
utility to the provision).
 CONFIDENTIALITY ISSUES IN ARBITRATION 5

confidentiality, may not succeed.19 Confidentiality provisions in

arbitration agreements are not per se unconscionable.20 Especially
where arbitration confidentiality does not apply to pleadings, papers,
orders, hearings, trials or awards (versus documents exchanged in
discovery) parties challenging confidentiality are unlikely to show
any stifl[ing] of their ability to investigate a matter, suggesting
unconscionability.21 A court, moreover, may consider interests of the
parties in privacy as an even-handed justification for confidentiality.22
Where parties have bound themselves not to reveal information
developed in their arbitration proceedings,23 courts generally will
enforce such an agreement.24 The addition of an explicit order from
the arbitration tribunal may also improve the chances of enforcement
of a confidentiality agreement.25 Thus, for example, in Lawrence E.

19
See Guyden v. Aetna, Inc., 544 F.3d 376, 385 (2d Cir. 2008) (citing Iberia Credit
Bureau, Inc. v. Cingular Wireless LLC, 379 F.3d 159, 175 (5th Cir. 2004)); see also
Morgan v. Xerox Corp., 2013 WL 2151656 at *5 (E.D. Cal. May 16, 2013) (mere fact
that the agreement contained a confidentiality clause does not, in-and-of-itself, make the
entire agreement unconscionable); Bahry v. Montage Mktg, LLC, 2011 WL 181408 at
*6 (D. Nev. Jan. 14, 2011) (Merely asserting a repeat player advantage . . . will not
support a finding of unconscionability.) (rejecting challenge based on arbitration
confidentiality provision); Delano v. Mastec, 2010 WL 4809081 at *8 (M.D. Fla. Nov.
18, 2010) (same).
20
Henderson v. Superior Court, 2010 WL 745161 at *8 (Cal. Ct. App. Mar. 5, 2010).
21
Mathis v. Screen Actors Guild Producer Pension Health Plan, 2011 WL 199002 at *5
(Cal. Ct. App. Jan. 24, 2011).
22
See Vasquez-Lopez v. Beneficial Oregon, Inc., 152 P.3d 940, 953 (Ore. Ct. App. 2007)
(advantage to defendant as repeat player was roughly offset by the advantage that
privacy about their financial affairs confers on plaintiffs).
23
Conversely, disclosure of privileged documents in arbitration may waive claims of
privilege for subsequent litigation. See Urban Box Ofc. Network, Inc. v. Interfase Mgrs.,
L.P., 2006 WL 2109508 (S.D.N.Y. July 26, 2006) (Katz, M.J.), vacated in part and
remanded, 2007 WL 2815622 (S.D.N.Y. Sept. 24, 2007) (Swain, D.J.).
24
See ITT Educ. Serv., Inc. v. Arce, 533 F.3d 343, 347 (5th Cir. 2008) (noting irreparable
harm from breach of arbitration confidentiality agreement, and rejecting public policy
objection to enforced confidentiality); Pasternak v. Dow Kim, 2013 WL 1729564 at *6
(S.D.N.Y. Apr. 22, 2013) (denying request to compel production of transcripts and other
documents from prior arbitration).
25
See Richard C. Reuben, Confidentiality in Arbitration: Beyond the Myth, 54 Kan. L.
Rev. 1255, 1271 (2006) (where there is evidence of party expectations, such as through
the securing of a protective order, courts may be more willing to defer to the protective
order); id. at 1281 (the promise of a dispute resolution process that operates apart from,
but is supported by, the public system of law would prove illusory if communications
made in that process were readily subject to discovery and admissibility in other formal
proceedings); id. at 1286 (free discovery and admissibility of arbitration
6 DISPUTE RESOLUTION JOURNAL VOL. 68 NO. 2

