The principle of confidentiality in arbitration is upheld

Can a person obtain documents submitted in an arbitration to which he was not a party? Arbitrations are often chosen as a means of dispute resolution because they are confidential. However, where the matter comes before the court, will those confidential documents be vulnerable to disclosure to third parties because the court does not provide such high protection? These were the issues before the court in Glidepath BV & others v Thompson & others, when the Applicant, Mr Onwuka, applied for inspection of various documents pursuant to CPR 5.4(5) (disclosure of documents on the court’s file).

Can a person obtain documents submitted in an arbitration to which he was not a party? Arbitrations are often chosen as a means of dispute resolution because they are confidential. However, where the matter comes before the court, will those confidential documents be vulnerable to disclosure to third parties because the court does not provide such high protection? These were the issues before the court in Glidepath BV & others v Thompson & others, when the Applicant, Mr Onwuka, applied for inspection of various documents pursuant to CPR 5.4(5) (disclosure of documents on the court’s file).

The 1999 Court of Appeal authority, Ali Shipping Corporation v Shipyard Trogir, held that arbitration proceedings and materials generated during the course of them should be treated as confidential to the parties and the Tribunal, subject to certain exceptions: first, by consent; second, by order of the court; third, by leave of the court; fourth, if disclosure is reasonably necessary to protect or establish the legal rights of a party to the arbitration by a third party; and, finally, if otherwise in the interests of justice.

CPR 5.4(5) provides that "any other person" may, unless the court decides otherwise, obtain a copy of various documents held on the court’s file. The proceedings, in which the Applicant sought papers on the Commercial Court’s file, involved allegations of fraud against the Defendants who were parties to a joint venture agreement to set up the first Claimant. The joint venture agreement contained an English arbitration clause and the parties agreed that an order be made for the court proceedings (commenced despite the arbitration clause) to be stayed under Section 9 of the Arbitration Act 1996 in favour of arbitration. However, prior to that order, the Claimants had successfully applied in the court proceedings for both freezing injunctions and a Norwich Pharmacal disclosure order (an order for disclosure against a third party).

The dispute concerned a transaction whereby part of a business of one company was transferred to another. The Applicant had been employed by the transferor and, subsequently, became engaged in separate litigation against it and its managing director (the First Defendant) in the Employment Tribunal for unlawful exclusion from the transfer and constructive dismissal. He applied to the court in the stayed proceedings for a copy of the Particulars of Claim, notices of application in respect of the freezing injunction and the Norwich Pharmacal application, as well as other applications and witness statements which had been filed with the court prior to the stay.

In response to the application under CPR5.4(5) the First Defendant and former employer of the Applicant submitted that:

1. All classes of documents covered by the application were confidential to the parties to the arbitration; and
2. the Claimants in the stayed proceedings had wrongly resorted to the courts instead of referring the dispute to arbitration and, accordingly, the court needed to exercise its discretion to protect the confidential nature of arbitration proceedings and all proceedings ancillary to them by declining disclosure of documents to the Applicant who was not a party to the arbitration. It was further submitted that the ancillary remedies preceding the application for the stay should be treated as if they were internal to the arbitration and not as if they were made in ordinary court proceedings.

It was held that the application under CPR 5.4(5) should be dismissed. The court’s permission to inspect the documents and pleadings would not be granted to a stranger to arbitration, including proceedings in which a Section 9 stay had been applied for, unless the parties to the arbitration consented or it was in the interests of justice.

Further, where the Section 9 application was preceded by an application for a freezing injunction or for a Norwich Pharmacal order in the face of a binding arbitration agreement, the court’s discretion in relation to such an application by a stranger should be exercised by reference to the principles of confidentiality attaching to arbitration proceedings.

The Applicant had failed to demonstrate that disclosure was reasonably necessary to protect or establish legal rights that he was seeking to enforce in the proceedings before the Employment Tribunal or that such disclosure was otherwise in the interests of justice. For a document on the court file to be reasonably necessary to establish a right or a defence in this context, it must be clearly demonstrated to the court that the document would play an essential part in establishing the right or the defence in question such that the Applicant would be seriously prejudiced if access were denied. Accordingly, the Applicant had failed to bring himself within the threshold of the confidentiality exceptions identified in Ali Shipping.

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq

The original publication date for this article was 23/06/2005.