EVALUATION OF THE LIABILITY OF CONFIDENTIALITY IN ARBITRATION IN COMMERCIAL DISPUTES ACCORDING TO ISTAC ARBITRATION RULES ARTICLE 21 AND NATIONAL AND INTERNATIONAL LEGISLATION
INTRODUCTION
In the arbitration proceedings, confidentiality is the obligation of the parties participating to accept the other parties’ information and trade secrets as confidential. At the same time, the confidentiality rules install obligations to the parties to not disclose their confidential information to third parties and this is one of the most significant reasons why arbitration proceedings are preferred. [1]Liability of confidentiality shall not be understood only as the arbitration proceedings shall be kept confidential it also includes the arbitration award and the information obtained during the trial not to be disclosed to the public. Besides that, litigations are open to the public as a rule[2] and case files could be seen by attorneys who are not one of the parties of the trial. The documents shared during the arbitration proceedings may contain sensitive commercial information such as profit margins, production costs, pricing policies, know — how’s, etc. It can also reveal the financial situation of a company or the existence of a defective product of a company, a situation that would endanger the image of a company by creating irreversible damage to the company and supporting its competitors. This would damage the win-win policy of the arbitration proceedings. [4] The parties may have an important interest in the confidentiality of any information or arbitration submitted in the arbitration proceedings. Arbitration proceedings regarding arbitration rules in both national and international legislation require that the arbitration proceedings be confidential unless otherwise agreed. In addition, by adding a confidentiality clause to the arbitration agreement that is concluded among the parties before the arbitration proceedings the line of confidentiality can be drawn and the responsibility of the parties can be determined. [5]Secrecy depends on the will of the parties because it is in the interests of the parties involved in commercial arbitration.
Transparency becomes a fundamental rule in arbitration proceedings in cases where the interests of the parties conflict with the interests of the public. When a particular third party, the shareholders of a parent company, a company, a company auditor, and an insurance company has the right to know the existence and outcome of an arbitration award, the frame of the obligation of confidentiality can be extended. In addition to this, in disputes in which one of the parties are the public or if the information within the scope of the arbitration needs to be disclosed to the public and this information should be considered as public information then the scope of the obligation of confidentiality extends. However, unless it is expressly prohibited by the relevant legislation or arbitration rules or otherwise agreed upon by the parties, the parties may disclose the arbitration award to interested third parties, to verify that they have acted in good faith. [6]
I believe that to better understand confidentiality in arbitration, the obligation of confidentiality should be handled within arbitration proceedings by national and international arbitration rules. Confidentiality in an arbitration held at the national level is regulated under Article 21 of the Istanbul Arbitration Center (ISTAC) Arbitration Rules. Likewise, the Arbitrator’s Code Of Ethics edited by the Istanbul Arbitration Association is addressed the rules that the arbitrators must comply with ethically and the measures to be taken under Article 6 under the heading of ”Confidence and Confidentiality”. Confidentiality in arbitration is regulated in the International Trade Arbitration Center (ICC) Arbitration Rules, London International Court of Arbitration (LCIA ) (art.30 / 2), International Dispute Resolution Center ( ICDR ) Arbitration Rules, World Intellectual Property Organization Arbitration Rules (WIPO). Hereby of these regulations, the confidentiality rules of the parties and the other bodies of the Arbitration shall be further examined.
I. CONFIDENTIALITY IN ARBITRATION PER THE NATIONAL AND INTERNATIONAL LEGISLATION
A. Confidentiality under the ISTAC (Istanbul Arbitration Center) Arbitration Rules
The obligation of confidentiality is set out in Article 21 of the Arbitration Rules of the Istanbul Arbitration Center. The arbitration proceedings are confidential unless the parties agreed. With the request of either party, the Arbitrator or the arbitral tribunal may issue an order for the confidentiality of the proceedings and take all necessary measures to protect the parties’ trade secrets and confidential information. [7]It is seen in the ISTAC Arbitration Rules that the parties’ joint statements or the declaration of one of the parties affect the confidentiality obligation. In the arbitration proceedings, the confidentiality mechanism is left to the parties. The arbitration proceedings can be conducted transparently if both parties agree. The Parties may agree and add a provision that the arbitration proceedings shall be held transparently.