Jaffe Pension Plan v. Household Intl, Inc.,26 a party in litigation

sought to serve a subpoena upon a party to a prior arbitration
(involving the same party defendant as in the litigation). The court
noted that, in civil litigation, a blanket protective order (such as the
arbitrator approved), would not be controlling, and could be
modified for good cause.27 The court observed, however, that a
court should not cavalierly disregard the expectations of the parties to
an arbitration as memorialized in their confidentiality agreement.28
Ultimately, the court found no compelling reason to resolve the
novel question whether a court can supersede a confidentiality
order adopted by a[n] arbitrator in a collateral proceeding.29 Instead,
the court ordered that the defendant in the civil litigation (respondent
in the arbitration) should produce in the litigation the documents it
produced in the prior arbitration.30
In the context of arbitration itself, the ability of an arbitrator to
issue a protective order is generally secure.31 In Amway Global v.
Woodward,32 for example, the losing party in an arbitration sought to
vacate an award, claiming (in part) that the arbitrator improperly
refused to order production of an experts prior testimony (in another
arbitration proceeding) and related materials from the prior
arbitration. The court upheld the award,33 noting that the
confidentiality agreement from the prior arbitration was not invoked
in bad faith, and the party seeking discovery could not show that the
confidentiality agreement previously entered was untenable, frivolous,

communications evidence can reasonably be expected to have a chilling effect on the

willingness of parties to use arbitration).
26
2004 WL 1821968 (D. Colo. Aug. 13, 2004).
27
Id. at *1 (citing authorities).
28
Id. at *2 (citing authorities regarding reluctance to modify protective orders where
modification could unfairly disturb legitimate expectations of the litigants).
29
Id. at *4.
30
See id. at *4 n.2 (subpoena to third party withdrawn as a consequence of court order).
31
See Durham v. Guest, 204 P.3d 19, 27 (N.M. Sup. Ct. 2009) (arbitrator may issue a
protective order to the same extent allowed to the district court).
32
744 F. Supp.2d 657 (E.D. Mich. 2010).
33
Immediate appeal of an arbitration panels decision to impose a protective order is
disfavored. See CPK/Kupper Parker Comm., Inc. v. HGL/L. Gail Hart, 51 S.W.3d 881,
886 (Mo. Ct. App. 2001) (no jurisdiction to appeal arbitrator decision to deny request for
deposition; immediate appeal would frustrate the purpose of arbitration) (citing
Thompson v. Zavin, 607 F. Supp. 780, 781 (C.D. Cal. 1984) for proposition that
arbitrator retains discretion to control arbitration discovery process).
 CONFIDENTIALITY ISSUES IN ARBITRATION 7

or wholly lacking in legal or factual support.34 Similarly, in Group

Health Plan, Inc. v. BJC Health Systems, Inc.,35 the court held that an
arbitration panel properly precluded discovery of materials covered
by a protective order issued by a prior arbitration panel. The Group
Health court noted that [a]s this [prior] protective order was signed
by the arbitration panel, we will give it the deference it would receive
as any other arbitration award.36 Misuse of information subject to a
prior arbitration protective order may even constitute grounds for
disqualification of an arbitrator in a later proceeding.37
Given the relatively weak protection for confidentiality in U.S.
arbitration law, practitioners concerned for protection of
confidentiality should consider taking specific steps to ensure that
their clients interests are protected:
Carefully review any existing arbitration agreement, including
the rules of the chosen arbitration sponsoring organization (if
any) regarding the treatment of confidential information.
Review the arbitration law applicable at the seat of the
arbitration, to determine its coverage (if any) of confidentiality
issues.
Where the protection afforded by the existing agreement, rules
and/or applicable law appear inadequate, consider negotiating a
more comprehensive and/or more restrictive form of
confidentiality agreement.
Draft any confidentiality agreement with a view to the
legitimate needs of the parties (and any third party whose
interests may be affected by limits on disclosure of
information).
Where negotiation proves inadequate, or where added
protection seems advisable, consider asking the arbitration
tribunal to so order a confidentiality agreement.

34
Id. at 681 (enforcing arbitration award).
35
30 S.W.3d 198 (Mo. Ct. App. 2000).
36
Id. at 204 (noting that judicial review of arbitration awards is limited).
37
See Trustmark Ins. Co. v. John Hancock Life Ins. Co., 680 F. Supp.2d 944, 948 (N.D.
Ill. 2010) (arbitrator not sufficiently disinterested where he obtained knowledge of
prior arbitration, contrary to confidentiality agreement).
8 DISPUTE RESOLUTION JOURNAL VOL. 68 NO. 2

For even greater protection, consider asking the tribunal to make

confidentiality protection part of its ultimate award, subject to
only limited scrutiny on review for vacatur by a court.
None of the above steps can guarantee absolute confidentiality for
information in arbitration. But awareness of the limits of arbitration
confidentiality can help parties plan for a dispute resolution process
most suited to their needs.
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