Confidentiality of International Arbitral Proceedings: The Limits for State-Owned Entities

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.

Contrary to other jurisdictions, the International Arbitration Bill of South Africa, 2017 (which intends to incorporate the 2006 version of the UNCITRAL Model Law) specifically contains a provision on confidentiality. Section 11 of the 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 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.