B.Confidentiality under the ISTA(Istanbul Arbitration Association) Arbitrator Ethic Rules
The Arbitration Ethics Code of the Istanbul Arbitration Association takes into account the confidentiality obligation of the arbitrators and ethical rules that arbitrators should comply with during and after the arbitration proceedings. The arbitrator or Arbitrators’ Board is responsible for ensuring that the parties respect the confidentiality of the proceedings and taking measures to protect trade secrets and confidential information.ISTA’s Arbitration Rules are regulated that the proceedings during the trial, the negotiations between the arbitrators, and the information obtained from these trials shall be kept confidential. The arbitrators should comply with the confidentiality rule except for the information allowed to be disclosed. [8]
C. Confidentiality under the ICC (International Chamber of Commerce) Arbitration Rules
The confidentiality rule is regulated in Article 6 of Annex I and Article 1 of Annex 2 of the International Trade Center. [9] Commercial arbitration rules of the ICC do not impose an obligation to the parties in terms of confidentiality in arbitration proceedings but only to the arbitrators and the arbitration tribunals. According to Article 22, the arbitrators may instruct in all matters relating to confidentiality, at the request of any party, for the protection of the interests of the parties, trade secrets, and confidential information. The arbitrator shall take all measures to protect the interests of the parties during and after the arbitration proceedings.
D. Confidentiality under the WIPO (World Intellectual Property Organization) Arbitration Rules
Liability of confidentiality is also held comprehensively by World Intellectual Property Organization. It is important to determine the limits of confidentiality in this regard, as the parties are willing to keep the intellectual property information confidential. The parties may request certain information to be confidential or the court will determine whether the information will be classified as confidential and whether the absence of special protection measures during the trial is likely to cause serious harm to the party requesting confidentiality.
According to the WIPO Arbitration Rules, those below are under the liability of confidentiality; the documents that are provided by parties, deposition of the witness, expert’s opinions, the arbitration award, and even the arbitration process are under the liability of confidentiality. [10]
E.Confidentiality under the LCIA(London Court of International Arbitration) Arbitration Rules
The confidentiality rule is regulated by Article 30 in LCIA Arbitration Rules. Under Article 30 the parties undertake as a general principle to keep confidential all awards during the arbitration, together with all materials in the arbitration created for the arbitration and all other documents produced by another party in the proceedings not otherwise in the public domain, save and to the extent that disclosure may be required of a party by legal duty, to protect or pursue a legal right, or to enforce or challenge an award in legal proceedings before a state court or other legal authority. [11]
The deliberations of the Arbitral Tribunal shall remain confidential to its members, as required by any applicable law and to the extent that disclosure of an arbitrator’s refusal to participate in the arbitration is required of the other members of the Arbitral Tribunal under Articles 10, 12, 26 and 27.
The LCIA does not publish any award or any part of an award without the prior written consent of all parties and the Arbitral Tribunal. [12]
CONCLUSION
As a result; it is the interest of the parties involved in arbitration, and the fact that the parties’ confidential information and trade secrets gain importance in the arbitration proceedings in commercial disputes shows that confidentiality is accepted as a general rule. It is an obligation that the arbitrator/arbitrators, parties, and parties’ representatives or consultants should protect this confidentiality. The Arbitrators / Arbitrator may instruct on all matters relating to the protection of the interests of the parties, trade secrets, and confidential information at the request of any party or under national and international legislation. The arbitrator shall take all measures to protect the interests of the parties during and after the arbitration proceedings. In addition, the arbitrator/arbitrators and third parties who may be natural persons other than the parties are also subject to these confidentiality obligations, including the staff, secretaries, witnesses, experts, court journalists, translators, or other persons who are involved in the arbitration proceedings.
As set out in Article 21 of the Istanbul Arbitration Center, this confidentiality limit can be set within an arbitration agreement made by the parties. However, on some occasions, third parties such as the company’s shareholders, company auditors, and insurance companies have the right to know the arbitration award and proceedings.
Unless it is not prohibited by the relevant legislation or arbitration rules the parties may disclose their arbitration decisions if they agreed to verify that they have acted in good faith.
In the case of disputes in which the public authority is a party or when the subject concern only the public opinion or information that the public should be aware of in the context of arbitration; in which the institution in question is required to make public disclosures to the public interest will outweigh the interests of the parties.
