ARE RECORDS OF DELIBERATIONS BY ARBITRATORS CONFIDENTIAL?
In the recent case of CZT v CZU [2023] SGHC(I) 11, the Singapore International Commercial Court addressed whether records of deliberations by arbitrators are confidential. And the answer is generally yes, subject to limited exceptions.
Brief background. In CZT v CZU [2023] SGHC(I) 11 (“CZT v CZU”), the defendant commenced arbitration proceedings against the plaintiff ([8] CZT v CZU).
In due course, a final award (the “Final Award”) was issued ([16] CZT v CZY).
The Final Award was only signed by the majority of the arbitral tribunal (the “Majority”) ([16] CZT v CZU). The minority dissenting arbitrator (the “Minority”) did not sign the Final Award ([17] CZT v CZU).
Instead, the Minority produced a dissenting opinion (the “Dissent”) where, in addition to setting out reasons why he disagreed with the Majority’s decision, the Minority accused the Majority of “… having “engaged in serious procedural misconduct”, “continued misstating of the record”, attempting “to conceal the true ratio decidendi from the Parties”, “distortion of the deliberation history”, lack of impartiality, and knowingly stating an incorrect reason for the Minority’s refusal to sign the Final Award …” (see [18] – [19] CZT v CZU).
The plaintiff subsequently sought to set aside the Final Award ([20] CZT v CZY) on the basis that:
The Majority acted in breach of natural justice;
The Majority exceeded the terms / scope of submission to arbitration;
The arbitral procedure was not in accordance with the parties’ agreement; and/or
The Final Award conflicts with the public policy of Singapore.
And as part of the setting aside proceedings, the plaintiff applied to seek production from the arbitrators records of their deliberations ([23] CZT v CZU) on the basis that (in short) they are relevant and material to the plaintiff’s setting aside application (see [33] CZT v CZU).
Confidentiality of deliberations. The Court observed that there is no statutory provision in Singapore that expressly protects the confidentiality of deliberations by arbitrators ([42] CZT v CZU).
However, the Court noted that not only was it common ground that such records are confidential, but that “… it can scarcely be argued otherwise…” ([43] CZT v CZU), stating that the confidentiality of deliberations exists as an implied obligation in law ([44] CZT v CZU).
Similarly, it was also common ground that this is subject to exceptions ([45] CZT v CZU).
Dispute over scope of exceptions. However, the parties disagree on the scope of the exceptions, with:
The plaintiff arguing that the “… confidentiality of deliberations will yield, in appropriate circumstances, to considerations of due process, the interests of justice and the public policy of preserving the integrity and reputation of Singapore as a seat of arbitration”, and that “… challenges that the arbitrators went beyond the parties’ cases could also fall within the exception” ([46] CZT v CZU); and
The defendant arguing that “it will only be in the very rarest of cases, if ever, that arbitrators will be required to give disclosure of documents; it would require the most compelling reasons and exceptional circumstances for such an order to be made, if ever”, with one possible exception being a case where there were allegations of corruption of the arbitrators ([48] CZT v CZU).
What the Court held. The Court first made clear the protection of confidentiality of deliberations does not apply where the challenge is to the essential process of the deliberations, as opposed to substance of the deliberations. This is because where the challenge is to the essential process of the deliberations, then the issue does not involve the arbitrators’ thought processes or reasons for his decision, and hence are not strictly exceptions to the protection of confidentiality of deliberations. See [50] CZT v CZU as set out below
“50 We deal first with Prof Jones’ distinction between process issues and substantive disagreements. We agree with Prof Jones that the protection of the confidentiality of deliberations does not apply where the challenge is to what may be described as the essential process rather than the substance of the deliberations. An example of an essential process issue is, as Prof Jones suggested, where the complaint is that a co-arbitrator has been excluded from the deliberations. However, cases involving such process issues are, strictly speaking, not really exceptions to the protection of the confidentiality of deliberations. The protection does not apply to such process issues because they do not involve an arbitrator’s thought processes or reasons for his decision. The policy reasons for the protection of the confidentiality of deliberations are therefore not engaged. The parts of the records of deliberations that need protection do not have to be disclosed. If and when the arbitrator gives oral evidence, his testimony will be limited to the process issues and he may not be questioned as to his thought processes or reasoning. Where the evidence is in the records of deliberations, parts of the records that deal with the arbitrator’s thought processes or reasoning need not be produced or may be redacted.”
