Key Takeaways

• In the recent annulment case of CZT v CZU [2023] SGHC(I) 11 where the Singapore International Commercial Court (SICC) was the seat court, it clarified that an arbitral tribunal’s record of deliberations is protected by the implied obligation of confidentiality under Singapore law. This includes discussions between arbitrators and draft awards submitted by the tribunal to an arbitral institution for scrutiny.
• Though this obligation of confidentiality is not absolute, the SICC held that the shield of confidentiality would be displaced only in the very rarest of cases, where very serious allegations have been made against the tribunal and which have a real prospect of success. The Court’s careful analysis of the arguments in this case demonstrates the robust approach Singapore courts would take in determining whether the exceptions apply. This high threshold in law and practice is advantageous to commercial parties because it promotes finality of the arbitral award by impeding parties from using the disclosure mechanism as a tool to fish for evidence or to launch spurious annulment or enforcement challenges against the arbitral award, save for the most serious cases.
• It may be prudent for commercial parties to take care in choosing a set of institutional rules which clearly provides for confidentiality of arbitral proceedings. For example, the SIAC Rules 2016 imposes on all parties involved in arbitration (i.e., the tribunal, experts and tribunal secretaries) a duty of confidentiality – and expressly extends to protect the tribunal’s record of deliberations.

Background

The Claimant sought production orders to compel the three members of the arbitral tribunal to produce records of the tribunal’s deliberations in an arbitration under the Rules of Conciliation and Arbitration of the International Chamber of Commerce (ICC). Singapore was the arbitral seat. These applications were made in the course of setting-aside proceedings before the SICC as the seat court, where the Claimant allege that, amongst other things, the majority members of the tribunal (the Majority) had acted in breach of natural justice, that the Majority had exceeded parties’ scope of submission to arbitration, and that the Majority’s award is in conflict with the public policy of Singapore.

These challenges were in part based on the dissenting opinion from the minority member of the tribunal (the Minority), Dr Philipp Habegger, where Dr Habegger remarked that the Majority had engaged in serious procedural misconduct and had attempted to conceal the true ratio decidendi from the parties. As a result, the Claimant sought records of the tribunal’s deliberations and a draft copy of the final award to seek to show that the Majority had decided on a key liability issue for reasons not contained in the final award, and that such reasons were concealed by the Majority through their amendments in the initial draft award.

The key issue before the SICC was whether the tribunal’s deliberations were protected by the implied obligation of confidentiality over arbitration proceedings, as established in the case of International Coal Pte Ltd v Kristle Trading Ltd [2009] 1 SLR(R) 945. If the answer is yes, the next question is whether any exceptions to the shield of confidentiality applies.

The Scope of Confidentiality

In finding that the tribunal’s records of deliberation were indeed protected by confidentiality, the SICC laid down two important planks of reasoning worthy of attention:

First, the Court found that there is an implied obligation in law that arbitrators’ records of deliberation were confidential (International Coal Pte Ltd v Kristle Trading Ltd [2009] 1 SLR(R) 945), and this protection of confidentiality extended to draft awards submitted by the tribunal to the arbitral institution for scrutiny as well. Such protection was justified by the following cogent policy reasons:

• The need to permit frank discussions between arbitrators. This secrecy was indispensable if the deliberation were to produce a true discussion and argument and not become a mere exchange of cautiously expressed and elected views.
• The need to permit arbitrators to decide freely without restriction. Hence, arbitrators were free to draw conclusions untrammelled by any subsequent disclosure of their thought processes, and, where they were so inclined, to change these conclusions on further reflection without fear of subsequent criticism or of the need for subsequent explanation.
• The duty on the tribunal to keep deliberations confidential protected the tribunal from outside influence. For example, the existence of such a duty would discourage an arbitrator from leaking or publicising discussions or decisions with which he disagreed.
• The need to minimise spurious setting-aside applications based on differences in the tribunal members’ deliberations.

The Court’s decision is significant because this shows that arbitration proceedings (including the tribunal’s deliberations) are protected by confidentiality even if parties did not choose a set of institutional rules which expressly provides for such confidentiality. Since this confidentiality is an implied obligation in law, it is not dependent on any factual finding that the parties intended the arbitration proceedings to be confidential. This solidifies the pro-confidentiality approach of the Singapore courts (and Singapore’s law governing arbitration procedure) and ensures that parties choosing Singapore as the arbitral seat would be able to claim protection from this implied obligation of confidentiality.

