Confidentiality and anonymity in Scottish arbitration

Scotland

Confidentiality in arbitration is key.  Anonymity for the parties, should matters be referred to court, is equally so.  In a recent case, a public authority and a contractor had different ideas about how these concepts should operate under the Arbitration (Scotland) Act 2010.  In a decision which will be of interest to any arbitration user, the Court of Session gave its view, exploring both confidentiality and anonymity and their interaction under the Act. 

Confidentiality and anonymity under the Arbitration (Scotland) Act

The Arbitration (Scotland) Act 2010 applies to all arbitrations “seated” in Scotland.  The Act itself contains sections and then a schedule of the Scottish Arbitration Rules, which are a mix of mandatory and default rules.  (The sections and mandatory rules apply to every arbitration.  The default rules apply if they are not dis-applied or varied.)  Together, these provisions set out a firm approach to protecting both confidential information and parties’ anonymity should there be court proceedings relating to an arbitration – for example a referral on a point of jurisdiction, a point of law or a legal error appeal etc:

  • Confidential information – Default Rule 26 of the Act says that disclosure by an arbitrator, tribunal or any party of confidential information relating to an arbitration is actionable as a breach of confidence.  “Confidential information” means any information relating to the dispute, the arbitral proceedings, the award, or any court proceedings in respect of which an anonymity order has been granted (see below) and which is not and has never been in the public domain.  There are limited exceptions allowing disclosure, for example if it is expressly or impliedly authorised by the parties, is required for the proper performance of public functions or is in the public interest or necessary in the interests of justice;
  • Anonymity in court – Section 15 of the Act says that where there are court proceedings relating to an arbitration, a party can apply to the court for an anonymity order.  This is an order prohibiting the disclosure of the identity of a party to the arbitration in any report of the court proceedings. (The only exception to being able to ask for anonymity order is for enforcement proceedings, where one party is asking the court to enforce an arbitral award.)  If an anonymity order is requested the court must grant it, unless it is satisfied that the disclosure of a party’s identity (a) is required for the proper performance of public functions (b) can reasonably be considered as being needed to protect a party's lawful interests (c) would be in the public interest or (d) would be necessary in the interests of justice.

North Lanarkshire Council v Stewart and Shields Limited

In this case the Court of Session looked at these provisions and how they sit together.  A council (North Lanarkshire Council) had entered into a construction contract with a contractor (Stewart and Shields Limited).  They fell into dispute.  The Council said it was terminating the contract, because the Contractor had failed to proceed regularly and diligently with the works.  The Contractor denied this and the dispute was referred to arbitration.  The arbitrator issued an award in five parts. Parts 1 to 4 found in the Contractor's favour i.e. that there had been a wrongful termination of the contract.  Part 5, which dealt with loss and quantification, was referred to the court. During the court proceedings, the Council asked for an anonymity order for both parties’ identity under section 15 of the Act. 

The Contractor objected. The Council had published its annual accounts on its website, as part of its statutory obligations.  Crucially, said the Contractor, these accounts had made a provision of liability following Parts 1 to 4 of the arbitration award being found against it.  They included a clear reference to the arbitration, the parties’ names and the contract which was in dispute.  This meant that the parties’ identities and information about the arbitration were already in the public domain.  So no anonymity order should be granted and there was no longer “confidential information” to be protected under the Act. 

The Council disagreed.  It said that the court proceedings relating to Part 5 of the arbitral award were not within the public domain and there was still the potential for confidentiality under Rule 26.  Only limited information had been published in the Council's annual accounts.  In any case, an anonymity order was a different issue; it did not require that the parties’ identities had never been in the public domain.

The Decision

The court agreed with the Contractor.  It said that “confidential information” under Rule 26 is a broad formulation and that the potential for preserving the confidentiality of arbitration proceedings is one of the key benefits of the Act.  Whether such confidentiality had been observed or breached was highly relevant to the granting of an anonymity order for court proceedings under section 15.  In this case the court said it was inept, to say the least, to seek an order from the court prohibiting disclosure of something that has already been disclosed to the world.  It mattered not that the arbitral award has been in five parts and only one of those was the subject of court proceedings; the arbitration was a single ongoing process.  The parties’ identities needed still to be susceptible to anonymisation.  Given the Council’s disclosure of the parties’ identities, no order of the court could achieve the statutory purpose of anonymity.

Conclusion and implications

Confidentiality can be a key factor in selecting arbitration; allowing parties to deal with their disputes in private.  Arbitration is designed to be a one-stop shop for dispute resolution and the ability to refer arbitral matters to the Scottish courts is deliberately limited under the Act.  Parties can take comfort that when there are such referrals, the importance of protecting confidentiality and parties’ identities is generally very much recognised by the courts.  Here, one party's disclosure of the parties’ identities and some details of the arbitration resulted in its request for an anonymity order being refused.  The court highlighted the arbitration was a single ongoing process, encompassing the several awards made and to be made.  Therefore in light of the disclosure to date, it considered that an anonymity order would be irrelevant, even if more details would be disclosed in the court proceedings. 

This is a useful decision to come from the court, which explored the confidentiality and anonymity provisions of the Act and their interaction in detail.  Any party to an arbitration with a seat in Scotland should consider disclosures of potentially confidential information very carefully and recognise how that may affect a request for an anonymity order at a later stage.

 

References:

North Lanarkshire Council v Stewart and Shields Limited [2017] CSOH 76