Hon. Robert A. Baines (Ret.) is a JAMS panelist in Silicon Valley and has more than 40 years of litigation experience. He has successfully resolved a wide variety of matters at JAMS, including business partnership dissolutions, software licensing disputes, real property disputes, personal injury matters and professional liability matters.
Privacy is what draws many parties involved in a dispute to arbitration. As Lucy Dalglish, executive director of the Reporters Committee for Freedom of the Press, recently noted: “This is what God made arbitration for.” However, there are ways in which the details of a private arbitration can leak out and it is important to identify and block these gaps as much as possible.
Parties should always be aware that law does not provide for the confidentiality of contractual arbitrations. In addition, most arbitration providers’ rules require confidentiality from the arbitrator and the providers, but not the parties or their attorneys. So, in order to keep an arbitration confidential, all parties should include confidentiality in their arbitration clause.
Each phase of an arbitration raises unique issues when it comes to confidentiality. In the pre-hearing, discovery and hearing phases, for example, decisions must be made as who has access to transcripts and other information generated by the process. Retaining confidentiality once a settlement is reached and award given can be more complicated, as judges are generally reluctant to seal files and parties often go back to court to challenge an award. For these reasons, it is important for parties to think through all possible issues as they draft confidentiality agreements.
Even in the case of a well-drafted confidentiality agreement, however, some gaps may still remain. It may not prevent third parties from discovering the information used in the arbitration if it is relevant to later litigation. Public disclosure can also be required for arbitrations involving a public entity, a publicly-traded company, consumer arbitration, or medical malpractice lawsuits where a health care plan is involved.
Ultimately, the best way to ensure an arbitration remains confidential is a well-drafted confidentiality agreement – coupled with a solid understanding of any unique issues in a case that may trigger disclosure.