ENGLISH COURT OF APPEAL CONSIDERS CONFIDENTIALITY IN THE CONTEXT OF ARBITRATION-RELATED COURT PROCEEDINGS

In the case of CDE v NOP [2021] EWCA Civ 1908, the English Court of Appeal was asked to determine whether, in court proceedings which overlapped with the subject matter of an LCIA arbitration, a case management conference should have been held in public or private, and whether an upcoming summary judgment application should also be held in public or private. In dismissing (in large part) the appeal and holding that the first instance judge was correct to have held the case management conference in private, the Court of Appeal addressed the distinction between "arbitration claims" under CPR 62.10 and court proceedings under CPR 39.2, finding that the starting point for the latter, even where the subject matter overlaps with an arbitration, is always that they will be held in public unless one of the applicable exceptions applies.

Background

The claimants commenced proceedings in the English Commercial Court, accusing the defendants of having orchestrated a fraud. The same allegations had been the subject of an LCIA arbitration against companies who were connected to the defendants. According to the claimants (and not disputed by the defendants), the arbitrators had already found that (i) the claimants' allegations were well-founded and (ii) the evidence given by the defendants in the arbitration had been false.

The claimants applied for summary judgment, arguing that the arbitral award was binding on the defendants, either because there was privity between the defendants and the companies who were parties to the arbitration, or because it would be an abuse of process for the defendants to insist on litigating the same issues all over again. This question was due to be decided in an upcoming hearing referred to as the "privity application".

At the case management conference, the claimants had submitted that both the case management conference itself and the upcoming privity application should be in public. However, the defendants resisted this. This was a case that had attracted a great deal of media attention, so even anonymisation of the parties would inevitably identify the case and what the arbitrators had decided.

The first instance judge ordered that the case management conference should be held in private, and made further orders to ensure that the award would not become public until the court had determined that it should. However, the first instance judge made no decision as to whether the privity application would take place in private.

Appeal

The claimants appealed against the judge's order, submitting, amongst other things, that in deciding that the case management conference should be held in private, the judge failed to properly apply the test in CPR 39.2 and to give proper weight to the fundamental principle of open justice.

CPR 39.2 (which can be found here) sets out the general rule that a hearing must be held in public unless the court is satisfied that (i) one of the grounds of exception applies and (ii) it is necessary to sit in private to secure the proper administration of justice. The applicable exception in this case was (c), which provides:

" (c)  it involves confidential information (including information relating to personal financial matters) and publicity would damage that confidentiality;"

The claimants argued that rather than using CPR 39.2 as a starting point, the judge had started from the principle of arbitral confidentiality recognised in CPR 62.10, which deals with "arbitration claims" (and can be found here).

As this case was not an "arbitration claim", this rule of confidentiality did not apply. The claimants also argued that they were seeking to pursue a legal right, which fell within the exception to confidentiality recognised in Article 30.1 of the LCIA rules. Accordingly, they said that there would be no question of any breach of confidentiality if the hearing was held in public.

The defendants stressed that the arbitration award was confidential and that confidentiality would be lost if there was a reference to the award at a public hearing. It argued that it was necessary to sit in private to secure the proper administration of justice, not only at the case management conference, but also at the hearing of the privity application.

Decision

The Court of Appeal dismissed the claimants' appeal and determined that the first instance judge was correct to hold the discussion about the award at the case management conference in private, based on the exception contained in CPR 39.2(3)(c). The court held, however, that the case management conference should have been opened to the public when the discussion turned from the award to more routine topics.

In reaching this decision, the Court accepted that the case management conference involved confidential information, and that arbitral confidentiality is recognised by English law as significant and worthy of protection. Moreover, the Court clarified that the arbitral award engaged CPR 39.2(3)(c) regardless of whether its disclosure would cause harm over and above the fact of disclosure itself.

However the Court of Appeal emphasised that confidentiality was not a trump card. The critical question was whether it was necessary to sit in private to secure the proper administration of justice. That question involved taking account of the stage which the proceedings have reached -  a case management conference was less likely to involve matters of public interest or require public scrutiny of the court's conduct of the proceedings and decision-making processes than a substantive hearing.

As for the privity application, the Court of Appeal declined to decide at that stage whether or not it would be held in private. However, the Court amended the judge's order to clarify that if the defendants wished the privity application to be heard in private, the onus was on them to issue an application to be determined in accordance with the provisions of CPR 39.2. The Court also commented that the considerations which led it to conclude that the case management conference should be held in private would not apply with the same force to the privity application given that the court would be required to adjudicate on the merits of the dispute.

Finally, the Court also noted that if it were to decide that the hearing should be held in public, there would be no question of any breach of Article 30 of the LCIA rules, as the exception to the obligation of confidentiality that is available for a party to protect or pursue a legal right would be engaged.

Comment

This case illustrates the distinction and interplay between "arbitration claims" under CPR 62.10 (i.e. court proceedings relating to English-seated arbitrations where the English Court is exercising its supervisory jurisdiction) and court proceedings whose subject matter may overlap with an arbitration,  but which fall within CPR 39.2.

Whereas the starting point is that "arbitration claims" under CPR 62.10 are held in private, the default position for court proceedings, even if they refer to arbitrations, is that they are heard in public. This means that a party who wishes a court hearing relating to an arbitration to take place in private must satisfy the court that (i) one of the grounds set out in CPR 39.2(3) applies and (ii) it is necessary to sit in private to secure the proper administration of justice. Whilst a confidential arbitral award will engage CPR 39.2(3), that is not the end of the story – whether the hearing will take place in private will depend on a number of factors, including the stage of the relevant proceedings and whether the case involves matters of public interest.

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