CONFIDENTIALITY AND INVESTMENT-TREATY ARBITRATION
Confidentiality is one of the key aspects of arbitration, and for many parties, confidentiality is a key reason why they favour arbitration over litigation. But does the obligation of confidentiality in an arbitration extend to an investment-treaty arbitration? In this brief update, we take a look at the recent Singapore High Court decision of Republic of India v Vedanta Resources PLC [2020] SGHC 208 (“Vedanta”) which touched on this issue.
The key issues in Vedanta. The key issues in Vedanta are summarised by the Singapore High Court at the very first paragraph of the decision, which we set out below:
“1 Singapore’s arbitration law imposes a general obligation on the parties to an arbitration to keep the documents and proceedings in that arbitration confidential. Does this general obligation of confidentiality extend to all species of arbitration? In particular, does this general obligation extend to an investment-treaty arbitration? And if a party to an arbitration puts this question of law to the tribunal in an investment-treaty arbitration and receives an answer it does not like, can that party put the question again to a Singapore court in an application for declaratory relief? These are the principal questions raised by the application before me.”
As the decision of Vedanta deals with many issues, we will focus just on some key points raised by the High Court in this brief update. We encourage interested readers to read the decision in full.
Procedural orders. At [48] – [49] Vedanta, the High Court made clear that while procedural orders are not final and cannot be nullified by a court, and that a tribunal has jurisdiction to reconsider and revise earlier procedural orders.
Practically, this is important for it means that if parties are dissatisfied with the procedural order granted by a tribunal, it is not open to the dissatisfied party to apply to the courts to nullify that procedural order.
However, it also means that it is open to parties to repeatedly ask the tribunal to reconsider and revise its procedural orders.
But as the High Court stated at [50] Vedanta, “[n]o doubt, a rational and efficient tribunal will not even agree to consider an application of this nature, let alone to accede to it, unless it is satisfied that there has been a change in the underlying circumstances or that there is some other compelling reason to do so“ (emphasis in original).
Court’s power to grant declaratory relief. At [55] – [58] Vedanta, the High Court made clear that the court’s power to grant declaratory relief is subject to the limit that the grant of the order must not exceed the court’s general jurisdiction or contravene any express statutory provision. As such, if the subject-matter of the declaration is regulated by arbitration legislation, such as in the setting aside of an award, the court does not have any power to grant a declaration to nullify an award or to set aside an award in any other ground save as those set out in the statute.
While this is quite trite, it is an important reminder that the court’s powers are circumscribed by the relevant statute.
Investment-treaty arbitration and Model Law. While the High Court made clear that this was not an issue which was strictly necessary for the court to decide upon ([60] Vedanta), the High Court stated that the authorities “appear to establish a judicial and academic consensus that investment-treaty arbitration does come within the meaning of “international commercial arbitration” in Art 1(1) of the Model Law” ([65] Vedanta).
Indeed, it bears noting that the High Court stated at [66] Vedanta that “[it] has been held in Singapore, albeit sub silentio, that the Model Law applies to an arbitration seated in Singapore under an investment treaty“ and referred to the Court of Appeal’s decision in Swissbourgh Diamond Mines (Pty) Ltd and others v Kingdom of Lesotho [2019] 1 SLR 263 where the Court of Appeal applied Art. 34(2)(a)(iii) and Art. 34 of the Model Law.
Arguable that the general duty of confidentiality does not apply to investment-treaty arbitration. Moving on, the High Court accepted that it was “minded to give the benefit of the doubt to the plaintiff”, and held that the question of whether the general obligation of confidentiality which Singapore law imposes on parties to a private arbitration extends to an investment-treaty arbitration was “at least arguably novel”, such that there was some ambiguity or uncertainty which the court’s determination would have the effect of laying rest to ([115] Vedanta).
In this regard, the High Court held that the decision of AAY and others v AAZ [2011] 1 SLR 1093 did not arise from an arbitration under an investment treaty, and the decision of Myanma Yaung Chi Oo Co Ltd v Win Win Nu and another [2003] 2 SLR(R) 546, while arising under an investment treaty, was decided before the decision of John Forster Emmott v Michale Wilson & Partners [2008] 2 All ER (Comm) 1931, and Kan J was not referred to the decision of Associated Electric and Gas Insurance Services Ltd v European Reinsurance Co of Zurich [2003] 1 WLR 104.