The Court then held that, nonetheless, even where no essential process issues are involved, a case may arise such that “… issues which are described as “process issues” [may] raise questions of fact and degree as to the extent of consultation between arbitrators which could give rise to the need to explore deliberations…”. As such, the Court was not prepared to limit exceptions to the protection of confidentiality of deliberations to only essential process issues ([52] CZT v CZU).
However, the Court held that the plaintiff’s formulation was too wide ([53] CZT v CZU). The Court agreed with the defendant that given the very strong policy reasons for protecting the confidentiality of deliberations, “exceptions are only to be found in the very rarest of cases”, and the case would (a) have to involve allegations which are “very serious in nature” and (b) the allegations must have “real prospects of succeeding” ([53] CZT v CZU).
In this regard, it appears that the touchstone is that “… 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 outweigh the policy reasons for the protection of the confidentiality of deliberations…” ([53] CZT v CZU; our emphasis added).
See [53] CZT v CZU as set out below:
“53 However, we disagree with the plaintiff’s formulation of the scope of the exceptions (see [46] above). The plaintiff’s formulation is far too wide. There are very strong policy reasons for protecting deliberations’ confidentiality. In our view, it would take a very compelling case to overcome these policy reasons. We therefore agree with the defendant and Prof Jones that the exceptions are only to be found in the very rarest of cases. Clearly, 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 outweigh the policy reasons for the protection of the confidentiality of deliberations. In our view, such a case would have to involve allegations that are very serious in nature. In addition, it must be shown that the allegations have 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, in our view, the case would fall within the exception to the protection of the confidentiality of deliberations. An order should be made in such a case for the production of the records of deliberations if none of the objections in O 110 r 17(2)(b) applies. On the other hand, if the case does not fall within the exception, a production order will not be made even if the documents are relevant or material and none of the other objections in O 110 r 17(2)(b) applies.”
(our emphasis added)
Application. On the facts of CZT v CZU, the Court disallowed the plaintiff’s application as (a) it was unnecessary to seek production of the deliberations as certain of the plaintiff’s allegations could be decided based on the arbitration record ([59] CZT v CZU) and (b) more importantly, the plaintiff has not shown that the allegations have real prospect of succeeding ([62] – [70] CZT v CZU).
In this regard, the Court noted that the plaintiff relied upon the Minority’s Dissent to support that the Majority’s “true reasons” were not found in the Final Award and has “… given untruthful accounts of the deliberation history and made misleading statements.” However, the Court found that the Dissent did not state the basis for the Minority’s allegations. The Court stated that “… such bare allegations, even if made by a co-arbitrator, cannot be sufficient. This is all the more so when the Minority has made serious allegations tantamount to accusing the Majority of dishonesty.” ([65] CZT v CZU )
Conclusion. CZT v CZU makes clear the confidentiality of arbitrators’ deliberations exists as an implied obligation of law, and that it would be difficult to pierce this protection.
We agree with the Court that cogent policy reasons exist for ensuring that such protection cannot be readily lifted.
In this regard, it appears from the case that the touchstone is one of “interests of justice”.
As such, it is unlikely that a party will be able to lift the protection if the case can be made without recourse to the arbitrators’ deliberations, especially if the case is evident on the face of the record.
Further, it is important to bear in mind the requirement for “real prospects of succeeding”: it is not enough for a party to simply show that serious allegations were made. The party must be able to muster evidence to show that there exist real prospects of establishing such allegations, which is a high threshold.
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