Arbitration is a popular avenue for resolving commercial disputes. One of the key advantages of arbitration is that parties can choose to keep the dispute and its subject matter confidential.
In the recent case of Wilmar Sugar Pty Ltd v Burdekin District Cane Growers Ltd  QSC 3, the Supreme Court of Queensland provided some interesting insights in relation to the confidentiality of arbitral proceedings.
This case concerned confidential information disclosed in arbitral proceedings between a group of sugar cane mills and a group of sugar cane growers.
The sugar cane industry is heavily regulated because, practically speaking, most sugar cane growers can only supply to the geographically closest mill. Therefore, where parties have trouble negotiating a supply contract, they are obliged by statute to refer the matter to arbitration.
The outcome of the arbitration is a concluded supply agreement between the parties on the terms decided by the arbitral tribunal. This protects growers from the virtual monopoly enjoyed by the mills in any given location.
In this case, an arbitrator made a disclosure order allowing the respondent, who represented the sugar cane growers, to disclose specific confidential information obtained during the arbitration to two named recipients. The recipients were a federal and a state member of parliament.
The applicant, on behalf of the group of sugar cane mills, applied to the Court under section 27H(1) of the Commercial Arbitration Act 2013 (Qld) to prohibit the respondent disclosing the confidential information in accordance with the arbitrator’s order.
Exceptions to the confidentiality of arbitration
The commercial community is right to presume that, generally, the substance of arbitral proceedings will remain confidential.
Section 27E of the Act prevents parties and arbitral tribunals from disclosing confidential information except in accordance with its provisions. Confidential information is defined broadly in section 2 of the Act as including the subject matter of the arbitration, any evidence tendered in the arbitration, and any award made by the arbitral tribunal.
However, there are some exceptions to the general rule. Parties should keep in mind that confidential information may be disclosed where:
- all parties to the arbitral proceedings consent to disclosure;
- the party discloses the information to their legal adviser;
- the disclosure is necessary to enable a party to present its case;
- the disclosure is necessary to protect a party’s legal rights in relation to a third party;
- the disclosure is necessary to enforce the arbitral award;
- the disclosure is necessary for compliance with the Act;
- the disclosure is required by an order or subpoena of a court;
- the disclosure is authorised or required by a government body or an applicable law in Australia;
- an arbitrator makes an order allowing disclosure; or
- a court makes an order allowing disclosure.
In this case, the Court dealt with the exception to confidentiality whereby an arbitral tribunal makes an order allowing one party to disclose confidential information without the consent of the other party.
Reviewing an arbitrator’s decision to allow disclosure
The applicant’s case for a review of the arbitrator’s disclosure order relied on section 27H(1) of the Act. This section provides that a court should prohibit a party’s disclosure of confidential information in accordance with an arbitrator’s order where the court is satisfied that:
- the public interest in preserving the confidentiality of arbitral proceedings is not outweighed by other considerations; and
- the disclosure is more than is reasonable for the purpose.
Justice Jackson held that disclosure could be prohibited on either ground separately. However, the circumstances did not warrant such an order on either ground.
Interestingly, his Honour’s factual reasons for this finding were not made public but instead given to the parties confidentially.
Courts will protect confidentiality
Generally, a court’s reasons for making or declining to make an order are available to the public. This is because the public has a right to know what orders are being made by the courts and why.
When dealing with confidential information, courts may comply with this obligation by either:
- describing the information in a general way so the substance is not disclosed; or
- if this is not possible, providing a sealed copy of its reasons to the parties.
In this case, Justice Jackson considered it appropriate in the circumstances to provide confidential reasons to the parties and not make them public so as to preserve the confidentiality of the information.
Presumably this was because his Honour’s findings would have included a detailed discussion of what the confidential information was, why it might warrant disclosure, and what documents were reasonably necessary to achieve the purpose underlying the disclosure order.
Arbitration is a smart dispute resolution avenue for parties concerned with confidentiality.
However, there are a few ‘carve outs’ to arbitral confidentiality and limited circumstances where an arbitrator may order disclosure of information.
Where that occurs, parties can review the arbitrator disclosure order through the courts on grounds of either public interest or unreasonable scope.
Parties should take comfort from the fact that courts will take appropriate steps to maintain the confidentiality of information disclosed in arbitration. However, it is a rare case where a court will provide confidential reasons.
If you would like more information about these issues please contact Rocco Russo, Imogen Kenny or any members of our litigation and dispute resolution team on +61 7 3231 2444.