Second, the Court found that exceptions to confidentiality were limited, and disclosure of the tribunal’s deliberations would only be permitted in the very rarest of cases. In particular, the standard required of an exception were:

1. the facts and circumstances of the case must be so compelling as to persuade the court that the interests of justice in ordering production of the records of deliberations outweighed the policy reasons for the protection of the confidentiality of deliberations;
2. such a case would have to involve allegations that were very serious in nature; and
3. it must be shown that the allegations had real prospects of succeeding.

For example, allegations of corruption would be serious enough because such allegations attack the integrity of arbitration at its core. If it can also be shown that such allegations have real prospects of succeeding, the case would fall within the exception to the protection of the confidentiality of deliberations.

Conceptual Framework on Confidentiality

While the Court’s decision clarified the scope of confidentiality over arbitration proceedings, there are some insights arising out of the Court’s reasoning which deserves further attention:

Robust approach to determining whether the exceptions apply

As stated above, the exceptions to confidentiality are limited. The determination of whether the exceptions exist requires a very factual analysis of all the relevant circumstances. The Court ultimately held that none of the allegations made by the Claimant reached the level required of the exceptions, and the robust approach by the Court is demonstrated in how the Court dealt with these allegations.

First, the Claimant argued that the Majority in fact decided a key liability issue for the true reasons that were not contained in the Final Award, but in an earlier draft award which was sent to the ICC for scrutiny, and that the Majority breached the fair hearing rule. The Court held that an allegation of breach of the fair hearing rule was not sufficient to displace the protection of confidentiality of deliberations, and such an allegation could be decided based on the arbitration record without referring to the records of deliberation. In any event, the allegation that the reasons in Final Award were not true reasons was insufficient to constitute an exception to confidentiality.

Second, the Claimant argued that the Majority attempted to conceal the true reasons behind the Final Award by making material changes to the draft award which had already been approved by the ICC, following further concerns expressed by the Minority. The Court held that this allegation was insufficient to constitute an exception to confidentiality.

Third, the Claimant argued that the Majority lacked impartiality. The Court held that it seemed arguable that a lack of impartiality could constitute an exception because impartiality was fundamental to the integrity of arbitration proceedings. The Court ultimately declined to come to a definitive conclusion because it held that the Claimant did not show that the allegations had a real prospect of succeeding.

Fourth, the Claimant relied on parts of dissenting opinion of the Minority which alleged that the Majority was wrong in its findings, exceeded the parties’ cases or did not afford the defendant the opportunity to comment. The Court held that these allegations were irrelevant to the issue of whether the tribunal's deliberations should be disclosed because the allegation that the Majority was wrong in its findings was not a legitimate ground for the purposes of the setting aside application, and the other allegations could be determined based on the arbitration record.

Lastly, the Court rejected the Claimant's argument that records of deliberations should be disclosed to allow the Claimant to investigate the allegations made by the Minority. This was because production of documents would not be ordered to support a fishing expedition.

Conclusion

The SICC’s decision has provided a welcomed clarification that there is an implied obligation in law that arbitrators’ records of deliberation are confidential under Singapore law, and that records of a tribunal’s deliberations (and draft awards submitted for scrutiny) are protected by confidentiality with limited exceptions. It is only in the very rarest of cases, where very serious allegations made against the tribunal that has a real prospect of success would be sufficient to displace this shield of confidentiality. Given the current system of party-appointed arbitrators, it is not uncommon for a dissenting arbitrator to render a dissenting opinion. The significance of the balance struck by the Singapore courts is that it would very much be an uphill task to obtain production of the tribunal’s deliberations, unless there are compelling reasons for doing so. This would likely promote finality of the arbitral award, in so far as Singapore has been chosen as the seat of the arbitration. Nevertheless, this finality cannot be over-stated as the exact contours of the exceptions remain to be worked out in subsequent cases, and the factual nature of the enquiry would permit arguments for disclosure to be made on a wide range of matters. Choosing a set of institutional rules (such as the SIAC Rules 2016) which covers issues of confidentiality would likely bring comfort to commercial parties and arbitrators alike.