INTRODUCTION
Arbitration has emerged as one of the most preferred modes of alternative dispute resolution, particularly in commercial and international disputes. One of the most frequently cited advantages of arbitration over traditional litigation is confidentiality. Parties often choose arbitration with the expectation that sensitive information, trade secrets, and business reputations will be protected from public scrutiny. Unlike court proceedings, which are generally open to the public, arbitration is commonly perceived as a private and discreet process.
However, the assumption that arbitration proceedings are inherently confidential has increasingly been questioned. While arbitration is undoubtedly private in the sense that proceedings are not open to the public, privacy does not automatically equate to confidentiality. In many jurisdictions, there is no explicit statutory duty of confidentiality in arbitration laws, and the extent of confidentiality often depends on arbitration agreements, institutional rules, or judicial interpretation. Moreover, the involvement of third parties, disclosure obligations in court proceedings, and enforcement of arbitral awards may further dilute the promise of confidentiality.
The growing use of arbitration in investor–state disputes, public sector contracts, and multi-party proceedings has intensified the debate surrounding transparency versus confidentiality. In such cases, public interest considerations often conflict with the private nature of arbitration. This has led scholars and courts to reassess whether confidentiality in arbitration is a guaranteed principle or merely a perceived benefit.
This paper critically examines the concept of confidentiality in arbitration and seeks to determine whether it is a myth or a practical reality. By analyzing statutory frameworks, judicial decisions, and institutional arbitration rules, the study aims to evaluate the scope, limitations, and enforceability of confidentiality in arbitration proceedings. The paper also explores whether confidentiality should remain a defining feature of arbitration in light of contemporary legal and public policy concerns.
INDIAN JUDICIAL APPROACH IN INTERPRETATION OF CONFIDENTIALITY IN ARBITRATION
The Indian judiciary has played a significant role in shaping the understanding and scope of confidentiality in arbitration. Traditionally, Indian arbitration law did not expressly recognize confidentiality as a statutory obligation. Instead, courts relied on principles of party autonomy, contractual obligations, and the private nature of arbitral proceedings. Over time, judicial interpretation, combined with legislative intervention, has gradually clarified the position of confidentiality in Indian arbitration.
Before the Arbitration and Conciliation (Amendment) Act, 2019, the Arbitration and Conciliation Act, 1996 did not contain any explicit provision mandating confidentiality of arbitral proceedings. Indian courts acknowledged that arbitration is a private dispute resolution mechanism, but they were cautious in treating confidentiality as an automatic or absolute principle. The decision in “R.S. Sravan Kumar v. CPIO” brought to light the intricate relationship between confidentiality in arbitration proceedings and the disclosure obligations imposed by the Right to Information Act. The ruling underscores the importance of adopting a balanced and contextual approach when responding to information requests concerning arbitrations involving public authorities. While the protection of sensitive arbitral information remains essential, the principle of transparency particularly in relation to the use of public funds cannot be overlooked. The judgment makes it evident that confidentiality in arbitration does not operate as an absolute shield against transparency requirements, especially where the State or public institutions are parties to the dispute. Furthermore, the case highlights the pressing need for clearer legislative direction to reconcile the competing demands of arbitral confidentiality and public accountability, ensuring that the public interest is protected without undermining the effectiveness and credibility of the arbitral process. Also, In “ONGC v. Western Geco International Ltd” the Supreme Court acknowledged the private nature of arbitration but allowed judicial scrutiny of arbitral awards under statutory grounds, thereby indirectly limiting confidentiality. The judgment reflects the balancing approach adopted by Indian courts between confidentiality and judicial oversight. In “Kamal Gupta & Anr vs LR Builders Pvt Ltd & Anr” a clear rule was established that non-signatories to an arbitration agreement have no inherent right to participate in Arbitral proceedings.
CONCLUSION
Confidentiality has long been perceived as one of the defining advantages of arbitration, often influencing parties to opt for this alternative dispute resolution mechanism over traditional litigation. However, a closer examination of statutory frameworks, judicial interpretations, and practical realities reveals that confidentiality in arbitration is neither absolute nor automatic. While arbitration proceedings are conducted in private, the expectation of complete confidentiality is frequently undermined by legal, procedural, and public interest considerations.
The analysis demonstrates that confidentiality largely depends on the arbitration agreement, institutional rules, and the governing law. Even where statutory recognition exists, such as under Section 42A of the Arbitration and Conciliation Act, 1996, exceptions relating to enforcement, judicial scrutiny, and public interest significantly limit its scope. Judicial involvement at various stages—appointment of arbitrators, interim measures, challenges, and enforcement of awards—inevitably exposes arbitral proceedings to public forums, thereby diluting confidentiality.
Furthermore, in disputes involving the State or public authorities, the principle of transparency often takes precedence over arbitral privacy, particularly where public funds or accountability are involved. This tension highlights the inadequacy of treating confidentiality as an inherent attribute of arbitration. Instead, it emerges as a qualified and conditional concept, subject to competing legal obligations.
In light of these realities, confidentiality in arbitration can be regarded not as a myth, but neither as an assured reality. It is best understood as a relative advantage that requires careful contractual drafting, supportive institutional rules, and clearer legislative and procedural safeguards. A balanced approach that protects legitimate confidential interests while accommodating transparency and public accountability is essential to preserve the integrity, credibility, and effectiveness of arbitration as a dispute resolution mechanism.
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