SA's new International Arbitration Bill excludes public bodies from confidentiality

© Roman Peleshko – 123RF.com

One of the selling points for resolving cross-border or international commercial disputes by arbitration is the proposition that the arbitral proceedings and ultimately the arbitral award will be protected as confidential between the parties. ‘Confidentiality’ being understood to entail the obligation on the parties not to disclose information concerning the arbitration to third parties, such as hearing transcripts, written pleadings, submissions, evidence adduced, material produced during disclosure and arbitral awards.

For parties to international arbitral proceedings to enforce any legal obligation of confidentiality, reliance must be placed on applicable domestic law regulating the arbitration proceedings, as opposed to any provisions of the Convention on the Recognition of Foreign Arbitral Awards, 1969 (New York Convention) that only deal with the recognition and enforcement of arbitration agreements and arbitral awards.

Most states that have adopted the UNCITRAL Model Law for International Commercial Arbitration (UNCITRAL Model Law) as domestic arbitration laws to regulate international arbitrations are often silent on the confidentiality of arbitral proceedings, rather:

• confidentiality obligations in those jurisdictions are imposed by arbitration agreements; or
  
• implied obligations of confidentiality are recognised by courts of certain jurisdictions for international commercial arbitrations.

Section 11 of the South African International Arbitration Bill contemplates confidentiality for private parties’ arbitration proceedings, but where one of the parties is a public body, the arbitration proceeding must be public, unless the arbitral tribunal determines otherwise.

The implication of this provision is that any international commercial arbitration proceedings involving state-owned entities, such as Eskom, the IDC, Transnet and SAA, must by default be held in public – with no regard to the commercial nature of the dispute - and the arbitration proceeding will only be private once ‘compelling reasons’ are provided.

There appears to be a justifiable reason (ie public funds and so on) for arbitration proceedings involving public bodies to be held in public, but the Bill provides no direction as to what ‘compelling reasons’ would entail.

Parties involved in international commercial transactions with public bodies will have to carefully consider the implication of s11 of the International Arbitration Bill, particularly when such international commercial agreements select South Africa as the governing law for the arbitration.