Understanding the Importance of Confidentiality in The Arbitration and Conciliation Act: An Exploration of Section 75

Introduction

In the fast-paced world of global commerce, dispute resolution has come to play a crucial role. The Arbitration and Conciliation Act, 1996 is the principal statute governing the process of arbitration in India. It is based on the Model Law on International Commercial Arbitration adopted by the UNCITRAL in 1985. Today, we at SimranLaw will delve into Section 75, which espouses the principle of confidentiality, a critical facet of this Act. Our team of legal experts will dissect this complex issue to provide readers with insights drawn from years of experience.

The confidentiality of proceedings is one of the key advantages of choosing arbitration over litigation in the courts. This aspect ensures that sensitive commercial information or damaging facts are not inappropriately disclosed, thereby safeguarding the parties’ reputations.

An Overview of Section 75

Section 75 imposes an obligation of confidentiality on the arbitrator, the parties and the arbitral institution concerning all matters except for the award itself. It states:

“Notwithstanding anything contained in any other law for the time being in force, the conciliator and the parties shall keep confidential Information relating to the conciliation proceedings. Confidentiality shall extend also to the settlement agreement, except where its disclosure is necessary for purposes of implementation and enforcement.”

Interpreting Section 75: Unraveling the Complexities

1. Scope of Confidentiality: The Act mandates that all information related to the conciliation proceedings must be kept confidential. This includes not only the matters discussed during the proceedings but also the documents and evidence produced.
2. Exceptions to Confidentiality: The Act recognizes that there may be instances where disclosure is necessary. This might be for the purpose of implementation or enforcement of the settlement agreement.
3. Persons Bound by Confidentiality: The Act enjoins both the parties and the conciliators to maintain confidentiality.

Case Laws and Judgments

There have been several judgments that have shaped the understanding of Section 75.

A. Vedanta Limited vs Shenzen Shandong Nuclear Power Construction

• In this case, the Delhi High Court ruled that unless expressly agreed, confidentiality obligations under Section 75 do not extend to the Arbitral Awards.

B. Hassneh Insurance Co Of Israel & Others vs Steuart J Mew

• The courts established that an implied obligation to maintain confidentiality exists in every arbitration.

C. Ali Shipping Corp vs Shipyard Trogir

• The courts held that parties can disclose an award if it is required for purposes of challenging or enforcing the award, or to protect or pursue a legal right.

Conclusion

The confidentiality principle in the Arbitration and Conciliation Act, as per Section 75, is both a shield for protecting sensitive information during arbitration proceedings and a sword that ensures the transparency and integrity of such proceedings. As legal experts at SimranLaw, we believe that arbitration’s success hinges substantially on its ability to balance these dual aspects effectively.