Confidentiality under the Arbitration Ordinance

In Hong Kong, privacy and confidentiality is often regarded as an important advantage in arbitration proceedings, and indeed is one of the first things that will come to mind when parties consider whether to opt for court proceedings or arbitral proceedings when entering into any agreement.

But more often than not, clients, their lawyers, and perhaps even arbitral tribunals may take for granted the scope of the duty of confidentiality in arbitration. Of course, many practitioners will already be aware that the right to confidentiality in arbitral proceedings is not necessarily a given, and will depend entirely on the applicable laws and rules governing any particular arbitral reference.

The Statutory Regime in Hong Kong

The scope of the duty of confidentiality in arbitral proceedings in Hong Kong is specifically delineated in the Arbitration Ordinance (Cap. 609) (the “Ordinance”). In taking this approach, Hong Kong has opted to be one of the few jurisdictions in the world to provide for a statutory duty for confidentiality in arbitration.

The basic rule is found under s. 18(1) of the Ordinance, which provides quite clearly that:

“Unless otherwise agreed by the parties, no party may publish, disclose or communicate any information relating to –
(a) the arbitral proceedings under the arbitration agreement; or
(b) an award made in those arbitral proceedings.”

This statutory duty is subject to certain exceptions found under s. 18(2), which permit publication, disclosure or communication where made to protect or pursue a legal right or interest of the party or to enforce or challenge an award, in legal proceedings before a court or other judicial authority in or outside Hong Kong. Parties are also permitted to disclose to their professional advisers, or where obliged by law to be disclosed to any government or regulatory body, court or tribunal.

The Hong Kong position stands in contrast to the implied duty of confidentiality as found under English law. Under English law, the duty of confidentiality is implied as a matter of law and arises as an essential corollary to the privacy of arbitration proceedings (as discussed in Ali Shipping v Shipyard Trogir [1998] 1 Lloyd’s Rep. 643). The English Arbitration Act 1996 is silent on the issue of confidentiality.

Existing Issues

We should certainly appreciate that Hong Kong has been quite proactive in encouraging and maintaining interest in arbitration as a form of alternative dispute resolution. As part of the process, legislators sought to make express provision for the duty of confidentiality in arbitration proceedings. There are however a number of shortfalls in the statute which are not currently addressed, but which may ultimately lead to problems in practice.

Perhaps most prominently, as identified by Choong & Weeramantry in The Hong Kong Arbitration Ordinance: Commentary and Annotations, is the lack of clarity for whether an application should be made to the Court or tribunal in order to determine the bounds of the duty of confidentiality, or in what situations the materials might be disclosed. It is also unclear as to whether the exceptions listed under the statute are an exhaustive list of exceptions to confidentiality (as discussed in The Hong Kong White Book 2017).

These ambiguities may pose a challenge in practice, especially in cases where there are peculiar gaps in the law. For example, according to s. 18(2) of the statute, disclosure can be made in instances to protect a legal right “in legal proceedings before a court or other judicial authority in or outside Hong Kong”. Pay special attention to the words “other judicial authority”.

Suppose disclosure was necessary in the context of back to back arbitration proceedings (not uncommon in construction, shipping, or other types of arbitrations), would the tribunal in the arbitration sub or sub-sub-reference qualify as a “judicial authority” adjudicating over legal proceedings? It would seem unlikely.

The effect is that in theory, in a back to back arbitration which is not otherwise consolidated or made concurrent, all of the materials disclosed by a party, for example a claimant, would not be disclosable down the chain of references to the end respondent. The current terms of s. 18 may not afford the tribunal with any jurisdiction to permit disclosure otherwise than where s. 18 does not allow for it. However, as a matter of principle, one might expect that the law would be intended to permit disclosure where it was necessary “to protect or pursue a legal right or interest of the party” before any forum, and not just before a court or other judicial authority.

