Transparency in International Arbitration
By Frederique Kwantes
In international arbitration, transparency is becoming a popular concept. It makes the procedures more open, reliable and makes it easier to access information. Transparency is furthermore related to good governance and is essential to the rule of law.[1] The popularity of transparency in international arbitration is, however, a bit controversial as arbitration is known to be a private dispute resolution, especially concerning international commercial law.[2] Privacy and confidentiality are therefore at the forefront of arbitration.
Advantages of Transparency
There are certain advantages to transparency in international arbitration. Firstly, it gives third parties the chance to weigh in on the case at hand. On an international level, the third parties may be nongovernmental organizations that can submit opinions that can give a perspective on the case beyond the circumstances of the parties to the case at hand.[3]
Furthermore, through transparency, international arbitration makes way to build cases that can be used as a guideline for future cases and even set a precedent.[4] Transparency also allows for organizations to provide reasons for their decisions. Article 11(4) of the ICC Rules was amended to allow for this amount of transparency to be reached.[5] Considering that arbitration initially is a private form of alternative dispute resolution, transparency can also allow for summaries to be posted with the parties listed as anonymous.[6]
Transparency, especially in international investment arbitration is very advantageous, as it concerns resolving disputes between foreign investors and states. These issues are therefore also likely to be of public interest. Cases that are of public interest are ones that concern, among other things, health, the environment, and the natural resources of the state. These are issues that concern the public directly and therefore, to exude good governance, the cases should be transparent.[7]
Risks of confidentiality
Different from the advantages transparency provides in international arbitration, there are risks concerning confidentiality in international arbitration. One risk is that providing confidentiality could mean that it is seen as the equivalent to secrecy. This could mean that arbitration cases are therefore not put under scrutiny. Potentially, this could be dangerous as confidentiality could be used to violate the principles of procedure.[8]
According to Gary Born, the chair of the International Arbitration Practice Group at Wilmer Cutler Pickering Hale and Dorr LLP., confidentiality, particularly in international commercial arbitration, is efficient and encouraging. Disclosing cases can lead to releasing sensitive information that competitors can use as leverage. However, it can also be said that confidentiality can lead to decisions that are to be perceived as unethical and incorrect.[9]
Furthermore, confidentiality could also lead to the law not being used to its full extent. Due to arbitration not being transparent, judges and arbitral institutions will not be able to access information on the case and therefore not benefit from its findings. This can lead to certain things being overlooked that could have been observed otherwise.[10]
In international commercial law, this is quite a sensitive topic. Known for resolving trade disputes of traders from different countries, international commercial arbitration values confidentiality. However, there is a consensus among legal scholars that the cases should be made public unless the parties involved have agreed to not publicize the case.[11]
Conclusion
In conclusion, transparency in international arbitration, especially in investment arbitration, brings many benefits. Although the private nature of this dispute resolution should not be forgotten, transparency should be allowed to develop further in order to create a good balance between confidentiality and transparency. Many jurisdictions, such as The United Kingdom, Singapore, Australia, and France have already established a balance and have a certain approach to maintaining this balance. By means of finding a good balance, both confidentiality and transparency can be used alongside each other in international arbitration.
[1] Asli Budak and Cemre Cise Kadıoğlu, “Transparency in International Arbitration” (Lexology.com, March 15, 2018) <https://www.lexology.com/library/detail.aspx?g=fc4ee619-986f-4d4d-b741-90cdaf119d3b#:~:text=Transparency%20is%20an%20emerging%2C%20though%20controversial%20trend%20in%20international%20arbitration.&text=Transparency%20is%20essential%20for%20good,public%2C%20they%20proceed%20with%20caution> accessed December 22 2020.
[2] “What Is International Arbitration? • Arbitration” (International Arbitration, December 30 2018) <https://www.international-arbitration-attorney.com/what-is-international-arbitration/> accessed December 22 2020.
[3] Asli Budak and Cemre Cise Kadıoğlu, “Transparency in International Arbitration” (Lexology.com, March 15, 2018) <https://www.lexology.com/library/detail.aspx?g=fc4ee619-986f-4d4d-b741-90cdaf119d3b#:~:text=Transparency%20is%20an%20emerging%2C%20though%20controversial%20trend%20in%20international%20arbitration.&text=Transparency%20is%20essential%20for%20good,public%2C%20they%20proceed%20with%20caution> accessed December 22 2020.
[4] ibid.
[5] “How Much (More) Transparency Does Commercial Arbitration Really Need? - Kluwer Arbitration Blog” (Kluwer Arbitration Blog, March 4, 2017) <http://arbitrationblog.kluwerarbitration.com/2017/03/04/how-much-more-transparency-does-commercial-arbitration-really-need/> accessed December 23 2020.
[6] ibid.
[7] Asli Budak and Cemre Cise Kadıoğlu, “Transparency in International Arbitration” (Lexology.com, March 15, 2018) <https://www.lexology.com/library/detail.aspx?g=fc4ee619-986f-4d4d-b741-90cdaf119d3b#:~:text=Transparency%20is%20an%20emerging%2C%20though%20controversial%20trend%20in%20international%20arbitration.&text=Transparency%20is%20essential%20for%20good,public%2C%20they%20proceed%20with%20caution> accessed December 22 2020.
[8] “Arbitration and Transparency - Relations Between a Private Environment and a Fundamental Requirement” (2015) <http://arno.uvt.nl/show.cgi?fid=142480> accessed December 23 2020 p 17.
[9] Avinash Poorooye and Ronan Feehily, 'Confidentiality and Transparency in
International Commercial Arbitration: Finding the Right Balance' (2017) 22 Harv Negot
L Rev 275 p 299-300.
[10] ibid p 17-18.
[11] ibid p 18.