After posts considering confidentiality protections under the EU Trade Secrets Directive 2016/943 when litigating in various jurisdictions, we next turn to how these issues arise in the context of arbitration.
Where trade secrets are protected by a contract, an opportunity arises for parties to consider alternative dispute resolution mechanisms including arbitration and whether to adopt express rules in arbitration that protect confidentiality.
In general, parties who select arbitration can expect an arbitration to be confidential between themselves and for hearings to be private. However, not all arbitration provisions protect confidentiality vis-à-vis third parties as a default. As just one example, domestic arbitrations taking place in France are automatically confidential, see Article 1464, Code Procédure Civile, while international arbitrations in France where at least one of the parties is not French do not automatically carry these protections and parties will need to expressly agree to keep proceedings confidential in order to ensure these safeguards.
Even so, arbitration may be more favorable in some cases than litigation with the risk of public court proceedings for a few reasons. First, tribunals have wide discretion on what documents to admit and can compel the production of documents under both the law of the place of arbitration (e.g., s. 34(2)(d) English Arbitration Act; article 1700.4 Belgian CCP) and typically under the rules of the arbitration procedure chosen by the parties (e.g., LCIA Arbitration Rules 2014, Article 22.1(iv); ICC Rules 2017, Article 22(2) and Appendix IV(d)). Second, parties to an arbitration can apply rules like the IBA Rules on the Taking of Evidence 2010, which have sought to codify expectations in this area or negotiate a dispute resolution clause that specifies which rules apply which can implicate confidentiality considerations. Under Article 2.2(d) of the Rules, parties are encouraged to consult with each other on the “level of confidentiality protection to be afforded to [the] evidence in the arbitration.” Article 13 states that the “Arbitral Tribunal may issue orders to set forth the terms of confidentiality.” Article 9.1 gives the tribunal broad discretion to determine the admissibility of evidence. Article 9.2 outlines the grounds upon which an objection may be made in response to a demand for the production of documents. Article 9.2 begins by indicating that the tribunal “shall, at the request of a Party or on its own motion, exclude from evidence or production any Document, Statement, oral testimony or inspection” based on any of seven stipulated reasons, including “Grounds of commercial or technical confidentiality that the Arbitral Tribunal determines to be compelling” and “Grounds of special political or institutional sensitivity (including evidence that has been classified as secret by a government or a public international institution) that the Arbitral Tribunal determines to be compelling.”
In addition, tribunals in some cases may use their authority to create confidentiality rings in much the same way as litigants in different jurisdictions are able to take advantage of these processes as discussed in previous posts. Non-parties to the proceedings themselves, such as witnesses, counsel and experts, may also be bound to confidentiality protections from such confidentiality rings by signature of undertakings drafted for that purpose which is yet another layer of protection.