Arbitral Confidentiality v. Freedom of Information

Arbitration is a confidential process. Rule 26 of the statutory Scottish Arbitration Rules confirms this as the default position for Scottish-seated arbitrations.

But what if one of the parties to an arbitration is a Scottish public authority subject to the Freedom of Information (Scotland) Act 2002 ? (FOISA) ? The scope of Scottish public authorities includes companies wholly owned by the Scottish Government, local authorities and many different types of “quango”.

This issue arose in a recent case from Trinidad and Tobago which reached the Privy Council Maharaj v. Petroleum Company of Trinidad and Tobago [2019] UKPC 21.

FACTS

The state-owned petroleum company (Petrotrin) had entered into a joint venture agreement with World GTL for the construction and working of a gas to liquid plant in Trinidad. It also granted a guarantee. The agreement appears to have had within it an arbitration agreement for disputes to be decided by arbitration under the rules of the London Court of International Arbitration (“the LCIA”).

Article 30.1 of the LCIA Rules obliged the parties to keep all materials in the arbitration produced for its purpose confidential except to the extent that disclosure was not required by legal duty.

The joint venture agreement was terminated and arbitrations resulted, one of which was under the LCIA rules and where Petrotrin was successful. In the meantime legal proceedings had been raised against the former chairman of Petrotrin for negligence and breach of fiduciary duty in relation to the agreement.

After a general election and a change of Petrotrin’s Board, the former chairman was appointed to a government post and a government minister suggested that the claim against the ex-chairman would be dropped. Thereafter Petrotrin’s QC advised that the action was likely to be unsuccessful. He did so on the basis of the witness statements from B and T which had been given to Petrotrin for the purposes of the LCIA arbitration. After some months the action was abandoned.

Mr Maharaj, an opposition politician, applied to Petrotrin to obtain the witness statements of B and T relying on Trinidad’s freedom of information legislation. The Trinidad FOI legislation made such statements exempt from disclosure unless:

“in the circumstances giving access to the document is justified in the public interest having regard both to any benefit and to any damage that may arise from doing so.”

Petrotrin refused to disclose the statements founding on among other things the damage that could be done to public authorities obtaining benefit from arbitration  with the LCIA. Mr Maharaj sought leave to bring a judicial review of the refusal. This was refused on the basis that it was not even arguable that Petrotrin required to disclose. This refusal was confirmed by the Trinidad court of appeal. A further appeal to the Privy Council ensued.

The Privy Council decided that whatever test one applied for judicial review of the refusal, Mr Maharaj had a realistic prospect of success in obtaining disclosure on the basis of the public interest. It allowed his appeal observing that

the damage caused by disclosure would be mitigated by :

• The fact that confidentiality under the LCIA rules was not absolute;
• The witnesses B and T were themselves employees of Petrotrin who arguably had a duty to provide statements under their employment contracts in any event;

while the benefit in disclosure was enablement of the public :

• to understand and if appropriate criticize the decisions of Petrotrin in embarking on the joint venture and the gurantee;
• to be fully informed about the ex-chairman’s involvement in them so that his public appointment could be commented on or opposed; and
• to understand and if appropriate criticize the decisions to bring and abandon the action against the ex-chairman.

DISCUSSION

The Scottish Situation 

The outcome in Scotland would have been the same. This is because while under the Freedom of Information (Scotland) Act 2002 there is an absolute exemption from disclosure of information that would otherwise give rise to an actionable breach of confidence, under rule 26 of the statutory Scottish Arbitration Rules, where disclosure is “in the public interest” confidentiality does not apply and disclosure is not actionable.

In that respect the test under the Trinidad freedom on information case applied in the Maharaj case reflects the test of “in the public interest” under rule 26. The Maharaj case can therefore be seen as an example of the application of the “public interest” exception to confidentiality under rule 26.

Comments

The case illustrates that arbitral confidentiality may well be subordinate to freedom of information from public authorities. A public authority is unlikely to be able to evade its freedom of information duties through the medium of arbitration.

The situation in Maharaj  is quite distinct from for example confidential information supplied to the arbitration by the commercial party to the arbitration. That may well be exempted from disclosure by the public authority under freedom of information legislation and arbitral confidentiality may apply.

On a broader note, where an arbitration involves a public body, there is an inherent tension between the desire for confidentiality, principally of the commercial party in the arbitration, and the need for transparency in the activities of the public body as desired by the public. This case is an illustration of the means by which that tension may be resolved.