Overview

The England and Wales Court of Appeal recently handed down a decision addressing the competing principles of open justice and arbitral confidentiality.

Background

CDE v NOP ([2021] EWCA Civ 1908) (“CDE”) concerns a dispute which is the subject of both a court action, and an arbitration involving companies said to be related to the defendants in the court action. Very few details of the actual dispute are set out in the Court of Appeal’s reasons, though it is known to involve allegations of fraud, and to already have some public notoriety.

Although the court action remains ongoing, the arbitration has concluded, and an award has been granted. Whether the arbitral award is binding on the defendants, as a matter of privity, is a contested issue that will be argued in a forthcoming hearing (the “Privity Application”). In the meantime, the claimants (appellants) have sought to have the award made public as part of the Privity Application. The defendants (respondents) oppose that measure.

Naturally, the award is relevant evidence in the Privity Application, resulting in a question of whether, or to what extent, those proceedings should be held in private.

The Issue on Appeal

The actual issue on appeal was somewhat narrower: The presiding judge in a case management conference, itself held in private, ordered that the contents of the award not be disclosed in any hearings in the proceedings not being held in private, that correspondence relating to the award be treated as private and not made available to any non-party (with a few exceptions), filings referring to the award be treated as private, and that the parties names be anonymized. This effectively put the onus on the claimants to seek a determination from the Court as to whether the Privity Application may be heard in public. The Court of Appeal considered whether the case management judge had erred in (a) holding the case management conference in private and (b) issuing the orders that kept the award private until the Court ordered otherwise.

Analysis of the Court of Appeal

The Court of Appeal held that although the case management judge was correct to hold that conference in private, the same analysis may not be suitable for the Privity Application, which will be left for the judge hearing that application on the facts as they exist at that time.

The decision relied on Civil Procedure Rule 39.2 of the Civil Procedure Rules, which begins with a presumption that hearings are to be open to the public, and which set out the considerations for the Court to determine whether a particular hearing should exclude the public. In order to hold a hearing in private, the Court must be satisfied that the one or more of the following apply:

(a) publicity would defeat the object of the hearing;

(b) it involves matters relating to national security;

(c) it involves confidential information (including information relating to personal financial matters) and publicity would damage that confidentiality;

(d) a private hearing is necessary to protect the interests of any child or protected party;

(e) it is a hearing of an application made without notice and it would be unjust to any respondent for there to be a public hearing;

(f) it involves uncontentious matters arising in the administration of trusts or in the administration of a deceased person’s estate; or

(g) the court for any other reason considers this to be necessary to secure the proper administration of justice.

And, that “it is necessary to sit in private to secure the proper administration of Justice.”[1] In considering whether the case management hearing should have been held in private, the Court accepted that the matter involved confidential information (satisfying subclause (c)), adding:

Arbitral confidentiality is recognised by English law as significant and worthy of protection. It engages a public interest as well as the private interests of the parties.[2]

On the second part of the Rule 39.2 test, the Court held that because nothing short of sitting in private could give effect to the first part of the test, it was necessary for the proper administration of justice to have held the case management conference in private. On the Privity Application, the Court found that the judge dealing with that application would be better placed to consider whether to sit in private, and that under Rule 39.1, it is presumed to be a public hearing, subject to the defendants’ right to bring a motion to have it heard in private (with that motion itself being held in private).

Key Takeaway

Canadian courts have also grappled with the tension between the open court principle and confidentiality of arbitral proceedings. Each case turns on its own merits, but a consistent starting point has been the test for a confidentiality order laid out by the Supreme Court of Canada in Sierra Club of Canada v. Canada (Minister of Finance):[3]

A confidentiality order under Rule 151 [of the Federal Court Rules, 1998, SOR/98-106] should only be granted when:

(a) such an order is necessary in order to prevent a serious risk to an important interest, including a commercial interest, in the context of litigation because reasonably alternative measures will not prevent the risk; and

(b) the salutary effects of the confidentiality order, including the effects on the right of civil litigants to a fair trial, outweigh its deleterious effects, including the effects on the right to free expression, which in this context includes the public interest in open and accessible court proceedings.

What seems to be common to both the CDE case and recent Canadian cases is that courts will consider the parties’ contractual arbitration arrangements when deciding what information, if any, should be kept private.[4] Parties wishing to avoid a future fight over the release of an arbitration award should consider setting out a clear confidentiality clause in their arbitration agreement that contemplates such a possibility. Precluding appeals, or designating another arbitral tribunal to hear appeals is another option to consider, as was suggested by the Ontario Superior Court in 2249492 Ontario Inc. v. Donato.[5]

[1]Civil Procedure Rule 39.2(3) and CDE at para 26.

[2]CDE at para 39.

[3]Sierra Club of Canada v. Canada (Minister of Finance), 2002 SCC 41 at para 53; see 79411 USA Inc. c. Mondofix Inc. [“Mondofix”], 2020 QCCS 1104 at para 19; 2249492 Ontario Inc. v. Donato, 2017 ONSC 4975 , [“Donato”]; McHenry Software Inc. v. ARAS 360 Incorporated, 2014 BCSC 1485 at paras 27-29; Boeing Satellite Systems International Inc. v. Telesat Canada, 2007 CanLII 7991 [“Boeing”] at paras 11-14.

[4] See CDE at paras 30-31; Mondofix at para 6; Donato at para 23; Boeing at para 11.

[5]Donato at para 23.