Daniel Harrison of Latham & Watkins LLP summarises the recent High Court judgment UMS Holdings Limited v Great Station Properties SA which may have significant implications for parties considering whether or not to resolve their disputes through arbitration.
The High Court recently held that a party was not free to disclose an arbitral award even though that award had already entered the public domain. Notably, the ruling may have significant implications for parties considering whether or not to resolve disputes through arbitration.
Background: UMS Holdings Limited v Great Station Properties S.A.
UMS Holdings Limited challenged an arbitral award on the ground of serious irregularity under section 68 of the Arbitration Act 1996 before the High Court. Because the judge had quoted parts of the arbitral award in the judgment refusing the application, UMS claimed that the award was a public document and that UMS could therefore use the award as it wished. The defendant, Great Station Properties, rejected this position and argued that the parties were still bound to keep the award confidential pursuant to Article 30 of the London Court of International Arbitration Rules (LCIA Rules), which provides:
“The parties undertake as a general principle to keep confidential all awards in the arbitration, together with all materials in the arbitration created for the purpose of 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.”
Great Station applied to the High Court for an order preventing UMS from using the award for any purpose other than the court proceedings or from disclosing the award to any third parties. In response, UMS claimed that the court should not issue an order for confidentiality because the award had entered the public domain by virtue of references, as well as quotation at the hearing and in the judgment in the court proceedings — thereby nullifying Article 30’s confidentiality obligations.
The judge in this case, Teare J, first noted in his ruling that the award had undoubtedly entered the public domain. Teare J then considered whether the disclosure of the award would breach Article 30. Teare J found that the Article 30 exemption “not otherwise in the public domain” intended to apply to an award, even if the strict grammatical interpretation of the exemption may have provided otherwise. Therefore, since the award was in the public domain, the contractual obligation to keep the award confidential no longer existed.
However, Teare J raised concerns about UMS’ ability potentially to use the award as it wished — particularly given that the court did not know UMS’ intended use. Teare J noted that the court’s own order meant that the award had entered the public domain and therefore the court had an “inherent jurisdiction to regulate the consequences of its decision.” Referring to CPR 31.22(2), which empowers the court to restrict the use of disclosed documents, Teare J granted the order preventing UMS from disclosing the award to any third party, but provided UMS the option to submit another application explaining its intended use of the award. Teare J stated that this option would likely cause increased costs, but was necessary in order to prevent abuse of the court’s order that the section 68 application be heard in public.
Further, Teare J did not address the non-disclosure of arbitral documents other than the award that may have entered the public domain, nor did Teare J provide any details on for what purposes a party can and cannot use arbitral documents, including the award document.
The disclosure of an arbitral award in subsequent court proceedings risks undermining one of the key advantages that arbitration offers to disputing parties: confidentiality. UMS Holdings Limited v Great Station Properties S.A. provides a degree of comfort to parties that the loss of confidentiality is unlikely post-award. As Teare J noted, a party should explain to the court exactly how it intends to use an award if it wishes to remove the award’s confidentiality restrictions.
This article is reproduced with kind permission from the authors and appeared in Lexology in November 2017.