The High Court also observed that in investment-treaty arbitration, it “raises important issues of public interest and public policy involving a sovereign which is ultimately accountable to its people”, and hence a “different approach may well be warranted in investment-treaty arbitration, given the different stakeholders and the sovereign and public interests implicated. The significance of these distinctions were not in contention in AAY and were not argued in Myanma” ([117] Vedanta).
However, it is also important to emphasize that the High Court did not decide that the general duty of confidentiality does not apply to investment-treaty arbitration. The High Court merely decided that, for the purposes of determining whether the High Court should exercise its discretion to grant declaratory relief (see [106] Vedanta), there was sufficient ambiguity or uncertainty over this issue the court’s discretionary power to grant declaratory relief was engaged (see [113] Vedanta).
Application was dismissed. The High Court found that a tribunal’s role was solely adjudicatory (see [141] Vedanta), and when the tribunal must apply a common law and is faced with an ambiguity or a lacuna, it is “entirely within a tribunal’s power to ascertain that principle, develop it in fullness of the common law tradition and to apply it to the facts as found” (see [142] and [144]Vedanta).
Therefore, even if the tribunal had developed Singapore’s arbitration law, it was something which the tribunal had the power to do and would not constitute a ground justifying declaratory relief (see [161] – [162] Vedanta).
In addition, the High Court found that as the tribunal’s finding involved Singapore common law as merely one of three sources of law and one of several considerations, the High Court found that it did “… not consider that the declaratory relief which the plaintiff seeks will even be a persuasive tool on which the Vedanta tribunal can be invited to reconsider or revise” its procedural order (see [171] – [172] Vedanta).
The High Court also considered the minimal curial intervention was an “especially compelling factor militating against exercising the discretion to grant the plaintiff the declaratory relief which it seeks” (see [175] Vedanta). We set out the passage below:
“… The plaintiff placed the scope of the general obligation of confidentiality in Singapore’s common law of arbitration squarely before the Vedanta tribunal. Even though the plaintiff submits that it merely asked the Vedanta tribunal to determine a protocol for cross-disclosure of documents, it accepts that the question whether the parties were subject to a general obligation of confidentiality under Singapore’s arbitration law was a necessary preliminary question posed to the Vedanta tribunal. Both parties made submissions and addressed the Vedanta tribunal on this question. The plaintiff argued before the tribunal, amongst other things, expressly that the obligation did not extend to investment-treaty arbitration. The tribunal considered this question and rejected the plaintiff’s submission. And it did so as only one aspect of a comprehensive review of the three applicable sources of law in formulating the cross-disclosure regime set out in VPO 3. The plaintiff then made two applications to the Vedanta tribunal under the VPO 3 regime seeking leave to disclose a series of documents into the Cairn Arbitration. The Vedanta tribunal rejected both applications in VPO 6 and VPO 7. And the only real difference between CPO 10 and VPO 3 is a question of the burden of proof (see [24] above), a difference which is unlikely to make any difference except in marginal cases.”
Hence, while the High Court accepted that the plaintiff’s application was neither an abuse of process nor a collateral attack on the tribunal’s procedural order, as the declaratory relief sought does not engage any matter governed by the Model Law, nor amounted to an invitation to the court to intervene in the arbitration (see [101] Vedanta), the High Court declined to exercise its discretion to grant the declaratory relief sought ([176] Vedanta).
On appeal. Given that the decision is on appeal, it would be interesting to see how the Singapore Court of Appeal would approach this issue.
What is clear, however, is that the High Court was prepared to consider that it is at least arguable that the general obligation of confidentiality which applies to private arbitration may not apply to investment-treaty arbitrations, given the different interests and stakeholders involved.
This publication is not intended to be, nor should it be taken as, legal advice; it is not a substitute for specific legal advice for specific circumstances. You should not take, nor refrain from taking, actions based on this publication. Chancery Law Corporation is not responsible for, and does not accept any responsibility for, any loss or damage that may arise from any reliance based on this publication.