We can only presume that this was not the intention of the law draftsmen, but there does not appear to be any mechanism under the Ordinance for how a party might go about seeking clarity on this issue, or whether to apply to the tribunal or Court to disclose such materials in a chain of arbitrations. It would appear that the safest course of action (or perhaps the only course) would be to obtain the parties’ consent for mutual disclosure.

Reporting of Arbitration Cases

A further issue concerning confidentiality in arbitration is whether arbitrations or court proceedings related to such arbitrations should be reported, if the award or judgment is of legal interest. The current legislation does already at least partially consider this.

Under s. 16, the default position is that proceedings relating to arbitration should be held in closed court proceedings. That said, under s. 17, if the court considers that the judgment is of major legal interest, the court “must direct” reports of the judgment to be published. Still, s. 17 qualifies that power of the court, and parties may apply for a direction to conceal certain matters in those reports.

What is interesting is that it does not appear that arbitral awards themselves are subject to disclosure or publication if they are of major legal interest or concern. Obviously, the reason for this is to preserve confidentiality in arbitral proceedings.

Certain institutional rules around the world do seek to account for this possibility. In Hong Kong, under Art.42.5 of the HKIAC Rules, it is provided that an award may be published if there is a request for publication addressed to the HKIAC, if all references of the parties’ names are deleted, and that no party objects to the publication within a certain time limit to be fixed. Despite this permission, so far to our knowledge we have yet to see an award delivered under the HKIAC Rules which has been published to public.

In addition, such a provision is not found in the rules of the other arbitration institutions which also have a presence in Hong Kong, such as the ICC or CIETAC. It goes without saying that this provision would likely also not apply to ad hoc arbitrations.

There are of course significant advantages to having anonymised arbitral awards being published. Primarily, given that an increasing number of cases are now referred to arbitration, having such matters reported would also help with the development of the law. For example, the Lloyd’s Maritime Law Newsletter, which started reporting maritime-related awards in November 1979, reports significant London shipping arbitration cases, which are cited in judgments, awards and textbooks worldwide, and commonly used as guidance in daily practice. It is not to our knowledge that Hong Kong has an equivalent reporter either.

As a starting point, when the Ordinance is ready to be amended, it may be an idea to consider whether the right to publish an anonymised arbitral award on the tribunal’s volition should also be included into the Ordinance (of course, subject to the parties’ consent). It would at the very least allow for and encourage the reporting of arbitration cases, and lead to the further advancement of the law.

Conclusion

In a number of common law jurisdictions, the confidentiality of arbitral proceedings is entirely expected by the parties. There are also unquestionable benefits for making it clear under statute that there is a duty of confidentiality in arbitrations.

While significant advances have been made with the Hong Kong arbitration law, we should not become complacent but remain aware that the current confidentiality provisions are still not perfect. It is hoped that future amendments will address the current issues surrounding confidentiality going forward, so that an adequate balance between the public and private interests can be achieved. 

Jurisdictions: 

Reed Smith Richards Butler, Senior Registered Foreign Lawyer

Qualified in both China and England & Wales, Mr. Liu specialises in shipping and commercial litigation and arbitration. His practice covers all areas of maritime and commercial law, including charterparty and shipbuilding contract disputes, cargo claims and sale of goods disputes etc. He handles a wide variety of cases of different types and sizes under LMAA Terms and HKIAC rules. He has published numerous articles and case commentaries in respect of shipping and arbitration topics in reputable journals and newsletters in England, China and Hong Kong. He is a member of The Chartered Institute of Arbitrators. In 2016 and 2017, he had been shortlisted for the Next Generation Award, one of Lloyd’s List Asia Pacific Awards.

Reed Smith Richards Butler, Associate

Jonathan Hooi is an associate with the Shipping Litigation team at Reed Smith Richards Butler. He mainly handles local and international shipping and trade disputes, including both wet and dry shipping matters. He has experience in both Hong Kong litigation and international arbitration cases.